it could be. it doesn't all have to be these extremes we worry about all the time >> i'm with you. >> good to have you on, michael. thank you. markets, you know, that plus 80 didn't last. now we're down 70. i didn't look at crypto, andrew, but that was interesting brian's very calm. i liked it it's good. let's do it again tomorrow make sure you join us. "squawk on the street" is next ♪ >> good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange the bulls are looking for a reset. futures, though, have lost some gains. china's pmi comes in hot, best manufacturing number in over a decade yields are higher today. our road map begins with the first trading day of march, dow and s&p coming off the second negative month of three. >> it is tesla's investor day.

this is elon musk lays out his long-term vision the stock, by the way, up almost 70% year to date we'll also round up another busy morning of retail reports, lowe's, dollar tree, kohl's, ross lot more >> let's begin with the markets as we kick off this new month of trading, jim certainly, the yield picture is not offering any new relief with the flip of the calendar >> no, no. it's not just talking about how frustrating this market's become, but look, rates tick up. everything you wanted to do, everything you were thinking about, everything that's reported is now muted, so yesterday, great example, brian cornell did an amazing job on target i thought that was a fantastic quarter. the inventory's clean. it looks like they've got a very good track for 2023 and stock's at 4 and finishes up at 1. we are so gripped in macro david said something yesterday

that i thought was brilliant relax. which is that there's absolutely no humans playing. it's all machines. >> the algorithms. yeah it's been the case for a while i was looking back obviously, my notes every day, and i was looking at how many times i had written down about things that are attached to mike wilson there's basically, like, you know, people -- they attach the algorithm to him >> they're generating mike wilson >> yeah. and i mean, that's what goes on. i'm not kidding. i had it in here like three different times. people telling me, oh yeah, it's the mike wilson algorithm. >> this is absurd. i mean, we have a real market, okay, with real stocks, of real companies, and they are being revalued i know waiting, forget that. they're being revalued every six or seven minutes, and i think that's so treacherous that you just have to let it play its course you can't make -- honestly, i was going back and forth with target on how great target was,

only to see target go down, because target, the stock, has absolutely nothing to do with target, the company. i mean, that's amazing to me how is that possible >> we're going to dive into a bunch of the other retail names with their reports and guidance. it's not all good, to be sure. >> oh, no, there are ones that aren't the hate on for dollar tree versus the ross stores, which i thought was terrible, and everybody loved it at one point, they said -- someone asked about stealing they said, we have guards in front of the stores. like, you know, yeah we got guards. oh, good tj doesn't have -- we've got guards is that -- that's where we are right now. >> you've talked a lot about what they call shrinkage in the retail industry, which really is another way of saying stealing >> well, because shrinkage is george >> that is george. and that has become a huge issue since the pandemic, really >> yeah. >> and continues >> chicago, they had an interesting election, usually don't talk politics, but anti-crime people, anti-crime in san francisco, a lot of this has

to do with the fact that when you go to a store -- like i told brian cornell. i was at the mission district target, and there was a -- they did one of these things where it was a group steal. there was someone who was causing problems at the register, and that was a chance for everyone to break, and i said, do you mind if i pay it would be great if you pay >> we asked cornell about it he said, it's material to quarters, but the bigger story is safety to his staff and customers. >> what happened when i said this, he goes, i'm not going to let those cashiers be put in harm's way i said, but the guy in front of me took this giant thing of cranberry juice. i also had cranberry juice, i had a smaller one. i paid, he didn't. >> i feel the same way getting on the new york subway i can't tell you how many people just jump the turnstiles all the time there's just lawlessness and how about those motorcycles driving in the bike lane i mean, what is that and then they go through red lights >> that has nothing to do with -- >> there's lawlessness

everywhere >> crime in new york is down every year >> that is not crime that is just jumping turnstiles and going through red lights >> you were talking about emotional epiphanies >> i just wanted to get that in there. >> t.j. maxx is willing to admit, even though they have undercover agents there, typically they're wearing mets shirts and eating potato chips they admitted to having a problem. no bone else did >> you go into the local drugstore and everything's under lock and key >> you know who doesn't do that? target walmart has very little lock and key. >> lowe's, they're clearing some of this out. even urban mentioned some of this >> i think that people have to understand that marvin ellison is running this company, lowe's, in a way that i have not seen lowe's run -- remember, it was -- marvin has been there for a while now, but lowe's has

god --g got -- they have do-it-yourselfers. home depot tried to make it so the year was resell,t, but i thought marvin delivered entirely just a fantastic quarter they see comps of minus 0.7 they had do-it-yourself, discretionary spending pull back during the holiday, but demand improved each month of the quarter, and pro sales were up 10% in the fourth quarter. that's not where the pros go >> how does it compare to what we heard from home depot last week >> i think they took pro i think they took some pro >> you think they took share >> i really do >> the contractor business, essentially? >> they lost 300 basis points on lumber deflation, but it was a terrific quarter they're improving information technology they had no systems at all they were like when my father was selling at gimbal's, like,

oh, we sold three pair how'd you do over there with sweaters no i mean -- i think it's just a really good quarter, and i think that people have to recognize that spring comes, and marvin excels in the spring excels >> overall market strategy, are you in the camp -- i mean, speaking of mike wilson, that march is treacherous, last month of the quarter, earnings get -- they have come to religion, come to jesus >> when you're on the b&g's foods call and they're talking about green giant, and they say, the problem is inflation, inflation, inflation, we're so -- we have to get a win here. i mean, i got to tell you. jay's got to get a win if jay gets a win, then i think that march is not going to be bad, but he's gotten no wins we are raising prices at will yesterday. home builders. >> some of the jobless claims, those numbers are considered a win, right >> well, "the journal" on monday

did a piece on falling rent. today, they front a piece on falling online recruitment and arguing that the labor market shows -- >> okay, so -- >> exactly, thank you. >> dutch bros, a big coffee company -- starbucks in the making >> you had them on last night. >> yeah, and they were having a hard time getting people to make coffee at their kiosk. now, they've been inundated with resumes, and it's no longer a problem to get people. i thought that was extraordinary. what an amazing change it's big in six months, nowthey're turning back people who want very much to work at dutch bros -- >> all right, so, isn't your buddy, jerome, then getting a break? you just said he's not getting any breaks he's getting something on the labor front. that's important that's what you have been talking about. >> it's too anecdotal. i need something that's bigger than an enecdotal, because when do that, someone throws in front of me, well, did you read hub

mania? it's one foot up, four feet backwards. i don't know i'll have this guy -- >> who what >> the ceo of dutch bros six months ago, you say, i can't find anyone to work. now he's rejecting people. doesn't that mean there's some progress but it's not counting. interest rates are not doing what we think they should do what >> i didn't say anything >> do you think that matthew mcconaughey is worth $10 million? >> matthew mcconaughey is worth whatever the market will pay he's a wonderful actor >> i've been to dinner with him several times. he's a strategist. >> okay. >> we are going to talk about -- >> what's his call does he agree with mike wilson >> i don't know. there's no -- is there an etf for mcconaughey yet? >> there's nothing stapled to him yet. staple an algorithm to mike wilson imagine him walking around with an algorithm stapled to his back >> we'll get to salesforce in the next block >> can we just say that lowe's

is better than home depot? >> all right let's get to tesla, elon musk set to offer his vision later today at the company's investor day event. he's expected to unveil the third part of that master plan battery production, slated to be a major focus. we'll hear about mexico and get the revamp details >> i've done a lot of business in mexico, and your first rule is now never disagree with the president. whatever the president says, you do he wanted that plant in central south mexico, not far from -- well, he wanted -- he didn't want it on the border. he wanted it to be near guanajuato, and musk said, we're putting it where we want he's amazing he disagreed with amlo, but he's going to in going to invest money, so amlo

conceded only brett taylor has not rolled over to musk >> fought him, obviously, as chairman of twitter and succeeded in getting the full price. >> just one more reason i like musk he's willing to tell the mexican government, here's where i'm going to build my plant, because he is about creating great wealth >> question today is, are they going to introduce anything new to the conversation in terms of long-term goals, including, perhaps, a car that is priced below the $40,000 level or at least sort of seen as mass affordable >> he's trying to lower prices to drive out -- justice department, don't listen lower prices to drive out the other ev companies he's going to be successful. >> that's quite a statement you just made. >> well, i made quite a statement. >> he's going to be successful >> you can't compete with him. >> you can't compete with him? >> he has a huge cost advantage. >> you have to have as a name play, the ford f-150, the lightning, the greatest-selling truck of all time. they have something that you can say, listen, i really want that.

but otherwise, you can't compete. >> a lot of chatter today about slowing adoption of evs. axios has a piece on gas prices, down 6% year on year, makes sticker shock on evs i made a chart of, actually, adam jonas in december revised his adoption forecast lower because it's -- people are showing up at the lots and pricing these and saying, maybe not, i'll go another round >> you are dead right. i asked mike wirth about which was the more existential threat to chevron, elon musk or the government and he kind of punted. but he did say, oil is going to be here for a very, very long time he added a "very." >> yeah. >> what? >> i'm just trying to think about ev adoption. i'm just going back to what you said, which is, like, game over, like musk wins >> it depends on whether you have a compelling -- >> you need to explain to people -- the margins on that car are far more significant >> you get the benefit >> it's because of -- it's

because of the basic production of it. it's so much cheaper to put them together >> it's the model -- >> there's hardly any moving parts. >> he's the model t without the existential baggage that henry ford delivered to our great country. it's the model t you can't compete. >> meanwhile, rivian has recalls, miss on production, delivery, miss on revenue. >> that's a suboptimal situation at rivian. remember when amazon said they'd buy every truck that rivian makes? if they make like 2,000 trucks, that's not a problem >> remember when rivian had more than a $100 million market value? >> yes, i do >> i do too. i remember us saying, that's odd. >> you said it >> i did >> you nailed that one >> i did say that many times, yes, it's true >> it was a faber report >> i got plenty wrong, but i -- was it i don't think so >> every dpay, you tried to get people out of rivian >> that's your job i just comment on things that look a bit peculiar, including that it was trading at something like 100 times revenues. >> i'm the unit here

this is falda. i'm the unit >> got it. >> you're first horizon. >> first horizon, the bank, that's going to be down sharply because of those comments from td >> did you see that? >> we're going to talk about that, actually >> when we get back from commercial, i'm going right there. >> we got other things to talk about, but when we get to the opening bell, we'll talk about that how about that is that okay >> when the show comes back, we have to talk about that. >> i like how he stacked the show in realtime we're going to do this, that, and this >> you just need to tell him >> exactly right david's right. when we come back, we are going to talk salesforce obviously, activist pressure, this piece in "the journal" yesterday about the ohana family >> there's always members of the family that are black sheep. 'rba ia numoh.t the nt wee ckn mite think i'm ready for. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat. ♪ you know you make me wanna...♪ and then we looked around and said, wait a minute, this isn't even our stroller!

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welcome back of course, a lot of investors will be focused on salesforce earnings that will come after the bell tonight, not just to see the financial progress that that company is making, but also because wondering whether, in fact, there will be anything associated with that that does meet some of the hopes and dreams of the various activists who have been in the stock it's a story we've been following for some time, of course a long roster of activists led, in part, by elliott, because when it comes to elliott, as i've said, it appeared for a while that they were at logger

heads and then for a while, closer to a settlement what i can tell you now is that elliott has nominated a slate of directors for salesforce's board. >> really? >> yeah. >> oh, damn. >> elliott has nominated -- now, many people may not be surprised at that. we've been talking about this as a possibility for quite some time the nominating window, by the way, closes on the 14th of march, so still a couple of weeks from now unclear if it's two or three nominees likely to include jesse cohn, who runs the activist practice at elliott not been able to find the names, though, and can't confirm, in fact, even that cohen is a part of them, although that is expected by a number of people who at least are close to the situation. but again, can't necessarily confirm that only about two weeks ago, i was reporting that the two sides seemed very close to a settlement in fact, based on the reporting i had at the time, it appeared that they might get to one in the near term. even perhaps before earnings were released later today.

that, clearly not the case and the question, then, becomes, well, will salesforce accompany its earnings release tonight with language that, in some way, meets the hopes that -- and the ask that has been out there from any number of these activists? started with starboard value and jeff smith and a cnbc interview last fall indicating, hey, this is a company that should be lot more profitable than it is >> are you seeing these guys they're going to back marc tooth and nail >> to your point, there are three new directors who are being added today. arnold donald, mason from value act, an activist, have joined the board. it's 13 members, but it is very conceivable at this point that they will be facing a proxy fight. it doesn't mean that will happen, and again, i would point people to tonight's earnings release and whether or not we

get language associated with it that perhaps details hopes, jim, that they do get to 30 to 35% margins as soon as possible is the hope of the activists here because incremental margins become very significant when you cut costs. they have begun cutting costs. marc benioff has talked about a focus on margins ahead of revenue growth that has been embraced by the activists. and there's a hope that they don't backslide. so, certainly, we're going to focus on the earnings tonight, not just to see the report card on the progress the company's making in terms of its profitability, but whether it includes, with that, some of the things the activists have been looking for. but this certainly brings up the prospect of a proxy fight in the future elliott would not have nominated if that was not a possibility. they have a multibillion dollar stake. that includes a lot of swaps and options, so salesforce may tell you, well, they're not even close the largest shareholder of the activists in our stock because they don't own that much

common but this is the way they do it, and if they needed to vote those shares, they could do it >> how upset are they with benioff? that's the equivalent of saying, you got to step down >> why >> step up to a larry ellison position i thought they had -- i thought they had reached some sort of -- >> jim, i was, again, i reported a couple of weeks back that they were very close to a settlement. >> with naming a director. >> my understanding was at the time, there were two directors potentially going to join the board and a number of different things the company was going to say to settle with elliott they didn't get there. they didn't get there, and clearly, whomever these directors are that have been nominated by elliott, they are not being met with -- well met by salesforce, who is clearing saying, no, we're willing to fight. >> would this be a peltz disney? you todo the quarter

>> it could be a situation where elliott sees language that they like tonight that accompanies this earnings report, and they say, okay, we've done what we needed to. by the way, there has been an ongoing dialogue between salesforce and starboard, salesforce and third point and dan loeb, salesforce and elliott. that's been going on for weeks and weeks at this point. >> marc has been very receptive. they like the product. marc was saying to you, listen, i'm excited to talk to these people maybe they have good ideas he's not in any way saying they have no good ideas >> no. the way it's been characterized by me is good faith conversations. >> yes >> but it did seem to me more recently that those good faith conversations were going to lead to peace that is clearly no longer the case >> yeah. >> where it leads is still unclear. and to your point, in the past, elliott has not gone to a proxy fight with paypal, but they ultimately got what they were after. they didn't go to a proxy fight with pinterest, but they did get a board member in fact, an elliott employee,

steinberg, is on the board of pinterest. so, you can have settlements that are nonsettlements, so to speak, without a proxy fight >> you know, i'm kind of -- >> what do you think for the numbers themselves do you have any -- >> so, every company, whether it be workday, whether it be meta, the company -- whether it be monday.com, you know, just to use -- just a general. zoom everybody that's cut as deep as marc is cut and everybody that's announced a buyback, and everybody that's accelerated -- he's going to do 17, 18% growth. he's going to announce that we did $30 billion in sales anyone who has done that course has had a good quarter anyone >> but "the times" piece talktalks less about what's been cut and more about what was bloated to begin with >> they added 60,000 people. you know, they probably didn't need that. but how many people did andy jassy add at amazon? how many people did ruth add

and they're not being pilloried like marc is >> he is focused on margins in a way that, again, this conversation really did start to give credit with jeff smith last fall on cnbc, saying, this company's having amazing revenue growth and somehow it doesn't keep up with its peers when it comes to profitability >> marc agreed with what jeff smith recommended. people are making fun of ohana you know what? two years ago, it was like, hey, you know what, marc has a family that he works with now it's like, oh my god, he has a family you can't have it. when the stock's flying, wow, family we are family, like the pirates. and now, when the stock's down, it's like, what is he doing with family >> you're saying that culture was a strategic advantage, and now it's a disadvantage? >> it was a strategic advantage. and i just find -- look, the stock went to $300 and change, now it's down to $164. but look at the charts of all the enterprise software companies, and a lot of those guys are doing exactly what marc

did, and they're heroic. marc's not viewed as heroic. and then matthew mcconaughey, how much did people pay to have some stupid name change at their company, like, you know, yeah, i'm naming this one remarc industries >> cramer spelled backwards. >> $10 million to matthew mcconaughey. remarc >> i like it i like it. >> like matthew mcconaughey is a bo bozo. he's one of the smartest people i've ever met. >> salesforce after the bell we'll be keeping a close eye on those numbers. >> who has them on >> do you? >> yes >> you have benioff tonight? >> yes, i have benioff le let me just check yeah >> see if it's still true. that's going to be a big one we'll get cramer's "mad dash," countdown to the opening bell on this first day of march. don't go anywhere.

>> announcer: the opening bell is brought to you by nuveen, a leader inning in, alternatives, and responsible investing. all right, let's squeeze in a "mad dash," give you an opening bell in a minute and a half >> a tease this is a meme stock

no, it's not amc it's palontir, on just now this is a piece by d.a. davidson, which talks about how they have -- we expect generative a.i. and more off-the-shelf solutions to capture more growth. we incorporate the use of the generative a.i. tool here's what's interesting about this piece is it that they think the solutions will be good do they mention that palo alto's already doing it and they're being -- they're crushing this industry no what they say in this piece by davidson is, "this was written by chatgpt and fact-checked by d.a. davidson. it finally happened. this is not written by a human >> this is a seismic revolution already beginning in the way work is done in terms of the use of chatgpt and you can't emphasize enough how basic this current version is versus what is yet to come and will come very soon. and writing code -- it writes

code, so you can -- it can help productivity enormously. the question is, when do you make that switch from helping productivity to replacing the person >> i don't know. a lot of the stories that come out, like, let's say a company releases earnings at 6:00. this is the first time i've seen -- the fact is, this is a very well written report that if you didn't know was written by a machine, you think it would be written by a human >> it's amazing. it's amazing >> this machine is thoughtful, and this isn't like they ask you, why do you love me, like that guy did in "the new york times. >> we're just at the very beginning of something that we have to remain very much focused on chatgpt and its ability. >> let's say you're not here, you're off in the morning. don't you think i can just do what you would say >> you could ask chatgpt what i would say. i don't think it would know. i'm such a mystery >> well, i just think that we're

there. we're there. people -- they're better than we are. they're better >> not yet, jim. >> why this palantir piece that a human could write as well as this machine? >> great piece by bank of america this week. we're going to generate more data in the next two days than all of the data created from the dawn of humanity to the year 2000 in the next two days >> well, then, go buy nvidia, because they're the only machines that can do it. >> that's -- >> page 100. >> the computing power that is needed to generate chatgpt is enormous the cost is enormous >> yes >> the natural language lakes that you need to have created, i mean, all of it. it's not something that is easily replicated. >> when you speak to nvidia about the h-100, which is the machine that people -- that's the platform i say, how many of these -- what's the demand? they say, we're never going to be able to meet the demand

imagine being a company and never being able to meet the demand it's not corn flakes >> despite google trading down 17% over the last three weeks, google gained search engine share in february. >> that's unbelievable i mean, we've got a microsoft piece today that says the revitalization of bing -- i think it's funny because it was never vitalized. >> bing was always bung or -- it was not a bing it was a blah. >> baa dada-bing bada-boom. >> now it's bing >> it's moving microsoft stock up substantially >> this is going to change the whole parameters of search when you can start asking more specific questions, and if you know what you're looking for, chatgpt will really help you in a way that it's not about, where can i buy a good bottle of wine nearby >> what do you do if you're a graphic artist and you can't do it as well as -- >> you've been all over the adobe stack. >> it's adobe that -- you would not be spending this amount of

money that they want to spend on this property if they weren't worried. adobe's worried. >> you need to explain this. sorry. you need to fill in the blanks there. figma. >> yeah. >> they need that to compete against canva, which is much less expensive, and when you combine canva with chatgpt, you can basically design anything by just talking to it >> what had been unanticipated in the rise of generative a.i. or a.i. in general was the idea that it would first replace creative activities. the sense had always been, those would be the last things to be replaced >> i know. have you tried it? have you done a matisse on it? >> no, i haven't, but it's gone in reverse it will be writing scripts it already is. it conceivably could do basic newscasts. it can write research reports. and this is the earliest days. this thing, three months from now, is going to be a lot more powerful >> should we be scared >> of course we should be scared >> okay. did it take pepsi down >> those in the industry would

argue this is a continuation of what's already been happening for years. >> yes >> i know. i mean, and jensen was telling me, i remember once when i went out to see jensen, he had this drawing of a space mission rocket landing on mars, and he was just doing it in his spare time for fun i knew that we were in trouble when you have someone doing -- but he's been saying over and over again, look, i've got these machines, and someone's going to use them someone will use them. and no one was using them other than mercedes, and then suddenly chatgpt comes out, 150 million people see it in 60 days and next thing you know, he can't handle the orders. it was not a big thing six months ago >> i'm glad you mentioned some chips really quick, because a great piece in "the times" yesterday about the chips act and the funding guidelines and how the administration's trying to cram in a bunch of disparate policies into this one mechanism. >> yeah. i think that the -- to defend the administration on this one, you could say that they're saying, if there are extreme

profits, they have to be shared. but the way that the article's read, that it was, like, a windfall tax and we're going to take some of your profit, we're going to share in your good fortune, because we gave you a lot of money i mean, that's -- did they do that at taiwan no the big issue here with the kripz chips act is, are we going to build seven nanometer and eight, and will they build two nanometer? we're really the highest cost, so they have to give us the subsidies, but if they give the subsidies and then they want to share, do you think that hock tan at broadcom is going to share? >> no. >> right and that's what we want made there. >> all good points >> and where's the worrykforce going to come? everything's built in ohio these days >> arizona's going to have a -- potentially a very large tsmc.

>> there aren't enough people in arizona either >> not enough people >> we're not letting enough in >> that's why we have chatgpt. we don't need people we can take all those people who push paper, replace them, and we have them go and be in a fab in ohio >> eventually. but first, they're coming for the creative types, it seems >> they're gunning for them. >> they are. chatgpt is >> you make it sound like it's some sort of vast conspiracy first, they came for the creatives, and then they came for the -- >> it's a new beginning too, but may not include us >> speak for yourself. >> on that dark note, caterpillar is helping to lead the dow jones labor force. >> i love kacaterpillar. >> they have a tentative six-year deal. >> people don't understand caterpillar. they are going to be the biggest winner from the inflation reduction act, because you're going to -- they're going to have to buy cat. the analysts have been, just like they were for procter & gamble until today, the analysts don't understand that

caterpillar has its orders made up until 2026. no one cares they're like, we're worried. the costs are coming down. bumblebee is doing an amazing job. the stock can't get out of its own way, because, david, the purported head and shoulders i think caterpillar is an amazing stock. by the way, 3m, which i have been critical of, they got the pentagon to say that, be careful. a lot of these lawsuits, combat arms lawsuits about hearing loss, not a lot -- not all of these people have had hearing loss so, i think 3m is going to be a very big contender >> we mentioned first horizon earlier, jim we should tell people the news here >> the fine print. >> this is a large bank, and it's in a deal to be acquired by td it's 25 bucks a share, additional 65 cents per share of common stock on annualized basis as well for the period from november 27th through the day immediately prior to closing you can see what's happening to the stock, though. why? well, in a filing, td said they

had already agreed to extend the date of the merger agreement to may 27th of this year, but now they're saying, they're recently informed first horizon that they don't expect the necessary regulatory approvals are going to be received in time to complete the pending merger by that date of may 27th and therefore they can't provide a new projected close r at this time it was got a lot of people worried. is it about a price cut they'd like unclear for their part desk says they don't think it's about a price cut as much as -- unclear exactly what it's about. but a mutually agreed extension could be an outcome here, but you also could have one in which they just say, see you later that's months away, and they're already saying, we're not going to meet months away. >> there's no increase in bad loans whatsoever ryan jordan is doing a terrific job. there's not a single hair on that quarter and they're going to walk away

>> they don't seem to know when they're going to get approval wh >> who's blocking it it's a plain vanilla deal, for heaven's sake. i think the deal gets done bryan was willing to accept the deal >> obviously, the point is, either side can unilaterally elect to terminate after that date >> i think the stock should be at $20 >> really? yeah, they say -- ubs says, price driven break -- price-driven break price is $15. multiple base break price is $17. >> that's way too negative the bank stocks have had a major move here. it doesn't take into account that at all. >> by the way, td did complete its acquisition. our friend, jeffery solomon. >> congratulations >> that's done >> but i just think first horizon is a really good bank, and if they really are for sale -- i don't know they don't allow a lot of mergers anymore, david >> no. >> you know? not like the old days. >> mergers are tough to come by, big ones

>> david mentions price cuts we got a price cut in the price of insulin out of lilly today. >> how do you like that? they were one step ahead of the posse when it comes that to. that is most visible on washington, insulin's the most visible issue, because the prices are so outrageous the fact that lilly is here. lilly has been down in a straight line from $375 since the end of last quarter. the drug's been horrendous i don't know lilly has -- in the spring, we're going to hear about dementia, alzheimer's. to me, my sources say it's good, but lilly won't confirm anything it's the weight loss drug that matters, and they're going to have -- they should get approval in the spring to be able to use it as weight loss. they don't have it now, and people keep thinking that doctors are going to prescribe it without you have to be careful, because a lot doctors are -- >> lilly will expand the monthly cap for out-of-pocket. >> i think that dave rikz is the

real deal. >> did you have a talk on novavax and what happened there? >> i've been saying the thing was not phony but worthless for a long time and refused to -- i didn't want them on the show i just didn't. i think that they have been very promotional. well, not promotional today. going concern. >> yeah. >> is that -- i didn't see the news there it is. >> they're promotional in a field, by the way, where you come on and you're promotional and you say that you have a vaccine that's as good as pfizer's or as good as what moderna has, you better back it up with facts. and they did not back it up. not as bad as emergent bio, who said they're making things great for j&j. that didn't work out you can't be in the companies that can't produce >> that's a good point >> what do you got there >> i was going to take a look at goldman-sachs, it was down way more than the group yesterday during its investor day. those shares, gaining back a bit

of ground this morning obviously, david solomon, a guest on our air prior to that investor day, andrew sorkin interviewing him, and indicating their focus is certainly on wealth management, asset management, and not on consumer banking any longer take a listen. >> we laid out a plan three years ago, we talked about a number of avenues for growth and opportunity, and i think it's absolutely fair that our execution around the consumer platforms hasn't been to the standard we'd like it to be. there's still opportunity for us we have some interesting platforms where we've built good technology and have good partners, and we're working to improve the performance of those platforms. but the real story of opportunity for growth for us in the coming years is around asset management and wealth management >> jim, you know, clearly a negative response. didn't get any better as the day went on. >> exactly one year ago tomorrow, they bought green sky, which was low-impact loans to accelerate strategy, develop

higher, more global returns. these were loans for home improvement. >> yes >> one year ago. and already, it's wrong? >> contractor loans. >> contractor loans, yeah. 10,000 i mean, david, can you buy a thing for $2.2 billion and then literally one year later, decide that, well, that was a bad idea? >> of course >> well, but -- >> i remember, i think, time warner bought something and about a year later was like, this aol didn't work very well >> this is the goldman-sachs, david. >> understood. >> it's the goldman-sachs. >> it is the goldman-sachs >> do you think it all started when omar left two years ago -- >> to go look for moby dick? what was he doing? sorry. this all started when ishmael went hunting the great white whale? >> "call me, ishmael." i get it, david. these guys were going full speed

ahead on the -- chasing the small loans, because they thought they could do it iteratively. in the meantime, they had the best wealth management division on earth, and they decided to starve that division and give the to the division that makes do it yourself loans >> they had the most profitable business on earth, which is this fantastic wealth management of rich people, and instead, they want to give along to a contractor for hvac system do you know goldman is probably the best hvac lender on earth? what do you guys do? i work for goldman, and i'm right now doing electricity, and i can put in -- if you want me to change filters -- what the heck goldman-sachs. the goldman-sachs, david >> we -- listen. we talked -- >> do you like asic? david solomon, would you like a

ci sic or treks >> that's windows. >> no, it's decking. decking department at goldman? they had this pristine -- >> all right, all right. we talked a lot about this at the time for months when they made this pivot to consumer. obviously, blankfine is the one who started it solomon committed to it even more so. >> why not just say -- >> you love the apple card, by the way. you were, like, mr. apple card >> i did not i said it was going to cost $5 billion you are wrong. >> really? i remember you being really positive on that apple card for goldman. >> two major banks decide to withdraw from the bidding there because apple had -- apple had none of the costs and all the gains. >> all right i'm sure john oliver's got the tape, so we can ask him. >> eventually, we'll find out. >> i had the baconator today >> we're getting breaking news on manufacturing pmi let's get to santelli. hey, rick. >> hi. well, we are definitely looking at 47.3. that's the february final for

the s&p global manufacturing pmi. we'll have ism pmis later in the session. this makes the fifth under 50 in a row for this series. that is not a healthy sign for manufacturing. we could see that interest rates, well, they are definitely up across the board, reversing a bit of yesterday's slide pay close attention to europe. we see that the ecb's terminal rate has moved higher in the market size, and their currency is reflecting some of those higher interest rates. don't touch that remote. "squawk on the street" will return after a short break

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given the data we've gotten in this the last month, which has been a strong jobs report, higher inflation than we expected, these are concerning data points. suggesting that we're not making progress as quickly as we would like at the same time we shouldn't overreact to one month's data even if the data is troubling. to me 25 or 50 is less important than what the dots look like at this point i have not decided what my dot is going to look like but i continue to raise further, i would continue to push up my policy path. >> that's minneapolis fed president neil kashkari, jim says doesn't want a recession

but slowing inflation is number one. >> there are so few companie that did not have a red hot inflationary month of january, i don't know what to say other than the fact he's dead right. >> that's not counting what happens in europe. german cpi up 87. >> they should do 50 we have to get cold numbers soon, january, whether it be housing, auto sales, retail, amazing in this country. >> you think it's china's reopening in play? >> that only just hurts the case what we saw was a spending and traveling bing that we didn't think would happen given the fact the consumer was supposed to be out of money that didn't happen. >> not yet. >> but it will we did get this morning lows, the reasons it's down, we got comments from the cfo that the consumers were cautious. they said the first quarter comp sales below the annual forecast. that was different from what i

thought they would say >> so now you have a different take on it >> i didn't know they lowered -- the cfo lowered the boom the cfo lowered the boom six minutes ago. >> explain the boom for people. >> we thought that the kcadence of spending was getting better, but this flies in the face of that the consumer is getting more cautious how do you think the spend is getting better? it's quizzical data. >> certainly comps kohl's would explain that, down 66, double miss. >> when you're down 66 you have to have break the spiral down 66 is then down 1010, i have seen this over and over again in retail. once you breech the minus 5, it's almost impossible to turn it around. almost impossible. >> once comps fall by that much. >> we never mentioned the n

nvidia, which got some attention last night. >> they can raise all they want. they can't make it as fast as they need it they can't they've got, i don't know -- david and i were talking they could take the 10 billion they're doing a new model. they're doing nvidia ai. >> the annual address is more important than it's ever been from jensen where he gives you the state of the world. >> i got the exclusive. >> can i come? >> no. >> tonight, which i don't know you periodically mention benioff. >> can i come to that. >> yes i was going to do ulta, because they are going to have a lift. dollar tree missed the numbers strange day. we didn't get to amc i know you're going to be first in line at walmart for the amc popcorn. >> i am. i'll have my popcorn watching u d benioff. >> see you tonight, 6:00 p.m.

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we planned well for retirement, but i wish we had more cash. you think those two have any idea? that they can sell their life insurance policy for cash? so they're basically sitting on a goldmine? i don't think they have a clue. that's crazy! well, not everyone knows coventry's helped thousands of people sell their policies for cash. even term policies. i can't believe they're just sitting up there! sitting on all this cash. if you own a life insurance policy of $100,000 or more, you can sell all or part of it to coventry. even a term policy. for cash,

or a combination of cash and coverage, with no future premiums. someone needs to tell them, that they're sitting on a goldmine, and you have no idea! hey, guys! you're sitting on a goldmine! come on, guys! do you hear that? i don't hear anything anymore. find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. good wednesday morning welcome to another hour of

"squawk on the street" i'm carl quintanilla with david faber sara eisen has the morning off march not starting with any better direction than february hugging the flat line here on a day packed with retail earnings, some tech, echo data points and fed speak even ism manufacturing coming out as we speak and for that we turn once again to rick santelli. rick >> carl, we have construction spending and ism manufacturing let's start there, headline number been down under 53 months in a row, will it be four? yes, it is 47.7 is the headline 47.7 would comp in to our most recent month, which was 47.4 just to see how it dove tails in 51.3 on prices paid, that reverses four under 50s in a row, which is very good news

51.3 is the best in september of last year. employment 49.1. 49.1 that's the first month under 50 since november when we were at 48.9 49.1, obviously, a bit higher than that. and finally on the new order side we have five under 50, this now makes it six 47.0 for new orders. 47.0 fits in nicely with 42.5 to give you some context there. and finally, let's go back to construction spending, shall we? that's a january number, the ism were february numbers. for this expecting up two tenths, not happening. a negative number down one-tenth of 1% with a big revision from december to now minus seven-tenths and that would be the worst going back to august of last year, so we see that these numbers, for the most

part, have been a bit disappointing outside of the headline -- excuse me, outside of prices paid which went up but that's not the one we want to go up, carl prices paid is the one component we would have liked to have seen for a fifth month under 50 back to you. >> rick, thank you for that. rick santelli. busy morning in a blog post today, atlanta's fed president writes the fed needs to hike the funds rate between 5 and. 5.25 and leave it there well into 2024. he said it's too soon to ease up on the tightening cycle needs, to see a number of changs, better balance between labor supply and demand. slowing aggregate demand and easing supply chain disruptions and reduction in the breadth of inflation. he said it's possible to reach the target without a major turn

turn also kneel kashkari said he's open to 25 or 50 later this morning but what's more important is what the dots look like leaning towards continue to raise further. he says i'm conscious if we declare too soon, there's this flood of exuberance and then we have to do more work to bring that back down so we'll continue to doing what we're doing until we finish the job. echos of the early part of the year. >> and seems to dismiss the stock market in most ways. it's funny this institutional culture exuberance at any moment looking for any excuse to get excited. we can identify that. >> we've seen it firsthand as jim said earlier, the data is not helping here, in europe, certainly china. it's been across the board the last couple days. >> a lot of talk about reopening of the chinese economy and

refuelling of the chinese economy perhaps meeting if not exceeding their 5.5% growth targets. >> let's discuss further let me ask if you 24i think 5 and 5.25 is enough we've had a couple firms break out the 6 handle in terms of a terminal rate. >> we'll see how far they take it but i think the reality is, the economy is not that rate sensitive right now. and then suddenly it will become rate sensitive at once i think the fear is, the higher they get, the harder it is to get back to neutral when they have to. a lot of the data is not helpful in that regard, i think. >> when you say that sensitivity has a stair step function higher when and where would that happen >> think about why the economy

is not rate sensitive because balance sheets are not in great shape but as they run down and supply chains get rebuilt, in market demand is the chance of falling off quickly. so that's the overall reason >> that's one reason why some strategists say 2023 could essentially be made up of a first half in which balance sheets are resilient and a second half things begin to crack. is that your framework for the year so far? >> thank you for having me, carl broadly i think that's true. but i think where there's a disconnect is, right now equity markets are very too optimistic. leaving both risk on earnings and where valuations stand at this point in time as the rates market has repriced in the last two weeks, our sense of that risk asset, particularly equity haven't adjusted to the same extent. so that leaves us vulnerable to

more down side at least in the near term. and the recent earning season wasn't exactly comforting from that standpoint, and you saw a number of red flags, but -- so i think we're in a precarious situation right now. >> so what would be a valuation that would make sense to you >> okay. good question. so if you look at where we are in terms of inflation, interest rates and growth then we think fair value is 15, 15.5 the market is trading at 18 times on consensus numbers which, in our view, overestimates the earnings potential. if you were to use ourearnings estimates for this year, which is further, we're talking a multiple of 20 or higher than that so that's a problem. the other way to look at it, you look at earnings yield, which is the inverse of the p.e. right now and see historically what is it consistent with in terms of

the pce number that the fed looks at and today's p.e. of 18 is more consistent with a pce number closer to 2% meanwhile we are sitting at 4.5, 4.7% and the last disconnect i would say looking at equity risk premiums themselves and the relationship, for example, which is an indicator of future growt and that perspective there's been a disconnect and a diverse jens typically in a slowing growth environment, you would see the space widen. and you've seen opposite of that i think along multiple valuations look extended even as earnings has more down side to go >> tavis, finally i'm interested in your energy call because i know you're bullish in that one area we had another call for $100 texas by q4 today out of goldman, who's been hawkish. how does that work if, in fact, economic activity softens in the back half of the year?

>> supply is an issue. but i think the bigger issue is like, we don't know if the economy is holding better than you would think or not january numbers were bizarrely strong but we're going to find out in the next month or two. but if the economy is holding better than the economists would have predicted, energy demand, especially with what you have said about china is going to do well so it's the disconnect in the market you had the rally in cyclicals for the first five weeks of the year and energy plummeted. rallying and cyclicals because demand is going to remain strong despite high rates, the big disconnect is energy is going to recover. it's not right now for a number of reasons but those are all short term oriented. >> finally, one thing we were counting on was a spillover in goods and shelter, that some argue we're not going to get if you look at the revival in home

buying traffic and home builder confidence i wonder, do you think we can count on shelter to be the natural lagging element of rescue when it comes to inflation later this year? >> i think you know, it's a big component and that's important but i think carl, the bigger question is even as inflation falls what's the implications for earning. we have pieces that it's going to lead to negative operating leverage your rate of growth of cost is going to be higher than that of sales because companies are losing pricing power as demand moderates. but the cost base is more sticky so rents is one piece of it, but wage is another piece of it. as long as there's a revival in services that element is likely to be strong and wages, are not going to come down as quickly as what people expect i think what it means is that margins are going to be continuing to be under pressure. and they're not sure it's

properly appreciated in the market right now >> sort of explains how you get to your target later in the year good discussion guys, with a lot to chew on today good to see you. thank you. >> thanks. >> thank you for having e. mortgage demand from home buyers dipping to a 28 year low this morning diana olick joins us she has the numbers. >> reporter: mortgage rates moved higher again last week that continued the pullback from home buyers even as the spring housing market is supposed to be heating up mortgage applications to purchase a home dropped 6% last week compared with the previous weeks according to the seasonably adjusted index, volume is 40% lower than a year ago. and sitting at a 28% low this is the average rate on the 30 year fixed rose to 6.71%. that's the highest rate since november of last year. mortgage rates have moved 50

basis points higher in just the past month last february rates were in the 4% range applications to refinance fell 6% for the week and 74% lower year over year because there are very few borrowers left who haven't refied mortgage rates haven't done much but the rates appear to be higher after the brief respite we saw in january. >> appreciate that the road map for the rest of the hour we'll talk about elon musk trying to rally tesla shareholders at the company's investor day later today more on what that means for the stock. plus elliott management has nominated a slate of directors for salesforce's board that's ahead of the earnings that will be after the bell. ever wonder how much billionaires pay in taxes? we'll tell you later this hour big show still ahead stay with us

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tesla kicking off investor day today amid reports it's readying a revamp of the model y suv. let's get to phil lebeau with the day we've been waiting for >> we have been waiting for this carl i'm not sure we get much detail regarding the model y reported when we've seen revamps of tesla models it's working on things like the headlights, back bumper, et cetera.

let's wait and see with the model y. but tesla investor day, this is geared for wall street and investors, what they can expect from tesla and it's all about lower cost and higher production you'll hear that message time and again from elon musk today battery manufacturing is a part of this. how they can drive down the cost while increasing the production of batteries and what about the plant in mexico, yesterday the president of mexico said they're coming here. do we get details from elon musk today? and what happens with the tesla gigafactory in texas, where they build the model y, still see strong demand here in north america for the model y and the cyber truck later this year and ramping up deliveries going into next year. speaking of deliveries, the protection from tesla, the guidance for this year is 1.8 million vehicles though more than a few week

think they could get closer to 1.9 million if everything goes their way as they would like to see it go their way for all of this year. and finally, as you look at shares, david, of tesla, over the last three months. remember that with these events we see the shares tend to run up ahead of the event and then we see a selloff. will that be the case today and so much of the focus here is about battery production, cost and growth those are the three primary areas. >> got it. battery production, cost and growth wrote them down phil thank you. let's keep the conversation going as well. for that we'll bring in george naricus, a $275 price target and a buy rating do you agree with phil >> i agree and so do our clients. last week we created a bingo card and poll for our wonderful

clients and asked them of 24 possible topics what they thought the most likely were to be discussed and the next generation vehicle platform was the top of the list followed by mining and refining operations for the company and also a 20 million vehicle goal by 2030 you know, we've already had a couple of hints from elon musk about what he's discussing at the analyst day and it's about scaling to extreme size. this is about vertical integration, scaling and we think it's not just about evs. but really scaling the company to enable a sustainable energy future for earth, which is the way he describes it. it's all about batteries, all about more cars. all about maybe robot workers at mines and factories as well. >> so what's the key to scaling to extreme size? what makes that a reality? >> battery production is number

one. and with battery production you need to be able to refine materials. and the key material to making battery happen where there's a bottleneck is refining lithium we've seen hints that tesla is going to start doing that in the united states. so we expect a robust discussion around than and a robust discussion leveraging spacex and tesla -- >> what? bringing together tesla and spacex >> leveraging things between the two companies. we asked our clients how likely a spacex and tesla merger would be, they thought that was the least likely thing to be discussed. i'm not saying that's going to happen but we think -- because -- by the way, elon musk has eluded to the fact they expect to discuss spacex today we'll see what he has to say about spacex but this is my bet

not our clients, there will be more synergies extracted amongst the elon musk companies over the next five to ten years for sure. >> but not a coming together of -- one's private anyway but they bought one in the past. you see them sharing best practices or you're saying beyond that? >> best practices, maybe some technology i asked mr. musk, i think two conference calls ago whether he'd merge the companies over time and he said he's basically not warren buffett he doesn't want to combine into one superentity. but if you ask me over time that's probably going to happen. >> didn't mean to diverge. let's end here, what about a new lower price vehicle platform is that something that will get unveiled today >> i think it's highly likely. he's eluded to it several times

and it's the number one competitive advantage that tesla has, they've been able to engineer electric vehicles lower cost than the competition and number one and most important way to perpetuate and accelerate ev, so, yes. >> to get to that 20 million goal george, thanks for your time appreciate it. >> thank you. still to come, eli lilly cutting prices for insulin products today as we take a spill in equies, ti the 10 year yield with forehandle for the first time this year.

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welcome back to "squawk on the street" i'm dominic chu. stocks drifting lower almost an hour into the session including the technology sector but within that group and the s&p more broadly, solar strocks are the bright spots that shows a loss with the outlook coming out ahid of expectations it's also giving a boost to solar edge and end phase energy as well.

keep an eye on solar energy. carl, back to you at the new york stock exchange. >> dom, thanks so much. as we ed said earlier, eli lilly making headlines after slashing the cost of its insulin products meg has more on how this came about. >> reporter: lots of pressure and attention beingpaid to thi issue for years. lilly saying that it's cutting the list price of its insulins or some of the insulins by 70% these are multibillion dollar products that price cut is going to take effect in the fourth quarter of this year, also a nonbranded insulin cutting to $25 per vile from $80 and launching a bio similar to sanofi's lantus. and they'll be capping what people with commercial insurance pay to $35 per month this follows the biden administration capping at $35

per month for people with medicare lilly's ceo saying in a statement this morning while the current health care system provides access to health care for most people with diabetes it still doesn't for everyone and that needs to change we heard stories about people not affording enough insulin and having to ration it. more than 16% of people who use ins dinsulin did in 2022. the question has been is it the company, the middlemen that's causing higher prices. lilly pointed out it has not raised the list price of insulins in years. you can see the spread here the net price is what they realize, $43 in 2021 compared with $275 the list price now that's coming down to $66.

in a conference just now, dave ricks calling on the rest of the system to make similar moves. >> to my friends and colleagues running large companies or big employers we urge you to share manufacture rebates with your beneficiaries or employees at the point of sale and exempt insulin and other life saving drugs from insurance deductibles to make prices more predictable and fair. >> reporter: and called on policy makers and pharmacies i reached out to see if they're going to follow suit and react haven't hear back. one person we heard from, tweeting, the president of the united states, joe biden saying this is huge news. last year they capped insulin prices for seniors on medicare but there was more work to do. today eli lilly is heeding my

call he said others should follow and we have dave ricks on closing bell at 4:30 tune in for that. >> good. it'll be interesting to hear from him a number of other important drugs they have as well. thank you. let's get to the cloud names or at least we're going to get to them. results from salesforce, snowflake and more they'll hit the tape in a few hours. don't miss the top picks that'll be after the break back in two.

i'm contessa brewer here's your news update this hour. greece's transportation minister resigned saying it's his duty to step down as a basic indication of respect for the victims of a head-on train collision overnight. at least 36 people were killed when a freight train hit a passenger train. both were reportedly traveling

at nearly 90 miles per hour. a bipartisan group of senators is introducing a train safety bill in response to the detrailment in east palestine, ohio sher rod brown said it shouldn't take a disaster for congress to p partisanship aside and work for the people and chicago will get a new mayor. lori lightfoot conceded after failing to get enough votes for a runoff she's the first mayor to lose a re-election in 40 years. >> thank you an hour into the trading for the month of march so far it's not going that well. at least if you're long stocks let's get to bob to break things down. >> this is not good news weaker economy and higher prices, that's going in the

wrong direction. look at sectors, holding up pretty well about even on the advanced decline right now semis have been holding up pretty good. consumer discretionary under pressure, lowe's and target pressuring them. the do it yourself crowd but interest rate sectors down, real estate and utilities, a tough month in february. utilities terrible performers on the higher interest rates. that's continuing to march the big decliners, the diy crowd. the lowe's report not greeted well the two biggest gainers in february, tesla and nvidia, they were big super stars they are to the down side to start the year. the gainers for today, first day of the month, you see they're picking at some of the worst performers intel, conoco, gm and ford hope springs eternal there

two things with the stock market, nothing is working, no momentum at all in any sector, a big complaint among the active traders and earnings are in trouble with the higher rates we've seen we've seen earning s come down, we've talked about this a couple months expectations are expected to be up 1% for 2023 you can see it was much higher three or four months ago what's going on is a slow deterioration in the earnings situation. the question is, is this enough about 1.7% as you can see there. which scenario is right? the soft landing crowd is pushing the idea we'll have lower inflation and then moderating rates and they're arguing that's going to lead to earnings stabilizing in the second half of the year that's the argument of the soft landing crowd. the problem is the scenario is not developing in this direction. getting higher inflation and rates. and that implies that earnings are going to decline again in the second half of the year and

that is the problem with the stock market right now everybody is grappling with how much more is earnings going to have to come down at this point? the bulls say cheer up a little, bob, it's not that bad we did have a poor february, down a little over 2%, 2.6%. but year to date still up about 3% by the way, guys, david, the 60/40 stock portfolio up 2.7%. everybody wants to buy two-year tr treasuries, that's the hot commodity right now. >> can't blame them. given real returns i should say, bob for the first time in a long time thank you, bob >> i want to keep an eye on shares of salesforce the company is going to report after the bell but that's not the only reason we're keeping an eye on it as we reported earlier the large activist fund elliott has nominated a slate of

directors for salesforce's board, at least bringing the possibility of a proxy fight into stark relief for salesforce doesn't mean there's going to be a proxy fight. the nominating window is open until the 14th but it does appear to be a bit of a change in direction i've been reporting on this for some time now. you look at the board of directors, which dropped a couple of directors and added three new directors just today but the possibility has been there for elliott to nominate for some time. we've been aware of their presence here with a multi-billion dollar position. much of the position does include swaps and options but it's multi-billion dollars you can look at the large swarm as we call it, of salesforce activists at this point. started off with star board. but again, even as recently as a week ago, certainly two weeks ago, it appeared that elliott

and salesforce were having a constructive dialogue and were on the road to at least a settlement, perhaps it would have included a director or two nominated by or agreed to by both sides and other certain things that salesforce would have committed to it doesn't mean we're not going to see some commitments come along with that, as financial commitments come along with salesforce earnings tonight that's why there's great focus on not just the numbers they report but whether there's any other language associated with it margin targets increased over time much of that focus began last fall when we sat down with activists investor jeff smith of star board who said his hope was the company would focus more on profitability. >> you get bigger and bigger you can't grow as fast you have to drop to the bottom line. you add those two things together you get to a number as it turns ut, with their

peers, the median number's around 50% adding growth rate and profit margins. they, as a great company, they really should be at that number or higher, and they're not >> smith, along with many others perhaps hoping for as much as a 30 to 35% margin target as soon as possible from the company they have been and mr. benioff, the company's ceo, has been focused on margins ahead of revenue growth recently. there have been significant cost cuts that have occurred at the company and, you know, carl, we'll obviously be paying close attention to the report itself tonight and see if that has come through to the bottom line and if there's margin improvement but now whether they're going to get embroiled in a proxy fight >> a lot of the desks today say fundamental. the channel checks aren't that great. business continues to

deteriorate. and the journal piece, the line that stands out to people is the notion they didn't closely track how many deals each salesperson made and that sort of loss of focus on at least operational efficiency is why you have the activists so focused on margin. >> without a doubt in many ways smith i said indicated that early on, you can grow and grow but you have to execute in terms of delivering for the bottom line and there was a feeling salesforce failed to do that despite being one or two in so many different parts of the market. we'll see what we get tonight. but this is a change in tone i don't want to overstate it, but it did appear and my reporting was they were close to a settlement with elliott. now you have to say that's not the case but wait and see what we get tonight. >> not the only name we're getting by any stretch more on the cloud names reporting after the bell let's bring in john who says to

b buy octa we'll get to that in a moment but where are expectations going into this and whether there's any room to talk about pulling forward margin targets or ai or other things that are interesting right now? >> of course adds they say in ai, the stock will go up in that that seems to happen on everything in software carl, i think expectations right now are pretty low for salesforce this quarter at least on the top line anybody that's done any checks comes back negative. we do partner survey with over 50 partners and that's come back more negative than it's ever been at the same time, the way they guided, they guided as if it was going to be a disastrous quarter. so they may put up numbers that are pretty bad but relative to expectations they don't look

bad. they could even beat the numbers on this quarter. guidance for next year is another story, i think. >> we'll keep an eye on it a huge story octa we mentioned in the intro you have a couple names where maybe directionally the checks are a little more favorably. >> both octa and spalunk, it's better than they have been they haven't been okay for either of the companies but they're getting better both are trading at levels that splunk has appreciated a bit re recently okta is off the bottoms but at the levels splunk is probably going to put up really good this quarter and guide well next year but the year is going to be below the

street and we don't know how that's taken we've seen other companies do that and the stock rallies because people think it's derisked in this case we don't think it is we think there's a lot of ren renewals coming in, and if it's on premises subscription you don't get that up front -- you don't get as much up front recognition of license for that kind of business so the -- you're going to see significant deceleration and growth for splunk for next year. okta is a different story. guided next year and have derisked the guidance we think so they should be okay with what they print. >> one thing you write about before we let you go, deal closures in recent quarters you had customers of large vendors moving forward but that meant the next quarter didn't have closures so is it hard to model right

now? >> it is hard to model there are always shifts whether renewals or new deals that get pulled into a previous quarter or pushed out to the next quarter. we heard it with salesforce, be they pulled in to the third quarter, not the norm, usually that's the fourth quarter so we think that's why the fourth quarter was light and why they guided the way they did. it was a tough quarter, maybe tougher than they thought it was going to be. but we think the numbers will be okay there one we haven't talked about is snowflake that's also reporting tonight, another cloud vendor. that is interesting because they -- that's been -- we've been hearing about -- a lot about the top of the funnel, new deals coming into the funnel that's been drying up a little bit but this, for the first quarter we heard the ramp up of existing customers that usually take about three quarters to ramp up the full capacity and that ramp has slowed

now snowflake is a great company. there's a reason why it's the most expensive software company on a revenue multiple in the world. but if that starts to -- if their growth starts to wayin and that affects next year's numbers that could be an issue for that one too. >> yes several reasons to play attention tonight. thank you, john. appreciate that intelligence. >> thank you still to come this morning tensions rising between the u.s. and china after the fiery hearing on the hill last night more on what that means for competition. more on that with ajet pai in a moment ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪ ♪(lovely day) (lovely day)♪ ♪(lovely day)♪

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the bigger coup for the chinese communist party if tiktok is permitted to continue to operate in the united states it gives the chinese communist party the ability to manipulate

our social discourse, the news to sensor and suppress or to amplify what tens of millions of americans see and read and experience and hear through their social media app tiktok is already one of the most powerful media companies in american history and it's still growing. it's not just dances and kids stuff. it's becoming a major source of news for a generation of americans. >> that was former deputy national security adviser matthew pottinger during a prime time house hearing last night. it marks the latest bipartisan pushback against china our next guest has long warned about potential chinese spying, threats to the freedom good to have you

i assume you agree with what we heard mr. pottinger say. let's talk tiktok and the latest effort what chances do you think it ends up being banned in the u.s. >> i think there's a reasonable chance that this legislation or something like it could pass as it is. we've seen 30 stateis. we've already seen 30 state governments ban tiktok from state-owned government devices we've seen similar measures taken by certain federal agencies i think there's a growing and bipartisan recognition that tiktok is an app that's ultimately subject to the control of the chinese communist party, in one form or another. and that's a risk that many policy makers are not willing to take >> you know, when it comes to the broader debate or competition between china and the u.s., things continue to devolve to the extent that at least separate where do you see the ending? what would be an appropriate structure in your mind in terms of our relationship with china, when it comes to all of these kinds of issues, whether it be

espionage or just telecommunications and so many other things >> it's such a difficult issue and the reason is that the chinese communist party has really placed a priority on domination of certain next generation technologies, whether it is social media apps, 5g, artificial intelligence, semiconductors, and so i think the question for the u.s. government and for u.s. businesses, honestly is, how can -- to what extent can we rely on chinese-made components or relations with china being stable over the long run and those -- each of those issues is very much in doubt and so if you're a company or if you're a government that is relying, for example, on semiconductor availability in taiwan, the relationship across the taiwan straight becomes very important. if you're a company that relies on certain other things that are involved in 5g, for example, you can't rely on huawei or zte componentry. there are some really difficult decisions that have to be made about how do we onshore some of this technology or how do we find more allied countries to work with in order to bypass

some of the problems we see on the chinese mainland >> ajit, it's interesting, we've been talking about tiktok, obviously, now, for years. and it's always sort of framed in this nefarious sense, but i wonder if -- how you explain to viewers how that data is used, in my practical sense, and what the risk is because of that. >> well, i think the risk is that ultimately, tiktok is subject to the jurisdiction of the chinese communist party through the national intelligence law of china. and ultimately, any data that it collects could be requested by the chinese intelligence services and this isn't just a hypothetical recently, it has come out that tiktok surveilled some of the personal information of u.s.-based journalists to ferret out certain -- who was responsible for certain stories that were unfavorable to tiktok. and there are many, many other examples like this as well, about servers outside of the united states getting access to u.s. consumer's personal data. those are the types of things that we really are concerned about, and rightfully should be

concerned about. and i'm not sure if there's any remedy, to be honest, that tiktok had put forward that would satisfy the concerns of those of us that have long warned that that national intelligence law ultimately makes every single company subject to chinese jurisdiction an arm of the chinese communist party. >> i mean, even ajit, if they moved -- you know, all of their servers are out of chinese territory and everything else they've obviously committed to doing, that simply wouldn't be enough in your opinion >> i honestly don't think so i think the time has shown over the past year in particular, and you see the bipartisan recognition in the house select committee, that this is a company that is unfortunately has to bend to the whims of beijing. and over company subject to chinese jurisdiction is essentially in the same boat huawei, which is a company that we looked at very closely when i was at the fcc, zte, similarly all of these companies may have technology that theoretically could be neutral in its application, but in practice,

the chinese communist party is going to exercise every lever of control as it sees fit can that's just simply not a risk for the united states or i would argue, any other country that should be willing to take >> finally, you know, we've been watching restrictions put on the chinese availability to get u.s. technology obviously, we're trying to repatriate a lot of semiconductor manufacturing. do you see relations withering to a point where some parties, for example, take a south korea, needs to choose whose side they're going to be on >> well, i think that might come up in certain sectors. so, for example, when it comes to 5g, i think some countries, and this is an initiative started during the previous administration, of course, are starting to see that you really do have to choose whether you want to have secure componentry in your 5g networks or not and that's kind of more of a binary choice. but there might be other areas where it's not as cut and dry. if your supply chain relies on the components that just aren't

really subject to surveillance capabilities and things like that, you won't have to reorient your entire supply chain but i think the time is coming, unfortunately. and i don't say that with any enthusiasm whatsoever, that the chinese communist party has made a decision that it really does want to export its control over all things technology related to the rest of the world. and you know, on things like 5g and ai and social media apps, countries like the united states, south korea, and others are going to have to make this unfortunate binary choice in many areas and that's not the way that we want it to be, but unfortunately, given some of the risks that are involved, we have to make that decision. >> well, i mean, ajit, if you think it's bad now, listen, ai, chatgpt, obviously, i mean, the algorithm that has fueled tiktok's success has been ai generated. we're only in the early stages i don't know how much time you've been given to thinking about where we're headed right now and what bad actors might be able to do with ai and regenerative ai, but at least to a lot of potential not-great possibilities, doesn't it?

>> well, certainly, we've seen that the chinese believe that. they've banned certain chatgpt functionalties within the mainland of china, so they certainly think that there is something there that they are worried about. when it comes to artificial intelligence, given the fact that china has poured so much direct investment from the public side into these technologies, given the fact that they are using big data already for all kinds of nefarious purposes, whether it's surveilling potential dissidents or monitoring democracy activists in hong kong, we unfortunately are seeing the dark side of ai's application within the chinese main lapd i think there's a tremendous upside, too, to be clear but, you know, unfortunately, we are seeing that there are two different verdicts that this technology can be pursued in so hopefully, the united states and other allied countries and companies within those countries will pursue things in a way that promises benefits to consumers, as opposed to some of the risks that we see in the chinese mainland >> all right ajit, appreciate your time

thank you. >> thanks so much. as we head to a break, l lowe's is the worst performer during the s&p 500 today it was comments during the conference call, jim cramer highlighted them, particularly about concern about the consumer the stock before that was looking pretty son quawk on the street" continues in a moment. opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today.

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all right. i wanted to end on rivian, at least for this hour. you can see the stock down about 17%. this was once a $100 billion market cap company or more, down below $15 billion, of course deliveries, cash burn, really strong, or really high a lot of concerns there. let's get over to carl and melissa now on the floor. good wednesday morning welcome to "squawk on the street." i'm carl quintanilla melissa lee, what a treat for us great to have you. >> great to be here. and pretty interesting day as we set the agenda for this wednesday. bill nygren is with us why he favors banks, energies, and some durables. >> and the chairman of the select committee on china. mike gallagher joins us on what we learned in prime-time last night. >> later on, the strength of the