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 roadmap will begin with a

checkup. walmart and home depot with cloudy openings. >> pressure is building in the biden administration accusing norfolk southern putting profits over safety. the ceo promising to do right by the company. meta to launch a new pay verification service my friend jim cramer here calls it a great beginning. >> let's get a rough start for walmart and home depot guidance disappointing the street and overshadowing the quarterly results. of the two, which do you want to handle first >> walmart, because it's the biggest retailer in the world, begs to see why it should be down as much the reason i say that -- this also applies to home depot walmart has historically being very conservative. the quarter was very good. let's figure out what they really have to do. you're john rainy, the fabulous cfo from paypal now at walmart

is there anything that would make him want to be aggressive about his outlook at the time when we can't figure out in the ten year is right, the two year is right, if unemployment is right. >> that's a great point. his comments on the call are indicative of that it's really kind of saying, look, supply chain issues have abated prices still high. considerable pressure on the consumer to your point, trying to predict where things are going with macro conditions being what they are at this point in terms of consumer behavior. we'll stay cautious. >> i think the analysts need to go to walmart. go to walmart right now. you see two things you see the branded price which is very high you see how they're reacting to the consumer which is the private label difference between the brand and their own story have never seen this big

that makes sense why doug mcmillon is saying consumers choice choice means they're willing to buy the private label. that's a great story for walmart that's not told enough. >> when comps come in at 8.8, the commentary is consumer very pressured, balance sheets running thinner, savings rate declining. >> that's people buying the good value which is their own house brand. you can see the tradeoff if you buy good value equivalent of oreos, so-called twist and shouts, you're saving a dramatic amount over a branded oreo i mention this, david, because there is not -- i've never seen so many side-by-side comparisons including organics they're going up against the katy perry vinegar that you like so much, the apple vinegar

they have their own which is so low that you say, i see what the consumer is doing, the consumer isn't paying up for katy perry. >> they're going for the less ser-priced organic i would assume there's a lot of margin in a katy perry organic. >> thank you the consumer is not buying the name brand why should they? in the end, they are pretty much the same we've seen this typically in a recession, which is what's freaking people out. what i think is happening is that, if your savings rate is lower, you're spending it on travel and leisure we've seen unabated travel and leisure. 177 america's best is telling you where the consumer is. i look at the consumer going to walmart and saying, listen, i can save a little. i can bet that when i buy their organic food -- the grocery store of the world, i'm paying so much less than the other organic, load it up. >> it's interesting. general mills today says we

see -- we do not see our elasticities changing from the first half of the year they raised guidance today saying, look, we're frustrated, too, but it's the environment we're in on pricing. >> but there's -- here is an observation i'm going with the consumer cares more about what the pet eats than what they eat themselves i know, david, you're a pet owner. you'll buy blue box before you buy branded oreo >> yeah. i'll buy whatever it takes for scoop. >> schmucker went to dog snack food i don't think they want to compete directly with blue buff. >> i do stick with my branded dock keys. >> do you go branded snacks for your dog >> my dog is a vegetarian. we're in a whole new level of absurdity. >> a year from now the dog will

be vegan and it's the end of all of us. >> he was getting ear infections what can i tell you? >> is the dog on keto? >> no. to carl's point and coming back to walmart in terms of the stock, you are talking about a company that saw u.s. comp sales up 8.3%, 13.9% in the two-year stack. in other words going back two years to compare where sales were what are you willing to pay with your view that guidance is perhaps overly cautious? >> 140, 142 seems fine for me. i think walmart, and i'll talk about this tonight, walmart's opportunity in e-commerce is extraordinary. 4,000 stores amazon is afraid to fire anybody because they don't know whether they're going to get to the next day. walmart has such an advantage over them. think about how many whole foods you need to compete with walmart on a fresh food basis. walmart is not playing to its strong suitor talking about it

enough which is the way to defeat the colossus that is amazon that's the story line. >> citi does say we believe the guidance will prove conservative marks the third consecutive quarter of eps beats since the ceo joined we believe this will turn out to be conservative as well. >> anybody who remembers rainy at paypal -- he's not doing the beat and raise he's a cautious individual some people are cautious some people are reckless. >> in this economic environment it probably pays to be cautious. frankly, we don't know >> right this is the soft landing versus hard landing doug mcmillon is a great guy he's very smart in what he's done the amount of -- what he's sourcing overseas. sourcing in indonesia, sri lanka, pakistan. huge amount of clothes from jordan, not all china. >> all he wants to do is talk

about how much we're sourcing in the u.s. >> the problem is, i think it's largely -- mr. mcmillon will come on and pitch this largely food remember, they are a big grosser. when i police the aisles, not peruse, but police, i find two things made in america, one is poly final flags and the other is reverse tablecloths otherwise i find much more main in eastern and central asia -- >> you get down to that level of granularity. >> you want to see the darn pictures i'll show you the darn labels. >> i follow your twitter >> i can tell you're a doubting thomas >> i'm not a doubter. >> look at this. >> walking the aisles of walmart. >> this is tim burns' store. look at that at walmart. we got the equivalent of $1,000 for $322

sold to emma cramer. >> not bad. >> we can be proud as a country. >> oh, my god, yes >> the long national air -- >> i want to show you more. >> more show and tell. >> fleece open pants -- >> you want to share with the class. >> made in india i'm sorry to be so granular. the important point that people understand, walmart is making it so prices are lower in this great country. >> speaking of lower prices, home depot, first revenue miss in several years, comps down if it hadn't been for lower lumber costs, comps would have been positive. >> what you really are getting at is how much is home depot making money by not lowering price. home depot is faced with a difficult situation. ted decker, the ceo is brilliant. do you want to keep price up and risk having people go to another

store, or do you want to lower price and bet more people come given the fact the professional was very strong, what you're trying to entice is the do-it-yourself person from lowe's i think ted derk has the right algorithm. i want the pro here at this point. i think the do it yourself is dropping off by nature that was a lot of work from home i want the pro they've got the pro. this company signals how well it's doing by the dividend increase, and that is one heck of a dividend. >> 10% -- >> can't cut a dividend. >> extra billion in employee comp. >> david, there are going to be people who say the fed is going to freak out because they gave an extra billion dollars to employees. i say, you want to freak out how about having to train a new employee every day because somebody left for greener pastures this is a great investment costco teaches us if you can pay them a certain price if they don't leave, they stay, you don't have the dead weight loss of training people, literally

two quarters where that person is being taught and is not helpful to the bottom line. >> you've made the point many times, employee retention -- you come back to the same theme many times. >> i got the guy from "last of us" saying show me your fungi, mushroom people. >> we were talking about "the last of us" before we went on tv that's why he's bringing it up back to home depot he was a contractor, that makes sense, the connection there. >> we need to talk about home depot from the point of view that there are many people who misunderstand what people are trying to do when it comes to their home >> what are they trying to do, jim? >> i think they've done what they want to do. that's that goods over services. they renovated the heck out of their place. that's why you need the professional david, is there anything that people haven't done?

they've upgraded their deck by using trax they've upgraded their appliances from whirlpool. they've upgraded windows, the floors they're done, and that's what you're seeing. >> okay. i guess we can move on, carl >> general mills is annoying thing. >> why >> you want them -- they're so good, but you want the cereal price to come down >> they now see full-year revenue up ten, prior 8 to 9, eps up 7 to 8, prior was 4 to 6. >> remember the old general mills? they were just called generous mills because they couldn't make the numbers. now they're crushing it. meanwhile kellogg is -- i would say disconcerting. >> okay. >> 3.5% yield doing the big breakup. i don't know general mills demands more attention, carl.

that's what people eat we want to get the grocery -- home depot is extraordinary. i don't want to see branded products doing this well branded has to be chased down by private labels not happening yet. >> a good question i know general mills presenting at cagney today. >> cagney is very important because they're going to be setting the tone for all year for what people put on their plates, and i am -- if you're front and center on inflation, you have to eat. that's what hal did. >> we've got the nuclear winter people and people who say the ten year has to go to 5.6. i tend to think once again we're in a bull market that looks like a bear market for a couple days at a time. i love being back here i've been saying this stuff to myself every day in the mirror it's good -- >> when you're shaving --

>> no, i'd cut myself. >> walking the aisles of walmart. >> i was looking for that chinese billionaire in the aisles of walmart. >> the guy from renaissance? i don't know where he is. >> there's no renaissance there. kind of the dark ages. >> he's been disappeared. >> we've got geopolitics in the mix as well today. the latest on the president's trip to poland after that surprise visit to ukraine over the weekend. also ahead, criticism against norfolk southern following the train derailment in ohio. take a look at futures weakness in light of what we've just discussed more "squawk on the street" continues after a short break. for businesses of all sizes, there are a lot of choices when it comes to your internet and technology needs. when you choose comcast business internet, 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.

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the president in poland a day after that surprise visit to ukraine showing support for that nation as we approach the first anniversary of the russian-ukraine war. our kayla tausche sjoins us wit the latest. >> today president biden and polish president duda affirmed the critical relationship between the u.s. and poland, a country with 10,000 u.s. troops on the ground that serves as a key channel for military assistance to reach ukraine. the leaders meeting following the war's early weeks when they met in march 2022. the u.s. president will deliver a speech that advisers say won't be a direct attack on vladimir putin but will paint russia and

other countries that challenge democracy as outliers on the world stage. president biden arriving in kyiv yesterday, a ferrive mission to shore up support there, announcing $150 million in new aid to ukraine, the 32nd of such packages since the war began. new warnings from secretary of state donie blinken and deputy treasury secretary that companies or individuals in beijing that support russia's war will be sanctioned president putin speaking from moscow told the west to prepare for a long war and pulled back from a nuclear arms control deal, deepening a fissure between russia and nato allies u.s. officials say they remain ready to talk to moscow on arms control which they say is too big an issue not to find ways to keep it in place. >> kayla, thoughts about how china plays into this, reportedly today the chinese official was in russia and

moscow and this journal piece that suggests that president xi is having some kind of rethink about the war because they're afraid that russia, a long-term strategic partner at least, should avoid any kind of large-scale defeat at this point. >> there's still big questions about exactly how president xi and the prc view what's transpired over the past 12 years there, reports that president putin told president xi early on that it would be a quick and swift victory to take kyiv certainly that is not what has played out over the last 12-plus months certainly, as this continues to go on, china has a lot of choices to make. that's what we keep hearing from administration officials whether they want to support an effort that so far has been pro tracted with no clear and easy victory for president putin or weather they can allow president putin to suffer a defeat in this case. it remains to be seen.

there's also that journal article from a couple weeks ago, a very lengthy investigation that found that after analyzing some of the russian customs data, that there were, in fact, a handful of chinese companies that had been supplying support to russia. so how the administration responds to that is something we're closely watching >> between putin and the president and nato, a lot of headlines to absorb today after a long weekend kayla, thanks. still to come, we'll get cramer's mad dash, count down to the opening bell "squawk on the street" is back in a moment. ♪♪ we all have a purpose in life - a “why.” 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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down to the opening bell it is tuesday, don't forget. we'll start the trading week about seven minutes from now molson coors. >> i include it, beer is included in recession. this company reports to do -- i thought this was very interesting. miller light and coors light are beading butt light, the first time that has happened in ages they have a premium and super premium. super premium is still doing well what does it say the rich are still spending at highest prices so people are going out, drinking molson coors. the numbers were very clear beat this is one to watch because people did not like bud. they didn't like the number. i think this is a stock with a 3% yield that is worth watching because i happen to like the beer category in a period when you're uncertain. >> what about constellation

brands something we talk about a lot. >> that's a cash flow story. that's modelo core roane know. they have good spirits the outliner is pacifico which they're not spending enough on the modelo, that's by far the strongest. this is not done well. one reason is they sell into california and the weather was bad in california. that's what caused that. the weather in california the last six weeks has been good people are deciding that this is a weather story will be gravely mistaken it is a cash flow story. that's for people who know the stock means it could be much higher so i like the stock. i think it's up 5% for the year. david, the category itself, spirits, has not exceeded expectations, but beer is still good >> you no longer have that front line view, though, from the bar. >> no, i don't we had to divest because the

federal law pied house rules, post prohibition, had to sell. >> don't forget we've got opening bell and you can catch us any time anywhere, listen to and follow the "squawk on the street" opening bell podcast five minutes before we get started with trading

this is really the same old story. corporations do stock buybacks they do big dividend checks. they lay off workers, thousands have been laid off from norfolk southern then they don't invest in safety rules and safety regulations and this kind of thing happens that's why people in east palestine are so upset they know corporate lobbyists have had far too much influence in our government and they see this as a result this kind of thing shouldn't happen. >> senator sherrod brown of ohio

on cnn blasting norfolk southern for the train derailment don't miss the interview with ceo alan shaw on "closing bell overtime." jim, it got an upgrade today over wolf. >> i understand that i had a nice exchange this morning with alan shaw i know the ceo he says every test have shown air and water are clean. anything that -- i covered a derailment once, really serious derailment when i was a reporter these things, if they affect groundwater, if they affect the air, they are a nightmare. i know shaw is going there i don't necessarily want to say, david, that the reason why this happened is because of cutbacks and because of lay-offs. i think that's too pat to me. >> also a focus on the braking systems of the trains and the fact they've been able to resist

pneumatic brakes which could conceivably be helpful that kind of gets to some of the crux of what i think brown was talking about in terms of the rails being able to sort of push back on increased costs. [ bell ringing ]. >> we don't know the insurance situation. these things tend to not hit the earnings hard enough to sell the stock. hence why you might want to buy it on the weakness i'm not recommending that. i happen to like the rails very much. >> wolf's target is 255, by the way. there's the opening bell at the big board, medical robotics maker ascension yeah surgical atlas cop kosel baiting 150

years. jim, where do you think the psychological pivot is right now? >> when i think the futures go down in lockstep with the ten year, i say the poor positioning of so many investors hedge fund, mut fund are going to get it o so we have a recession and the ten-year will be right is disapproved on a daily basis the ten-year is going up to where it should be in terms of an interest rate we're not going to have the fed cease raising rates any time soon we're not going to have a recession. the ten-year is out of whack, 3.9. why couldn't that be 5.2 >> there are people who believe it eventually will be but not quite yet. >> you have to go through allows of pain to get there. >> yes, you do potentially you do have you revised any of your thoughts after last week's numbers? there are a number of economists

or people we listen to who seem to think we'll end at a higher terminal rate and stay there longer >> we've been there before there seems to be no institutional memory of the long-term view of what we always thought the fed funds rate was we've had this abnormally low period we've all lived through 5%, 6% and we're still sitting here. >> the dot-com boom came in a period like that and there was plenty of capital around as well the adjust period can be kind of difficult. >> i would tell anyone, particularly of the older cohort, what a bonanza i put bonds in the mix for a long time. not the ten-year the notes, i think the notes are up for real value. by the way, your cash reserve. you can switch and get a really great price. there's nothing wrong -- it's not a defeat it's not a defeat to own notes it is opportunity given the fact

that to some degree i think these rates had to go higher for alittle bit longer we don't know for how long longer higher is one quarter away for cpi cpi was still bad for apparel. you get hit by apparel when you walk down the street >> we've been watching the two-year, even the six-month, jim, pretty astounding yields. when mike wilson of morgan stanley says we're in some kind of speculative frenzy and the global liquidity allowed stocks to survive longer than they arguably should have -- >> in the two-year stocks what does he want? what kind of multiple does he want we already had a collapse of a lot of stocks that were involved with the broader rubric of enterprise software. we've had tremendous declines in pretty much every tech company.

i think frenzy, is he speaking of the intel frenzy to get out what frenzy has he got there that's a terrible exit, like a bad football game in britain, liverpool loses and they're getting out of intel, to bend an analogy far further -- >> you've taken it way farther that's okay. >> trying to find something that describes the frenzy here is mike -- listen to me, mike it went up, now it's coming down stick with your game plan. don't mock the frenzy. >> he was on squawk and put this call -- he still says s&p 3k is a possibility in the first half. here is what he said putting it into context of prior downturns. take a listen. >> some of the retailer results this morning prove our thesis again which is that profitability is the question. inflation increases your operating leverage and that

cycle has turned down. we'll get through it this is 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 overearning that we enjoyed during covid. >> do walmart and home depot prove his case >> when home depot reported the stock was down 16 -- let's see, mike now home depot down 11 walmart was down 5 and now it's down 1.5 i think if you include those as exhibit a and b, it's a moving case and, mike, the prosecution rests. >> there was some indication that the buy side numbers for home depot are more in line with what actually got printed. >> there are two things these analysts need to do, they should have dinner with ted and go to the stores what they'd recognize is that ted decker decided that business, david, is good enough to put one of the biggest

dividend increases through which he can't cut, and everything else is kind of okay do i think they're going to cut prices if louisiana pacific has bad numbers, they'll cut prices for number, cut prices for inputs i'd say the stock ruz high for no real reason now the stock has come down. it's interesting >> speaking of earnings, let me get your take on nvidia. >> they report this week. >> they report this week i want to make sure i know when. where are you right now on the expectations there and more broadly speaking, you can't go more than an hour without hearing about chat gpt, ai, everything that that is going to mean potentially, not just for business but for society. >> in march, jenson wong, the ceo is going to outline the

future but kres, who is the cfo is not someone who is going to say i see the earth move, okay colette kres is going to go over the numbers, and she's going to stick to what i'm regarding as not being pie in the sky, but shorter in the near term jeb son hasn't outlined what he sees that pretty much is what determines the earnings. if you're buying the stock of a miracle gpt platform, colette kres is not going to give that to you she's way too conservative, a very good ceo. she'll say we're really a gaming company? no they're far more than that will she talk about china? yes. will she say it's the biggest opportunity ever i think she'll have to say we need to see what jenson says about the opportunity because it's jenson's baby

i've talked to jenson about it he has a tremendous vision he's not going to say, listen, it's going to translate into $6.30 per share next year. that's not the way they play it. some of the cfos -- >> when are we going to hear from him >> getting ahead of that presentation is wrong. he really is the father. i know cloudflare is trying to make a claim. >> when we look at the end of civilization, sam altman, jenson or mark zuckerberg. >> certainly not mark zuckerberg what is he going to do with that building >> they lease the space. why? >> you're referring to meta, a building here where obviously not that long ago they agreed to a long-term lease. >> and they got a really good price. >> it's a mess over there, by the way. there's good restaurants over there. >> fabulous. glad you brought it up

invideo, carl, is what you have to use there's super computers. they also have software. again, you find these companies in the first quarter not anxious to put in pie in the sky estimates that they will serially miss every quarter. colette kres is a great cfo. i know this is punting let's see what she says. she's not going to put a price tag -- >> did misjudge the arm acquisition badly. >> like joey brown, david. nobody is perfect. >> mnobody is perfect. >> by the way, beam mow updates their target to 15.20. >> i wish they hadn't done that. i even have people who are in the business of building data centers and they're saying, they don't build them like they used to don't pin your hopes on data center that is just ill-advised.

>> interesting not data centers benjamin, data centers, no >> no. not like plastics. >> exactly >> data center business -- go speak to the people who build data centers they wish they were building more data centers. it's not the growth engine that it was. >> it's a big part of, say, meta's capx guidance i have to ask about this subscription plan now. seems social media is moving to this professional content creator model. >> i think, mark, if i may be so bold as to call him that, is envious of the subscription model. to me he was trying more to do a service revenue stream allah apple versus a user stream i think the modernization of whatsapp which i believe is a $100 billion company buried in this juggernaut he's got going.

>> is he going to start charging us >> that's my point >> do i have to get paid to show his space launch do i pay him to show the space launch or does he pay me i just don't think you want to sell meta because i think that he -- his level of pivot is the greatest level of pivot i've seen pivot being the operative term i'm going for broke with profit, not revs he overexpanded in a way that was so suboptimal -- i almost said reckless. that wouldn't do me any good. >> no, but reckless was the right word >> i'm not one of those analysts who when it's bad they say congratulations because they don't want to lose the call. i'll comment on that today

congratulations means please don't keep me from getting a call after this. >> i can't be too mean, otherwise i won't be able to get access >> exactly he knows the game. >> guys, i wanted to stay focused on something we haven't talked about -- >> are you doing activation? >> no, i'm not i'm doing credit suisse. the out flows continue and they have to stop and have to stop immediately. >> what do you mean they have to stop >> as in the outflows. they've slowed and here they've slowed as well, but they haven't stopped. you do get to a point where you've got to be concerned to a certain extent or at least have questions about liquidity. they're doing many things at credit suisse in terms of cutting costs. obviously we heard from the company back on the 9th of february when it reported earnings but what we learned as well is while out flows had moderated

certainly, they hadn't fully stopped in december. that doesn't quite square up at least with some comments from the chairman at the time that indicated that they had. so there's a reuters story as well that doesn't help things saying the comments have drawn scrutiny from the financial watch dog in switzerland, specifically the idea being that he gave the sense that outflows, assets at the wealth management part of the company had ceased that was a positive. the stock went up. what did they do they issued $4 billion worth of stock. the saudis bought a bunch of it. remember it was a $10 billion market value so 40% dilution there. the problem now is with the stock down yet again, you're talking about approaching the same level you were at prior to that huge equity raise, and so, once again, you've got people

wondering or at least curious about liquidity. can you move faster? they are on a significant cost cutting drive. they've committed to significant actions through 2025 there is a sense of urgency certainly from what i hear that said, guys, you've got to watch it you know how these things can go and will the stock price continue to tick down -- not bad today. but back towards the level when it was when they issued all that stock, it raises questions and pressure on credit suisse overall. what's interesting here is there's been an assumption in some ways that assets were kind of sticky. they're just not going to move they're not. it's easy to do. it's easy to do a wire transfer and you're done. so those assets, whatever it is -- >> what precipitated this? when did this start?

>> this started quite some time ago because of the continued deteriorations in the financials of the company, the fact that the banking franchise hadn't been doing well, capital markets, so many different areas. that's kind of where it's gone you're talking about a company that's had a turnover in ceo suite, board of directors that's been changed considerably and has financial performance that has been horrid. >> people may not recall, when i got out of graduate school, this was the toughest job to get. >> i know, i know. >> by the way, remember, the u.s. part is being -- they bought michael klein's firm. he is now taking that and separating it out. of course, it remains unclear how many people he's going to be able to keep at credit suisse, how many of the best performers will stay, with the hopes of getting new equity in this new

company once it's split off. want to continue to do that. this is a great franchise, a very significant wealth manager. the question about its future continue given those outflows again. you have to stop them completely and get them going the other way. >> could be a bargain for heaven's sake. >> more dilution really? >> it's not bed bath & beyond. >> no. let's get to rick santelli for the pmis. >> good morning. s&p global pmi, the manufacturing pmi, these are preliminary february numbers, 47.8, a bit better than expected that's one, two, three, fourth sub 50 in a row, 47.8 actually is the best streak going back to

october of last year now, if we look at the services side, expecting a number right around 47 and change, we popped above 50 so we stop the run at seven of sub 50s, 50.5. that's the best level going back to june of last year finally, the s&p global composite pmi of 47.5 is what we're expecting. once again we stop at seven on sub 50, we pop over 50 50.2 on the compospocomposite. interest rates have ticked up a bit on that, as they should. it's better for the economy. maybe it brings the fed a bit closer as we watch the stock market tick down as well, and "squawk on the street" will return after a short break

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what the heck is that? those are the bad guys. are they friendly? the 10g network, only from xfinity. one giant leap for mankind. . high stakes for big tech at the supreme court. this morning the justices will hear a case in which the plaintiff seeks to hold google liable for the 2015 death of a woman in a terrorist attack. the suit taking aim at section 230 which provides the legal shield over google, facebook, and other social media firms regarding what users post only early but what is your think >> this conservative court that i think would lean toward not liking big tech, but chief justice roberts is on the merits guy and going to say look, there is an element you have to protect their version of free speech

we have to stick with the law until the law isoverturned he's not going to make it. that's not his style he's very rigorous. >> you'll be watching for indications of - >> will they try to make -- are they going to try to legislate the new republican court i don't think they're going to try to legislate because i don't think roberts will let them. >> even just legislatively just the margins -- >> he's going to say punt to congress that's my view i hold him in high esteem. he's managed to be able to really i think not infuriate either side, other than, you know, obviously, abortion is hot. but on business he's been straight down the middle let congress change the law. >> in the meantime let's get to stop trading. >> if you want to buy something in an era where it seems the market is down, at least three firms that raised prior targets. deere's quarter was exceptional. feed the world thesis is exceptional. that's the one to watch. you don't get three price target boosts on a down day without

thinking that's where i should be let's go there. >> ingersoll we didn't mention, almost a one-year high. >> ingersoll rand a tool and dye name working it's unfir rating to people because these companies are not tech and they seem very old-school economy, but ingersoll rand will benefit from infrastructure infrastructure is big and people forget that's a secular spending cycle going on not cyclical. >> walmart tonight. >> i can't wait. doug howard schultz is -- this is really his swan song he's coming on "mad money. the travel trust is in a big position and read why we took it if you remember the club it was the first to pivot and recognize people don't want willie-nilly revenue growth. they want profitable growth and there's nothing better than profitable growth.

>> no. big story in the journal about margins coming down and not impacting the view of stocks that much. >> i will watch you tonight when i get home. >> you'll watch? oh you mean my doppelganger. >> yes last of us. >> but you represent three, right? >> i'm up to date. >> our theory is, by the way, that david is pedro pascal. >> all those years - >> i never watched it and now i watch this show, and i'm like -- looks like a favor. >> i was 15 an i was bernthal. i loved you in - >> mandalorian. >> yeah. it's not easy to wear that thing for all night. >> hard to see i can't -- >> got phased out too soon. >> good to have you back see you tonight. "mad money," 6:00 p.m. eastern time dow down almost 400 to start this week. don't go anywhere.

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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? welcome back to "squawk on the street." rick santelli here live at cme hq with existing home sales for the month of january we're expecting a number around

4.1 million. seasonally adjusted annualized units. we're hovering 11 in a row weaker existing sales. this will make it an even dozen. down 0.7%. to 4 million 4 million. seasonally adjusted annualized units, the weakest month over month change since october 2010. we all know that interest rates have been moving higher and has been the death now for housing in many ways. we are expecting this number to potentially turn around, but we know that the recent run of back into interest rates with 2-year notes below their high of 4.71 and 10-year at the highest levels since early september we'll continue to haunt the housing market carl, back to you. >> thank you very much rick santelli. good tuesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla with david

faber and sara eisen joining us once again here for "squawk on the street." it's great to have you back. >> thank you. >> we're going to have fun. >> i'm excited to be back with two people i love very much. but more excited to build a new show with you guys i think the timing couldn't be better i mean this is not -- 2023 is not a boring year. we've got a lot to unpack. >> we do. >> and some years for investors i think are where the market kind of steadily creeps up, but now, the fed, the peak earnings, where the markets head, it's all up for debate as evidenced by some of the earnings this morning. i'm not sure even executives know what to expect in the back half of the hour, which is just to say i'm very happy to discuss all these things with you guys. >> that is amazing. >> it's going to be great given how easy it is to build a bull and bear narrative right now that's how tormented the market narrative is. >> we're going to have great debates and movers we'll start with 30 minutes into the trading session. three movers we are watching starting with biotech.

goldman sachs upgrading to a buy from neutral, believing the stock could double citing the company' release of flu vaccine data in the year ahead stock up almost 7% ubs downgrades doccusign to sell from neutral concerned about the company's dwindling growth following the 10% workforce reductions last week better late than never i guess the movers of the morning, home depot and walmart under pressure and home depot getting hit harder not surprising because that was more of a miss. comps go negative, flat expectations, for sales. the earnings call was going on in the last hour and the question we're all trying to figure out is, what is home depot's way say about the consumer here's how the ceo addressed it on the call. >> we do see a unique environment with many cross currents right now there's heightened inflation and rising interest rates and tight

labor market and moderating equity in housing markets. given all that we expect moderation in home improvement demand and as we've said we see more price sensitivity given all that we've set the stage for a moderating year in 2023. >> i think bottom line you can't look at home depot and say the consumer is falling apart. what you can say there's been a consumer shift away from goods and into services. in fact, the cfo said it this morning, ceo reiterated it on the call there's been a shift away from buying stuff for your home and diy home improvement, which is what home depot saw, but it's not like the consumer is falling apart. comps weren't a disaster they were barely negative. home depot is dealing with deflation on lumber. >> the deciding factor in having the negative comps jim's point last hour was luckily they have a pro business which they're going to lean increasingly on if the consumer is done around the house.

>> yeah. not to mention they would not have had a significant increase in their dividend were they not somewhat confident about the future of their business walmart similar tune in the sense of you have david rainy the cfo and david made the point, conservative when a cfo at paypal and remains conservative look at home depot and the comments he made about lumber in particular. >> expect it to continue with pressure. >> on walmart, which does give you, still the largest retailer in the country, largest employer, our inventory is in a much better position, basically flat year over year, but they also talk about the consumer still being pressured, that's rainy's words, look at economic indicators and balance sheets running thinner, savings rates declining relative to prepandemic periods and why they're taking what they call a pretty cautious outlook on the rest of the year it goes to your point at the top of the show, a lot of different views on things at this point,

including even from walmart, which again, had a good quarter, strong quarter, but it is this guidance that at least certainly is giving the markets -- >> u.s. comps, ex-fuel, were up 9% that was expecting in the 4% range. sam's club ex-fuel up 12%. the stock i was wondering if it would go positive because it was a really good quarter and the outlook was cautious but they explained it by saying we don't really know what to expect in the second half of the year. and the consumer is being more discerning that's how i would characterize everything the consumer being more discerning doesn't mean it's recessionary look at real time data it's not recessionary january is up 5% december up 2. >> i was just this morning thinking about your interview with moynihan last week. jpmorgan today puts up a chart that cites moynihan that says, consumers who had 2 to 5,000 in savings before the pandemic now

have 12,000. it's not come down it's not back to 2 to 5. >> niright. >> we talk about dwindling savings and higher credit card debt and delinquency rates but coming off a low base we're not at levels that we're comping in 2019 and i think that's kind of the point and the takeaways and e i'm not sure walmart and home depot did anything else. i keep saying target home depot is under pressure is a lot of analysts say it's hard to see a clearing event here because they're going to invest a billion in wages which i think speaks to wages, development of employees, the kind of market we're in where margin preservation and earnings, bottom line growth, is going to be scrutinized by investors because we're still dealing with this tight labor market. a lot of cross currents. >> there are although fourth quarter consumer credit card balances were up 6.6% that's a pretty big jump

now are above where they were prepandemic. the consumer may be spending more, but they are starting to pull up those balances >> it would be impossible not to have an impact from inflation. we're still seeing double-digit inflation if you go back the headline number -- >> 6.4%. >> if you go back and look at some of the categories relative to where they were prepandemic, double digits, especially food i'm going to talk to mondelez next hour. the stubbornly high food prices, what walmart talked about, why walmart is doing better than its competitors because it's more than 50% sales - >> buying more store brands at walmart as opposed to the known brands and people are trading down and gaining share in all, by the way, all demographics in terms of income. >> that's a lot of analysts like the gaining share of the grocery because it's high end trades down - >> did i see you would have dirk on >> mondelez. i just said. >> i know you did. >> joining me for my first day

in the 11:00. >> is that what you're working on. >> david is okay with shrinkflation but not when it comes to mel lan mar. >> you're the only person i know who eats - >> i think so. >> i'm with you. don't worry. >> like sour patch kids. a lot of popular things. oreo cookies. >> i'll ask him for you. >> to sara's point markets in the red as investors work through the fresh reads. our commentator mike santoli with more. i was noticing depot touching the 200 day first since almost halloween. >> yeah. absolutely we're retracing a fair amount and had this idea of the consumer a little bit too hot maybe for the fed's liking in the broader markets but not working to the benefit margin wise of the actual retail chains it really looks like a very long multimonth trading range when you set it up this way the s&p going back to the end of 2021 where is it spent the majority

of the time. between 4200 and 3800 call it. if you consider this is the range until proven otherwise, we're rollioff it we touched a new low for february but mostly trading war maintaining the gains built up in january clearly a little more defensive, a little more nervous in the face of the rising treasury yields in particular we used up the bond market rally coming into the year, the dollar, and now it's getting tested the way i would view it this is the long-term treasury etf relative to the s&p over the last six months. i'm not rigid about thinking that stocks really have a precise relationship with bond yields and interest rates. it's not always a very fixed interplay between the two of them and i'll point to this, you had bond prices continuing to go down in october, november the only times we were above the levels in the 10-year treasure re yield, 3.8% or so you saw the stock market try to hold the gains into that until

bonds rallied again. he don't know if that's going to happen this time a similar disconnect do they have to meet somewhere along the way so that's i guess is what we're going to find out with this little test that i keep saying, 3940 or so in the s&p is the 200 day moving average. 3800 where we started the year if you retrace back to that it's still in the range. >> i think 3.9% on the 10-year is notable today, mike ticking higher last week it was all this good data means no landing. the economy is not going to go into recession, inflation will stay high and that was a bullish thing. this week i feel like that's not a bullish thing anymore. maybe it means the fed has to keep hiking or stay higher for longer and that is a headwind. >> it's a narrow path as we've been saying forever between what's acceptable in terms of the pace of the economy and how much the fed will have to do i still think it makes sense to be aware of how fast the narrative changed to no landing and, therefore, how fast it can

change again you know, we're working over really strong january numbers and retail sales and in job growth we'll see if that persists for another month here. for now the two is absolutely the story. >> we haven't touched on energy today, but nat gas cut in half year to date going to close to 220, not to mention gas prices lowest since 2020 how much of a learelief to consumers and might get complicated by geets owe politics today >> it means the consumer cushion remains intact and you were talking about the credit card balances in aggregate. they're above where we were before the pandemic and we're a few trillion bigger in terms of gdp and disposable income is way higher than it was before the pandemic i feel like the consumer is not necessarily the thing that's going to buckle quickly and you always could have a sudden stop. the fed could grind things down. people say low unemployment is

where recessions start from. i think in general it builds a story of, you know, pivoting towards services that's going to be stubborn in terms how far fast it goes away. >> even tom lee, who is always bullish, says he thinks february is going to be weak because we borrowed from january. >> that's right. >> along with morgan stanley, goldman sachs, and jpmorgan all putting out notes over the weekend warning february will be rough and the market is over valued. >> starting out this way this week morgan mike, thanks. more on the retail under pressure depot the biggest laggard on the dow. >> lber lumber prices. we'll dig into home prices >> don't miss brokerage chairman thomas petterfy. a solid startto the year "squawk on the street" will be right back

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stocks sliding here to start the shortened week of trading. the dow off the third straight negative weekly performance. it's down about 474 points here in the early action. interactive brokers founder and chairman thomas peterffy joins us now for some coloring of the markets. i was going to ask you about the broad market but how about your own stock which is up 20% year to date trading near an all-time high are you seeing a reaccelerate of

business and enthusiasm among retail traders right now >> yes our business is extremely good lately, and part of the reason for that is that interest rates are going up and we are, obviously, making more money on the -- some of the cash we have. also, it allows us to pay 4.08% currently on idle cash in the customers' brokerage accounts and most banks and brokers pay only a fraction of a percent so this enables us to get more and more customers and so it's a terrific time for the growth of our business >> what's also up sharply amc entertainment, gamestop, the meme stocks. meme stock trading

back >> this is a terrible situation. i feel so sorry for these people, that are going to lose all their money. of course, i've been saying that for some time and i've been wrong. look, eventually there is no magic here if a company doesn't make money, its stock cannot float high forever, right. >> i'm just curious what you're seeing though in terms of just if you could give us some color into engagement among retail investors? this year versus last year. >> so as you know, many of our investors are more professional investors and on these stocks, you know, we had just as many people on the long side as on the short side this is an actively trading market, and that is, dreamily good for our business and as i say, many customers are not long

these stocks rather on the top side. >> i was going to say -- >> yes >> we normally like to ask you about short positioning. how would you characterize your clientele's short thesis right now? are they all-in on the short side >> not all, but right. i mean, we have plenty on the short side and, you know, we're almost -- the long side is still a little more than the short side but not much it's pretty balanced and, of course, as the higher the stocks go, the shorts are and keep piling up i yonts expect the shorts [ inaudible ]. >> what about margin levels and leverage and that sort of thing? what does that look like now >> margin levels are pretty

high look, i'm generally bearish on the market and i have been for over a year now. i've been, of course, wrong, but i think we're just postponing the inevitable margin loans are again picking up and that's not good, so i'm very, very -- the higher the market goes the sharper it will fall and that it's going to not be pretty. this is not a good situation i keep cautioning people that they should hedge their long positions or get out of stocks and the fed is expected to raise the markets currently expecting the fed to raise to 5.25 to 5.5% later this year so cash is a very good thing to have and it's a terrific alternative. i think people that stay long in

the market are going to regret it i think people who have unrealized gains, they should try to hedge with index options or index futures and others who can liquidate should liquidate and put their money in cash. >> wow. >> it's pretty telling coming from someone whose business makes money based on the transactions. >> i understand. >> telling people to get into cash. >> that's right. so it would not be the bear stearns thing for our business, but in the long run we want our customers to do well because we are into the long run here you know, it's -- i think that's the prudent thing to do right now. >> we appreciate you joining us for some of the color and your opinion. thomas peterffy, ceo of interactive brokerage. >> thank you very much norfolk southern ceo alan

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tensions grow in ohio more than two weeks since norfolk southern derailment there. ceo alan shaw meeting with public officials from the county over the weekend, apologizing to the community and pledging support. shares are down more than 10% since that derailment, but wolf ups the name to buy and calls the sell-off overdone. ceo will sit down with morgan brennan this morning to discuss the headlines. take a listen. >> this has been a traumtsic experience and all the toxicology reports and testing shows we're clean however, if folks are experiencing symptoms with way they're not accustomed i would strongly encourage them to see a trusted medical professional. >> if east palestine was your

home, would you have come back would you bring your children back right now >> yes yes. i've come back multiple times and drank the water here i've interacted with the families here. look, i know they're hurt, i know they're scared, and i know they're confused they're looking for information and who to trust i encourage them to ask questions. i think when they really dig into it, they're going to see that all the testing, whether it's done by the epa or local health officials or our independent contractors, show that it's safe to return to this community. my commitment to this community is we will continue with the environmental remediation. we've made a lot of progress and we're cooperating and coordinating with the ohio epa on a long-term remediation plan. we're going to continue our financial assistance to the residents of this community.

so far, we've either reum bursed or committed $6.5 million to this community and we're working with the local officials here. >> tune in to "closing bell" overtime today at 4:00 p.m. eastern for the full interview the "times" piece on this derailment last week cited the company's presentation in which they have said, their accident rate has crept higher for the last four years. so safety, long-term safety, initiatives will be a question as well. >> i think not just them, the entire industry and there have been some investigations and there will be questions to him and others about the lobbying this industry has done against rules for carrying hazardous material they've lobbied against it during the obama administration and trump administration i think they've gotten a lot of their way. i'm not an expert on it but that's something worth probing as we continue to see these dangerous crashes.

>> yeah. and also continue to focus again on that point on the higher costs that would have been required if they had been required to put in pneumatic brakes on each car, not the case as of now is my understanding. >> they're going to be dealing with a ton of lawsuits wolf research says that's a good buying opportunity because they have $2.5 billion in cash flow he's getting it from all angles transportation secretary pete buttigieg blaming him. looking forward to "closing bell" overtime another down day for natural gas. more on today's market action after the break. walmart did turn positive just at the top of the hour it joins merck as the only two dow stocks working right now we'll be right back. plates. plates. plates. there's somehow no better way to travel this place,

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welcome back to "squawk on the street." i'm bertha coombs with your cnbc news update. secretary of state antony blinken says today that russia's decision to suspend participation in the new start nuclear arms treaty is deeply unfortunate and called it irresponsible. as he met with members of a greek rescue team that helped search for survivors of the earthquake in turkey, blinken said the u.s. will be watching russia carefully to see what it actually does. former gop representative liz cheney is criticizing marjorie taylor greene's call for a national divorce to separate red and blue states in a tweeted response, cheney said no member of congress should advocate succession after swearing to support and defend the u.s. constitution. and in turkey, an 8-year-old girl who survived the earthquake was rescued by police after she fell into an icy pond. she had dropped a toy into the water and was trying to get it

back once she was back on dry ground and in dry clothes, that came from a box of quake donations an officer gave her a new teddy bear david, it's tough with children. >> yeah. it's an ongoing tragedy, of course, the result of the earthquakes and, in fact, another one luckily far less magnitude, but nonetheless deaths associated with that as well. we're about an hour into the trading session. a look at the markets, you can see near the lows of the session with the nasdaq the biggest loser down 1.75% let's get to bob pisani and get more on what's going on here this morning. >> good to see you, david. pleasure to be back. 6 to 1 declining to advancing stocks and it's about the consumer day in figuring out what's going on with the consumer you can see this in the s&p, the biggest decliners, all the names, besides home depot, and besides walmart, you got lowe's, mohawk industries, best buy,

these are all the biggest decliners now. walmart has gone positive. that's a surprise here so the way i look at retailers is simple, are people buying more and how much are they paying that's a simple way to look at trends in retail difference between walmart and home depot walmart the transactions up 1.8% that was very impressive that means that walmart is gaining market share because people are trading down in this particular environment i thought that was a good number and as you can see, ticket up 6.3% this is not typical of the retails. more typical what's happening at home depot where the transactions were actually down 6% that we saw for home depot, and we also saw some other things that was interesting there as well where the ticket was up 5.8%. here people are paying more and buying less. that's more it typical of what's going on ted decker, the ceo of home depot, made this point early and talked about the unique environment, what did he mean way in he means we have a strange

situation where we're getting rising wages into a slower economic situation that's unique and even a little weird frankly. here's the conundrum we've got we have strong labor demand and we're getting higher wages at the same time, higher wages plus sales slowing, that means lower operating margins and we're seeing a lot of pressure opt retailers today. home depot was talking about invest vesting a billion more in their people and wages overall that's a sign they can't walk away and they have to pay higher wages. imagine the impact on mom and pop retailers who will have a hard time paying the higher wages the bigger companies can pay. the retail trends what appears in the last couple days that are happening. we have very strong labor demand continuing throughout. the consumer is still strong, but as sara mentioned slowing a bit, but strong. cost cutting is another big feature besides labor demand strong inventory reduction, another one. put this all together here and you've got pressure on operating

margins and, guys, carl, i would say that's the big story right now. pressure on operating margins. >> bob, well said. thank you. bob pisani we're going to stick with the retailers for now, joining us on set, d.a. davidson analyst michael baker with us. thanks for coming in bob's point on inventory, how important is that? >> i think that's one of the biggest issues we're seeing in the fourth quarter and what's going to happen in 2023 that's going to look better retailers took pain in 2022. they identified the issue early and marked it down pain point in 2022, but i think it's going to be a benefit. >> today's two prints which is the better inventory picture >> walmart walmart's inventories flat up 25% mid year aggressively marked it down. took the medicine. i think that will lead to better margins. >> does that explain the price action >> i think so. home depot is hurt by trends in housing market the existing home sales came out and they missed. price appreciation is getting

squeezed, so i think there is a housing issue. walmart's comps were great the guidance appropriately conservative why would anyone get over their sees right now in terms of the 2023 outlook john rainy just started. more conservative than we thought. you want to set a low bar here. >> towards the end of last year and this quarter it was where you were, which koergs, housing no good, groceries good, services good, goods no good and now you have an added dynamic where a lot of categories are still inflation rir nay and some disinflationary. how does that impact retail margins and sales? >> well, so our outlook at margins is they will be better in 2023 in terms of the trends in 2022 there were three sure that hurt margins, the markdowns, supply chain deleverage and it was labor costs inflation. i think two of those three are going to be better the markdowns should be better

and supply chain the labor is going to be an issue and we saw that today with home depot raising their labor rates. we think margins will be better this year as it relates to which categories, we're tending towards categories that are more recession i don't want to say resistant but hold up better auto parts and retailing walmart grocery as an example. ulta beauty. >> new high every day. >> it's been great that does seem to be a little bit recession resistant. and the housing has been, obviously, a lot weaker. >> you know on the broader issue of inventories, are there any retailers in your coverage universe that have not been handling it well or you're concerned about? >> well, certainly throughout the year, we've seen a lot of issues most retailers have gotten their arms around it target was the poster child of the issue. our view is that should look better for them. so in general, we think the inventory issue will be a lot

better. >> generally speaking a positive for the group as a whole >> we think inventory trends will be a positive in 2023 versus 2022 coming off a very easy comparison if you will, just a disaster 2022, but retailers did the right thing, identified it early, marked it down and we think most retailers will start 2023 relatively clean of if not at the end of the fourth quarter maybe it lingers into the first or soecond quarter, bt for the full year inventory will be peak. >> back to school. >> i would agree with that the wildcard is what happens with the consumer and consumer spending in the fall and we go into a recession, back to school could be a little bit more promotional. that's not my call right now retail sales have held up well we think retail sales will slow in 2023, versus the last couple years. 2021 was a record year for retail sales 2022 for most of the year also stronger that has started to moderate

we think 2022 retail sales should hold up reasonably well if we're wrong we'll have a much more aggressive back to school. >> one caveat, on retail, is there have been some interesting factors leading to strong january. for instance, we got the 8.7% bump up in social security payments that's the most we've seen in decades affects 70 million consumers. minimum wage rose in 20 states i wonder what the resiliency is of the strong january. >> we do think retail sales will start to slow. january was up we look at it on a year over year nonseasonally adjusted basis and up 4.8%. which is a pretty good number by historical standards we think that will moderate. our same-store sales is as low as we've been since the great recession in 2020. we are expecting a moderation. you wouldn't say disaster, not a negative, not a fall off the

cliff number. >> we'll chew on these and await target in the days to come michael, thanks. good to see you. >> you too. as we head to break, take a look at the laggards right now on the nasdaq 100. a lot of the chinese internet names are at the bottom of the pack jd.com a south china article the commerce giant will launch a subsidy program to compete with a rival weighing on that stock evs getting hit today also first, during the month of february we are celebrating black heritage through some of the stories here of our cnbc teammates, contributors and business leaders here's compass founder and ceo robert roughkin. >> i know that i'm only here today because incredible black leaders paved the way creating opportunities for me and my generation i remember my early 20s on wall street trailblazers like vernon jordan, bill lewis, they were an example

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welcome back to "squawk on the street." i'm dominic chu. just about the every sector in the s&p is lower energy flirting with flat lines. the industrial sectors among the biggest laggards on the day so far. within that group, we're seeing a sharp drop in nordstrom corporation, adhesive company missed estimates on earnings and revenue lowering its full year guidance shares down 10% right now. elsewhere, generac is in negative territory after analysts at truist securities

cut the stock from a buy to a hold rating saying higher interest rates and product prices could slow recovery this year keep an eye on those shares. generac down 6.5%. he resqwkn e street" coming up. don't go away.

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ja. home depot is one of the biggest drags on the dow after reporting results today. the stock down 4.5%, down worse than that, 20 minutes or so be the problem, we had transactions decline and they were declining more than people were spending on those transactions. lumber prices. people are not investing the same way in their homes as we saw during covid joining us is sheryl palmer. it's good to see you we got existing home sales down for the 12th month in a row. how would you characterize the state of the market right now? >> good to see you thanks for having me this morning. the existing home sales have just come out, so i haven't had an opportunity to look at them not a real surprise to see those

continue to go down. obviously, we have a number of consumers that are in their homes and sitting with very low interest rates i think the number i saw this morning was something like 75% under 5% so we haven't had a lot of inventory in the existing home market you know, when you talk about the state of the market, sara, you almost have to go backwards and say we came into last year really strong, healthy market, and then the combination of just price movement that we have seen along with the increase in interest rates, as everybody knows, really changed the consumer sentiment as we moved into the middle and back half of the year i would say the peak was probably mid-november, as we've come into this year, as i reported on our earnings, you know, just last week, we've seen that consumer come off the sidelines, back into the market, but we had four or five weeks of i would say very stable interest

rates, something that was much more in the low 6s, allowing customers, consumers, to get mortgages in that high 4 or 5% range. as we've looked into -- the beginning of '23 it's been really, really good. >> i hear two things when people in the people in the industry talk about mortgage rates, sheryl, to your point, maybe it marks some bottoming that we saw the peak in rates at 7% and things have come down, but then i also hear 6% is a lot higher than, where were we last year, 2022, 2%, 3%? it's still - >> 3%. >> it's still higher, which keeps people on the sidelines. >> 3%. we're comparing against an unprecedented low, though, sara, so i don't think we should be looking at 3%. just like we shouldn't be looking at the kinds of price increases we saw last year and

think that's normal. i think we're in a reset i think we're in a reset on both -- when we think about affordability, it's not just rates, not just prices it's truly the compounded effect if you go into long-term averages, long-term interest rates in the 6%, 7%, 8% would be considered a very good interest rate but you're right, we had two years of unprecedented low interest rates and i think that's kept inventory, you know, out of the marketplace. but we don't really have inventory today in the new home market or the existing market. so, i think the consumer can adjust to a 6% interest rate in fact, we've seen that in 2023 and then you have the tools -- we have the tools as a builder to help them with what allows them to get to the closing table with some sort of concessions. for some folks, they're really looking for help on cash to close and closing costs.

others it's helping them buy down their interest rate >> that's interesting. we were watching very closely these charts of number of days on the market, home builder confidence, home buying traffic. were those improvements in january, february, do you think that was a blip? >> yeah, we saw those improvements, carl, probably i would say the 10th, 15th of january and the momentum has continued to build i think that we've got is a lot of people that were on the sidelines that really did have housing needs. i think you have to remember that the most basic concept here is we are still underhoused as a country today. and that number -- you know, there's different numbers out there floating around, but i would say 1.5 to 2.5 million homes. shelter is a basic need. i don't think it's a blip. certainly as interest rates move, the consumer has to adjust but i think the consumer can absolutely adjust to a

six-handle interest rate comfortably. >> sheryl palmer, it's good to talk to you, especially with house front and center thank you. >> thank you take care. next hour, a check on the consumer with the ceo of mondelez, dirk van de put at 11:00. we'll be back. ♪ ♪ engineered to elevate the senses - touch, sight, sound, and scent. it's the electric that recharges you. the all new, all electric eqe sedan from mercedes-benz. see your dealer for exceptional offers on mercedes-benz electric vehicles. ♪ great estimations ♪ interesting piece. let me bring in my expert. mmm so many scratches...

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marriott is diversifying its travel offerings and entering the luxury yacht market. can the hotel chain make a splash in that multibillion dollar industry? let's get over to seema mody to find out seema? >> david, thank you. joined by marriott international ceo tony caplano it's great to be on board here >> welcome >> thanks for having us. we typically meet at hotel launches but we are on marriott's first mega yacht. a michelin star restaurant on board. some would say is marriott entering the cruise market >> it's the yacht market, a much smaller ship in terms of capacity 149 cabins on the yacht, 298

passengers, 6 food and beverage outlets. i think what really distinguishes with the yacht is its affiliation with ritz-carlton it immediately identifies for our prospective passengers what their expectations should be in terms of the physical quality of the ship and maybe more importantly, the service delivery. >> this clearly is a bet on the luxury customer. luxury makes up 10% to 15% of your total sales with this new offering, how do you expect to grab customer share? >> for that luxury customer, they're a discerning customer and they want to find new and unique experiences we think this is a natural extension for our luxury portfolio. >> it's an interesting partnership. marriott and oak tree capital and two more ships coming up in 2024 >> we do yachts two and three are under construction in france, as we speak. yacht two will launch in 2024 and yacht three in 2025. >> what's the demand been like,

occupancy so far >> fabulous. we launched in october of last year the forward bookings for '23 are terrific next month we'll start opening bookings for yacht two we have every expectation the demand will be just as strong. >> in the last week, tony, two of your peers in the hospitality space are talking how customers are trading down, opting for shorter trips, two to three-star hotels instead of four-star. are you seeing that across your portfolio? >> we have 31 brands, but luxury has been strong through the recovery and continues to be strong in fact, if you look at our industry-leading luxury portfolio, which is almost 500 hotels, rev par in the fourth quarter was up almost 10%. we continue to see deep demand for our luxury experiences. >> average daily rate for marriott holtzes up 21% year over year. a lot of questions if inflation has peaked what's your reaction >> a few things.

number one, remember, we have this unique business where we get to reprice our inventory every day. you see that in the rate trends we've talked about in the last couple of quarters in the fourth quarter earnings call we talk about global rev par for 2023 being up somewhere between 6% and 11% i think what will be different about 2023, the rev par growth was rate driven. i think this year it will be a little more balanced with both occupancy and rate. >> so prices could moderate -- >> a bit but accompanied with strong occupancy. >> talking about china, we're seeing the big reopening outbound travelers, is this one way you hope to get them back to marriott, whether on land or at sea with the ritz-carlton yacht? >> china is a really important market for us. it's our second biggest market we have almost 500 hotels in china operating. about a similar number in the pipeline behind that and like many markets we've seen around the world, as borders start to open, we see big spikes

in search for both inbound and outbound travel. we see projects that may have been stalled, restarting, and we've seen a nice spike in inbounding queries for new projects. >> tony, we'll leave the conversation there thank you for joining us david, i'll send it back to you. >> seema, thank you. looks nice and warm. this is the part of the show i say so long. let's go to carl and sara on the floor. good tuesday morning i'm kcarl quintanilla with sara eisen on the floor of the new york stock exchange. let's talk about the agenda. carlyle group, and dirk van de put, we'll get his take on consumer strength and inflation, and robert