lead announcing a subscription plan for user verification. price is $12 a month it is tuesday, february 21st, 2023 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live at the nasdaq market site in times square i'm andrew ross sorkin along with joe kernen. becky is off today we have some red on the screen 216 points on the dow. it will be opening lower nasdaq opening lower 125 points down s&p off 33 points. treasury yields. flip the board

3.879. some tuesday morning thoughts as we kickoff the week? >> they caught up to where people say they should be. taking you back to tepper. he said they are telling us what they are doing they never had a bottom. you know what central bankers will do. we will have mike wilson on. he is bearish. we will have him on. he thinks stocks got way too -- still the old picture of him he thinks stocks got far ahead of themselves in valuation it went from october which went from what was fairly valued given the terrible 2022 which has turned into something which was a good january and now we're in territory where i think he is talking about new lows again rates continue to go up.

earnings continue to come down multiples contract at 3,200 which the gentleman from piper talked about, i don't think mike wilson would say that is out of the question at all. you are going to interview jeremy segal >> i am. >> we will both interview him. a three-day weekend tuesday is almost like a monday on steroids it is raining and 39 degrees. are you happy? >> i'm happy to see you, joe i'm very happy >> someone who i doubt thinks i'm great will say i'm incredible instead of doubting him, i'm supposed to believe him because i am great

that's what my horoscope said. someone who isn't usually wh wholesome in praise will slap you on the back and tell you you are a great guy. are they for real? they think you are special. >> get the cameras out can we do this >> they think you are special. >> on the back, no less. >> of course, they are right >> i really believe it i'm being genuine. i am there. >> thank you >> you okay? >> i'm going to try to compose myself home depot just reporting -- thank you, andrew. i love you, too. we're together we're together for the eek like it or not we're together becky is not around. >> she is taking time off. >> family time

home depot just reporting. melissa repko has the numbers. melissa, i'm sorry that preceded you. >> joe, home depot numbers are out and beat on earnings and missed on revenue. on earnings, it beat by 2 cents. it reported $3.30 against the $3.28 expected on revenue reported $35.8 billion. we are seeing the stock down this morning in part because of the outlook. it talked about comparable sales being flat in the year ahead i spoke to the cfo and he mentioned that they are seeing more price sensitivity than the months before. they are seeing that with inflation remaining high he noted home depot consumers are resilient and homeowners who see an advantage in staying in

place. that is helping with a fixed income he talked about how there is a fundamental assumption that home depot is factors into the forecast that flat sales forecast that economists are right which consumer spending is flat and that means flat sales for home depot >> that's the first thing i saw. flat results, but i looked at the earnings per share number. very similar to what the company earned and this is the fourth quarter. fiscal fourth quarter. the flat same-store sales. that is uncharacteristic we are down 3% right now >> exactly it is also worth noting comparable sales were down for the fourth quarter richard told me the reason for that in part was lumber deflation. were it not for lumber in the

fourth quarter, comparable sales would have been positive >> it was price. it wasn't the unit sales >> exactly. >> we're waiting -- sorkin, where is barry sternlicht's economy? melissa, thank you >> thanks, joe >> at least four or five months ago. >> i think if you are in the real estate business, things have been tougher, maybe >> it has been surprising. >> it has held up. it has not fallen. >> 500,000 jobs. joining us now for more is home depot reaction with brian nagel. you always liked the stock, brian. can you explain what is happening here is it surprising to you or is it the macro back drop? we said real estate of the sectors may be the one place

does that impact home depot? >> joe, good morning generally speaking, i have liked home depot as a stock. i always liked it as a company. i think we are seeing we have to keep in mind that it behooves home depot to be conservative with the initial outlook for 2023 if you look at the q4 results, that was largely in line with expectations no surprises there largely in line. the initial 2023 guidance looks a bit soft to relative expectations to some extent, that is reflecting a challenged back drop home depot is a smart company. they understand how to guide where they can deliver on the guidance and beat the guidance there is some concern with the initial outlook. >> now is the time to take your

lumps and try to beat. at least be conservative and hope for the best two and a half months before they finally have to report. 3% haircut today, brian, on the stock. raise the dividend a little bit? >> yeah. home depot has an extraordinarily strong balance sheet. they generate a strong amount of cash it is easy to fund that deaf continued. the concern as i talk to our clients is the home improvement market is slowing. this report from home depot, this initial guidance will help to service a beat for the concern. there is no question that is why we see the stock down marginally the company with the conference call at 9:00 to give more color. there are pressures out there. we have seen more macro challenges i think we also have to understand that home depot is likely being conservative at

this stage in giving guidance. >> you don't see anything necessarily here that we can glean about the overall economy or you do see something? we are grappling with that right now. we now think that the fed will not have any choice but to keep going given the last couple numbers. could things change quickly in terms of jobs? could it change quickly in terms of inflation starting to moderate more quickly? again, given if we see labor and unemployment rate tick up a little do you see that here to indicate that as a canary in the coal mine >> a few things. we need to keep it in p persp perspective. home depot with flat comps sales growth are flat. that is not home depot home depot in a normal home depot is a low-to-single digit

comp game. in the pandemic, and i know we talked about this, comp sales growth of north of 25% we are seeing the home depot results in a post-pandemic normalization. we are past the period of outside sales growth for home depot driven by the pandemic as far as the numbers telling us broadly, you know, i'll make this comment and i follow a lot of retailers every one of the retailers is talking about input costs. primarily supply chain and shipping costs coming down dramatically home depot, i don't know if they mentioned that, they talked about that on the conference call that is from my vantage point. that is a clear indication that inflation pressure are moderate. that is a positive as far as the macro standpoint we are seeing the indications of moderating inflation

we also have to keep in consideration for home depot and others inflation was a positive sales driver as far as the employment goes, i don't necessarily make employment forecasts we see home depot talk about paying employees more. home depot is a good company they have done that in the past. that signalled they are having a difficult time getting it in place. that is a further signal of the labor market in this economy >> all right brian, thank you i guess we'll see you for lowe's you expect similar for lowe's >> one goofy thing is doesn't report the until next week >> okay. good to know >> i think it will be largely the same. >> okay. when it does come in thanks in the meantime, we have other news this morning. meta rolling out a paid

verification service meta verify. it will cost $11.99 per month on the web or $14.99 if you buy through the app. users can submit government i.d. and get a blue badge the service is introduced in australia and new zealand this week it is following twitter blue which gives you a badge if you pay a monthly fee. the subscription benefits provides protections and monitoring businesses are not eligible currently to apply we will see. >> someone keeps being me. when i get rid of them being me, they come back check the name i'm so well respected in terms of advice, they have a new trading scheme they offer people >> trading scheme? >> a trading scheme. something. join my and they have all pictures they steal.

>> stop saying "they." you have a great program. before we head to break, a programming note tomorrow at 8:00 a.m., former vice president mike pence will talk about inflation and the economy and we will, obviously, talk about the debt ceiling and talk about the fed and all things money we may, andrew, 2024 we may talk about 2024 2020 we don't know what he will do. we don't fknow what he thinks of the former president think about that at this point, desantis and trump are very close you add enough people in the group with desantis and it could look like 2016 again where there is a plurality, but not majority see what the vice president -- i know you will have good questions. we can -- trump is fair game again. he is still living in your head

rent free? he's not gone. you are free to delve into what you think is appropriate >> he doesn't live in my brain >> he doesn't. you know >> i charged him >> i think mike might be here. how about jackets? i'll get him to try to take his jacket off >> out of respect. >> out of respect for the show i'll do a jim jordan this is what i do. this is how i am you can see my gut so be it. coming up next, when we return, data on the pace of consumer spending. steve liesman is here with the latest credit card spending numbers. you are watching the one and only "squawk box" on cnbc.

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welcome back to "squawk box. on the planner, housing data at 10:00 a.m. we get the january read on existing home sales. we heard from home depot guid guidance disappointing the street off 4% walmart is out at 7:00 a.m the bellwether for the economy

and consumer specifically. after the closing bell, we hear from coinbase and toll brothers. over sseas, president biden will speak in warsaw after the surprise visit to kyiv we are awaiting earnings and outlook on retailers we have steve liesman with the latest of the data saying about the health of the consumer steve. >> reporter: we looking at the data on credit cards strong out of the holiday shopping season and they continued spending into february look at the chase consumer card spending tracker through

february a recent dip that looks like noise. running 3% over last year. it remains above the downturn of 2022 bank of america showing strong retail sales report which were not just seasonal problems people may have been holding back spending until afternoon the -- until after the holidays daily bank of america credit card activity is meaningful year over year growth in the weeks after christmas. you have strong job growth and decent wage gains. real earnings have turned positive weekly and hourly security cola increases. states raised minimum wage in

january and you still have the elevated savings rates the area of concern here is credit new york fed report last week showed surge in use of credit cards in the increase in delin delinquency. not at worrisome levels. debt levels could become a problem with inflation and rising unemployment with interest rates the good news is this may stall the predicted recession. the bad news is more work for the fed ahead to cool the economy and bring down prices. we'll ask these questions tomorrow right at the nasdaq guys we have mike pence, but to me, this is a bigger deal. st. louis fed president jim bullard. >> i don't like to stack them like that. >> one is the president and the other is a vice president. >> former vice president >> yes >> former vice president

good point. >> we heard from brian moynahan in davos where he said if you look at credit cards and bank accounts, the consumer is still flush. seemed to indicate, i thought, as you get into the summer months and potentially farther along, it gets more complicated. the question is do you think those predictions are still true of the health of the consumer? you talk about more debt racked up, but the savings rate at the same time. >> andrew, it is interesting the banks have the data and they are making it semi public. bank of america is behind. you know, these guys have incredible visibility. they see how much is coming in and where it's going they can tell us how much is going to 401(k) which is down in

the recent report i saw. so i would believe what brian is saying he is seeing the flowing in front of him and making public what he is seeing. that is really important right now, i don't know what will happen in the summer. that's why i tie this to joblessness and employment that is key. whether or not folks have jobs and the credit looks worse if the joblessness increases. >> i'm curious because i read a bunch of studies of 401(k) contributions over the years it seems 401(k) contributions go down not as a function of where the economy is, per se, but typically, i think, as a function of the stock market the year before. if you had a tough year the year before, maybe i'll not put in as much this year another down market. i don't want to be part of the down market. do you think that is the case or do you think people want cash in

their pocket because they need it >> it could be both. i like what you are saying there. to my friends at pell over the weekend, andrew, you should n't do that. >> you are 100% right. >> they asked me for stock tips. i have no stock tips every month, put money in the market, and be done with it. my friends at pell and pizza >> how is the crust? >> it is very good for a free pi pizza. >> you go in for 20 years and they are lovely guys >> thick crust what are we talking? >> it's just regular standard new york pizza >> pepperoni >> you got pepperoni, sausage. variety. >> what do you get >> i usually get a plain and

piece of sicilian. >> steve, thank you. coming up, the perils of stock based compensation a new report says amazon co ama corporate employees could miss their stock point. we hear that all the time. there is a risk to being paid in stock. we will talk about the plan from united airlines to eliminatfe fe esor families to sit together "squawk box" will be right back. maybe it's perfecting that special place that you want to keep in the family... ...or passing down the family business... ...or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why?

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the decline in amazon stock price will mean some workers pay will come in significantly lower than target for compensation this year. the company pays corporate employees a chunk of salary in restricted stock unit. the wall street journal reports some packages in 2023 will be 15% to 50% lower than the proj projected target amazon said the come ppensation model comes with upside and downside risk. that seems that is implicit in doing it that way. it has a history of working out well for people with a long-term view >> that has also been the case. some news that families will be happy about united airlines saying technology will make more seats available for children to sit with adults. the software will open up

preferred seats to parents and other adult travelers with a child younger than 12 to sit together they don't come necessarily with extra legroom, but cost more because they are at the front of the plane. president biden called out airlines for this. delta blocks certain rows for families to sit together american's platform will search for seatsing t at the time of bn and day of departure if needed i don't know how often you have gone on a trip with one kid here and another kid here. >> no. my kids aren't kids many more when did this come in practice paying for sitting together for your family. that is within the last five

years. >> the last couple years you didn't get everybody together you get on the plane and say to the person next can we switch here and here. >> my kids are now in their 20s. >> they put their headphones and watch the movie on their ipad. >> we try to sit together, obviously. we switch around like that some people are funny. they won't switch. i try to have -- you like window or aisle some people like aisle. >> i go between them nobody on my plane with me a lot of space >> which seat? i know which seat you like in the g-5. the one where the president sits >> that's where i go take a nap in the back. we will talk portfolio strategy next as we await quarterly results from walmart >> people know we're joking?

>> never assume. it is staggering no one ever went broke the futures are down 251 the nasdaq down 109. oh, when i said we were in washington and i said what is that pointy structure up there someone said you have someone on your air who doesn't know what the washington monument is tomorrow, don't miss our interview with former vice president mike pence he joins us at8:00 a.m. eaerstn. >> all 57 states >> all 57. we'll be back. >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you.

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good morning welcome back to "squawk box. live from the nasdaq market site in times square. checking the futures we are off 251points that is a significant move lower this morning which comes after what wasn't a great week last week

the anti-january this month. it has not been nearly as friendly to those in of the market we will see. we are in an important inflection point, i would say. we have a couple of good voices today to weigh in on that. mike wilson and jeremy siegel. we have another good voice we talk about the markets right now and figure out the strategy maybe managing direct or will talk about it with us. thank you for joining us the journal has the piece of the strange economy and stranger market where you have, you know, profits holding up, of sorts, against the fascinating revenue picture and the markets have continued to go up and people are thinking what is going here.

i should say propefits, but marn compression. what is happening here, mimi >> i think there is a tug-of-war here we see the earnings is not great as you pointed out and margins compression is continuing. on the other side, i think some of whatwas giving markets the optimistic view into the start of the year was the china reopening story. also a potential to maybe have a soft landing got some folks geared up. >> zach? >> you know, andrew, i see it differently. i think earnings have been pretty good-bye a by and large. i think that is part and parcel for the situation today. volatility is elevated in the real economy we have high inflation there is a difference between nominal and real growth. we saw it with the gdp print and

again this year. we are looking through this in the short-term and we reassess the health of the u.s. economy and that is strong that will feed through corporate profits. >> if you are right, what are you doing about it >> if we're right, that means equities have room to run here we have been increasing our risk exposure across the portfolios in the last couple months. that does set up the situation potentially in the summer months or the fall as you look at the fed projections and the way they are looking at things and they rely on the slowing economy. we could be in the position where we don't think the fed is behind the curve right now, but if they guide things slower in the next few months, we could be in the situation where we are not talking about 5.25%

terminal, but 6% rates certainly at 18 times forward earnings, the s&p not priced for that >> mimi? >> we came into the year squarely neutral we are in a good position right now. we have been enjoying the upside we have seen thus far and we are getting cautious on equity valuations here. having said that, we look for a broad range trade in s&p in the year call it 3650 tor 4000. we are picking points. emerging market debt is yielding close to 7%. front end tips are just moved a bit. we have been long on them for some time. we expect them to continue to provide protection overall, we are looking for a 10-year yield of 3.5% to 4.25% we are happy to earn that on the

fixed income side. >> zach, you are taking the other side of this >> i agree with mimi on the fixed income front if we are right about the underlining strength of the economy, that is a good environment for credit we are taking more risk in the fixed income portfolios than we had for a year one thing i want to at add on the equity side is we are trying to pick out spots. where we have increased risk is internationally. we think the china reopening is a big deal the dollar has peaked and decoupling from the fedex peculiar takes which is what we -- fed expectation which is what we saw all of last year that rally has been called a junk rally and we agree with that we are not adding risk in those areas. we prefer to do so

internationally. >> we will leave the conversation there mimi and zach, thank you coming up, a milestone for disney at the box office that story after the break. later, morgan stanley's youthful mike wilson will join us to talk why he says stocks are ripe for a selloff reminder, you can watch or listen to us live any time on the cnbc app we're coming right back.

good morning, joseph >> good to see you the latest marvel movie -- i'm working on things for tomorrow working on things with the jacket, no jacket thing. >> yeah. >> work that out >> i'll get the veep it will be a working breakfast for the vice president now liesman has thrown down the gauntlet on the guest. lates la latest marvel movie topped the box office "ant-man. brings in nearly 1$104 million disney's "avatar" sequel

surpasssurpas ed "titanic. >> amazing. coming up, a new study -- you ready? hybrid work models are costing the city of new york more than $12 million as workers spend more days out of the office. we will dig into that story next. >> you have been an enabler on the subject. >> hybrid work >> yes hang tight we will talk about it after the break. check out shares of home depot. down right now close to -- come back off 4% before revenue missing. disappointing guidance walmart is due out at 7:00 a.m do not go anywhere we are coming right back after this

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♪ . welcome back to "squawk box. hybrid working is costing new york $12 billion in the city because they are spending 30% viewer day fewer days in the office we talked about hybrid work and the reshaping of the city. the numbers arie staggers

the question is what do you do about it we saw the report from the uk with the four-day are workweek and study will continue unabated if this is the new universe we're living in, is there a way to shift it around universe we e living in is there a way to shift things around to make that money back >> if you look at the economy of new york city it has grown over 1% since 2019, so the economy of new york city is not shrinking because of remote work what the study doesn't make clear is what they are talking about is losses to the manhattan central business districts >> right >> the city is going to be less manhattan centric in the foreseeable future >> look, a lot of folks, obviously we built a big infrastructure around the city,

whether it's laundry or restaurants, the services that historically workers took advantage of, and the question is are you trying to encourage less hybrid work is your view we should go back to the five-day workweek is that the answer or there of another answer to this >> i am a generation that grew up with at least a five-day workweek, and that's my comfort level, and that's not true of the generation now, and 82% of employers today in the manhattan office employers, 82% say hybrid work is their future plan. before the pandemic, that number was 6% we have seen a dramatic change and that's from employers. forget the employees as we are seeing employees take for granted, the benefit, the fringe

benefit of having the flexibility of working from wherever they are. >> we have not seen companies say we are giving up office space, i mean, really giving up office space i wonder, two or three years from now whether we will get to that point and how that might change the dynamic, if it does at all >> yes, we are seeing employers say they are going to either maintain or expand both their head count and office space in the city, which is a big benefit to the city, obviously it's hard to tell. the property owners, the landlords are very worried there's a 20% commercial vacancy rate in the town manhattan, which is the highest in memory there's a concern, what do we do with the old buildings i think the real estate industry will figure that out and make

new york city and manhattan will become a social center, cultural center, and a lot more housing, just like we saw in the '70s and '80s >> you go over to hudson yards, and i am pointing behind me, and then you go to the left and it's buzzing over there, and then you go to park avenue and it's bleaker than it used to be is that a place people will move and shift away to? >> the oldest office buildings are experiencing the lack of rent, and the new buildings that have gone up and they are a magnet and they are fun places to be. they have coffee shops on the

23rd floor they are really -- have been built to accommodate >> where are you on safety, security, policing in new york city we have had so many conversations in the past two years, a pandemic, post pandemic, about what is happening in the city. things seem like they have improved a bit, but i am curious if you feel the same way >> well, certainly in the subways it has improved. certainly in september, 24% of respondents say that crime was a factor in the return to work, and in january that was down to only 6%. the fact that the governor and mayor put on a blitz in terms of police presence and trying to bring services to the homeless who were in the subways has made a big difference and that's a positive trend line. on the other hand, gun violence

and general anxiety that is a function of the experience of the pandemic where we lost 45,000 new yorkers everybody has become more conscious of their mortality and more nervous about -- >> what do you think about the tax space? the other part of the story, at least antidotely -- >> yeah, i am nervous about the doom loop theory the outcome of new yorkers is a real problem, and that didn't start with the pandemic but in 2017 the federal government enacted the tax act which eliminated state and local tax deductibility, so everybody who pays taxes in new york, their

taxes went up because you could no longer deduct your real estate faxes, your income taxes that were paid to the state and city new york city is the highest taxed state in the nation, and those that feel grossly over taxed are moving out we lost 330,000 people since 2019 in the city population. >> it is the city we love. it's great to see you this morning. >> thanks. >> i hope -- hope springs eternal, things get better in the city, even with the hybrid workforce. joe is looking at me and saying everybody needs to be back seven days a week. >> yeah, the dignity of work people go to work. >> did you see that report in the uk four-day workweek and the employees want -- the employers

want to do it. >> i am not against that coming up, walmart results due in the next few minutes, and the numbers and reactions straight ahead a programming note tomorw roon "squawk box," don't miss our interview with former vice president mike pence "squawk box" will be right back.

good morning higher rates continue to pressure the market sentiment this morning we are going to hear from warden school of business professor,

jeremy seagull and then we are going to get the latest details on the president's trip and the impact of the war on business earnings out from retail giant, walmart we will get the numbers and break down the results literally right this moment as the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" on cnbc in times square i am joe kernen along with andrew ross sorkin becky is off today and the rest of the week. futures starting off on a negative note here down 222 points a couple rough weekends we had

after a positive january for equities a lot of it has to do with two interest rates after the jobs number we got another jobs number not that far off it will be an important data point. we will get -- before the next fed decision we will get another cci and ppi, and neither of those were market friendly a long way from peak inflation, but not indicating disinflation to the extent that a lot of people were hoping for at this point. meantime, we want to get over to dom. >> aobviously retail is a big focus this morning, and we got the results from home depot, and the shares lower just around 25

to 30,000 shares of premarket volume after it posts what we call mixed results revenues narrowly missed and there's an emphasis on the forecast, where home depot is expecting sales growth to flatten out and looking at a full year earnings per share by a single digit amount, and it's effort to boost wages on a billion for employees. seems hard to say. we were talking about rises in lumber prices not so long ago. and then shares in in vidia and amazon, and some of the stocks were named among top picks when it comes to artificial

intelligence, and not plays on ai or the earnings, we will see those shares -- just keep an eye on those we will end things with a big check on vir they have upgraded that talk to a buy from a prior neutral it's 53 bucks and it was 41. an anticipated flu vaccine that could show better effectiveness, so vir bio is down keep an eye on those shares. >> dom, thank you. not sure why walmart is down, the bottom line and the top line looks good. the results are just hitting the

stock, 143 bid -- everything up 8.9% in the u.s. let's get to melissa is there any way to explain what the stocks are doing it's a little early? >> yeah, for same store sales will rise between 2 and 2.5%, but if you factor in inflation that's more modest walmart did beat on the top and bottom line. it's expecting earnings per share in the coming fiscal year to range from 5.90 to 6 for fuel consumers are still under pressure and that could be something the stock market is

talking about or thinking about as well. he said the consumer is still pressured, balance sheets are running thinner and savings rates, and he said we've called out to you that the share gains in the past two quarters have largely come from household that have a greater than $100,000 income, and he said that's changing a bit to walmart attracting not just consumer with high income consumers, but also low income as they look for milk and eggs and other things we heard a lot from retailers including walmart about inventory trouble and he said our inventory is in a much, much better position at the end of

the quarter. it's basically flat year over year and down 3% in the u.s. he also had a little commentary on what they are seeing in the labor market that's getting a lot of attention. reporting today, home depot increased its wages. if i were to draw a comparison to six months ago it's a little better not quite the same struggles to hire associates. walmart is the largest private employer in the country, so hearing that color commentary from them is always interesting. back to you, joe >> okay. forecast earnings -- exactly what are we talking about apples to apples on the outlook stock is down a little bit, down 2.5% for the actual comparison, the headline that they are -- okay, 2024, the estimate is 650 for

next year. is that apples for apples -- you said it was x gas -- >> that is excludeing gas. >> was it 650 exsphcludeing gas >> yes, all those figures are excludeing gas >> yeah, and home depot was conservative as well, i guess. >> yes >> that would be -- that would be -- one way of calling it is conservative >> yeah, the word that kept coming up was cautious we will be hearing cautious and concerning a lot as we see a lot of the big retailers' reports, so it echoed the sentiment in home depot with using kaucautio-

>> it's probably fiscal 2024 we will have more reaction victoria green, chief investment officer and cnbc contributor are there surprises here or should we have been able to deduce that the numbers would look something akin to this, the last three months and the outlook? >> yeah, we did think they would be a well executed company, and grocery is 42% of revenues and we did think walmart would come in nice, and we were watching the guidance and the margins, and it doesn't seem like they had to absorb too many discounts to get rid of inventory, and

inventory back to par. we think maybe they are under shooting so they have a little easier of a year, and they recently hiked their minimum wage up about 17% to $14, and that, like we saw with home depot, some of the pressures may continue to eat into the margin, and that's something we would like more guidance on and digging deep in the numbers, and for walmart it's about grocery and value to the consumer. >> such a huge behemoth, and a great proxy for the u.s. economy. on the one hand i would say, okay, i see the same store sales for the u.s., they are at 2 to 2.5 versus a 3% estimate on the one hand i could say we're talking about 12 months, do they know to a half percentage point exactly what that is going to be, or is it being conservative

but then again, it's so big and the margins are so narrow they may know, they may know now that's more likely you see what i'm saying? it's so big, and then again we are all guessing on what the fed does and how the economy looks for the next 12 months i am wondering -- i am wondering whether this is a real number or conservative guidance? >> i think it's probably a real number they are so large, a half percent does matter. and it's the mix of goods they are selling. tkp grocery is a lower margin, and you have seen the higher big ticket item. i think that could pressure where you see these sales coming in a little softer if they are selling more high volume like eggs and milk, where people are picking up the value there, and the margins are thin versus selling tvs and electronics, but

it has to make the fed pause with home depot and walmart coming out with wage increases and that's not going to help the fed, and it's great for the employees, and it's difficult especially with home depot, investors tend to like it more when they saw cuts, and they cared less about q4 and more with cuts and tightening your belt we have seen large retailers saying we are going to increase our labor cost and commitment to our employees. >> the quarterly dividend goes up a penny, and it's a widely held -- i guess you wouldn't call it a yield, but the dividend keeps going up 1.53% is where it was before the dividend hike victoria, thanks for the quick work on that

going to be tough today with home depot down almost 4% and walmart down over 3% >> you can see the dow now at 280. coming up, the great russian business retreat a new ad in today's "wall street journal" listing the companies exiting russia since the war in ukraine almost one year since the invasion began we will hear from the man behind the ad before we head to break, let's check on the markets "squawk box" will be right back.

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boom. introducing the 10g network only from xfinity. welcome back to "squawk box" this morning i want to take a look at the big week of earnings that we have had so far this morning. home depot and walmart just out and still to come we are going to get numbers from ebay, warner brothers discovery, and in a programming note, you don't want to miss this, the ceo of roblox to talk about the state of gaming and the metaverse and everything else. i don't think my sons will want to go to school tomorrow, because they are big fans and r roblox fans. and then coming up,

president biden making a surprise visit to raukine, and more on the great business retreat from russia. "squawk box" is coming right back

welcome back to "squawk box. to russia's invasion of ukraine, as we approach one year since the conflict began, president biden is in poland, a surprise shot there after a surprise shot to ukraine yesterday putin casts the war as western allies attacking russia. kayla joins us this morning. >> president biden set to deliver his own address which national security adviser, jake sullivan said, it will seek to put the war of ukraine into brute force. you can see president biden arriving at the presidential palace in warsaw this morning ahead of the expanded meeting that he will have with the p polish president

10,000 troops are stationed in poland $450 million in rocket launchers, javelins and artillery. president biden seeking to galvanize more support from the u.s. in a surprise visit to the war-t war-torn capital of kyiv that trip was very secretive but months in the making china meanwhile was warned of the consequences it would face if it assists russia the deputy treasury secretary confirming the u.s. would sanction individuals and companies that were providing material support, saying last night that beijing siding with the kremlin will lead them from

being cut off to do business with the g7. as for communication between the u.s.and russia directly, a senior u.s. official says it remains ready to talk to russia over arms control after putin's announcement that russia would pull out of a key nuclear arms treaty and a senior official says this morning that russia did not respond to president biden's visit to kyiv. >> "the wall street journal" features a ad and lists the companies that have left russia. jeff, it's great to see you at the table, no less, this morning. >> great to see you. >> how much did that ad cost you? >> just happen to have a copy.

one for each of you. >> i got one >> it's incredible, and on such a day, of course, with the surprise biden visit which we had a hint was going to happen the timing of this is really fantastic. we wanted to salute the bold companies that moved so quickly. we talked about this praoivatel, and i never said it on air, the companies that were the first movers, and it was big tech, and everybody else got onboard >> i will make it more complicated. if you believe the news report and think about what antony blinken is saying, and if china is going to be supporting russia, what are all the companies on this list that are probably doing business in china right now -- >> it's a much bigger market >> it was one thing to exit russia, and what do these guys do in china? >> the china engagement is way

overstated china knows it doesn't need putin. china is starting to realize they don't need russia russia has become an economic afterthought russia is not an economic superpower in any measure. they are like -- >> what accounts for these reports? >> well, there are always going to be companies that cheat there are european companies that are doing business with russia >> i am not talking about the companies, but i am talking about the reports that china is backing russia in its fight against ukraine. >> we have not seen the evidence of that happening just yet in the auto industry, there are joint deals like the chinese automaker, and if china gets in, in a big way, that would be an unbelievable miscalculation by xi jinping russia is not one of the top trading partners for china russia needs china way more than

china needs russia china needs the westmore i think it's sabre rattling. >> what do you think xi is doing? >> some kicking and screaming pulled out before the government sanctions before the xi jinping -- some proudly, like nike put it up on their website and took a hit from chinese customers, and it was only for three months and they rebounded. >> china, russia and the u.s. redline. you wonder about the redline you wonder if it does happen,

you know, the president has made some pretty strident threats do you think the redline holds are we willing to lay it all on the line for ukraine >> we should >> lay it all on the line? >> well, it's bigger than almost any company we talk about here on this set, it got out, and that reports directly to xi jinping. the bank of china, the top five bank, they got out immediately no loans china is not funding -- >> this is bipartisan. you have republicans and democrats saying we need to back ukraine to the hilt, and then again there are certain untones of how long will this last we will continue to support the war for five more years? do we want a complete withdrawal from all areas of ukraine?

kissinger has said it's about diplomacy. >> kissinger has done an about face >> what would we accept to end the -- >> the company investing was the rule of law -- >> you don't want to talk about it the realities of the situation is what does the end look like how long do we continue to be all in on this >> russia is losing militarily -- >> you don't think it will last much longer? >> it's losing militarily, and now i am here to tell you it's losing economically. the country is crumbling, and the only reason they survive is the lies, the propaganda because he creates a fake gdp.

>> you don't think china and india is keeping this country afloat >> no. >> no? >> the price caps are working incredibly well. unfortunately, for the world, the price is too cheap for russian oil, because nobody wants russian oil, and it's not at the $60 cap limit, it's around $55 it costs russia $45 a barrel to extract it from the earth, and it only cost the saudis $22, and then they have to spend it another $10 to get it to india or china >> the missile landed in poland and it was quickly defused because it was not russian, but what happens if something happens in poland? >> something happened yesterday

with the president there, which was very smart >> do you think russia is on poland's wish list what would our response be to that >> it is there are plenty of countries that want nothing to do to nato, and certainly when you look at lithuania and estonia, they are warning us they are being targeted what the business community has done, this is the largest exit in world history, to have a regime change, yes, this can shake that out when you have government sanctions matched by a private sector exit, the average russian, and that's the solution here, joe, the average russian is to realize that putin is the source of their misery and as the companies leave it's adding stress -- >> it was not great before the companies left, and putin has been able to make up from some of the losses with the business

and the higher price for oil >> he has a lower price for oil, and he's losing half a billion a day on energy right now. his gas is 46% of europe's gas, and it was coming from russia but now it's 7% and it could be zero they don't need it we are providing more until terms of gas russia has become an economic afterthought believe it or not, their wheat is to have on the market, and the rare metals, right now it's competitively priced in south america and north america, and all russia brought to the world marketplace were raw materials it was an a colony in an old mercantile china doesn't mind russia as a -- they don't want putin

>> it sounds like you want regime change? >> a lot of russians want regime change that's what happens -- the way the apartheid regime came in south africa, is because south africa realized they were pariahs and a rogue nation the individual businesses, every company benefited from getting out. proportionate with their exodus, when i came on another cnbc show and read out the companies real and which were fake on "squawk on the street," and you could see who took a hit and who benefited, and those that pulled out proportionate with their exit, they definitely -- >> do you think the average russian wants putin out?

what do you think his approval rate something now in russia >> i think, like we saw in east germany and in poland and romania, the average russian would like there to be a regime change, but they are afraid to answer surveys honestly. these private sector -- a lot of time economic block aids don't succeed, but when you have private and public working together they do >> thanks for coming up. >> how do you really feel? >> thank you very much still to come, the futures down near the lows the session got home depot and walmart down jeremy siegel win join us on the fed and why he still sees rates going higher stay with us novation electrifie.

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welcome back to "squawk. our next guest thinks the fed should slow down on the hike rates and is betting on a 25

basis hike in march, and after recent commentary, officials calling for a bigger rate hike jeremy siegel, the ward school of business. a lot of professors on this morning. we just finished with another professor from yale. professor siegel, what do you think? you look at the walmart news >> yeah, they are positioning them conservatively going into this year. listen, andrew, most -- the way the fed works is that a week before the meeting they sit down with the chairman, the staff and some of the members and they discuss the latest data. everybody is talking -- listen, i will admit i was shocked by the strength of the january payrolls by the time the march meeting

comes along, we will have the february payrolls. in fact, october 8th, we will have a report, and if we see a big slowdown there, i think chairman powell wants to go 25 however, i will say if it's as strong as we got in january, yeah, 50 is definitely on the table. i don't think it will be, but certainly january was a shocker in terms how strong that labor market is. >> are you surprised the way the equity markets have been >> this is an interesting thing. at the same time this makes rates higher, it also lowers the probability of a recession so it's more likely that the earnings estimatesare going to

be realized than they were before don't forget, stock prices are between the enumerator and the denominator. we could have a strong consumer and gdp going up more than the fed expect, and earnings better than anybody realized, and so that enumerator went up and they said that means the fed might tighten. that's why you almost saw a standoff on the stock market, and not the bond market, because the bond market doesn't care about earnings but only the interest rates and the fed and what will happen to inflation. >> take a look at the bonds right now, 4.665 for the two-year some banks are offering interesting rates, let's call them >> yeah, and the rates --

listen, everybody is talking about the pce that's coming out friday it's going to be hot you know, i have to admit it's not going to be a good number. everybody is trying to beat that higher rate and inflation is not under control scenario while when i look at on the ground indicators, commodity prices are still going down gas, oil are still going down. the housing indicator, zillow, apartment rentals going down, and i still see a lot of disinflation it does not show up in the lag statistics such as the cpi, and we know that powell is now acknowledging that those contained lag data, and that's why he's talking about

ex-housing statistics. remember, the fed only started tightening 11 months ago to start panicking because it's not down to 2% in 11 months, i think is not waiting for the cumulative affect of the monetary policy that powell and the fed itself has admitted is yet to be felt that's why i urge caution. >> professor, january must have made you feel gratified in terms of your forecast when you come on the show, and the stocks sort of ignoring a lot of the things you are describing right now since then we have had the hot data points and have had bonds and yields rise, and the stocks haven't really reflected that to any great extent yet we have a widely followed analyst coming on, mike

wilson -- >> very negative >> -- from morgan stanley. he says there's a disconnect between stock prices right now and what has happened, the things that i just outlined. in fact, he thinks the final lows lows, that we have not seen them yet for the bear market. >> i would agree i think those october lows are not going to hold. the main thing, if we are going to have a strong economy so the fed, quote, stays higher longer, then, you know, why are you penciling in, you know, a recession? >> right >> what basically happened with people saying, you know, i think 220 -- that's what the current estimates are for the 2023 s&p is very conservatively positioned we talked about walmart and home depot conservatively positioning their earnings estimates, and 220 is conservative. if we really have a strong

economy so the fed stays tight, we can not only meet 220 but we can exceed 220, and we are only at 18 types eimes earnings whics below what we should be at 220 and the bond market has forced higher yields. >> i would actually ask mike about that, using purely fundamentals, i understand what he's saying. you always have to use some technical analysis in terms of who has not heard these arguments that are so front and center that these things are looming, a recession, perhaps, higher interest rates, and stubborn inflation it seems like there would have to be something else to come in to push us to new lows because everything else, technicians would say a lot of that might be in that, and then we have katie stockton, the technician that

would disagree with you and think we do need more lasting lows are we saying good-bye to him? >> we are going to say good-bye. professor siegel, see you next time coming up, two big cases in the supreme court this week that could reshape the internet that's next. and then ranking member, brendan d yle talking about the economy anthe president's push for a bigger wealth tax. "squawk box" is coming right back

this is a great time for businesses to be evaluating and how do they need to evolve what products and services they are selling to keep up with technology trends. >> building on the example, how have ev batteries become a whole new business for you >> the electric vehicle is unique and they are driving new ways of doing business, and at cox ouautomotive this means extending the first life of a battery pack from repair to recycling. they make economic and environmental sense. >> what is the broader take away across all industries?

>> health care, technologies, 5g, and companies need to make sure they are evaluating where the business to business relationships are going and modifying products and services to be fit for the future >> thank you so much for joining us >> thank you welcome back to "squawk box. the supreme court will hear arguments in two cases back-to-back this week that have huge power to reshape the internet we are joined with more on what is going to be at stake this week ayman? >> yeah, gonzalez versus google and it's about the flash point in technology today, and that's

section 230 of the communications decency act that law has been interpreted as giving immunity to tech companies that allow users to post their own content, so google, facebook and twitter and the rest of them can't be sued for liable for content on their airwaves the question that is going to be before the court today is does that immunity apply in search results, like when tech companies make targeted recommendations based on a user's interest. the gonzalez family sued google after their daughter was killed in an isis terrorists attack in paris in 2015. they are alleging google helped isis recruit through youtube videos, and arguing google's algorithms surfaced on who was interested in seeing them, and it protects google from the

content of the videos, or does it go further than that and protect them with the algorithms and the decisions those make we will watch to see how the justices frame their questions and if we get hints on whether section 230 will stay or go. the family of a person that was killed in an isis attack in istanbul, accuses twitter of abating the terrorists and that's going to hinge on the anti-terrorists act. >> it's fascinating and has massive implications we will have to see where things go thank you for that >> you bet we have a lot more coming up this morning ranking budget committee member, brendan boyle will join us to talk about the debt ceiling and much more. we are going to open lower

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in following the cbo's warning that the country could default as early as july if congress cannot come to an agreement on the debt limit, our next guest says the republicans

caused the country problems because of unpaid tax cuts for the rich brandon boyle, that doesn't sound like you think the democrats share blam trillion, $32 trillion that we have in deficits now, congressman? >> yeah, great to be with both of you and as a viewer of the show, i always enjoy these interviews. but now i'm on the other side of it in terms of, you know, a roughly $31 trillion of debt, slightly more than half has been added under republican presidencies. my point was the pushback on the argument that republicans often make, that somehow deficit and debt is only a democratic created. the overall point, though, that i want to make, when it comes to the debt ceiling, is despite, you know, obviously, chairman arrington and i have a different point of view when it comes to this, despite that, though, that

should not impact, and i don't believe will impact, the raising of the debt ceiling. congress has raised the debt ceiling more than 80 times since 1960 has never failed to raise the debt ceiling it's our fiscal responsibility we must do it. and i do believe, ultimately, we will but i am concerned about how much of a roller coaster it might be kind of like 2011, which actually led to the first-ever credit downgrade in american history. >> how would you handle it, if you were someone that, even if your party, if you decided, you know what, we really have to get a handle on this debt, because it's going to start impacting gdp growth, medicare and social security need to be at least dealt with in some way, so that people -- so that it's not -- when people get to certain age 10 years ago, so it's not

insolvent. so there are things that need to be done. you just would not use the debt ceiling to do that the president says he won't negotiate. the republicans say, this is our only chance to try to get some type of movement in terms of dealing with these things. >> yeah, well, it is funny republicans only talk about this issue when they're in control of congress and there's a democrat in the white house just a few years ago -- >> and vice versa, though. this is just -- the finger pointing gets us nowhere, congressman. what is your solution -- >> excuse me, it's not just -- >> what would you do to try to deal with the $31 trillion should we keep doing omnibus -- >> -- there's a lot of argument of convenience on the other side in terms of the debt ceiling, this is why we need to raise it, first. when i asked secretary mnuchin in front of me several years ago on ways and means, obviously, republican treasury secretary and republican administration, when i asked him to describe the

consequences if we ever failed to raise the debt ceiling, he responded it was absolutely unimaginable, that it would be such a cataclysmic event, i as a democrat voted three times to raise the debt ceiling under a republican president so i've been pretty consistent on this. raising the debt ceiling is about paying for debt that we already rang up. it's like, you know, if you're a household and you went out with a credit card, and then a month later, you get the credit card bill for the spending you already made that you decide not to pay that bill so we need to raise the debt ceiling. >> and then what >> more than anything else >> that'll happen. that'll happen, probably it always does and then we're left -- do you support having that last-minute omnibus every year you know, not introducing a budget that people can, you know, actually structure in a way that, you know, gets our fiscal house in better order we should just, whatever

happens, we don't have time to read it, do it at the last minute, do a couple of trillion next year. isn't there something that you think the republicans have a point on, in terms of wanting to at least have a conversation about what we do >> i'll say this, over the last 20 years, and certainly the whole time i've been in congress the last eight years, we have had a broken process in that you haven't had the normal well of appropriations bills that's happened again, regardless of which party has been in power. we have a real problem, and this is where as a house guy, i would put more of the blame on the senate we at least have passed appropriations bills on the house side the senate didn't pass any last year so those are the kind of process reforms that i'm actually interested in working with jody on, where i think we could improve things and i wouldn't be surprised if in the end, we're able to improve some of those, if there's a willingness in both chambers >> all right congressman boyle, we appreciate

your time. i don't -- i'm not feeling more optimistic, show, if we just continue to sort of -- it's like this it's your fault. both parties have to -- >> yeah, but let's -- the reason why the other side is playing this game is they don't want to focus on a remarkable economic growth coming out of covid that did not happen by accident. we're not at a 50-year low in jobs by accident in the end, that's why the other side wants to talk about deficit and debt, they don't want to talk about all the jobs we've created. >> congressman, the jobs weren't -- created is probably not the right word, since about a month and a half ago, we got back to where we were pre-covid. reopening and having jobs come back is not creating jobs. cutting the deficit when you're -- >> it was not preordained that they would come back -- >> it was going to happen. how about, are you going to take credit for cutting the deficit when we don't spend $8 trillion,

we only spend $4 trillion. a lot of this is sophistry. the economy is good, but we paid with it for 9% inflation, a stock market is down -- >> but look at what we paid for the economy when it was pre-pandemic look at the debt and deficit then >> going into the pandemic, we were at 3.5% unemployment -- >> yes, but how much did it cost us but how much did it cost us? we weren't paying for ourselves. >> we've never paid for ourselves. but we certainly -- saying we create -- >> i don't remember you complaining -- today you're complaining that we're not paying for yourselves, back then you were not complaining >> you think we created all of these jobs you don't think that's pre-opening the economy -- >> i think part of it it's reopening -- >> and which programs we enacted resulted in these better jobs.

>> what i don't understand -- >> no, which ones? >> can i ask a question? you either decide you're going to give president to the credit who's in charge for whatever's happened, or not on their watch, right? so you can say -- so we can say, let's give president trump credit for what happened on his watch during -- >> like you used to do >> pre-pandemic. >> did you do that >> yes, actually, by the end, i think we were. i think we were! >> i remember. >> and then the pandemic happened and we can talk about his response to it anyway, we got a lot more coming up for a big hour ahead. right? >> we do

good morning futures pointing to sizable losses as we make our way towards the opening bell on this holiday shortened trading week speaking of losses, two megaretailers, both down in the pre-market we'll get you up to speed on the latest results from walmart and home depot and inside the government's growing crypto crackdown the incoming ceo of kraken will

join us on his company's multi-million dollar settlement with the s.e.c. as the final hour of "squawk box" begins right now. good morning and welcome back to "squawk box," right here on cnbc. b we're live from the nasdaq markets live joe kernan. got a lot of news and earnings reports coming out this morning. take a look at u.s. equity futures at this hour right now, looking down on the dow, 294 points down close to 300 points, actually. nasdaq off about 136 points. the s&p 500 looking to open down, as well, off by 32 points. but the ten-year note at 10.884, the two-year at 2.667, joe and a lot of folks trying to sort through this walmart and home depot news. >> you would think that they

would know whether things were flowing better -- but it's nuance big retail earnings starting to roll in. we have walmart's fourth quarter results, all there company beat analyst revenues and profit analysts for the past few months, but expects fiscal year earnings in this next year, this was the fiscal fourth quarter, now looks like 5090 to 605. and that is below the consensus estimate of 6.50 walmart's ceo said the company is taking a pretty cautious outlook on the rest of the year, and we should also point out the same-store u.s. sales number, a little bit muted from where expectations were, 2 to 2.5% now versus 3% estimates. and don't miss walmart's ceo, doug mcmilllon on "mad money" with jim cramer tonight at 6:00 p.m. eastern time. >> let's continue that conversation about home depot, because those fourth quarter results are out and the retailer beat on the bottom line, though it missed analyst revenue estimates for the first time

since 2019, since before the covid pandemic the company blaming a drop in lumber prices for that top line miss the company gave a muted outlook for the next year amid what is now looking like a tough consumer backdrop. joe? >> excuse me let's get over to our senior markets commentator mike santoli for a look at what he's watching ahead of the opening bell. good morning, mike >> good morning, joe coming off another week of modest losses, the s&p 500 still holding on to, you know, 5ish percent gain year-to-date, but getting tested by those higher treasury yields, the dollar up a few percent off of those lows as well never really got that escape velocity move out of this trading range. where can it get to? keep saying 39.50, 4,000, pullbacks to there seem okay we started the year on 3800, just for reference sake. retrace back to that might still look like an okay consolidation, but the margin of comfort is maybe getting a little bit

thinner, because we've kind of churned in this area for a while, without getting more momentum take a look at consumer discretionary. this is the equal-weighted version of that sector, relative to the srt, the retail-specific etf. over six months, you see the outperformance of broader consumer discretionary over core retail a lot of that, of course, is the move to services so you do see travel-related stocks doing well. also, you know, some auto stocks, things like that things that feel as if -- and also home-builders are outperforming right now. it's not so much the shopping stocks that are doing that well, but it's other parts of consumer cyclicals that have perked up, and this on a six-month basis. obviously, people talking about the one-year anniversary over a two-year period, the commodities index, interesting kind of set-up here. it really did launch, as you would expect, right here around the ukraine invasion with energy mostly driving that higher but also, we know some of the ag commodities and things like that, as well. it's kind of interesting

it's been bumping along that same level that it took off from a year ago it hasn't really given away below that you're seeing certain things like steel, certainly quite strong because of some of the global reopening moves and things like that but so far, this is at least telling you that that goods disinflation should be in place for a little while longer. we'll see how that filters through to the bottom-line cpi numbers. joe? >> i wonder if there's any -- you think -- what do you think of the next jobs number? what are you forecasting there, mike i know it's not your thing, but we could have a -- >> well, no, it's not my thing -- >> we could have weaker number and maybe revisions. did we get ahead of ourselves with thinking that, you know, that we're just rip-roaring along when you see walmart and home depot like this >> i think there's a fair case to be made i was talking about this on friday just think about how fast the story line shifted from maybe we're going to gently soft land to, oh, no, we have huge momentum in the economy coming through january, because of that

jobs number and the retail sales numbers. both of which could perhaps be a little bit juiced by some seasonal effects and the warm weather and all of that. so i would expect some giveback. you just don't necessarily see the availability of workers, necessarily, out there to drive half a million jobs per month. but i get what you're saying that perhaps, you know, we have this kind of stop/start in the data we're very sensitive to every little twitch, in terms of whether it looks like we're reaccelerating or not. and so i think we should be alert for the idea, that it could turn the other way, at least in terms of, you know, each fresh data point changing the story a bit. >> all right very good, mike. thanks our next guest says that the bear market rally that began last october, from reasonable prices and low expectations has morphed into a speculative frenzy based on the hope for a fed pause or a pivot that isn't coming joining us now is mike wilson, chief investment officer and chief u.s. equities strategy at

morgan stanley the recent data points all indicates that a pivot or a pause would be unlikely. do you think that that could change quickly, though, mike >> good morning, joe i don't. the fed has a job to do. they've been very clear about that they were slow to start, but have been very serious in since doing that we thought that there could be a pivot on february 1st. but then the data came in a bit stronger and the fed doesn't want to give any chance to inflation rearing its head again we think there's at least two more hikes, maybe three going into june. and you know, that got priced into the bond market over the last 30 days but stocks seem to have ignored it so what we're left with is just stocks are more expensive. and there's really no justification for that, because the earnings picture really hasn't improved yet. >> the s&p estimate that you are holding for this year, for earnings, i just want to try to

get an idea of what fair value is because you obviously think that the market has disconnected. the equity market has disconnected from the backdrop, the fed backdrop, the economic backdrop what do you think -- what is your estimate for the s&p for the year, mike >> yeah, our so base case hasn't changed, joe it's 195 $195 you know, we have a bear case, if we have a recession, it's closer to 180/185 we're still holding out that the recession is avoidable, but the margin degradation is not. and that's really where we're differentiated now, what we have heard from clients more recently is not just because the economic data has been better, but there's better tone out there, that perhaps the earnings degradation doesn't have to bed eas bad as people were thinking two or three months ago and we just disagree with that that's what our work suggests. i think some of those retailer results this morning kind of prove our thesis again, which is that profitability is the question, right? this is -- inflation increases your operating leverage, and that cycle has turned down

we'll get through it it's not the end of the world, this is not 2008 there's not going to be a financial crisis this is just a good old-fashioned earnings recession because of the over-earning that we enjoyed during covid. >> does the multiple need to contract, too? >> if you want to get down to -- >> 180 times 15? what what's that come out to? >> well, that would be our trough number. you don't usually put a trough multiple on -- >> not 15. >> but it could, it could overshoot, right so, look, we thinkthe range is somewhere between 3,000 and 3,300. we've been very consistent about that for the last six to nine months we kind of went down to 3,500 in october. we thought that was close enough we traded that, but now we're back at 41, 4,200 over the last month or so, on really air because the earnings picture we've mentioned hasn't changed i think that low 3,000, at least a re-test of the october lows, which is now is very out of consensus. most clients back in october thought we would take out 3,500. but now the majority of folks

think we don't need to go anywhere near there, because of this potential soft landing with, and the fed -- the fed will pivot eventually. so there's this willingness to kind of look through the valley. and we think that's a bit dangerous, as well >> that's an interesting way to view it, mike. my point has been that there's nothing that you can say to me that i haven't -- or to anyone, that i haven't already thought of in terms of reasons to be bearish. it's front and center. stubborn inflation, fed is definitely going to keep hiking. at best, we get a soft landing, or if we don't, the fed has to go even higher, if we continue with a very resilient economy. so you're damned if you do and damned if you don't. but i thought that you could say that the market in the way that it's holding up was sort of telling you that it knew all of those things you think the market's wrong you think the market is holding up for what reason, mike

what's keeping it here >> well, first of all, the market's never wrong the market's always right. we try to dance around that. right now, we've been probably too pessimistic in terms of the timing, but our work suggested that it's going to flow through. look, we think the explanation is pretty clear. that global m2 has exploded higher since october that's been a function of three things the china reopening, which has released a lot of cash into the economy, not to mention the fact that they're stimulating again the bank of japan, which has been defending their yolker control very aggressively has added liquidity to the system. and then you've got the weak dollar that's probably been the single biggest reliquckqureliquefycatif markets. that could persist that would be why the markets are not wrong. they're trading off the liquidity, and that could continue even with the fed hiking, if you get global liquidity offsetting that, that's the story we think that will start to fade, though, and we think that

will ultimately, you know, kind of contribute to the downward move that we expect in the next three to six months. >> so that almost puts -- this is basically kind of a secular bear, that started what, 14 months ago and we're going to have two or three years of a trading range or no upside in the stock market when it's all said and done. this is that period that we haven't seen in the past, i don't know how many years. you don't expect dip buyers to be rewarded and eventually we get back on track with, you know, technology is great, great country, you know versus the rest of the world, in terms of the way we do things, that we have entrepreneurs, we have, you know, we have a lot going for us but this is a period where there will be no gains for two, two and a half years >> well, we're not that pessimistic. we think it is a cyclical bear market, okay we don't think -- >> a long one. how long so how long does it last two years? >> well, 18 months is typical

for a proper cyclical bear market and let's not forget, joe, that we overshot to the upside, both with earnings and valuations so it's just a bit of a payback on a cycle that went well beyond where it should have so 4,800 was the high in early january of 2022, but we never should have been there the earnings was overstated and the multiple got overstated because the fed was late to come in and hit inflation so we're just dealing with that consolidation. we don't think it's, once again, the end of the world we're believers in the future, too. we're pretty constructive on the capex cycle. we think technology will continue to be a big part of the u.s. economy we think the redistribution of income and wealth will be a big driver of the consumer so we're actually quite positive on 2024 and '25, but we've still got to get through this valley and that's that risk/reward right now is poor. that's our job to point that out. and just kind of look through all of these concerns that we think need to get repriced one more time.

>> so, 3,000 is your worst case. 4,800 to 3,000 that's like 38%. that's certainly a bear market and certainly some comeuppance and gives you a heck of a regression to the mean for long-term stock prices that would certainly do it, mike so when do we get to 4,800 again? what year? >> that's a good question. i think we could see new highs sometimes probably next year if everything sort of plays out the way that we think. and i think that's why we're seeing some equity investors say, who cares, then i'm going to hold out and not worry about it >> well, if it was 3,500, i feel better than 3,000 in terms of a buying opportunity it doesn't make sense to sell here if you're going to 35 or 3,600, i don't know. if you're going to 3,000, it probably does. >> i think it also depends on kind of how you, you know, your personal situation, right? if you're an asset owner and you have tax consequences, the

answer is probably "no," particularly since you've already moved down significantly. and let's not forget that there are some stocks that are down 70, 80, 90% during this bear market already we've done a lot of good work. the valuations have come down for the really speculative stuff. now it's getting puffed again, we think, probably, prematurely. and so we have to finish this situation, because the fed's not done and the earnings revisions aren't done either we'll get through this we've been pretty consistent about this, joe, as you know hyperbole is not there for us. we're just rationale we think the risk/reward is the way to think about markets right now, the risk/reward is not particularly great, but it doesn't mean it's not the end of the world. there's always opportunity at the stock level. we try to provide advice there and have had pretty good success in picking stocks. that's the game. pick stocks where you can. find things you can underwrite where we're comfortable with 10 to 20% downside to make 40 to 50% upside that's the strategy.

>> all right, mike we'll see if some technicians agree. katie stockton probably feels the same way as you. hope springs eternal, though mike, thanks we'll see you again soon >> see you, guys thanks a lot coming up after the break, we'll speak with the incoming ceo of crypto exchange, kraken, who reached a settlement with the s.e.c. over its staking problem. but next, united airlines ceo scott kirby will join us on spring travel demand and a new push in his industry for sustainable aviation fuel. stay tuned, you're watching "squawk" and this is cnbc.

welcome back to "squawk box. some of america's biggest companies putting their weight behind what's called sustainable aviation fuel. i'm here to explain is phil lebeau and a special guest this morning. phil >> thank you, andrew let's bring in scott kirby, ceo of united airlines scott, you guys just announced a new investment fund, a sustainable aviation-oriented investment fund, united along with five other corporate partners will be collectively putting in $100 million to target start-ups that are developing sustainable aviation fuel, as well as technologies to help advance the use of saf.

how quickly can you put that money to work and do you expect to see other companies ultimately joining the fund as well >> yeah, we do what's exciting about this, this is unique. i think it's a first of its kind, because we're not just buying sustainable aif viation fuel, we're investing in the technology, the r&d, the companies that are trying to build this industry. this industry really doesn't exist today. to me, this is like going back to wind or solar 30 years ago when it was uneconomic and tiny, and today it's a huge part of the electric grid. doing the same thing with saf is what this is about and it's about building an industry from scratch. one of the great things, inflation reduction act actually made hundreds of potential projects, you know, feasible that weren't feasible before so getting a partnership of companies and customers that are going to invest in the future, instead of just investing in the short-term is really important and a fascinate milestone, i think. >> scott, you and i have talked about this before. this is a chicken and egg

question because you've got saf that you and other airlines want to use, but it's not available, and it's not economical right now, it's two to four times more expensive than jet fuel, depending on the price of jet fuel at the time. how quickly does that equation change in your opinion are we talking five years, ten years? >> well, this is all about trying to change the supply. and change the economics and i think we'll be on a curve that we still need to invest in the technology we'll hit an inflection point where the costs start dom down and be competitive with oil-based jet fuel and you'll see a skyrocketing increase. right now, we're in the fantasy phase. that's what this fund is about, is about investing in the future

and building the industry. the industry doesn't really exist, except, it's a tiny fraction of what it needs to be today. and this is about investing in building the industry from scratch. >> scott, let's switch gears i want to ask you about the announcement that you made yesterday, that you will now be working with customers when they are booking seats to have people who are flying with children under 12 seated together, and they will no longer have to pay in order to have a child under 12 seated with them. a lot of this, many people say, is simply a reaction to the airline industry being called out during the state of the union speech by the president. when he was forceful and said, look, this is ridiculous there shouldn't have to be a fee for parents to sit with their kids is that a fair thing to say, that it was in reaction to the state of the union >> we've been working on this for a long time. the reality is, what we did prior to this announcement is within 24 hours, we got over 90%

of the families seated together. but, it still created stress and uncertainty, as a father of seven, i understand this and have sat away from our kids on many flights and what we're doing now is just letting customers that have a child 12 or under pick even a preferred seat where they used would have had to pay something, so we hope it will take a lot of stress out of the up-front process you book your ticket, you know you have a seat, instead of having to wait to get to the airport and cross your fingers and hope you can get a seat. we have been working on iterations of this for a long time and we've been working with department of transportation so, what was in the state of the union wasn't new to us, because we heard it not just from the department of transportation, but from consumer groups, from our customers, from people on the hill, and we knew this was a direction that we wanted to head so we, obviously, this technology has been in development for a while, to be able to be announced today

>> scott, speaking of the d.o.t., do you expect that you'll take a harder look at other fees let's take baggage fees, for example. that they'll come down even harder on the airlines whether it's in terms of how much can be charged or trying to put some caps or limits there. >> tbd, i suppose. i doubt that that is what is going to happen. you know, free market let business models evolve how they want and really give the customers the choice and, you know, if you look at an airline like united, and this is increasingly true with the large airlines, our fees are really transparent when we have them. we have a lot fewer than we used to have and while that -- those kinds of fees used to be a big pain point and complaint point pre-pandemic with our customers, at united, at least, particularly getting rid of change fees and a lot of the other fees that go along like that, it's really background noise now at united. now, some of the other ultralow-cost carriers in

particular that have some policies that may be egregious, but i would be surprised if there's meaningful changes but who knows? there could be for what it's worth, if those changes happen, it's probably good for an airline like united, because it wouldn't really affect us very much, because we're already charging lower fees or not charging fees. and some of our competitors are charging some pretty outrageous fees >> hey, scott, it's joe kernan we've had a lot of people on it at goldman sachs, jeff curry points out, we've spent over the last three years we spent over $8.5 trillion on renewables and fossil fuels went from 82% of energy consumption to 81%. and i hear what you say about wind and solar they're more economically competitive at this point, but very little of the energy is gleaned from that at this point. whenever i talk about the need for not rushing the transition away from fossil fuels, i always

think about global commerce and how important it is for fedex and united and, you name it, to be able -- to go around the globe. and jet fuel is how you do that. 100 million, i get it. but you guys spend billions on other things this seems like you're putting your toe in the water to sort of say, we're trying to do something, but realistically speaking, when do you see any real replacement for the jet fuel you use right now ten years, 15 years? 50 years what is a realistic number without just, you know, feeling good about doing this? >> look, i think you're hitting on the correct point, which this isn't a transition globally that's going to happen overnight. and i know the statistics as well as anyone, because i really do pay attention to climate change and the world is not going to turn off using fossil fuels overnight. that's why we need to have the

people on both sides of the argument solving it in a way that takes a long-term perspective. because this is a long-term problem. it took us two centuries to get here or three centuries to get here we're not going to solve it in one or two years and investing -- what has happened in wind and solar, i think, is a very good blueprint. it's a very -- it's a meaningfully higher percentage of the global electricity production than it was 30 years ago. and it's growing rapidly and that's the perfect blueprint -- it didn't happen overnight. and the same thing is going to be true for saf. what we've got to do for saf is get to commercial-scale projects that work. which is what happened in wind and solar. i don't know if that's going to be in two years -- it's not going to be in two years if it's going to be in five years or ten years, but we have to start making the investments today. and that's what this fund is doing and what the inflation reduction act does, is it creates a framework that you can make investments with certainty

for the future and that's the key to unlocking this i'm not 100% sure how long it's going to take, but i am certain that that's the only way to actually eventually get to an answer for saf, and for a har hard-to-decarbonize industry like aviation. >> scott, we're coming up against the break here quick answer, what are you looking at in terms of bookings for march and april? >> really, really strong >> that's a quick answer >> that's quick. >> i know we'll be talking more in the weeks and months to come. scott kirby, ceo of united airlines, thank you for joining us today joe and andrew, i'll send it back to you guys >> all right, phil thank you. thanks for that. coming up, a special interview of the incoming ceo of cryptocurrency exchange kraken a lot to talk about including the s.e.c. charges that his company have just settled and dave ripley, believe it or not is coming on and a reminder, don't miss our big interview moowtorr with former vice president mike

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welcome back to "squawk box" this morning president biden greeting his host right now, the president of poland at the presidential palace in warsaw later this morning, he has a planned speech as we approach the first anniversary of russia's invasion of ukraine this follows biden's surprise visit to ukraine yesterday, in which he met with the country's president. and a development this morning

russia's president vladimir putin saying that moscow is suspending its participation in the new start nuclear arms treaty coming up next, a can't-miss interview this morning with cryptoexchange kraken's incoming ceo, dave ripley and a reminder as we head to a break, you can get the pest of "squawk box" in our daily podcast. follow squawk pod on your favorite podcast app and listen anytime. and drrainy and dreary new york city right now a look at the empire state building with all of those clouds hopefully it will clear up after this you choose the largest, fastest reliable network. you choose advanced security for total peace of mind. and you choose a next generation 10g network that's always improving, getting faster; more reliable; and more intelligent to keep you ready for today and tomorrow. the choice is clear: make your business future ready with the network from the most innovative company. comcast business. powering possibilities™.

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welcome back to "squawk box" on cnbc. futures now, just a minute ago were down an even 300. 295 on the dow home depot, walmart, both pulling back after results that were mixed, i guess you would call them, with an outlook a little bit conservative, that's one word for it. treasuries making that, what might be an inexorable rise back to 10% on the ten-year 388 this morning, and oil prices have kind of been behaved really with trying to reopen.

still haven't rushed back to anywhere near $100/barrel, but it seems like 70 is the low, 80 has been the upper end of that range, but these things can change, quickly. >> meantime, let's talk a little crypto and some policy news out of washington. earlier this month, cryptocurrency exchange kraken settled an s.e.c. charges that it failed to register its crypto staking service. staking is a process in which users lock up their coins to then have them used in block chain validation efforts in exchange for investment returns. as part of the settlement, kraken will pay $30 million in penalties, although it did not admit or deny the s.e.c.'s allegations. kraken agreed to shut down its staking service for customers in the u.s. we spoke with the s.e.c. chair, gary gensler about that settlement when the news broke >> what kraken was doing was asking the american public for their coins, crypto tokens, and saying, i'll give you a return,

4% to 21% returns, the problem was, they were not disclosing to thevesting public the risks that the investing public was entering into. >> right now in his first interview since the settlement is kraken incoming ceo, dave ripley good morning to you. lots of questions about the settlement, but also what it means more broadly to the crypto industry, and really how the s.e.c. is policing the world of crypto i think there's still so many unanswered questions about sort of the path of travel and i think a lot of companies oit there in your space confused about what they are allowed to do, not allowed to do, what it means to register with the s.e.c., all of those things. i'm curious what your lesson is from this settlement and also, i'm curious, are you allowed to talk about it publicly >> yeah, well, thanks for having me on, andrew. it's nice and early out here on the west coast first time i'm probably up

before my kids so, yeah, happy to share a number of things you're right thanks for the preface one of the aspects of the settlement is that we can either confirm or deny any of the claims contained within. but i am happy to comment on, you know, crypto, cryptocurrency, regulation policy, and a number of the things at play here, for sure. kraken's been a company that we've been around for over a decade, we're going to be around for another decade and several more to come we've built the company with a security mind-set, focused on clients, focused on service, and regulatory compliance. you know, we're active with licenses and registrations across the globe, in many different geographies. that's really, really how we approach this space. >> dave, let me ask you, though. one big question in the industry around this settlement in particular is, you know, you're no longer offering this staking service in the u.s., but you are

offering the service elsewhere and that raises a sort of broader policy question around how other companies in your space are supposed to work also whether americans or others are going to then basically move towards the international service as opposed to doing it onshore, if you will yeah, well, you're hitting all the right questions, honestly. so when chairman gensler was on your show, you addressed this. so there today are a number of other staking services available right here in the u.s. the chairman says they're all on notice, but as we sit here and speak today, they're all up and running. so maybe they all end up getting shut down, we don't know it's tough for us to comment but one thing that will not happen is all of the staking companies that are running across asia and parts of the world will continue to run, and we know firsthand that many u.s.

customers, u.s. users, go to these services offshore and what lo and behold happens is that many of these services are in jurisdictions with no regulation, you know, companies that are not interested in a regulatory forward approach. and what happens through all of this, who are the losers the american people. so they lose opportunities to participate in this innovation and end up with, you know, just a really, really suboptimal outcome. >> but dave, who should be responsible for that piece of it because any american who is going on these international services, i imagine, is using a vpn effectively to disguise where they're coming from. because technically, with i think, it would not be allowed for one of these international services to serve one of them. am i right or wrong? >> well, that is -- that is, you know, potentially, the case. you know they may require a vpn, they may not require a vpn. i think we see both variations

from these asian players but the real path here is to come up with sensible regulation that allows the innovation to thrive here in the u.s., allows great services for, you know, for individuals here in the u.s., but in a safe way. and that's really what we want -- >> dave, what do you say to those policy makers who say, look, not that this is not a proven space, but that so many of these currencies are, quote, uncontrollable and that actually part of the whole decentralization of them in many respects makes them out of the bounds of regulatory control. and that may very well be one of the reasons that regular urals are trying in their own way not to approve this stuff. and to doing these sort of one-off things, as opposed to having a clear policy approach >> you know -- well, it's tough to tell. i think we see a mixed approach globally, truthfully and so, yes, these -- you know, cryptocurrencies are decentralized, and it's a new

innovation and it's very different. but there is regulation of entities, centralized entities that are often the gateways to these currencies like kraken. so, you know, for example, i mentioned earlier, we have registrations, licenses across the world. let's take europe, for example they have gone forward they built something called micard it's markets and crypto asset regulation a regulatory framework that answers these questions and provides clarity for business in that region or how to actually -- what needs to be registered and what doesn't. what requires a license and what doesn't. they've already kind of gone through the definition phase, open for comment from participants in the industry and they're moving into implementation now >> are you a believer -- you talked about some of these changes, of course, are centralized. that's been the breaking point in some of these look at an ftx or the like do you think an ftx situation or something like that would have been preventable if that was a

business on u.s. shores? >> well, you know, it's a good question i mean, frankly, i was and am quite furious about the fraud that is ftx and sam bankman-fried. i probably haven't been that upset about an industry event since the bailouts of the too big to fail banks back in 2009 but, you know, i do think that part of the dynamic that we're faced with is that, yes, there is less of a clear path here in the u.s., and so there is, you know, an entity like ftx that largely operated more offshore, served u.s. clients. and yeah, we've run into challenges >> the reason i ask, and i don't know if you saw the news this morning, ftx japan is effectively reopening, because apparently they have the cash on their balance sheets we've heard sam bankman-fried had said that was the case, and also said similarly about the united states version of it. that was living onshore.

that has not reopened yet, but perhaps there actually is money there. what do you think of that? >> well, you know, in the case of japan, it is one of those jurisdictions where they did create a specific cryptocurrency regulatory framework you know, i think that potentially, in this case, i actually don't know the details, whether there's actually assets there. it sounds like there likely are for these clients. you know, i would have to understand the details a little bit better, but that would certainly be a good thing if those customers are able to get their full assets back >> and then, finally, back to the issue of staking, where we began. you know, coin base has -- you wouldn't call it a staking program, i don't know what you would call it, but there's a whole bunch of companies in the u.s. that do have some version of a staking something happening here and it -- best guess, if we were having this conversation two months from now, do you think that those services still exist? they've been taken offline,

online, what happens >> well, withlook, again, accorg to chairman gensler, they're all on notice and i think he thinks that they'll be shut down. we have seen the communication from coin base they seem to think otherwise i honestly couldn't give you a good answer on this one. i think that's part of the problem, is that we just don't have that, you know, clarity from many of these regulators in the u.s. >> and finally, what is the timeline for your ascension as ceo? i know it was announced, where are we now it was announced in the fall of '22? >> yeah, so the timeline is the first half of this year, we're working on identifying a backfill for my current role as chief operating officer, where we're on track there, and we'll look to have the full transition complete the first part of this year >> dave, thank you appreciate it. thanks for waking up early >> yep, sounds good, thank you, andrew >> when we come back, a lot more to return.

the return of jim cramer we'll get his first take on the trading day ahead of this week i don't think we've seen him -- have we seen him since the super bowl since the eagles won -- oh, the eagles didn't win. see? >> testing me? i don't know if we have. he was out all last week >> that's what i was -- we'll have to talk to him. do we have to talk about the eagles i don't know >> he may be okay by now >> he may be okay by now although, i'm not over either -- that game or the bengals game two weeks before with the officials. i'm not over it. they should stay out of things they should really staouofy t things and they don't. >> we're coming right back after this but as you get older, it naturally begins to change, causing a lack of sharpness, or even trouble with recall. thankfully, the breakthrough in prevagen helps your brain and actually improves memory. the secret is an ingredient originally discovered... in jellyfish.

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let's get down to the new york stock exchange. jim cramer joins us now. it's almost march madness time, jim. the statue of limitation andrew brought that up i don't know if we've talked to you. the statue of limitations, has it run out have you moved on? >> yeah, i've moved on nfc champ, let's leave it at that made it to the big game. defeated by a fabulous coach bingo. on to the next >> i know. >> on to the pitch clock and larger basis >> how about home depot and walmart? conservative guidance or storm clouds storm clouds brewing, jim? >> no?

>> i think conservative guidance i've got walmart on tonight and i go through it and i think that, look, they did do the number they are, i think, adjusting price by doing it through private label. i think it was a very strong quarter. and they are not going to be aggressive there's no need to be. home depot, i have to lear more home depot, i was hoping for a little better. they gave a dividend boost that would indicate things would be better haven't had a same score sale comp since 2009. this may be an opportunity to buy home depot i know if you have a positive outlook about housing and about when the fed is going to be done,you're going to regret yo didn't buy here. i need to know more. >> the question about whether there are storm clouds brewing is -- that plays into what the fed does do we want things to go well, or do we not want things to go well if things go well, the fed keeps

hiking maybe if heme depot and walmart are showing signs of a wearily consumer or trading down, maybe that brings the fed pivot closer still hoping for that. >> we spend way too much time talking about home depot compensating associates more what do they think they're going to compensate them less we have a rising wage inflation problem that includes what heme depot is doing home depot will lose people to go to another store if they don't put more money into the workforce. i think there's still a vicious -- the vicious cycle up. we haven't finished it what does the ten-year show? it shows we're going to be in some sort of crash i don't think that's going to happen i think these stocks being down like this are exactly what you'd expect by people who really don't know what it's like to own a stock when a company is cautious at the beginning of the year, as both companies are every year this quarter is accompanied by a

cautious outlook for the year. how can the people who own this thing not know that? these are time-honored, conservative companies. >> we've got an unbelievable show tonight a week's worth of guests tonight. howard schultz, dave mcmill lon and nikesh arora. >> you guys are terrific i missed you good to be back. >> we'll see you in a couple minutes. we'll be right back with more about walmart's earnings from cowen's oliver chen. thinkorswim® by 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.

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shares of walmart are lower in premarket trading the big box retailer posted profits and revenue above estimates. joining us fresh from the walmart call is oliver chen, managing director at cowen, also professor of retail at columbia university do i call you professor? can i call you oliver? how are you doing oliver >> great to be here. good morning >> do you know anything different -- do you feel any

differently than you did last night before this came out is there new information for you with this? >> what's really impressive is walmart as an ecosystem. what i mean there, advising growing 30% for the full year, reaching $2.7 billion. also, lots of progress on curbside and pickup. thinking about walmart as a tech-enabled company is really a key them also, joe, it continues to be a tale of different product categories resonating. for example, a grocery running at high teens, consumer discretionary running at negative mid single digits that's a key aspect we'll continue to see. walmart is picking up higher income consumers that's something to pay attention to as well we're watching inventories every quarter. inventories were flat. they were up double-digit last quarter. that's a much better position to be in. we're encouraged by the

momentum the consumer is very choiceful that's the right adjective in terms of the consumer facing inflation pressure yet having no unemployment there are a lot of crosscurrents having in the broader consumer ecosystem. >> if we were to try to extrapolate to the overall economy from walmart, you don't see any negatives really are there trouble spots? are there storm clouds anywhere? >> i would say storm clouds, discretionary, business, homes, electronics, apparel everybody is looking to save money, so the focus here is value, and also, retailers have to manage inventory with a lot of agility so we think they'll be winners and losers as we go forward. tight labor market is a key positive, low unemployment is a key positive, too. >> so at that point -- this always comes back to the fed they're going to be on track for

50 or 25 you think based on home depot and walmart, oliver? >> i think what we have to watch here is really what happens with inflation and disinflation other time also the unemployment figure is something we look at as a lead indicator of what's happening with the consumer. we'll also hear from target next week we're more cautious on target. we have out dealer perform rating on both our caution with target is because of what we're seeing with negative trends and consumer discretionary the consumer being much more discerning is something we'll see play out at retail at large. also, the consumer is looking for a lot of promotions as well. that's a tough scenario for mall-based retailers and apparel as well. >> interesting you brought up target in recent quarters, they had things to deal with that weren't evident at walmart do you think they've worked through some of those problems, as long as you're on i know you're here to talk about

walmart, but do you expect to see some problems still with target, or are they past those bumpy quarters >> target has been a work in progress, also a show-me story the big focus for investor day will be operating margins for next year. street is looking for about 5% we're optimistic on cost savings. however, apparel, other parts of the business, it's a tougher place to be in keep in mind walmart has about 56% grocery. food at target is about 20%. what's really working is food, essentials, beauty, those items that the consumer really needs however, target is a much better business post pandemic lots of drive-up on the capabilities as you know, it's great at executing and private label. those are positives to watch as well. >> we'll end it there. you got a target on walmart real quickly? >> yeah. our price target at walmart implies 20% etrment. >> that would be a new high.

oliver chen, from cowen. thank you. a big interview tomorrow we'll speak with former vice president mike pence at 8:00 a.m. eastern he'll be in studio we're working on three of us being jacketless and getting down to work. >> are you going to come over and give me a pat on the back? >> i don't know, after all of that earlier that we had there. >> really? what about tomorrow? >> we'll do it again i want to win again. make sure you join us tomorrow "squawk on the street" is next good tuesday morning welcome to "squawk on the street." i'm carl quintanilla jim cramer is back david faber as well. futures starting the week led by guidance of walmart and home depot. ten-year 3.9 ro