4% shall we take a look at oil or crypto maybe both wti at $76.63. show us a little bitcoin on the screen i think we're probably at 22,000 $2,408 fun week make sure you join us next week. "squawk on the street" begins next ♪ good friday morning, everybody, welcome to "squawk on the street," i'm david faber with scott wapner and mike santoli. we're live from post nine at the new york stock exchange. jim and carl both have the morning off. let's give you a look at futures as we get ready to wrap up the trading week 30 minutes from now. you can see we are headed for what appears to be a higher open and our road map this morning, well, it starts with fed speak that's in focus. the ten-year note yield, right around 4%, and the s&p 500 is aiming to snap a three-week losing streak. as for retail and the

consumer, costco posting an earnings beat but missing revenue. the company citing weakness in big-ticket discretionary items also ahead, new data indicating why tesla shares are more pop popular than ever among individual investors dow tracking for its first positive week in five. the two-year, that's the highest level you've seen since 2007 we can kind of get back to that year, try in my memory to remember that. >> what happened around then >> it was, yeah, the fixed income started to go a little -- >> felt like the last noncrazy year for a while >> yeah, it was, as we head into the financial crisis in '08, but mike, as we head into next week, what are you looking for >> it's interesting. the bond market has been the fixation of everybody, for good reason the stock market, the s&p 500's high for this year was a month ago yesterday, so, february 2nd, ten-year yield closes at 3.4% on that day ramps right up to 4%

everyone is repricing what the fed's going to have to do. we got our 5 to 6% pullback in the s&p yesterday. as yields were hovering, they didn't really come in much at all. i talked to you guys saying, yield looks a little stretched on the upside, probably going to be buyers at some point here in treasuries, maybe get some relief atlanta fed president bostic kind of gave an excuse for that, i think, but we can debate how much that mattered what we have today is the stock market kind of absorbed that yield move with that 5% decline and yesterday, maybe coincidence, maybe not, held around its 200-day average so, caused some people to say, we're not breaking down. you took what the bond market had to throw at it for now we're looking at a jobs report next week, ton more fed speak. so, in other words, it's very contingent as to whether or not we've repriced for where the economy is the january numbers, were they an outlier or a new trend? that's going to be, i think, where the suspense lies at the

moment >> that's part of what waller was talking about yesterday, almost the efficacy of what they've been doing are we really making progress, or was the hot data a blip are we making legit progress bostic, as you said, talked about '25, maybe, that made the market feel better yesterday, but i thought yesterday was pretty interesting in that you had the ten-year get to about 4.07%, and the stock market hung in there and it even ramped into the close as bond yields continued to rise. the two-year was, you know, not that far from 5%, and somehow, the stock market, mike, hung in there. >> it did. and you know, it's interesting if you're the type of person who -- and i tend to be more this type -- who says, what is the market trying to tell us the market, you give it some credit for being forward-looking and processing all the information that we know, and trying to essentially, you know, price a plausible scenario if you're that type, you're basically saying, as i said, historically strong january, after a typical classic textbook

october low, you had the momentum signals early cycle sectors like industrials and steel are actually outperforming, and you got the typical february pullback in other words, things are moving in a way that you shouldn't be surprised if, in fact, this is a decent shot at being a new uptrend. the problem is, all the circumstances around it seem extraordinary. how much the fed had to do, what they might have left to do, and i think that's the big question. with waller, you know, he's been saying, february comes in soft, we can start to say we're seeing moderating activity and maybe you can have a little more faith that inflation gets friendlier, but that's a leap at this point. >> scott, we got a lot of earnings we'll get through this morning, kind of a milxed bag, but i feel like we've heard more strategists recently talking about a market multiple that they say is a bit too high, given what they've seen from earnings so far and what their expectations are for the second half of this year. you obviously are talking a lot

of people during the course of the day as well. >> earnings expectations have come down, and i think the most recent estimates are around 222, something about that, where they started at 250 so, to your point, what multiple -- >> started like the middle of last year. >> yeah, but now they've come down, and the trend is that they're going to continue to come down, even while some still argue that the market is, you know, fairly priced where you are, even in a world where bond yields are where they are. i have had people who make the case that, you know, earnings aren't going to be as bad as feared, so the market is appropriately priced at 17 times-ish, where it was. it was at 18 now it's come down a little bit as the february pullback has taken place, but the expectation is that earnings expectations are going to continue to come down >> yeah. >> you, as an investor, have to decide, okay, what price do you want to pay for those earnings then >> really, also, the nuance of where the earnings are coming from and where the valuation

excess seems to be sitting in the market you see a lot of stuff tom lee talks about how you take away the top five stocks in the s&p or five or six stocks and it's like a 15 times multiple. in the top five, you have amazon, tesla -- top six, amazon, tesla, nvidia, all 40 to 50 times earnings. and then, microsoft and apple are not cheap. they're at premium multiples, and then, you know, you got berkshire hathaway and alphabet in there, which are more typical. that's one of those where if you want to ignore the very largest companies in the world by market cap, you can come to a more modest multiple. the s&p mid cap has been a great outperformer recently over the last several months and even over longer spans, it's 14 times. equal eighted s&p, 15.5. so, if you think that's okay where rates are, if they're not going to go too much higher, or if i'm leaning toward the math between stocks and bonds and yields and everything else is a little bit less precise and fixed than people pretend, then

i think you can make your peace with it if earnings are not just going to fall apart entirely >> to your point, too, and the analogy i made yesterday on half was, go down two different aisles, and you'll come down with two different conclusions if you walk down the airplane aisle, you're like, man, the economy is just unbelievable every seat is full everybody paid top dollar. if you go down the aisle at the grocery store, you got rodney mcmullen, who was on this network yesterday, maybe 10:00 >> i think it was in the 11:00 hour >> and says consumers are already acting like they're in a recession. costco sales were down consumers seem to be trading down >> not just seem to. i mean, we heard it from walmart initially as well. >> is the consumer as strong as it appears to be are you making your judgment from the casino and the airplane or are you making it from the costco or the target or the grocery store? >> also, what are you hoping for? if you're bullish. >> world peace is what i'm hoping for, mike, every day.

by the way, that would be really good if the war in ukraine ended. probably be a good thing >> it would be an excellent thing. if you're hoping the economic cycle lasts longer, you don't have a big employment effect or you're hoping for the market to do well, are you even hoping for the consumer to be throwing money at stuff >> the bulls are, because they say it's -- i have some that are on my program that suggest, see, that's evidence of a no or soft landing. the consumer's keeping you going. >> it's a backstop of the economy, but it's also the thing that's going to embolden the fed to say, we have more work to do. wages are growing too fast the jason firmen op-ed in the "wall street journal" got at that today soft landing is possible, but you don't manage for a relatively low possibility outcome. you say, what's probable is wage growth is too high to get inflation core pce down to where you want it. >> furman, i thought, was interesting, because he said,

don't wait for the lag effects just punch it now and punch it far. go faster and farther than people are talking about he's talking about 6% and doing 50 basis points in march >> this month. >> march 22nd or whatever the date is. that's an interesting perspective from somebody that comes from the administration that he was in >> he also says that you don't have to believe that january strong labor data was the trend to say, go 50 this time, because if you believe we're at a half million job pace a month, he said, the fed should go 250 in one step in other words, you're not panicking about one month's number to go 50. look, there's a case to be made, you just get where you need to go if you think it's above 5% and then just hope you have a little bit of traction and inflation comes in the right way >> there he is 4:00 eastern time, furman is going to be on today in "overtime" to get into more of his op-ed, which was certainly provocative, as you get a lot of fed speak today. there's like three, four, at

least, speakers. let's continue the conversation on that note with our senior economics reporter, steve liesman. steve, you got a lot to chew on between what bostic said yesterday, waller last evening, and then this op-ed from furman. >> yeah. i think that waller spoke in the direction that the market was already moving if you look at where rates were -- in fact, believe it or not, they're a little bit lower, but the damage has been done there's been, scott, you know, a dramatic rethink of the fed already. then you got furman, i think, somewhat -- what's the right word not hysterically, but a little over the top, arguing the fed should panic the fed may get there, but i think it wants to get there a little bit more slowly, in a measured pace, is what i'm hearing from fed officials it may be they need to do 50 and go back to the front end loading, but they are conscious of the idea they don't want to tank the economy if they can help it. scott, we have had a

100-basis-point rethink of where the fed is going to be at the end of the year, but the big adjustment that i think the market needs to make here is the idea that they have about 130, 120 basis points of cuts built in next year that may be the next big rethink. >> yeah. >> steve, i was going to say, i mean, and maybe this explains, too, why the markets have been okay with the -- personally, i don't think that right now the stock market is where it's at, because it truly believes that rate-cutting is going to happen, and it's going to be in a good scenario if it does happen, but i'm going to work a new metaphor for you, because i can talk baseball with these guys if you're a center fielder and the ball is hit way over your head, what you're taught to do is, turn your back on the ball, run as fast as you can, sprint to the area you think the ball is coming down, then turn, look for the ball and adjust slightly to see if you're in the right spot or not. i think we're in the adjusting slightly part. last year was the sprint and now, it's about, okay, we see where it is, maybe the wind's going to carry it a little farther, we're going to

have to back up more, but it's still happening in an incremental way and not in a, "we have to race to catch up with something we may not be able to grab." >> first of all, mike, i was taught to keep running and catch your ball over your shoulder like willie mays >> the only one who did that was a alan greenspan >> i think the idea here, scott, is that the market's doing a lot of the market for the fed. the problem i have with jason furman's article is he gives no credit for inflation actually having come down remember, we were at 9%. it has come down some of the forces are out there. shipping costs are down. i actually think china coming back online for the u.s. is likely a disinflationary phenomenon, not an inflationary phenomenon, but i've got great respect for jason on this. the center of the fed right now is to go a quarter and see if

some of that data is revised from january down a little bit or if it's more a weather-related phenomenon the economy looks like it's slowing. you've got enough mixed reports from folks out there waller was very serious yesterday, very, i want to say, moved by the data in the sense that he was sort of out there, everything we thought before was wrong and there have been some revisions, but i just don't think that that's where the center of the fed is right now i think they're more, get back to a place where you can field the ball in a nice easy way. >> i think, though, steve, that waller's commentary was somewhat provocative in i felt like it was questioning the efficacy of all of what they've done to this point. you know, is it really working that last, you know, the data of late has been so strong. was it a blip? are we making progress or aren't we and i wonder how pervasive that kind of view will become if the data remains hot >> yeah. i agree with you, scott, that he was sort of, is this the right

way? is this working? but remember his conclusion, scott, is if it's not, it's because we haven't done enough there's also another idea out there, which is that the fed may have little control about what's happening with the economy right now, because it's still just the adjustment from the covid lockdowns and coming back, and there's still a lot of hiring that's related to that there's still -- you still have crazy, wild swings in inventories, companies getting their inventories right relative to sales you have massive savings that are out there. it may be that the fed's best course here, scott, is to do the best it can and keep rates at a relatively high level, but not to panic here because there's still a lot of adjustment to happen in the kr eeconomy. >> steve liesman, thank you very much still to come, another busy day of retail reports. costco and nordstrom are on the move take a look at the futures look like we're going to open higher, and we still will, according to how it looks now. dow jones industrial average would be higher by about 150 or so

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let's get to another busy day here of retail reports we're going to be digging through. we'll start with shares of costco, you can see, they may be down as much as 2% it did report what is a revenue miss in its fiscal second quarter. of course, scott, you were talking earlier about tradedowns we heard from rodney mcmullen yesterday in the 11:00 hour of

"squawk on the street," talking about a perhaps weaker consumer. really started with walmart having a good quarter but in a sense also remarking quite a few times on those store brands, those walmart brands, picking up share, in part, because people are being more aware of their budgets. >> yeah, and i feel like almost everybody is singing that same tune, david. nordstrom, too eric nordstrom, when we look at our customer cohorts, it's pretty clear the customer across the board is challenged. i mean, i feel like almost everybody who's selling goods is thinking about that. you know, the apparel retailers have had to mark down a ton of stuff, because they have had too much inventory the question is, what happens to their margins as a result? have they cleared all that issue out? something that target had talked about, walmart had talked about for the better part of last year are we past that now or not? >> it seems like we're not exactly past it. i think the bigger issue is, when you have at least certain consumer categories that are

either stressed or trading down or getting a little bit more cautious, nothing happened to the cost increases that these retailers had to do last year. there were big minimum wage increases that came through in some states and started this year i think that's the squeeze that's why the investor base is a little bit cautious on things. you know, you get to a point with a costco where it's always an expensive stock, everyone knows it's really well managed they don't really run the company to fatten up margins, even in good times so, they're kind of built for this environment, but still, if topline is looking like it's going to have a hard time growing as fast as people had anticipated, that's where you get a little bit of a backing off of the stock also, february comps, people focused on as well pacing, you know, in a way that is below expectations, so it wasn't just the actual financial results. >> yeah, 3.4% for four weeks in the u.s., 3.5%, but still, you know, again, for the last 12

weeks, we're talking 5.7% in the u.s. >> which sounds great. >> right >> so, you're kind of -- you're kind of, you know, essentially getting the aggregate price gains that we're having throughout the economy not to say that's where it's all coming from. i'm sure they have traffic growth and stuff, but i think that's why it becomes a tougher fix to buy costco at, you know, the 30 times earnings you always have to pay for costco >> maybe not a surprise. i don't know jpm today upgrades both procter & gamble and kroger to overweight interesting to watch it. and david -- >> i thought the kroger call was interesting in the sense of saying, like, look, clients, jpmorgan's clients, expect deflation to basically hit those categories, food categories and essentially really pressure kroger's numbers they're saying it's probably not going to happen this way yes, there are episodes where it does it's more likely disinflation, and kroger trades near its 20-year low in terms of pe >> speaking of businesses,

david, that have large food portions, walmart, a company you know better than probably anybody based on the -- >> it was a long time ago at this point >> institutional knowledge >> sometimes yeah >> walmart's ceo, doug mcmillon, plans to stay in the role at least three maore years accordin to "the wall street journal. >> he's 56 i don't think it's considered a big surprise that said, he has been in the job for sometime i can remember his predecessor, mike duke. that was a long time ago he has presided over a significant change at the company. obviously, vastly increasing their digital business and their distribution and doing a lot of other important things, wages have come up substantially for many of their employees during that period of time. i think generally thought of as a very strong ceo, and so this does give them more time to consider succession, which, as we say many times, is probably the number one role of a board of directors from all the things

they think about it should be getting succession right. unfortunately, they often don't. >> that's right. >> all right, still to come, a new note from morgan stanley on apple, saying there are "unappreciated catalysts that support the stock as its top pick." take a look at futures once again. we're going to open higher on this friday across the board more "squawk on the street" when we come right back we need more ways of connecting with customers, fast. i know some consultants with great ideas. can they help us improve our digital experience? absolutely. they've invested over $2 billion in tech. that could really help us manage inventory. and save us a ton of dough. then let's take back our market share. checkmate, chess heads. girls, i said “bedtime”! what if you were a trendy apparel company facing an avalanche of demand? to ensure more customers can buy more sherpa-lined jackets, you call ibm to automate your it infrastructure with ai .

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yesterday's session after dropping nearly 6% following its first investor day mike, in a story today in "the journal," tesla's stock more popular than ever among individual investors you've had an unbelievable amount of money pour into this stock already and we're only talking about the first few days of march year-to-date, $13.5 billion. all of 2022, $17 billion from individual investors, according to vanda research. >> it is amazing we did see this fever really get to a high pitch in late 2020, into 2021, on certain days, it was -- tesla's trading volume, and still to this day, is sometimes just multiples in dollar value of what any other much bigger company is that was a huge chase, and hype cycle going into the investor meeting, so that was part of it, i think. you had people kind of really building up the enthusiasm we had disappointment yesterday, backing off the stock. it is interesting, though, because the set-up was so unique

in terms of how tesla got sold down so severely into the end of last year. >> so, it was a hundred bucks at the beginning of this year amazing. >> exactly so, now, it's -- i think, you know, it's never that easy to put on a couple hundred billion in market cap, but that was the easier part. you go above 200, and it starts to get real in terms of where the chart has been and just, i guess, finding sources for that enthusiasm we've talked a little bit about how the daily options trading surge has really exploded, so you have these sort of one-day options or options that only expire at the end of the day names like tesla, where there's high volatility, and you're basically just sort of day trading the, you know, the sort of second derivative of the stock move has been pretty active i guess it's always one of those things, does this mean there's huge public sponsorship for this stock and company? or is it kind of overexcited money that doesn't really know what it's doing? >> yeah. daily trading. daily options exploration. >> zero data exploration

>> yeah. >> it's the vast majority of the flows right now. >> so interesting. well, you heard the applause building here, of course we're going to get opening bell in 15 seconds. actually, five seconds take a look at the cnbc realtime exchange of course, we expect more green on the board celebrations here, "time," its 100th anniversary. owned, of course, by marc benioff. also known as the guy who runs salesforce over at the nasdaq, the world's largest agricultural input retailer, celebrating a listing via spac yes, there are still spacs out there occasionally, and occasionally they still close. it would seem more often they liquidate. >> a spac? what's that? >> you can find them most of them below ten, but you can find them. guys, we had a lot of different earnings jump ball into where you want to start, whether it's hpe. we are going to be joined by

antonio neri later in the program. all significant players in technology, kind of seeing different responses. >> broadcom is the leader in the s&p out of the gate, up about 3% and i think it was a pretty reassuring report, pretty much across the board obviously, a more diversified and steadier player within semis, a lot of software business there, but it definitely sort of delivered they also tried to quantify what they're seeing in terms of hardware-related demand for a.i., so everybody has to have a nod in that direction, and they're trying to isolate exactly if the end user is actually building out those capabilities but it seems like right now, you know, again, this is a capital return story, always about dividends and buybacks and maybe deals down the road, but the symptom up about 3.1%, trades at discount to the market kind of a typical kind of slower story, but one that's a little more defensive than the other names like nvidia. >> they're still in the midst of

completing a deal as well. that's significant >> it's also a.i., a.i., a.i. with seemingly, you know, anybody who can talk about it, including hock tan, of course, of broadcom. let's listen to what mr. tan had to say, the ceo. >> i think it's still early innings on generative a.i., but we obviously are also indicating we're seeing a very strong sense of urgency among our customers, especially in the hyperscale environment, to be -- to not miss out -- not to be late in this trend >> i mean, david, it's the buzz word of the moment >> it certainly is and i think it will be for quite some time. of course, i'm just struggling to understand all the implagues of implications of it, as are so many others, whether they be leaders of businesses or investors as well. referenced a note to barclay's,

coming back to one of the central themes we've seen play out in the marketplace in terms of chatgpt and the implications of that. consumer-led technology at this point, namely on alphabet. google and microsoft, barclay's, for its part says -- and it's an important point here, guys legacy web search is cheap, right? >> exalyh chatgpt, they just cost more. it's a lot more computing power, ten times the cost of the old ones, and they say that hasn't been explored in detail as the idea of google losing query share and how that might impact the overall profitability of the company. but again, most of the zero-click searches today transitioned to a.i.-assisted results and it costs ten more times on you locating a specifi, which is interesting, because you know the way that's going to be spun, you know, on wall

street is, well, this might mig, and therefore, spend and invest in their platforms and buy the hardware and make their -- get scale and try to be as efficient as possible to see if it's economic so, there you go that's why the chip makers and everybody else seems like the immediate kind of high-confidence beneficiaries, put it that way. >> i just want to mention, since we're talking about chip makers, amd, which had a nice pop yesterday, our reporting of a passive stake, a new passive stake from third point and daniel loeb. what i thought was interesting was the prior position in intel in which they're, like, look, we want you to do more to be more like amd they're eating your lunch. and then it's like, you know what, intel? forget it. now we're just going to buy amd. we'll go where the winners are it's just less headache and hassle, and maybe representative in some respects of a stock that, you know, amd was, what, 80 bucks

now it was, i don't know, the october lows, it was in the 50s. >> it was. >> and they saw that as an opportunity, and started buying it when it was down, and it was, what, in december, it was still in the 60s low 60s. and here we find ourselves, giving a little bit back today but on the doorstep of 80 bucks. >> one of the many investors who benefitted from the increase in the stock so far this year and to your point, $128 billion market value, versus intel, which is down 1% -- a little over 1% this year, and once-mighty intel has $107 billion market value, trails that of amd by $20 billion. we can all remember the days when the question was simply, why is amd even around, just to give cover to intel on the antitrust front? >> got to keep them alive so they don't come after you as a monopoly exactly. but also the stock, especially at the lows, but even now, it's really more in a normal valuation range than it used to be you had to pay up for the

growth it is a bit more of the normal zone little bit off the, you know, the tech stuff i was going to hit hormel, which got a downgrade today. yesterday was one of the weaker stocks on core earnings. it's down almost 11% this week and it represents a lot of what's happening in consumer staples where they're still dealing with supply chain stuff, margin issues, pricing they got last year, they're not going to have as much of it with hormel in particular, jpmorgan saying the balance sheet isn't as pristine as it used to be the planters acquisition, remember, they bought the nuts business from kraft heinz, and planters seems to be losing share. they've been very high dividend payout ratio now, over 60%, which they can hand, but it sort of shows they're not as financially flush as they were at some point. also, of course, not a cheap stock. all the staple stocks. and staples have really underperformed even though people are nervous

about the economy, rates have been taking their toll on that and the fact that margins are eating into what they managed to reap last year >> since you're talking about staples, i know we mentioned it in quick passing, but that procter & gamble upgrade, that stock getting a little bit of a bump since we were talking about intel for a minute, your read on dell, both dell and hpe. pcs, as we know, have been horrible enterprise has been holding up okay is that the tale of the stories there? >> yeah. i mean, hp, obviously, is enterprise we don't want to confuse it with hp ink, which is the printers and pcs, and we'll be speaking to antonio neri who took a lot of questions about a.i. and what are the implications for their business we're going to be asking about that but, you know, dell is down a little bit but not bad. not bad in terms of the quarter. deferred revenue, $30.3 billion,

recurring revenue, $5.6 billion. that was up 12% year over year cash and investments up, and they did increase the dividend by 12% i got the stock down -- let me look here but i got it down very little at this point >> quarter percent, maybe. >> barely that obviously, hpe, you know, not bad. up a little over 1.3%. their revenue was 12%, 18% when adjusted for currency of a beat and a lift of guidance, and we'll talk to neri in a little bit as well, get a bit more on that quarter >> looking at salesforce, guys, by the way, up again up 1.25% after one of the best days it's had in an awfully long time carried the dow for much of the day yesterday before, again, that late-day surge. but we just talk about "time" magazine, you mentioned benioff's name >> i did

>> they hoped the market here at the new york stock exchange, but it's been a good couple days for him in their puckbackshback agat the activists. >> he was talking about the activists being like ice cream, they all come in different flavors. those were his words, not mine >> he's hoping they melt away quick. >> given the move in the stock, you might expect some would take the opportunity to take some profits. that's not my understanding, and again, we are keeping a close eye on elliott, because, of course, as we've said, they've nominated directors for the board and there is an expectation that they still will be willing to go to a proxy fight, despite what they did laud as the goals that the company now has in terms of margin improvement, which is far above where they had been previously talking about 27% near-term and 30% by, really, what calendar year -- fiscal year '25, which is a year from now >> next year they're in fiscal '24 now. >> that kind of gets where a lot of the activists were looking

for, but you can get a sense here in terms of what we're talking about with salesforce. >> 50% off the low >> up 40% year-to-date >> it's all happened in the past several years. absolutely i was going to take a -- i don't know if you looked at this commercial office reet downgrade. real deep dive into lease rolloffs, refinancing risk, a lot of them have floating rate debt, and the fact that, you know, it seems as if the vacancy rate might not even peak until next year. people, obviously, the way that the lease cadence is, and even though the office reets -- s&p 1500 office reets sub sector is down 40% in less than a year basically saying, there's still downside based on where their balance sheets have to go. the payouts are going to be. >> we all know what's going on to the extent that people don't

come to the office as often as they once did. a lot of companies grappling with how big a footprint they need but particularly, guys, it's not the a-buildings, for example, hudson yards here in manhattan, which, you know, has square foot equivalent to most cities -- what they have entirely, it's doing okay in many ways. one vanderbilt at grand central, doing pretty well. but if you have a b-building where that is, you know, a decent percentage of your portfolio, mike, you've got some issues real issues in terms of occupancy, and therefore, what you're going to do, because, of course, you have a significant mortgage on it you may be in a position where you're unable to pay it and it's like, okay, bank, you figure it out. >> that's right. i think this pimco-owned building default kind of spooked some folks bmo also saying slg, s.l. green, most at risk in 2023-2024. looking to sell $2 billion of

assets that's the position that you say. >> and sl green again, they do have a lot of "a," but they got a lot of "b" too i wanted to come back to tesla if we might, just because, why not? it's the most followed company by all of retail, as review learned. stock is up 1.4% after what was a significant drop in the stock yesterday, perhaps some have called it on disappointment that more wasn't shared at tesla's investor day meeting about the next model that will be coming but something that i had not focused on until later yesterday, guys, and i don't know if you saw it, but it gets back to a.i. and certainly some concerns that certain people might have >> yourself included >> he's talking a lot about robots i don't know if you caught this. the humanoid robot they're developing there at tesla, it's improved a great deal in six

months the sort of exponential change going on there take a listen to what musk had to say about how many robots there may be at some point in the future and what that they mean for the economy >> i think we might exceed a one-to-one ratio of humanoid robots to humans it's not even clear what an economy means at that point. since an economy is output per person times persons, but if output is much higher and there's no limit on persons, then what's the actual limit on the economy? >> i mean, output per persons times persons is just output, for one thing. but nonetheless, what he's saying is -- >> don't let the facts get in the way of a good sound byte >> are you questioning musk? >> only his math at this point he's very concerned about underpopulation in parts of the world. >> he's concerned about

underpopulation, has taken it as a personal campaign of his own >> doing his part. >> i mean, we're all going to have our own robot until, of course, they take over, which is clearly going to happen. >> didn't you guys play a sound byte too yesterday from him calling a.i. dangerous i think that was the word he used >> without a doubt and he said he had a role to play in that, and he kind of regrets the fact that he did accelerate it. he's worried musk is worried. he's not going to stop him from making robots, by the way, and at some point, the ability of them to master these skills being able to do this, it's coming and he won't have any human beings in his plants >> i don't know. they haven't perfected full self-driving cars, so maybe things take longer than he, in particular, anticipates. >> that would seem to be true. >> one-to-one, though, mike. one-to-one eight billion robots >> wow >> tesla's up 2% let's take a look at apple >> i was going to say apple. >> go ahead. >> it's up near 2% as well morgan stanley with a positive

note out there they have it as their top hardware pick for a variety of reasons. i spoke with the analysts the other day who had taken over coverage from katie y huberty. as a matter of fact, that particular analyst was talking about a.i. being an opportunity to add an additional trillion dollars of market cap to apple shares so, you go to, like, $3.3 trillion at that point. >> yeah. which, of course, is going to make it tougher for tesla to become bigger than apple and aramco combined, which i think is musk's goal what i do think is interesting about the apple note is he wants to point to specific, discrete catalysts that are out there, including ar/vr. you want to own the stock six to nine months. it's always about pushing it ahead. this is not a high-growth year earnings-wise for apple. you don't just buy it because

it's reliable and the yield and everything else. it's more, there are some catalysts. so, right now, he's got traction with 2%. >> all right guys, we're going to have some breaking news on services pmi and for that, we'll go to rick santelli good morning, rick >> good morning, david we have two sets of service sector pmis. this is the first from s&p global, and it's a feb final, which means we take the mid-month read and toss it, and in this instance, the mid-month reads were quite important they reversed a seven-month stretch of under 50 in contraction, but they remain above 50 50.6 on the services pmi replaces 50.5, and as i referenced, we haven't been above 50 since june of last year, which is where we comp to. same could be said for the composite. 50.1 the only difference is that the mid-month read was 0.1 higher on the composite. as i said, both the best since june of last year, and we'll

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take a look at the top laggards for the week on the s&p. led by dish network. we've talked a bit about that. of course, the company's continued those roll out a 5g wireless service nationwide and the capital that will be needed to do it a key question for many investors. we're back right after this.

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welcome back sports leagues and teams are trying to navigate this new world of gambling partnering with casino and gaming companies. contessa brewer is live with more good morning, contessa. >> hi, scott it's great to see you today. so i have to say that when i'm sitting on this panel with caesar's ceo tom reed, on the panel with fanduel's ceo amy howe and the president of the

pays jonathan kraft, i was thrilled to be talking about the launch of massachusetts mobile gambling next week because all three of them are interested, they all have a stake in this game jonathan kraft, president of the patriots, said he is thrilled about the opportunities of increasing fan engagement. listen to this. >> we love it because now something that wasn't legal is legal, but it drives engagement in our business and from a data standpoint, it views properly and i think there's a lot of great information there to enhance our product. >> reporter: and a really interesting moment because kraft was an early investor in draftkings in 2012 yesterday fanduel announced it's now 50% market leader across the nation i asked kraft, did you bet the wrong horse? he started laughing and then here's what he said. >> i think for mobile it's a

three-horse race in the u.s. it's fanduel, it's draftkings and i believe because fanatics is a digital mobile first company, with a huge database and knowledge of sports fans and what they want, they started taking their first bets yesterday in tennessee if we were to wake up three or four years from now, i believe those are the three people who dominate the mobile space in our country. >> reporter: and amy howe told me there was a real inflection point for the industry once the nfl really wept out and embraced gambling and gambling partners and today that drives a lot of fanduel's business >> one of the biggest questions i get from investors, are you going to go out and acquire casinos. you have a structural disadvantage you don't have the database. >> are you >> no. i don't want to ever own casinos. that's not the business we're in >> reporter: by the way, i asked

tom this morning on "squawk box" if he's in acquisition mode. sort of played coy and sidestepped that question a little bit what's clear is that the industry trend is to bring tech in-house they are really working to innovate their technological platforms so that every time they have a chance to acquire a customer it's working the best for the customers. william hill, the business that caesars bought, had a problem with that in nevada. caesars has been trying to move to a new technology platform and the regulators have not been keeping up that's a challenge regulators factor into the business bottom line for all of these operators. david? >> contessa, thank you so interesting to hear those per spktives fanatics, have to keep an eye on that as well and michael rubin all right. still to come don't miss our interview with the ceo of hpe. up after an earnings beat. we'll be right back.

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. good friday morning. welcome to another hour of "squawk on the street. i'm david faber with melissa lee. carl and sara have the morning off. live from post nine at the new york stock exchange. we have an up market so far as you see. fairly significant one when it comes to the nasdaq with a 1% gain ism services was just posted moments ago and let's get to republic rick santelli for that. >> yes david, this is additional packet of ism services we were discussing earlier these are from ism february read, 55.1. sequentially following 55.2. besting expectations we were looking for a number around 54.5. 55.1 the best number going back to november of last year in between we had december at 49.2 that was the weakest since may of 2020. on the prices paid, remember this is prices paid. if this goes up it's not good, if it goes down that's good.

65.6 definitely lower than january's 67.8 that is a good thing on prices paid and 65.6, well, it is the lowest level going back to 65.1. that was january of' 21. this is definitely a nice improvement. if we look at employment, knowing that next week, one week from today, we'll be getting the big jobs report, employment 54.0 sequentially following 50.0 and 54.0 on this one is the best going back to, wow, quite a ways, to survey says, december of '21 new orders, 62.6, besting 60.4 our final read from january. we see that interest rates on the 10-year are hovering at the 4% level and keep in mind, that means they're only down 6 on the day. they're up 5 on the week back to you. >> yeah. just above 4% right now.

rick santelli. we're 30 minutes into the trading session. here's three movers we're watching this morning. shares of software provider c 3 ai surging after narrow than expected losses, stock up triple digits this year even with today's move it's 20% off its 52-week high the short interest there is above 25% or shares outstanding. broadcom another one we are watching also higher the chipmaker beating system, strong outlook given by demand for a.i. products. finally costco one of the biggest laggards on the s&p. the retailer missing revenue estimates. craig warning they've seen weakness in discretionary items. we're hearing mixed things about the consumer, but basically the overall theme is, people are minding what they're spending, buying smaller formats that's what we heard from kroger yesterday. smaller packaging. costco is big format it's also trading at a premium. >> always has.

>> sort of as morgan ike santol pointed out. own separate thing with costco with margins, very steady employee base and still at $215 billion market value sometimes people forget just how large this company is. to your point, there's, you know, a lot of focus as you might expect on the consumer despite strong job growth or certainly lack of joblessness and wages moving up. you reference rodney mcmullen from yesterday, a guest with i think you guys on the 11:00 hour talking about the fact that customers are doing things to stretch their budgets. >> right one of the pressures here is what we're seeing today in the bond market, what we saw yesterday in the bond market in terms of being above 4% on the 10-year yield. the cost of debt servicing higher for the consumer when you have credit card debt at record levels, prepandemic levels, you have auto delinquencies rising

at this point and just the payment on credit cards much higher in general. forget the mortgage rates. people have locked in a rate so they're not feeling that yet not feeling 7% because they're not looking. they are feeling 20% on their credit card versus 15% and go down the list in terms of an auto payment, 6% versus 5% it goes on and on in terms of the pressure building for the consumer not to mention gas prices have gone up. another tax on the consumers when it comes to discretionary items, one of the number one things that influences whether the consumer is going to buy that extra sweater, nice plaid blazer et cetera. >> right what does it mean for the fed's view of inflation and, you know, in terms of where it stance right now and that weakness of the consumer does that mean they back off at all. >> it's a thorny issue and we heard fed speak yesterday. if we had given you the fed speak, david, would you have

guessed that markets would have gone to session highs off of it or the other way i think that's sort of the interesting question it went to session highs, even though we heard waller, for instance - >> 5.4%. >> or above. >> or above. >> i know. >> i would go back to jamie dimon, not a fed member but from last week's interview with jim cramer, talking above 6% as a potential at least in his mind as a terminal rate. >> right. >> that could make the second half of the year look different than people think. >> very different. >> if it bites hard. >> let's take a check on the markets where we stand gave up a little bit of our gains after the data, but pretty much, you know, green across the board. nasdaq up 0.8% the s&p higher by 0.5% 10-year yield 4% let's bring in art cashin who joins us on the news line. it's always great to get your perspective on things. what do you make of all that fed speak yesterday and where the markets stand today?

>> first of all, i hope you're getting overtime they have you carrying the ball day and night these days the fed speak yesterday, i think people might have overrated bostic a bit yes, the stock market moved up, but i think part of that was internal if you look at what happened with the dollar and to some degree what happened with yields, they did not move markedly after bostic, but we'll get a chance to see that again he's going to be talking late morning along with one or two others and through the conversation you and david were having about the impact of higher rates, keep your eye on the commercial property area we had one big default yesterday and with the three-day week going around, i think commercial property is going to be a problem. we've got a bank of japan

meeting coming up with rumors they're going to change their negative interest rate policy and, guess what, the fed has stopped being an aggressive buyer of u.s. treasuries and if the japanese people stop being an aggressive byre, that's going to force rates and yields higher too. >> you mentioned that, art i would love to come to you on qt i feel like we don't talk about it or think about it as much as we might you raised that prospect it's going to start to bite a bit more as we get towards the end of the year if they continue, obviously, to reduce the balance sheet? >> it is and it's been a little subtle, david, because, you know, they talk about it, but they're implementing it rather slowly. you know, we've gone from, you know, in the trillions down merely -- i bite my lip when i say this -- merely a couple hundred billion, but i think

yeah, i think everybody is watching interest rates and what's happening behind the scene. the quantitative tightening, the money supply dropped the greatest any time since the great depression now they had shovelled money in, so it's not going to be dramatic immediately. i think we've got all these tiny ticking time bombs to keep an eye on yes, i agree with you, people aren't watching qt as closely as they should. >> art, going back above 4% was a moment in the markets in we all were observing very carefully and granted, we simply reclaimed a level that we saw, you know, in the fall, but still, markets digested that move well. you say there's actually a level that you're watching on the 10-year yield in terms of where the markets will find trouble? >> yeah. if it gets back above 4.10, i

think that will begin to put pressure on it we were ready for an -- actually significant almost climatic test yesterday, and salesforce threw a major curveball to the market. one stock at one point put almost 200 points in the dow to close, put over 120 points in, when everything else was selling off, we were going to go for that test of the important level of 3925 to 3940, and we got turned away. now we're back above 4,000 lot of resistance here between 4,000 and 4025 so the viewers have places to watch. watch the yield, if it gets above 4.10, you watch the rally, can it get above 4025. or will we reverse

i think by my -- working on my cocktail napkin charting process it looks to me like the bounce we got out of salesforce yesterday, the influence in the market, might carry on until maybe tuesday of next week and then i think we go back to putting pressure on the market and retest lows. >> by that time we're looking ahead to the jobs report i mean, how do you think traders will position based on the fed speak we've gotten >> it's going to be critical to see some sort of moderation. we don't want to see such a strong number. we, meaning the generic markets. >> yeah. well, they -- you know, the fed speak again, you know, bostic was somewhat milder. he was talking about 25 basis points here's the problem for them, melissa. they made the mistake, if you would, of beginning to decelerate they went for 50 down to 25. if you react sell rate, go back

up to a 50, that tells the market there's a good chance you made a mistake it's a kind of uh-oh move. they're going to move heaven and earth not to have to re-accelerate. that may mean that you continue on the longer side three 25s maybe four 25s the fed is in a psychologically difficult point here about re-accelerating. >> that's a really interesting point. it's always great to get your perspective on things. art cashin. >> my pleasure >> as we these break let's give you a road map for the rest of our hour while consumers may be pulling back as we discussed, hpe is not seeing a slowdown in the enterprise we're going to break that down with the company's ceo antonio neri. >> plus we go live to beijing as china braces for its biggest government overhaul in a decade. the k webb seeing the best week in two months.

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those smiles. that's why i do what i do. that and the paycheck. . this is a dramatic change and people should get really geared up for how you can use a.i. for good. it can be used for bad there's an arms race the bad guys will use it too. >> the a.i. technologies have the potential to be very, very transformative. >> i'm a little worried about

the a.i. stuff it's quite a dangerous technology, and i fear i may have done some things to accelerate it. >> the data that we train things on, the particular algorithms that he develop that may be evil, that may be used for evil purposes, so i think that it's very important and there's rightly a lot of focus right now on, you know, the kinds of data that's put into these systems and what kind of behaviors from the systems that elicits >> all right the a.i. arms race is officially on analysts from morgan stanley, for example, see it as a $6 trillion opportunity want to read that report over the weekend. fueling massive investments from a broad range of companies and emerging as a growth, a bright spot at least, for the semiconductor industry but the ftc this week is warning

companies, don't oversell your a.i. capabilities. joining us now is the ftc's bureau of consumer protection director sam levine. good to have you, mr. levine what's your concern here by the way you can listen to those guys and be concerned about a lot of other things. what's the focus of the ftc >> we've seen companies making pitches to investors about the use of a.i. and transformative uses of a.i. what's concerning, we're seeing companies make claims to consumers. there's been a lot of hype around a.i. application, new a.i. fueled products, and cha that is translating into is companies making claims directly to consumers about their own use of artificial intelligence what we're trying to remind the marketplace is that those claims need to be truthful, they need to be substantiated or we're prepared to hold those companies accountable. >> what would be an example of that in other words, of a company

that promises its a.i. product does something, i guess, better than it either does or a non-a.i. product does? >> sure. we recently brought a case, for example, against a company that said it had a proprietary algorithm that could help consumers get rich quickly that's exactly the kind of claim that we're concerned about seeing we know that a.i. is -- when companies make that claim, they need to actually have a basis to make it. that company did not we held that company accountable banning the company from making that claim going forward we're prepared to do that with other companies using a.i. hype to suggest their companies have greater capabilities than their competitors. >> what struck me about that example, sam, is that the second part of the claim seemed to worry me more, they can help you get rich quickly, regardless of what it as, and i'm wondering if you're finding that a lot of these a.i. claims are being made by companies that already engage in deceptive marketing practices?

>> well, i think you hit the nail on the head something we've been worried about for a long time is the use of artificial intelligence in targettive advertising we know that companies are using a.i., major social media platforms, for example, to target consumers with ads that are often deceptive and that's been a huge tool for fraudsters. a massive search in fraud emanating from social media and we think it's sophisticated a.i. that helps companies target customers, help fraudsters target customers with the claims the risk grows when a.i. is not only used to target consumers with ads but again rate the ads or worse againer in rate content that might appear like news but something trying to sell consumers something or enroll in a program that could harm them we're concerned abilitout the uf these technologies to facilitate

fraud. we've seen a surge of fraud on social media and some of the new generative a.i. tools could accelerate that trend. >> yeah. i think there's no doubt that, in fact, it probably will and the power of generative a.i. is in the early stages and only going to accelerate as well. are you in a position to even be able to recognize at some point in the future what is a deep fake and what isn't and how do you do that? >> it's great question one of the things we benefit from at the federal trade commission is we have a lot of talent in our agency and a lot of lawyers, some of the best lawyers in the country prepared to take lawyers to court, we have technologists, data analysts, investigators, prepared to look under the hood around some of the claims and assess whether they have a basis in fact. we feel very confident in our ability to detect these kinds of frauds and other violations of the law and we feel confident that we can hold companies accountable when they cross the line. >> and i'm just curious on a broader perspective, are you

concerned broadly speaking about the growth of a.i., generative a.i., what it's going to mean for society, business, humanity? >> we issued a report last summer that detailed how a.i. can offer benefits in a host of areas from fake reviews to misinformation online, but we also sounded the alarm about some of the risks. the fact of the matter is, especially tools that have not been audited, tools that have not been tested, can cause a lot of harm. one of the things we stressed in the report is the need for companies to really be transparent around the uses of these technologies and for there to be accountability on the back-end if these technologies result in harm to consumers which could include discriminatory outcomes. there's a lot of potential around this technology, but we have to be very aware of the risks before it's too late. >> well, appreciate you taking time with us this morning. thank you. >> thank you.

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bitcoin falling this morning amid broader fears of another bankruptcy, a crypto bank silvergate capital dominic chu. >> it's not just silvergate, also some of the negative sentiment about what could be more stringent regulatory frameworks from the sec and others later on down the line as well to your point about crypto prices if you look across the board it's red across the screen doesn't matter if it's the big ones like bitcoin or ether, light lightcoin. all down bitcoin's to yesterday's lows and levels we haven't seen since mid to late january. so this move below 23,000, if you look at the charts right now, the levels that some traders are keeping a close eye on with regard to bitcoin prices

specifically, center around just kind of what's happening with silvergate and everything else $5, down 12% today we're seeing some of the moves lower. for silvergate, losing about two-thirds of its value. take a look at some of the bitcoin prices specifically, then those particular charts are showing some levels that people are watching right now, 21,500 is the level that some traders are watching 200-day average price for bitcoin prices we've rallied about 40% off the lows that we saw in november if you take a look at some of those, that becomes one of the places to watch. with regard to ethereum prices, 1490, david, $1,490, the 200-day average price for thethereum we are revisiting some of the levels we saw in january if there is more negative sentiment around some of the coins we could see at least a little bit of a move down to the levels and we'll keep a close eye on i'll send things back over to you. >> thank you

dominic chu. mortgage rates jumping above 7% this week inflation fears continue to drive rates higher therefore, those rates higher as well that said, one key real estate market hotter than ever. robert frank is live from palm beach. he's got a look at what is still ahead in our show. wow. boom >> the migration of wealth from new york and the northeast literally finding a home here in palm beach. sales prices up 25% in the fourth quarter we're going to take you inside the most expensive home for sale right now in florida and tell you the price coming up on quk t see"sawonhetrt. ♪ icy hot pro starts working instantly. with two max-strength pain relievers. ♪ so you can rise from pain like a pro. icy hot pro. - [announcer] payroll takes too long.

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i'm bertha coombs. welcome back here's your cnbc news update at this hour. alex murdaugh has been sentenced to life in prison without parole for the murders of his wife and

son. the judge announcing his decision just 20 minutes ago in a statement before he was sentenced the disbarred south carolina attorney, again, said he was innocent. power is being restored for thousands of customers across texas this morning as many as 170,000 homes and businesses lost electricity overnight strong winds hit the state with potential tornados reported in several counties and nbc news reports it will take $1 million in donations to get florida governor ron desantis to show up in person at a political fundraiser unless he's already in the area in that case, a gop operative tells nbc they'll do it for 500,000. even though he's not formally a presidential candidate, nbc says he is in such high demand that donors are lining up to give him

money david >> thank you. we are almost let's call it an hour into what is the last trading day of the week. let's go over to bob pisani and get more on what's moving in this market. >> three to one advancing to declining stocks we've had a turnaround this morning and this ism services, people were looking at, new orders were stronger than expected so the strong economy continues, but the prices paid component went down. that's good inflation news we haven't had this in several weeks and i think that's a factor in a little bit of the rally we've seen we've also seen some momentum here i know the sentiment is terrible this week. i did a trader talk talking about some of the awful sentiment indicators we've seen movement. here's what's important. china has stopped going down that happened the middle of this week and that's been a factor in the fact that we have seen strength in material stocks this week we've seen notable strength in big global industrial names as well semiconductors have also

stabilized i wouldn't say semiconductors are rallying as a group, but they have stabilized at this point. i want to emphasize the cyclicals. we are -- we have a very small new high list today, but it's almost entirely big global industrial names ge has just been on a tear ever since the health care spinoff. it's been great. the health care spinoff has been doing well too i want to emphasize new highs, otis, ingersoll rand, united airline, technically an industrial and there's not much else on the new high list right now. either that's significant. at the same time we're seeing essentially new highs. we're knocking at the door of new highs on global material names. so some of the steel stocks like steel dynamics and nucor are at new highs. linde makes industrialized gas sitting at a new high. mosaic has been on a tear in the last few days. that's a big global fertilizer company essentially.

not a new high there, but very strong momentum. again, i think this speaks to sort of the global growth story. we've seen some of the markets outside the u.s. outperform. as for the week the sentiment is terrible some of these indicators awful but the s&p is up 1% for the week we had a turnaround yesterday in the middle of the day and that's continuing today and it's obvious most of the turnaround is due to what's happened in the last 24 hours. we've moved 70 points since the middle of the day. finally just want to note guys, the vix is below 19. we hit 18.9 just as i was sitting down that's a collapse. we were at 22 at the start of the week remember, the vix measures concern, put buying in the next 30 days, and that's been going down steadily all week want to counter some of the negative sentiment out there back to you. >> that has been a head scratcher for traders. thanks our next guest believes we are not in an inflation regime

change but it will be bumpy. goldman sachs asset and wealth management chief investment officer julian salisbury great to have you with us. what do you mean we're not in inflation regime change? >> i think, you know, our expectations is we're seeing some strong data here over the last month, this has led to a resurgence of some of the concerns that we were all preoccupied with last year we are expecting some modest three more rate hikes over the next four months with some modest risk to the upside on those numbers, but, you know, we think this is not a fundamental change it's -- we're nearing the end of these hikes. i think any likelihood of cuts is pushed well into 2024 at this point. but i don't see radical moments from here over the next few months. >> do you see radical movements in inflation or does it remain

stubbornly sticky? >> i think it's going to be sticky, which is why i think we will see three further rate hikes. there's a modest risk to the upside in that certainly that -- those rates will have to stay higher for longer than we have been anticipating six months ago, which is why i talked about any kind of talk about cuts have pushed well out into 2024 at this point i think it will be sticky. we're in the later innings. >> julian, those rates we're looking at, of course, have brought life to the bond market or at least for investors looking for either investment grade or other credit. what are you seeing amongst your client base and those who manage portfolios at goldman sachs asset and wealth management in terms of their willingness to buy corporate credit >> yeah. last year, you know, we had huge demand in our liquidity products, people wanting to stay at the very short end, benefitting as rates were rapidly being hyped through the course of last year. we've seen the beginning of this

year, a bit of a pullback at the start of the month of february most people are looking to push out in duration, willing to take a little bit more duration risk, recognizing that while we may have more rate hikes to go, we're certain not done with the inflationary story, but there was some willingness to push out in duration, as they were doing that, tending to push into quality more ig or higher quality end of the high yield universe recognizing that it's still going to be bumpy along the way. the other thing i would say, really significant demand for diversifies in the portfolio and people are looking at, you know, private credit as a floating way to get some exposure to the high normal rate environment. >> aside from even private credit, aside from corporate, julian, i mean the appeal for just a t-bill must be immense. david rosenberg is circulating

this chart yesterday and showed the earnings yield on the s&p 500 was approximately the same as a yield of a six-month t bil bill hard case to make if your time horizon is a short term to be in equities right now. >> yeah. look, i think the attractiveness that you're seeing in bond yields is certainly raising the bar for all other asset classes. one of the things that, you know, we see in both the public markets and the private markets is, you know, when the benchmark risk is so much higher it raises the bar for all investors, whatever the asset class, not just nonequities. >> all right julian, we'll leave it there thanks so much for joining us. goldman sachs. >> thank you. let's get to deirdre bosa with a news alert on amazon. >> amazon is pausing construction on its second headquarters in virginia, known as hq2

john shutler, amazon's head of real estate tells us in statement quoting him, we're always evaluating space plans to make sure they fit our business needs and create a great experience for our employees since it will have pace to accommodate 14,000 we decided to shift the groundbreaking of pen place, the second phase of hq2 out a little bit our second headquarters, he says, has always been a multiyear project and we remain committed to arlington, virginia, and greater capital region it examines back in 2017, guys, they went on this huge campaign to choose a second headquarters. they were expanding their workforce by a huge amount ended up expanding it more than anyone could have imagined during the pandemic. now amazon is trying to pull back some of that. remember those cuts amount to 6% of corporate workforce, 18,000 employees. at hq2 there's no job cuts, this is separate, only pausing construction and expect to pick it back up this is part of the larger

amazon story their a trying to reduce some of the huge hiring, a lot of expansion plans that got sped up over the pandemic. >> do they own the land here i mean, just curious how much a commitment this will have to be ultimately in the future even if they're pausing construction now? >> i don't know if they own the land, but they did make a lot of promises they got certain subsidies and certain promises from the local governments there in order to build and bring these jobs i'm not sure how that affects their land plans but they say that it's still coming the only thing they're shifting here is the groundbreaking and in that statement as well, they say that they're committed to investing in affordable housing, computer science education, into schools and supporting other nonprofits, so again, they're not saying they're going back on any part of their bargain, aside from the land here, but they say that they're still moving ahead with these things just pausing and that comes as andy jassy, the ceo, is looking at a lot of different things

recently he said employees have to be back three days in the office, so that remote work reality likely fits into that as well how much office space are they going to need. >> yeah. and the push to cut costs further. thank you. deirdre bosa some expecting the biggest government reshove until a decade at china's annual meeting this weekend live to beijing as the kweb sees the best week since january. "squawk on the street" will be right back

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china's parliament session kick off this weekend with major reforms and government appointments potentially on the table. eunice is live from beijing and she has more on what to expect eunice >> reporter: thanks a lot, david. over the next week or so, lawmakers are going to be discussing china's outlook for the year and on sunday, it's going to be kicked off with the premier, the outgoing premier. he's going to be unveiling the annual growth target, which is

expected to be above 5%, possibly as high as 6%, because of the economic recovery that's expected here after the zero covid restrictions have lifted now the major issue that people are looking for this time is that president xi jinping could be exerting even more political control over economic policy making we're going to see him likely renamed as -- very likely renamed as president but all the other top jobs in economic and financial planning, going to be completely changed the expectation is that a lot of these familiar faces to international investors, are going to be out, such as, for example, liu he, who united the deal with the united states and replaced by a lot of what's expected to be xi proteges, some with very little financial experience the other interesting development to watch is that the

state media had flagged that there's going to be a reform plan, which they describe as far reaching, which would entrench the communist party even more deeply into state institutions such as the central bank of course, we're already not getting a ton of detail here, but we are hearing that this is going to affect the financial system, technology, private enterprise, as well as state and public security. that would be the intelligence community -- intelligence agency as well as the police. in terms of the delegate list, there are a couple interesting developments there, and that's because the top tech names, especially those in the private sector, are now off the list, so this includes tencent, baidu, jd, neteze, the ev maker is on the list this time, but it's

been changed quite significantly in that we're seeing a lot of state and partially state-owned companies in the chip industry and the a.i. industry represented much more at this event. guys >> you know, eunice, there's nothing you said there that would seem to me to be something that investors would like to hear, and i just wonder, is this already expected so much that it's been incorporated to a certain extent in investors' outlook for many of the companies that we follow closely, or are we going to here in the u.s. wake up to a lot of headlines that send these stocks down >> well, i think there are a lot of mixed signals that are coming out of the chinese leadership. i think people are expecting that the direction is still going to be much more state controlled because of these latest signals it was only a couple days ago that president xi had talked a lot about the importance of foreign investment, that they're rolling out the red carpet for

all these international ceos to come to china and invest, definitely know that on a local level there are a lot of officials that are trying to get more money into the country, so i think the question is going to be, whether or not the authorities here feel that the investment is going to be more important for their security and stability, as opposed to anything else. >> yeah. well we will watch closely thanks to your help as well, eunice eunice live in beijing hp stock still in the green. you can see it there ever so slightly, of course. it had been up a bit more earlier in the session we're going to talk to the company's ceo antonio neri after the break. a slumping housing market, palm beach is thriving robert frank has a preview of the island of riches >> you pay for your own 98-foot pool, 25,000 square feet of

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hpe posting a strong first quarter and lifted its full-year guidance you can see the stock call it flat joining us on a first on cnbc interview, hewlett-packard enterprises ceo antonio neri antonio, good to have you with us i would love to have you with us i would love to start on the topic we're starting with a lot more these days, and i know you entertained on the call, ai, and the opportunity it may present for your company you were asked about it a number of times give us a sense and our viewers, what you're assessing, what kind of business model you can deploy that will capitalize on what is this revolution. >> well, good morning, david thanks for having me today ai is -- has the potential to disrupt every industry and it is an important inflection point because it intersects very well with our innovation we have been working on ai for a number of years, including with the acquisition in 2019. we deploy ai at scale.

it has a tremendous potential. we as a company, we continue to invest in ai these past six weeks we acquired another company. we can offer cloud super computing to enterprises of all sizes so they can train large language model and just pay as you go that's part of our strategy and it will be integrated in our hp platform, our flagship product >> right none of that is cheap, though. just the computing power alone you need to power the cloud you're offering, you know, are you in a position to be able to achieve the goals you want to in terms of the capital structure you currently have >> absolutely. i mean, the fact of the matter is that when we think about this

level of innovation, we do it with sustainability in mind. you know, the latest systems we just deployed is actually 35% more efficient, but obviously require capital outlay to build this large super cloud, if you will but the fact is we can do that and we can do it in partnership. and i have to tell you, we have an amazing pipeline of customers. yesterday i spoke to one that want to be tenants of that it's not like you build it for people to come, but actually build it for people who already want to consume it. >> you can also buy it, antonio. i know you've done a number of smaller acquisitions, but back in december, early december, there were reports you were in talks with new tannics, which would have been more like multibillion dollar acquisition. are you in position for that size, that more transformative acquisition? >> if you think of the type of

acquisition we have done, over 30 over the last seven years or so, we always use a very stringent return on investment of capital what is the best investment for shareholders we consider, of course, acquisition of all sizes when you look at the last four we have done just in the last eight weeks are, generally speaking, the type of acquisition we bring, innovation in ai and talent that we can scale to market. it's something that will make us unique and differentiated, we will consider using that framework. >> tan ti wanted to quickly geto supply chain not enough progress, you say, against a strong order book. quickly give us a sense as to what your expectations are there. >> well, david, the supply chain continues to ease. that was one of the reasons we delivered record-setting q1 performance. we brought the $1 billion air.

we expect that to continue through the rest of the balance of the year. there are pockets where we still need to make progress, particularly on the networking side, where our book is extremely elevated that combined with our strategy allows us to be very confident to raise the guidance we provided yesterday for the balance of the year, which now the revenue is double the original guidance we gave just four months ago. eps, obviously, follows with that growth as well. very proud of what we have done in the last four months, but it's not just a combination of four months. it's a combination of many things we have done over a long period of time >> right we will continue to check in with you on that progress as well today we got to keep it somewhat short. antonio, thanks for your time. >> thank you, david. >> "squawk on the street" will rhtack. when covid hit, we had some challenges. i heard about the payroll tax refund that allowed us to keep the people that have been here taking care of us.

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an island of riches amid a slump in housing robert frank joins us from palm beach with all the lovely details. robert >> good morning, david the average sale price in palm beach just near $13 million in the fourth quarter that's up 25%.

and the business of flipping mansions has taken a whole new level. tommy hilfiger bought a mansion and flipping it for $38 million three weeks later. this was purchased a year and a half ago for $85 million the owner built a new house. it is now on the market for $218 million. so, it could make a profit of over $100 million if he sells at that price, which he says is still a good value >> whoever buys this house in five years is going to be very happy with the purchase, and they're not selling it it's a legacy property that they'll own for the rest of their lives and one day it could be $1 billion. >> reporter: this house has 11 bedrooms, 22 bathrooms it's got a spa, salon, gym, a tennis pavilion. two docks, one for your small

boat, one for your mega yacht and two pools, including this one, david, behind me, which is 98 feet long this is the only private island in palm beach. if it sells for anywhere near that $218 million asking price, it will be the most expensive home ever sold in florida. >> robert, the increase in prices over such a short amount of time, i mean, can you put that in some comparison given all the work you've done in all the years of real estate markets? >> reporter: david, i can't put it in comparison that's why we're here. if you look pre-covid, many of these homes have sold in the past year for four times their price in 2019 and early 2020 before covid palm beach, which has always been a very exclusive place, a place we've seen price increases over time, has never seen anything like it and even if you look at aspen, the hamptons, these very

high-end markets like bel air, they have not seen price increases like this. some is because of the wealth creation, and as we talked about, it's that migration of the very healthy, hedge fund, private equity, all coming here. >> it's a beautiful spot could be worth $1 billion. it could also be under water robert frank let's get over to mike and melissa on the floor >> always the optimist, david. good friday morning. i'm melissa lee alongside mike santoli live from the new york stock exchange jeff sherman as wall street's fixation with the bond market continues. investors looking to logan and bossic this hour for clues on the fed. jeff de graaf also with us, charting the s&p as it tries to claw back above 4,000. got there just now and what the breakdown of utilities has to do with that story. fidelitity's jurrien