wealthy businesses and people. it is tuesday, april 11th, 2023 and "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm andrew ross sorkin along with joe kernen and melissa lee. becky is on assignment she will join us in a moment you are looking at green on the screen dow up close to 50 points. s&p is up 12 points. nasdaq is up close to 50 points as well. let's show you treasury yields 10-year treasury is at 3.39. the 2-year treasury is close to 3.09 let's talk crypto.

ethereum awaiting for the tech upgrade. that is scheduled for tomorrow bitcoin is topping $30,000 that is the first time above $30,000 for the first time since june now we have news we have to get to becky. she is live from tokyo good morning >> reporter: good morning. we are live in tokyo with warren buffett. as you know, warren buffett has preferred omaha over the financial centers of the world he does visit from time to time. that is what he is doing this week he is in tokyo this week first time he has been here in 12 years he has come because he wanted to check in on the five trading houses that berkshire bought a position in back in august of 2020 august 30th, 2020, he announced

he accumulated a 5% stake in the five trading houses in japan that is big news, especially in japan, but around the world. the companies on the screen here those are the five major trading houses responsible for so much of the japanese economy. they do everything from importing energy and materials and textiles everything the nation needs for financing for everything beyond that in all places in the economy and including in manufacturing and beyond the five trading houses are known as the sosugosha we knew he bought 5% back in 2020 in november, we found out he bought an additional stake in

each company bringing it above 6% guys, he has bought 7.4% stake in each of the five companies. implication is they could buy more he is meeting with the heads of the companies today and expected to continue to meet with them tomorrow this is the first time he has been in japan in 12 years. last time he came was 2011 one of the things he has been doing is talking to the companies. berkshire is issuing a major bond issuance in yen berkshire is the largest foreign ev entity to issue bond yields. they had 55 billion in jyen coming due there is a lot of speculation this is a move to invest more in japan. you know that he likes hanging out in omaha and likes staying

there. he is excited to see the offerings here and see what the people at the trading houses are up to and just get to check in with them. we tell you that warren buffett with will join us on "squawk box" tomorrow from 6:00 to 9:00 a.m. we will sit down for part of the time with greg abel at berkshire. greg runs all of the non-insurance operations at berkshire. vice chairman. he we will sit down with both of the gentlemen tomorrow on "squawk box. >> we remember japan when japan was actually -- we talked about japan the same as china. when was it? you remember back in the '90s.

it has been a long -- they have done well, but we have not thought about them the same way. inflation is stuck and a problem. we know how difficult it is for japan to grow. does buffett from what you can tell, does he see changes in the wind in terms of any of those things or just five trading houses look cheap and he already owns some or are things finally turning a corner in japan? >> you know, i don't know about the larger issues on japan we'll ask him about that tomorrow where he sees the future of the company. if you were just looking at the stock prices of the trading houses, they were all at incredible cyclical lows and trading cheap back when he was buying it and before he announced it they have all taken off since the news came in that berkshire

had been buying and buffett buying stocks were all up today between 2% and 3% that he bought if you look at the five-year chart of those companies, you will see the cyclical low they hit. trading below book value they have all done better since then i guess if he is still buying, you assume he still thinks they he are under valued. they were sitting in 2020 at the lows before the news kcame out it was august of 2020. the stocks have done well since then you could say this was something where he was being opportunisti and jumping in we will ask more about that tomorrow. >> becky, i'm curious if this coincides or in part with the change of the helm of the boj and change of monetary policy from super accommodative to

tighter which is what everybody expected when the new boj governor ueda came in. he gave a pre-conference and stick on the super accommodative policy which helped the nikkei how does that factor >> it is interesting you bring that up. i never heard buffett mention those things i had conversations with him about it it is a fair point he is not somebody who ignores the macro, particularly what any central bank may be doing. that is a factor in the investments he made in the united states in the last decade plus that is watching the central bank i don't know if that factored in here he has never mentioned that to me it has never been at top of mind with these things. it is worth questioning tomorrow if you look at the united states and the federal reserve has been doing, he talked about how when

you look at interest rates, they act like gravity when interest rates are low, there's not a lot of gravity pushing down on equity prices. i'm not sure how he factored in the bank of japan. >> so you want to get out more from omaha let's see there are other stops. imalfi coast he flew right over that. right to tokyo is that on the other side? 12 hours >> i don't think he is doing much sight seeing. it is a 13 hour difference 7:00 p.m. here i don't think he is doing sight seeing for him, sight seeing is a chance to talk to the heads of the companies. those are the type of things that rate high on his list in terms of what he wants to check off while he is here i got out a little bit today >> he's not a young guy.

i don't know how long that flight is in coach he must have been -- you get a little antsy >> i think -- >> i would say he said to me if you find him in a commercial airline terminal, you know he's lost >> all right i think i knew that. >> great news, becks looking forward. >> thanks, guys. coming up, inflation data and bank earnings. we will talk about potential portfolio moves to make right now in this environment. that's next. later, mike novogratz will weigh in on the rising crypto prices there was a bottom, it seems you know about katie stockton? the trend works until it is no

longer in effect she has given us new support levels, but never said now is the time we will talk to her about it you are watching "squawk box" on cnbc >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. you got this. let's go. gobble gobble. i've seen bigger legs on a turkey! rude. who are you? i'm an investor in a fund that helps advance innovative

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it is a big p market week ahead with inflation data and consumer spending and kicking off the earnings season. the first of the big banks report on friday we bring in stephanie link from hightower advisers steph, the question is not what w we will hear, but how do you position ahead of it >> it is a really challenging year, to be honest with you. we know 23% of the s&p 500 has done so well technology stocks are the big ten that led the overall market. the question is do we see it broaden out, andrew. the question is you want more diversification and not all clustered in one sector or style. we have a lot of mixed data. we know we have housing which is weak and manufacturing weak.

we didn't get great data on jobs across the spectrum. it is not terrible, but wages are still high and consumer is still spending you want to have more of a balanced approach and that's the way i have gone about it this year. >> we will hear from the banks on friday. the big ones and some of the regionals next week. you want to own any going into this >> i do own. i owns wells fargo i also own morgan stanley and schwab is my recent purchase >> you bought schwab in the downturn >> i did about a month ago. the stock is down -- when i bought it, it was down 33% it is now down 37% it hasn't been great so far. i think the valuation is compelling for a top ten bank in the country. so, they have a great franchise. i think it is not a credit issue

with them. it is a mix across the spectrum. it isis going from deposdeposits i think the stock is really de-rated and attractive. the same for wells fargo i have found over the years when you buy a bank under one time book, it is a good opportunity you have to be patient on friday, we get jp and wells fargo. those are the two i'm watching with jpmorgan chase, you want to hear big picture we heard from jamie dimon this year the question is can they grow net interest income and expense at $81 billion

they have been gaining share, but losing share in fixed income we want to hear about that wells fargo is an expense reduction story. can they do better than 50.2 billion in expenses for the full year i think they can i think there is a lot they can do it is a restructuring story. you know me by now >> we will hear from the tech names. they are two weeks out from some of the tech names. do you want to own a tech name into the print >> well, i own meta, as you know i suffered with this last year i'm not crazy with the risk/reward set up i'm trimming meta. i think with the semiconductors, we are getting close to the inventory correction we are a little early with that. you want to be selective

i own broadcomm and ibm. that was one of the best technology stocks last year. not so much this year, but still with a good yield. i want to be selective within tech. >> how do you think about energy we talk about oil and saudi arabia and what it is doing. its inability to change the price given so many others and opec not playing along what does that mean long term? >> i mean, the companies have changed strategy no matter what the price of oil is, they have been focusing less on overproducing and more on shareholder returns. by buy dividends that is a barbella approach. this is a cyclical sector. i think the shareholder returns are attractive i own chevron.

diversified and $30 billion in free cash flow what do they do with that? returning to shareholders. they are not overproducing or focusing on the boom/bust cycle. diamond back energy. that stock is down 13% from the highs. i think they have done a good job in production and volume growth and also expense savings and yields with so many special dividends. it trades at seven teams ear -- times earnings. >> we will leave it there. steph, thank you we will see you many times this week and next as the numbers roll out we will see which way it heads thanks coming up, survey data says americans are feeling financially stressed and those making six figure salaries that story is next. you can now stream "squawk

box" live on peacock every weekday on the morning news live hub. we're coming right back. >> announcer: "squawk picks" is sponsored by wisdom tree the modern alpha pioneer

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a majority of americans say financial stress has increased since before the pandemic began. this was a survey and we have sharon epperson with more on the results. >> it is fascinating, melissa. you look at instability and lack

of savings which increased the share of feeling financially stressed according to cnbc's your money financial survey conducted with momentous a majority of people responding say they are stressed about the personal finances. that includes 57% of people earning $100,000 or more this survey of more than 4,000 adults in the united states was conducted during the last week of march overall, 58% say they are living paycheck to paycheck that is true for six figures the main factor contributing to stress for the six figure set include inflation and economy instability and interest rates and lack of savings. the same stressors for all res respondants. one-third feel they need $1 million to feel comfortable.

12% would invest all in the stock market 24% would stash in a high yield savings account and 30% would combine. keeping some money safe is a priority across the board regardless of income, melissa. >> this is fascinating we hear about households in better shape savings tucked away during the pandemic they got stimulus and traded stocks, et cetera. what happened? >> people are feeling stretched no matter how much money they have and they want their money safe they are a little bit recetisce about the banks. among those making $100,000 or more, the number is higher at 16%. more than one-third or 37% of those making six figures are not confident about the banking system comipared to 34% overall

they want to protect their money, but they are not confident in the banking system. >> this happened right after the meltdown are there differences among genders with the financial confidence >> it is interesting looking at the group of women surveyed. more women are stressed about the personal finances than men 72% of women are financially stressed compared to 67% of men. women are more likely living paycheck to paycheck and have no emergency funds. women were also more likely to be the primary or sole decision maker when it comes to house finances look at women who are high earners. those numbers were interesting you look at what women who said they had a $10,000 windfall and what they would do if they were making $100,000 or more 8% in the stock market 26% in a savings account

30% in a combination of stocks, bonds and savings. for women, men, all of them are more likely to say they want to have diversification savings is key at this moment. >> fascinating sharon, thank you for joining us join women, wealth and cnbc event later today to discuss how to save for the future register at cnbcevents.com coming up, the top stories, including a rollout plan for alibaba's a.i. chatbot that is next. programming note, the next two days, we have special interviews from the kiawah leadership summit. we have alex carp and ceo of formula 1 group. as we head to break, we look at the s&p 500 winners and losers

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good morning well come back to "squawk box" live from the nasdaq market the site in times square the futures are green across the board, but muted that as big inflation numbers come out this week. and alibaba will possess a chinese and english language capabilities for its chatbot it will be on the workplace communication software bing talk the new a.i. model will be integrated across the alibaba

business models in the future. shares jumped 3% in hong kong before pairing back 1.5% draft rules released to govern a.i. products. it must embody the core values of socialism it cannot subvert state power. it mustrespect intellectual property and accuracy. the regulator says the providers will be responsible for any content generated. that's something i wasn't sure i would ever read. must embody the core values of socialism. hmm. two lawmakers reported trades in bank stocks last month as they worked on government efforts to address the fallout from two large bank failures a report saying that representative nicole ma

malliotakis agreed to the stock days before signature's closer the spokesperson for the lawmaker made the trade according to the financial trader congress member earl blumenauer reported three trades in stocks as he sponsored legislation seeking to restrict financial firms. the spokesperson saying the trade was made by his wife he wasn't aware of it at the time let me say if i could, the fact we have to read these stories and the fact they exist, even if they were done by mistake -- >> or simple last names, that would be okay. jones and smith. >> sure. the bigger complication is it

undermines the credibility of the elected officials and the system and why we allow the trading at all is the problem. >> we have standards as journalists here at cnbc we do not trade individual shares >> of anything. >> they can really do things you really think i'm going to be able to -- you know -- we can't, obviously. >> i don't understand why. >> why they allow it. >> if anyone could benefit, it is these guys and gals >> it would benefit them and their credibility and to the extent they do care about the credibility of the system. for every person who goes to washington and because i'm a patriot and love my country. if you love your country, stop tra trading! >> that's part of public service. you know the excuse is we don't

want people that aren't involved with the private sector running the government that is what we have for the most part. that's already what we have for the most part. i can see why they say that. that rings hollow. you know, depending -- you don't have to stay there for ever. think how long i haven't been able to trade. think about that 19 -- >> yeah. this job has helped. >> i was a stockbroker for ten years. i'm fine i'm not complaining. the fbi warning against free he public charging stations. the criminals have managed to hijack public chargers to infect with malware and give hackers access to your tablet or computer you are recommended to carry your own cord and charger. the fbi's denver field office said this is an advisory and no

specific case that prompted it always good to keep it in mind coming up, the irs with the plan on how it plans to spend $80 billion in funding robert frank has details next. get the best of "squawk box" in the daily podcast follow us on your favorite podcast app or watch "squawk box" on peacock. >> on the morning hub live. >> listen any time thank you, melissa we'll be right back. how's the chicken? the prawns are delicious. oh, i have a shellfish allergy. one prawn. very good. did i say chicken wrong? tired of people not listening to what you want? it's truffle season! ah that's okay... never enough truffles. how much are they? it's a lot. oh okay - i'm good, that -

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the irs releasing the plan for spending $80 billion of funding and it could crackdown on wealthy people and corporations robert frank is here i hope they found more than $80 billion. >> they hope so, too high income taxpayers, get ready for audits over 7,000 agents in the next

two years as part of the funding plan of $80 billion. they are narrowing the tax gap the taxes owed that go uncollected every year one of the chief targets is partnerships the irs saying the number of partnerships has soared by more than one-third in the last decade to 4 the million. partnerships have increased 75% in that period taxpayers use partnerships and layers of llcs and pass throughs to minimize taxes. the irs will increase the audit rate for high earners. other than $1 million or more have fallen by 90% to less than one tenth of 1%. the irs will reveal advanced data analytics to go after crypto and digital assets and other novel issues audit rates will not change for

those making less than $400,000 a year the cbo estimates it will raise additional $180 billion through 2031 joe. >> robert, w-2 earners i don't understand if you are a w-2 earner and if you do well -- i have a friend who is a w-2 earner. there is nothing to mess around with here's the amount. here's what you owe. here's what you pay. there's no deductions after the trump tax laws >> that friend of your's doesn't give money to charity? >> yes that's capped, too >> that's a deduction. >> isn't that capped, too? >> no, that's not capped >> okay. if you claim you gave ten times more than you do, they could find that.

>> yes yes. as a share of your income. >> it's mostly people that probably do llc. where is the real gold mine for the audit? where will they find things where people make $100,000 or $200,000 difference in taxes >> you are right about w-2 income which is not the focus here there is nothing to see. that is already shown to the irs. the irs gets the form. the gold mine is the partnerships they have just exploded in size and number over the past ten years. it is like it has become its shadow tax system. if you have a private business and then interlocking layers llcs and pass through and real estate depreciation and business deductions and carry forwards. all kinds of things you can play

with as a pass through, you can't with w-2 the huge explosion with the pass throughs with the income generating and number is where there could be a lot of unpaid ta taxes. >> robert, we talk about a.i. and chatgpt. it is fascinating to see how a.i. can analyze you give it a ton of data and it is able to actually analyze wha is happening where is the irs with a.i. technology and actual numbers and data basis -- databases if they had the ability to do it, i imagine they could flag and identify things that don't look right >> that's a terrific point, andrew that is what the irs is thinking

about. the new commissioner could ask chatgpt who is not paying taxes and maybe there is an answer there is a focus on data analytics and algorithms to identify the types of returns based on previous audits and findings that might be red flags that they were not noticing before the red flags they look for are excessive large business deductions and things like hobby deductions if they really drill down. >> what is a hobby deduction >> that's what people do with the race horse they deduct a large part of that a category of taxes that they are not supposed to deduct. >> i don't have a hobby deduction. >> a horse >> i claim my dogs as

dependents i have four. do i have an issue they are they may as well be with how much that stuff costs. >> andrew, to your point, technology and improved data analytics is a component as an overlay to the awedudits. >> how many years are they away from pulling this afternoon in an effective way when you layer in technology, when can that come to be i say that, by the way, because i know people are watching this broadcast saying, you know, i think there was a five or a seven-year period. there are people counting the days >> it is typically three years this will take a long time we know the government sector and irs in particular is way

behind on technology that was the reason for a lot of the funding increase >> all right robert frank, thanks for bringing us that i don't know who is out there sweating at this point i think you named some of the issues >> my friend my w-2 earner friend i'm sure people are counting the days >> right my friend. if you are a w-2 -- look, look taxes we pay if you are w-2 with no write offs. we were able to write off our agent. new jersey state tax that is a huge amount. no longer. that's why when people complain how great the tax cuts were for the wealthy a couple years ago probably 20% or 30% increase for people in new jersey and new york, wouldn't you say >> more.

i feel i pay enormous amount of taxes. >> you do. i'm not complaining. >> high cost problem >> i'm wondering i was audited long ago i moved back from california when fn was acquired guy cnbc. i had a moving expense that was $40,000 a year. they audited a person making $40,000 a year because of the $5,000 moving expense. you know, you can't believe what you have to do, sorkin you cannot believe what they ask for. absolutely nothing that's why when we argue when we need to do this. it better not be weaponized. lois lerner. anything with patriot in the name audit. patriot, audit it better not happen again

>> you should be happy they are auditing the partnerships. >> right if it has patriot in the name. coming up, prices trading $80 a barrel for wti we talk to helima croft coming up. and don't miss warren buffett live tomorrow between 6:00 a.m. and 9:00 a.m you can watch us any time on the cnbc app >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws

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speaking at an event yesterday, he thinks the figure will climb to around 4 to 4.5% in the march jobs report williams, who is a voting member also weighed in on the recent trouble saying the failure of the bank hikes were not the driver of the issues, and maybe it was the bank's fault for having duration risks but were absolutely the reason for the driver being valued as much less -- if you do it for sale, it's less, and if you do it for maturity, it's not, and that's not true, john i see what he's saying

>> it was super well telegraphed. >> yeah, but the rate hikes are a factor in why the assets are valued at 20 to 30% less than they were. i see what he's saying take a little responsibility saudi arabia's oil hike, it's not as strong as it used to be in terms of the price >> i think it's more powell is a threat to opec, and when you look at market dominance, it's the market on the supply side that can be controlled by countries like saudi arabia, and the u.s. production is not a

threat like it was years ago who will win out, the prince or powell in terms of the market? >> well, the cpi had been looked to -- >> it was the full story of the oil. we were optimistic on the oil and looking for a chinese recovery we could see the increase in buying and seasonality in the united states is going to come in soon, and the people that optimistic on oil focus on the back half of the year, and opec has shown now they will come into the market. will they stay on the sidelines? opec has shown they will come in, and the question is will they have to do more >> what price will they come in with >> well, they basically wanted to signal it would be risky to short this market. there are countries that have

massive development programs that hinge on a higher oil price. it's never a question, like, we don't have a specific price point. for example, i always thought if it was go to break into the 60s, they would show that, and they are going to signal they are going to stay activist this year >> geoffen all that has happened in the past couple of weeks in tuplgz of the china data we are seeing, which puts into question the reopening story, has your price forecast changed much? >> we basically, you know, we think there should be a recovery in the back half of the year they are meeting in june, but the question is is it a recovery into the low 90s for wti people forecasts out there 200 everybody ratcheted back their call, the question is, is the back half of the year going to

be significant >> most people thought we would be well above 100 by now it seems top heavy >> and when you end up in the macro world, oil struggles in a recession-story environment and a rate-hike story environment. this is a challenging market for oil. opec to come in when they did now off cycle signals they thought they had to become super activist and send a super strong signal, and didn't wait until the monday meeting and did it on a sunday, and they wanted to signal, don't short this market, we are here, and on the other side stands powell >> thank you >> thank you for having me two biggs hours ahead. bitcoin topping $30,000. that's for the first time since june we will talk to a crypto investor right ahead and becky is in tokyo this

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right now, and bitcoin is back now, over $30,000. we will find out what is driving crypto demand. and warren buffett making a move we have the latest from tokyo. the fda commissioner weighinging in on the push for obesity drugs. we will bring you his exclusive comments, as the second hour of "squawk box" begins right now. ♪ good morning and welcome back to "squawk box" here on cnbc, live from the nasdaq market site. becky is in tokyo this morning and will join us again in just a couple minutes take a quick look at the futures as we anticipate some interesting numbers later in the week, in terms of corporate

earnings the beginning of earnings season when the big banks all report, which should be interesting given the developments in the last month or so but we are in the green after a decent session yesterday which did not start off so well. let's look at treasuries, also with the two-year almost at 4% again, and the 10-year as you can see, 3.39, and then take a quick look at oil, and it's below 80 if you can't hold 80 after the opec plus news, it makes you wonder bitcoin climbing above the $30,000 level. we will talk about bitcoin, crypto, the fed's inflation battle and more with galaxy digital's mike novogratz we have a lot of upgrades

this morning we will start in the health care sector united health care stock moving this morning, and analyst seeing a double digit move to the upside, and also citing its regulation in the pharmacy business and possible recession. shares up double digits over the last month health care the sepbgd best sector so far in the quarter price target here, shares up 2%. bank stocks overall could bounce but there are more headwinds possible especially when it comes to net income difference take a look at this chart. nycb shares. a software company akamai, the

call would likely be as popular as nickel back in the 2010s. jeffrey is seeing an unpr unappreciated growth joe, back over to you. >> all right i always wondered about that, too. i like a couple of their songs, frank. there are some people that don't like them at all and never did like them. i heard them recently on a hit -- a channel, like, 11, that my wife leaves on in the car do you like them at all, frank >> they have a couple anthems, but i am not in my car listening to them. >> they have not cut an album

recently >> i have no idea. i don't think people care. >> the analyst brought it up and i thought it was an interesting take, and it was -- >> that was your reporter. did you use chat gtp again >> i am irreplaceable. >> i thought it said you both have your strengths. >> my strength is standing here and being here at 3:00 in the morning. >> let's get to becky. she joins us live in tokyo breaking news on warren buffett. >> we have been wondering for a while if warren buffett has been looking around and seeing any bargains, and today we got the answer for some of that. part of what he has been interested in is increasing his stake in the five major trading companies that berkshire first

told us they purchased a stake in in august of 2020 these are the five companies that berkshire told us in 2020 that they ka accumulated a 5% sk in each of them. buffet has talked in the past about how he wants to make sure he's looking at all of them and treating all of them equally he said it's a purchase he's in for the long haul and not an easy trade he's backing that up with a trip here to tokyo. he arrived last night in tokyo, and spent today talking with the leaders of some of those banks, some of those trading houses he's meeting with the rest of them tomorrow. he started meeting with them in alphabetical order

just trying to make sure they understand what berkshire is, what their interest is here and they know this is something that warren buffett feels strongly about, and also able, the vice chairman who is here meeting with all the companies with buffett, too he will be sitting down with "squawk box" tomorrow, 6:00 a.m. eastern time to be sitting with us for three hours to talk about why he's in japan. he will talk about what he's talking to the trading companies about. greg abel, the air apparent for warren buffett's job will be sitting down with us for some of the time tomorrow, too we have never been able to talk to greg abel, and we will get a

chance to talk to warren buffett about what he sees happening, and we will see what he thinks about the stock market right now and much, much more. again, we will be sitting down tomorrow with warren buffett and greg abel. we have got a lot of questions and things we can talk to them about. >> have we had greg on for an extended interview >> no. never. never. we actually went back -- we talked with him briefly over the years, and we went back and had to check, i don't think we have had him on camera or sit down with us, and it has been brief things we talked with him about in the past, and it was an annual meeting in los angeles in may of 2021, and that's when covid was here and they were not having the meeting in person,

and somebody slipped and said greg was the air apparent, and greg runs all of the noninsurance operations in berkshire hathaway he's here in all of the meetings, too. we will get the chance to talk to him and get his perspective on a lot of things joe, as you mentioned, we have not had him before >> we know what a presence warren buffett is, and how many times have we said berkshire is making moves, and then we are saying, what is buffett thinking, and then it's abel making the moves, and it will be good to hear from greg abel about some of this stuff

>> thank you markets are bracing for key inflation and quarterly results this week. for insight on what is at stake with the markets, let's bring in the co chief investment strategists at hancock investments. when you were previewed, your first quote was a warren buffett quote. did you know you would come on after we had a long conversations? the tide goes out and you see who you definitely don't want to see sometimes if they are not wearing a suit, and by that you mean higher interest rates have costs for especially companies that are dependent on a low cost capital. >> yeah, joe, you can never go wrong with a warren buffett

quote. i can't wait for that three hours tomorrow we will get a lot of good stuff. this is what happens at the end of every cycle, and we never know what will happen, and it's companies that have solvency issues, and we are left seeing who has got too much leverage, and who is overly exposed to certain parts of the market. that's why we want to load up on high quality companies in order to grow and stay away from the anti--priced names out there today. >> that probably makes your bias towards larger companies, mid caps, large caps, for the most part >> yeah, you will find a lot more quality up in market cap. you look down at small cap companies, and those types of areas of the market can do

really well in a early cycle environment, but we don't think we are there yet yes, mid cap is a sweet spot for us in having some risks in the market today you want to participate. the equity market is almost defying gravity in terms of what all our macro signals are telling us you have leading economic indicators at negative 6%. the manufacturing sector in the u.s. in a recession, and yet you see equity markets, aspespecialy markets like europe outperforming, and we want to lower the beta in the portfolio, and emphasize quality and ride out almost what is becoming an exhausting late-cycle environment because it's never ending at this point >> it's not cheap but not

outrageous you think revisions on earnings, do they actually square with reality? do they still need to come down more if it's 18 and if we are, we had a lot of revisions already, would you characterize the s&p as gross rely over valued or moderately over valued if rates come down by the end of the year >> we are bumping up on areas hard to break out of before, so we struggled to break out of this level we think earnings are probably a bit over optimistic. you look at what is expected in terms of q1 earnings, and there are four sectors slated to have positive earnings and they are all financials, and cyclical you are probably a bit over optimistic to expect that, and

if you own technology, for example, expect it to see more modest earnings growth, and i think we can get there we look at areas like utilities, and defensive parts of the health care sector, and they are having reasonable earnings here. 18 times is a generous multiple on the market given where we see the macro environment going. you have to be picky >> thank you john hancock thank you. appreciate it. >> thank you we have more coming up on squawk we will bring you special interviews from the kiawah summit we will talk to the ceo of formula one. "squawk bo icox"s ming right back

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firm with a breakout piece for the financial times, why america's companies keep getting bigger let's talk about this. >> fine. >> the bailouts for the banks are the ones rescuing and creating the competitive problem across the united states >> yeah, if you look at america, after every rescue america has done over the last couple decades, the bigger have gotten bigger, and this is the fallout when you have the government intervention, you are helping the entrenched remain in place and the cost of regulation is going up a lot, and that's making it harder for new startups to come out the big getting bigger is that the number of startups are is

going down, in fact. what is going on, the concentration at the top is increasing, the top five companies in the america to have the top five value -- >> let me ask you this >> yes >> i want to put you into the chair, if you will, of regulator. maybe even the president of the united states. whatever king for the day would be you have a bank that is going to go out of business, sbv in this case there are payrolls and companies that are going to go, and not just that they are going to be put into pain, but the ramifications of letting that bank fail and letting depositors lose money, means probably there will be lots of other runs on banks. i will stipulate that would happen

what do you do given your other concerns about competition >> i think in each individual case it seems justifiable, right. in this case it seems justified the way you are presenting it, but what choice do we have but to bail it out my point is each time we are doing that we are setting up a bigger risk that is leading to more concentration of risks, and it's hard to make the case, if you are a regulator, if you putting me on the chair, that we should do nothing. before the 1980s, that's what american capitalism was about. they did not intervene the rescue, the bailout culture started with the continental bank bailout in the 1980s. >> let me ask you a different way. is there a way to do both? is there a way to say, okay, we will save the system in the

moment because we understood the ramifications of not doing that, and on the other end, now we have to talk about regulation, and nobody wants to do anything about that, is there a way to regulate it on the other end so the competitive issuer raising, which is an important one, gets sorted >> we tried it in 2008, right? we made all sorts of regulations and provisions to say, this is it, we are doing it this time, we will not do it again. then here we are in 2019, and i think people with the market crisis, and the feds had to intervene, and now you have this crisis the entire problem is the size of the global financial markets to date has become five times larger than the size of the underlying economy that number used to be equal, the size of the markets and

economy used to be equal in the 1980s, so now that the financial markets have become so big, every time there's the slightest wobble in the markets, we think it will bring the entire house of cards down, and then we justify intervention we made laws saying we will not do this again, and janet yellen is having trouble to say all depositors are insured so we made laws, and there's a feeling there's always a backstop available. the size of the problem will just keep getting bigger you would prevent the regulation, and then like wahack amole, others come up.

guess what other countries in the world, i found surprising it in my research, europe, japan, and even china, the number of companies in the top 10 at the end of the last decade, it was greater in those regions and countries than in america that used to be the beacon of capitalism that's the problem i wanted to point out. >> we want to thank you. it's a longer conversation, and it's a good read, though hopefully our viewers will also be your readers. appreciate it. >> thanks, as always we are tracking shares of moderna, and they are down about 7% this morning. the safety and monitoring board saying the flu shot did not meet

the statistical threshold. it does say also that it expect six major vaccine product launches in the next few years coming up, obesity drugs disrupted the dieting industry in the next half hour we will hear what the fda commissioner is saying about the surge in demand "squawk box" returns in just a moment you can't buy great conversations or moments that matter, but you can invest in them. at t. rowe price our strategic investing approach can help you build the future you imagine. t. rowe price, invest with confidence. the two most important things in golf are your swing and your style. dick's sporting goods has everything you need to upgrade both. find top-rated drivers and irons from callaway, taylormade, titleist and ping. tour balls from your favorite brands. and the most dapper styles from travismathew and walter hagen to calia and lady hagen.

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still to come, bitcoin climbing back above 30,000 this morning. we will discuss this with digital founder. and then the competition with china and former google chairman and ceo, eric schmitt. "squawk box" coming right back dad, we got this. we got this.

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we're back, "squawk box. the futures weakened a little. nasdaq now in the red, but coin, though, training above 30,000, up almost $1,000 joining us, founder and ceo of

digital. i don't know if your ears were burning on the way down, nobody can ever call a bottom there were a couple times when you thought some of the levels would hold i am not sure it matters they didn't hold on the long term, because here we are. we may have gone to 16, but when you said it would hold at 30, i think maybe you can claim -- you were wrong but now it's back at 30 it's hard for people to understand what causes bitcoin to go from 67,000 back to 16 and now back to 30 that's what we have seen through the history of bitcoin >> listen, i think going from 60 on its way down happened because chairman powell got aggressive on interest rates. >> right >> the last bit, i don't know if

it was 65 to 16 or 30 to 16, if it was a collection of mistakes that the industry had to wash out of the system and it took out lots of bad actors and left the market at the end of the year, and we are having a constructive rally thanks to a bunch of things. one is the market is certain the chairman powell is finished or close to finished. the assets that will do well in a slowdown are telling us something. the second is adoption we're seeing aggressive moves in hong kong and dubai and abu dhabi. we are seeing a lot of asian

money move in. you are seeing some hedge funds in the united states participate in the futures market. but it's really got a story for the first time in a while. the correlation with cold makes -- gives credence to your argument that maybe it's because powell is getting close, but also, mike, the sv situation, i know you saw how bitcoin -- it's crazy, but it almost looked like a flight to quality, which that throws anybody who thinks of it that way, it's almost heresy to think that way if the immediate airy is the issue, the bank holding the assets, and you can disintermediate kwraeut every

institution you would have, and the bitcoin would be the in inherent value >> the old crypto community that started this ecosystem based on a distrust of centralized banks that came out of the 1980s crisis, and we regalvanized that original story this has been built on the backs of the crypto community. it is not the new money. it's not the pension funds and asset managers coming in, it was retail-driven and crypto we are seeing an uptick in business, and i think our uptick in business is coming because our competitors got wiped out,

not that the overall u.s. institution has been growing >> what happens to ether when that is upgraded and all the stake at ether is for sale, what happens >> well, i think a lot of people sold ether has under performed a bit this year based on that, and we don't think there will be that much selling people would sell their stake rewards, and so it will take a couple days to digest. but it has its own community and this is another big win, you know, a feather in the cap of progress in that community, so most people i know right now have a bitcoin and ether position, and coins feel safer, but i don't see a big selloff

coming >> from what i have been reading, and i am curious if you can help us with this. the money that flowed back into bitcoin is not what necessarily we described as new money insofar as not necessarily new investors, but a lot of these are established investors that are in the world of crypto before what does that mean? is that correct from what you know that effectively it's folks that invest in bitcoin before doubling down as opposed to new money? >> i think i would put it 75/25 or 85/20 remember how the system works, right? it's about bringing people into the tent as price goes up, every crypto owner is reaching out to his friends or colleagues and saying, hey, you got to get in on this. the adoption cycle always accelerates when the price is going up, and we are seeing

that it has been a crypto-led rally it's not that we are seeing big u.s.-based institutions coming in and saying give me a bunch of that we are seeing hedge funds, right, macro hedge funds are participating. >> what i am asking, is there a healthy version of this? it's uniquely healthy because it's not quick, new money on one end, and others would say it's completely unhealthy because it's a group that already owned -- i heard people argue there's a manipulation going on in a world that is a tight-knit group of people trying to push the price up >> it's very hard to manipulate a trillion-dollar market teach me how one day these are big markets, so some of the small coins you could manipulate, i guess, but bi

bitcoin, it would be hard to do. in some ways you have to look at this, we are at 30,000 despite all of the regulatory attack, despite all that the market is going up >> the expression, what couldn't kill you makes you stronger. you would have thought -- there's still no regulation or clarity on regulation. if we are in a -- if we went through a tightening cycle that knocked it down to whatever, i mean, the tightening cycle you could argue knocked down some of the tech stocks, some of the biggest names in tech lost the same amount of value as crypto if we are going out of a

tightening cycle, and these things are multi-year events, and the -- >> we will have a cutting cycle. >> so where are we going back to '67, and it's going to be a two-year bull market going back to new highs in your view >> within two years, we will have new highs assuming i am right on the credit crunch that will hit the u.s. and the way interest rates go, you will have a macro backdrop, and you will have more adoption listen, at one point the u.s. will get some regulatory game work i don't know if it's after the next election, but if they don't, you are seeing one in hong kong and seeing one overseas, and this is a global asset class. so you will see people migrate

there. we just hired eight more people in hong kong ourselves, so i wouldn't have thought i would have said that a year and a half ago, given how i felt what was going on in china. they are very crypto friendly. >> as crypto recovers a little, do you think the prospects for coin-based -- five years from now, do you think they will be -- >> i think coin based is a very important company in the ecosystem. you remember, companies like ours, to a smaller extent because we only deal with institutions, but coin base and lots of the exchanges have been getting people from fiat to crypto those are important companies. my hope is, you know, they win their case in court on this

wells notice, and they continue to thrive. i think they will. they are doing a lot of smart things >> yeah, if you have a casual interest -- if you want, 1%,2, 3% -- i would lose that. wouldn't it be gone for good if i lost it, mike? is it gone >> i had a friend that had three of them when he came in a couple days ago, and listen, it's going to have to get easier over time. it is getting easier over time for most people, trusting somebody like coin base or an etf, and the big win will be when the u.s. says here's an etf, and that will be a safe way to buy without everybody understanding the ecosystem.

we are watching the court case pretty carefully the judge really chastised them, and they were, like -- >> there was a tweet out there, and there was a guy like this leaning back saying, yep, just got out of my bitcoin and put it on silicon valley bank feeling good that's how ironic it got there was like a flight to equality in bitcoin because people were worried about the regionals. it's insane. >> if you look at bitcoin, and divide it by the volatility and the theiram, it has outperformed almost every asset, and it has beaten, jpmorgan, google, and

it's not as risky as people think it is if you volatility adjust it. you shouldn't buy as much bitcoin as you buy a low-ball asset and expect the same amount of risks >> it's amazing, we have you on every three months and the world is different every time we have you on, so thank you you stay the same, though. the colors are muted today >> it's my bitcoin stars my general outfit. >> thank you coming up, what the fda commissioner is saying about the obesity drugs. to get the best of "squawk box" in our daily podcast, you can

follow on your favorite podcast app and listen anytime stay tuned

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administration is closely watching we spoke to the head of the fda and she joins us now good morning >> i did go down to silver spring maryland to meet with the fda themselves, and we talked about the effect the drugs are having >> i have a great hope for the class of drugs, and you heard in god we trust and everybody else must bring data. the evidence is good in the treatment of diabetes at this point. if that pans out we will have major decisions to make as a society, when do we add the drugs to the advice that we are giving to people in the general population >> now that study he mentioned, they specifically went from novo

and that's looking at people that have obesity but not diabetes and whether this can reduce their risks of heart attack and stroke. and also they said if people stop taking the medicines, the weight comes back on what are the safety implications of that? >> i think any drug we take for a long period of time we should be concerned and that's why i am focused on our evidence generation system, and we should be generating the evidence we need as a routine part of the clinical practice of health care and of public health >> something the doctor really focused on is the fact that we have all the data and electronic health records and the united states is not using that data the way we should, and he said

in the perfect world you could aggregate the data from the health records and look at the people on the treatment and not on the treatment and see if any safety signals popped up, and countries like the uk and israel have these systems and the u.s. needs to catch up. he thought perhaps with more study, if the medications are paired with clinicals, maybe that would not be the case, but that will be looked at over time >> seems like every other person you talk to is either on one of these drugs or knows somebody on these drugs, and if the long-term -- if the trials have not yet been done on people who are obese but without diabetes,

what if the studies have not been completed >> well, the studies have been completed, and it's just the next question, we know the drugs help with weight loss, but does that weight loss translate into protective effects on the heart or other health outcomes, and we would have more reimbursement potential if you could show there's more health outcomes >> thanks. great interview. coming up, what the charts are saying about the markets and which sectors are about to breakout that's next.

the company also plans to add five new store locations, and stocks up more than 7% right now. "squawk box" will be right back.

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the nasdaq down by 23 points a standout in terms of a nasdaq and s&p mover is premarket no news that we know of, but that's one that we're keeping an eye on along with apple. well, our next guest says that she is getting monthly buy signals which shows in the next 12 months, markets should be higher for more, let's bring in marian bartels. what are these buy signals that you're seeing? >> thank you so much, melissa, for having me. a lot of people look very short-term and forget that we have some really good longer term indicators. one of the indicators i really like to watch is this 14-month stovepipe. we were watching that and thought we would get a buy signal, and sure enough, we got a really good buy signal not only for the s&p 500, but also for the nasdaq. we have a weaker signal for the

russell 2000, but it certainly looks like it's possible that the russell 2000 is bottoming out. and melissa, there's a few other longer term indicators where we got buy signals last week. and ones that you normally don't hear about one is called the topic indicator, it's a momentum indicator. this one sounds a little funny, and it's an old one that most people don't look at it's called the swide breath brust indicator. and that indicator very rarely gives a signal and when we get those signals, it's because we were very oversold and got overbought in a very short period of time. now, that indicator has kind of mixed results in terms of signals. but in the last three buy signals, the market was higher 12 months later. >> within these signals, you're seeing particular sectors look good to you and what's that means with semis, a technical

breakout, and you think they should go to new highs this is an area that's extremely cyclical in the markets. some of the high flyers have got pretty rich valuations compared to market multiples, marian, so what are you seeing here >> at least semiconductors, it's broad-based. you have a broad selection we like to look at the smh, which is the van eck semiconductor or etf and if you look at that, i think it has the ability to challenge its highs near 300 to 318. so we've already had a breakout in it. semiconductors, yes, are cyclical they're leaders in terms of innovation and i really think what can be driving the sector is the chips act. there's money being invested by the government in this sector, and you're really starting to see that in the stocks so if we break out tech -- you know, most people own all of the big tech names

they have been leading really charging the markets but if you really pull out an important leading indicator in terms of, you know, the markets and in terms of cylicality, it's the semiconductors and they're trading really well. >> marianne, just quickly, what are you seeing for the regional banks, specifically? >> so, obviously, regional banks, banks got hammered, right? and they've come down into support. and if these sports hold, these are going to be great buying opportunities. technicians are not going to go near them until we get a good basing and get them to move. but if you really look at them from a fundamental perspective, they're trading, you know, some of the stocks are trading below price-to-book, below tangible book and those are generally good times to actually be buying financials given that we may be going into a recession, we're really stressing quality, and you really want to know what you own. but as long as the banks actually hold here, it actually can help stabilize the markets and allow the markets to go a little bit higher.

the s&p 500, you know, has resistance around 4,100, 4,200 and we can actually challenge that support zones are around 3,800 >> marian, thanks. >> coming up, the risks and rewards of artificial intelligence former google chairman and ceo eric schmidt will join us in the next hour to give us his perspective on the current ai arms race. an interview you don't want to miss "squawk box" coming right back

good morning warren buffett making headlines in tokyo this morning, raising his stake in five japanese trading houses becky quick is there and she's going to join us live with an update in just a moment. and alibaba outlining its plan for an ai chat bot rollout we'll talk the future of artificial intelligence and so much more with a former google ceo, eric schmidt. plus, bitcoin hitting $30,000 for the first time since june and etheorem rising too, ahead of an updpgrade. the final hour of "squawk box" begins right now

good morning welcome to "squawk box" here on cnbc, live from the nasdaq market site in times square, i think. i'm joe kernan along with andrew ross sorkin and melissa lee. we're going to check in with becky. she's like far away. >> 13 hours away in tokyo this morning. >> meanwhile, u.s. equity futures are now, started off in the green, but not big moves either way if you turn those numbers green, that's where we were when the show started so take a look at treasuries i think we're under 3.5 on the ten-year, 3.4, and the two-year, 3.995. that's as close to 4 as you can get. and then, maybe the most

significant or interesting development is back over 30 on bitcoin. barely, 30,072 ether closing in on 20,000 -- or 2,000, sorry ether rising as advisers wait the etheorem network's largest tech upgrade that's scheduled for tomorrow. and bitcoin, the first time it's been above 30 since june now up more than 80% year-to-date >> shares of moderna this morning under pressure after the company said it is delaying its flu vaccine because it had not enrolled enough cases in a late-stage trial the shot failed to meet early success criteria moderna also said it expects to file for fda approval of its rsv vaccine candidate. we'll get more details from meg terrell later this hour. >> meantime, alibaba's cloud computing rollout to ai technology chat bot will possess chinese and english language capabilities and eventually be

integrated among their various abilities. chinese regulators draft rules meant to govern ai products. it must embody the core values of socialism and can't subvert state power. must respect spintellectual property and accuracy. they'll be responsible for any content generated. that's a nice segue for our next guest, that knows a lot about the risks and rewards of artificial intelligence. someone who's seen the future and knows it well. eric schmidt is here the former google ceo and chairman he's co-chair of the special competitive studies project, cofounder of schmidt futures, a philanthropic initiative that funds science, tech, and social research, including ai and other things we're all trying to make sense of what's going on and how fast this is all moving i was telling everybody yesterday on the broadcast, i spent the weekend playing with chatgpt 4, and my mind was blown. and i just think about all of the implications, some of which

i can't even begin to think about. but there's a real move afoot, it seems like. we've heard from elon musk and so many others in this space to say, maybe we just slow down what do you think of that? >> well, they wanted was a six-month moratorium, which would have only benefited china, which is not a good idea i don't think china is going to lead in this area, because they can't take the emergent behavior of these systems these systems were based on predicting the next word, the next sentence, the next paragraph, but they're showing remarkable ability for example, you can say, build me a website and it will write the code to build a website. what an improvement! >> but when you think about the implications of that, right now, we're spending a lot of time talking about chatgpt. there's some conversation about bard, which is google's version of this. is this eventually a winner-take-all world? if it doesn't, does it become

commoditized >> this technology is incredibly powerful it's going to be used everywhere every time the computer asks you a question, why does the computer not generate the answer for you? why doesn't it do the advertising for you instead of you generating -- all of this generative ai will allow that. every site, every app you use will use this in some form there will be lots of different things for example, the alibaba thing is something that american companies are already doing. no problem there will be a few extremely large models that will cost $1 billion, $5 billion. and those things are the once everyone is going to watch, because we don't know what they're going to do. every level of scale we've seen behavior that we did is that more about the model itself or the data that its training off of? because we keep talking about the two and how people are going to make money, by the way, off

of some of these data sets >> well, nobody is making money on the stuff right now there are lots of people trying to there's a gazillion start-ups, there's enormous amount of capital. people will make money on it right now, it's a technological achievement of a scale that's remarkable it's data, it's compute, and it's programmers, algorithms we're just at the beginning of building general intelligence in a world where we have these systems that we coexist with is something that we're not prepared for as a society. >> eric, you remember -- i remember it well, the revolution in cad cam cae back in group 128. that was back there in all of those companies. this sounded like a description of the next generation computer-aided design, computer-aided engineering, we're just doing the same thing. it's much better, much more advanced, is it quantum different? >> yes >> it is

>> is there a sentient being on the horizon in our lifetime? >> it's not conscious, it's not alive, it's not sentient, it just looks like it all it does is predicts multi-scale systems, which is very useful in science, in biology, and chemistry this will lead to huge breakthroughs in drugs, we were talking about moderna and so forth. all of these technologies are transformative at that level we don't know -- the biggest issues will be how people interact with these systems. when it becomes your best friend, what will you think about normal human beings? >> why did it all happen -- that's the other thing i asked i had mea culpa. i owned a lot of stock called symbolics. and i talked to you about it, because the ceo of novelle took over at symbolics and that gave it credibility that's -- you know, i built the position, it didn't work, but that was what, 35 years ago.

what changed between artificial intelligence then and now? the most important thing >> the first thing is enormous amounts of computers these computers are super computers like you've never seen but in 2011, a set of people organized a competition around imaging. and they figured out a way to get computer vision better than human levels in 2015, a group of people built games better and learned the games by themselves. in 2017, the "t" in gpt is transformers, which is a way of prioritizing attention and looking at big-scale systems those achievements, which are computers, algorithms, right, and lots and lots of data, are incredible remember that these systems you're seeing have taken $100 million of money to train them that's how expensive they are right now. >> and they're expensive to run. you're playing with chatgpt over the weekend. your search costs a lot more than just an ordinary bing search, these days, at least,

without scale. so i'm wondering how you should think about the change of economics to a business like google, like alphabet's google search engine. where instead of having a sponsored link, et cetera, how duds that work how does that business have to transform in order to make money off of search, when search becomes ai enabled >> today, if you use the gpt category of things, it doesn't work very well for serarch, because they're not current. i asked it who would win the oscars and it gave me an answer of two years ago at the moment, they're not recent at some point, that will catch up remember, in google, google is about advertising. just generate the ad for answers, read the answers and summarize them for me. that should drive revenue. zb >> let me ask you this, there's the search piece for google, but every other site that benefits from google. right now, it's a two-way street, you put in the search and somebody can monetize it on the other side a newspaper, nbc, whatever, can

monetize it through tiadvertisi, a subscription, a doctor can monetize it because you can visit their website and decide you'll go to that doctor and that's how they monetize it. if everything is one way meaning the system is learning off of all of this information, but never sending you back to it, well, what happens to all of those effectively information providers? >> every single one of these systems is going to give you a summary and then it's going to show you what its sources were because you're not going to trust it initially the question of attribution and who gets credit is a huge issue. if you take someone's artistic work and feed it into chatgpt, and it looks the same, do you owe them money there's a sound that sounds -- a new song you think it is jay-z. they effectively sampled his voice, but not the way we listen

to that. and artists would hear other music and they would try to do music, some would say, that sounds like a michael jackson song or that sounds like a taylor swift song, whatever, but it isn't. this is different. >> i'm sure jay-z will want his money. there's an unannounced product that you can record your own voice for 15 seconds -- >> yes, i played with a stealth version of this literally this weekend. it was mind boggling mind boggling. >> what did you do you recorded yourself for 15 minutes and what did you -- for 15 minutes >> and you could type anything and out came my voice. >> the demo i saw was my friend's voice in martin luther king's "i had a dream" speech. it was chilling. >> chilling. >> chilling. >> from a policy perspective, and this goes to the elon musk of it and folks saying, maybe

there should be a time out, part of the time out isn't just about the technology it's having policy catch up with it >> it's not a good idea to time out and let your competitors win. it's much better to get policy people -- where are we on the policy i am not even -- we all know about it a little bit, we probably know more than people in washington do about this. >> the industry has working groups working really hard on this, which i have met with. the government doesn't understand yet and that's okay. it's so new, it's happening so fast remember, chatgpt got 100 million users, right, in two months g-mail took five years >> eric, talked about 35 years ago. let's go 35 years ago. >> you're still upset about symbolics. >> no, now i'm talking about -- have you read "fire" -- >> yes >> you've read that. fiction. is there any way we're approaching the singularity. >> ray talks about the singularity, which was estimated in the 2040s, which is the point

at which computers can evolve faster than humans it could happen. it's science fiction today, but it goes something like this. these systems, which today don't have memory. they can't hallucinate and so forth. eventually, if they can feed themselves information -- here's a good example tell the system, work really hard to learn everything about the world and feed it into yourself it so learns and it learns and it learns and it learns, and you could eventually get that. we don't know yet. >> we don't know yet >> well, along with the singularity could come immortality, according to ray kerswell >> well, your voice, andrew, is going to be with us forever. >> ahhh! >> i want to go back to the sort of here and now of it. when you look at the competitive landscape, because you know about a number of -- about the stealth start-ups and others, but then the microsoft of it all, and the google of it all. what happens meaning, how do you see this play out in terms of winners and losers at this point >> in the first place, there are going to be four or five huge of

these projects and cost $1 billion. and they're going to be watched like hawks because of this question of emergent behavior. there are going to be thousands of companies below and those thousands will be specialized. so there'll be a specialized advertising company and so forth. what we don't know is whether it's the existing companies or not. every single piece of technology that was invented in my career in the last 20 years all the apps that you all use need to be rethought with generative ai. the ability to generate pictures think about it, why do you think you have to take a tiktok video. just describe the video, have the system make it for you it makes perfect sense >> do you say to yourself, we talk about google, we talk about microsoft. you know who we don't talk about? we don't talk about amazon by the way, they had a massive lead in some parts of this universe because of alexa, you would have thought siri, on apple, where's apple in this and so, and do they end up having to rely on a chatgpt -- now, that's supposed to be an open source -- and by the way,

is open ai really open anymore >> chatgpt is not open both apple and amazon have massive efforts inside of them that are not announced so use this technology. the obvious thing as an outsider is, alexa and siri you want a more intelligent ching to talk to just making their lives better i'm sure they're working on it could it be dangerous? >> the six-month pause is because we don't know what social media is going to look like >> but could it ever be dangerous to humans -- >> is this really your fear, joe? >> no, i read a lot of science fiction, and you saw "2001," right? >> i'm just curious. >> "2001," it would not open the door for the humans. >> by the way, that was a movie done in the 1960s. >> unbelievable. >> the first question i asked a chatgpt predecessor was, what's the device that was in "2001: a space odyssey" that we use today and it answered correctly, which was ipad the most important danger is the

proliferation of the raw versions of these models if you asked the system you used, the chatgpt 4 system, it worked really hard to prevent you from asking about bomb making and racism and all of that but if you release them in open source, those protections can be stripped away. we know there are evil people in the world and we know that there are some smart evil people and they could use that for bad. >> and that's dangerous. >> how quickly does this go from being used to write things for us, right? a presentation, you know, if you're a bank analyst, by the way, today, that seems like a job -- there's a lot of jobs that -- but where it goes from writing something to actually doing something. >> right >> when i say "doing something," expedia is trying to integrate this into their service. once it starts to make transactions for you and the transactions are going to be negotiated not just with humans, but possibly bots negotiating with other bots.

and that's -- but then the question is, can it get beyond us once the bots are talking to the other bots >> that's the question of liftoff. can it actually develop some form of intelligence and we just don't know there's a lot of speculation on that but the fact of the matter is, this technology is going to be pervasive. it is dangerous in the sense that if it's used without its guardrails, it can do bad stuff. >> in terms of the competition, we had google launch bard. it was sort of a botched launch. the stock went down on the back of it. satya nadella has told the ftc they're gunning for some of the share. and for so long, google had the juggernaut on search is this a seminole moment for google and alphabet in that these other competitors are there. and could this be a moment where search is up for grabs to some extent >> i don't think so. google has something like half of the world's ai researchers at this level who will have invented much of this

technology google has larger computational resources than the others. google had its own hardware architectures for this google did lead. there's every reason to think that the google leaders can become leaders in this space >> what did you think of that botched launch >> it's hard to know how to launch these systems, pabecause you don't know how to test them. if you release it using bing, its alter ego sidney scared a reporter when it suggested that it should leave his wife it had been trained on romance novels this is the hallucination and randomness that's why you shouldn't use this in life critical situations >> final question. as someone who knows this space, to those folks who are out there thinking to themselves, i want to be investing in the universe of ai, is there a way to do it that's in the public markets today or though?

>> not yet i think it will become clear in the next six months who the leaders are. >> eric schmidt, the real version of eric schmidt today, a year from now, we might have the chatgpt version. thank you. it's great to see you. >> thank you coming up, shares of getty images moving after a move my an activist the details next a programming note tomorrow on "squawk box," don't miss three hours with warren buffett live from tokyo. we'll be right back. this all-new ariya is an elegant ev. yeah, with 389 horsepower. ♪♪ and all-wheel drive. ♪♪ it's beautiful. it's a beast. it's electric. with an edge. oh, let's go with that. ♪♪ i am here because they revolutionized immunotherapy.

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welcome back to "squawk box. gettyimages shares are much higher take a look at what's going on, activist investor trillium capital urging the content provider to essentially take the company private. or for its largest shareholders to take it private collectively. we will see. trillium says it owns hundreds of thousands of shares of getty stock. says the board has not acted on what it calls obvious opportunities to increase shareholder value. we will keep an eye on that little sitch, as the kids say these days

coming up, cnbc has confirmed that warren buffett has raised his stake in five large japanese trading houses. those stocks all rose in overnight trading in tokyo guess who's there? becky quick in tokyo she's going to join us live in just a moment with more of the details. and tomorrow, boy, have we got a big show three hours with warren buffett live from tokyo. be sure to tune in that will start at 6:00 a.m. eastern time and you can stream "squawk box" live on peacock every weekday on the morning news live- ub we're coming right back with becky quick from tokyo

welcome back to "squawk. i want to get to becky who is live this morning, really, her night, in tokyo with our top story of the morning becky? >> you said it it's our night here, and boy, this is a heck of a time change. it's 13 hours later here, but andrew, a lot of people have been wondering what warren buffett and beckershire hathaway have been up to, wondering what they're doing with that cash ward they have increased their stake in the five trading houses, the five joifrmajor trading houses japan. these are companies they revealed back in august of 2020, that they have developed a 5% stake in each of the companies, which is pretty important, because these companies pay such

a major role in the japanese economy. they're responsible for doing everything from importing goods, many of the goods that this country needs, everything from energy and textiles to far beyond that. but also very involved in financing and developing things. and making sure that they provide all kinds of services for manufacturing and other services and industries, too anyway, today, we found out that berkshire hathaway has increased its stake in each of these companies to 7.4%. we knew that they had risen above 6%, as of november of last year, when the company released a filing but warren buffett and vice chair of berkshire hathaway, greg abel are here meeting with the heads of all of these companies today. and that's how we found out about some of this news. you can see all of these companies, shares were up on this news. you saw, they were up anywhere from 2.5, 3%, up to almost 5%. all of these stocks have risen pretty significantly, since berkshire first revealed it was

buying a stake in the companies. we knew that they could increase their stake up to 9.9%, but buffet had said that he would never go beyond that without the explicit approval from the boards of each of these companies. again, he's been meeting with the leaders of some of these companies. he did that today. we'll finish up wrapping up with the rest of those companies tomorrow and after all of that, he'll be sitting down with us for three hours on "squawk box." and guys, it's been a while since we've had the chance to sit down with mr. buffet and speak to him in depth. we'll be talking to him about what he's doing in japan, why he's here. also talk to him about what he's seeing in the financial crisis right now, if there are opportunities he sees afoot, if he's been talking to the biden administration about any of these things what he thinks the economy is doing right now and beyond also maybe what his thoughts are on the fed we'll also be getting the chance to sit down with greg abel, the vice chair of berkshire hathaway, who has been named the heir apparent. he'll be sitting down with us for part of this conversation,

too, and this is the first time we'll be speaking to greg abel on camera. it's something we're looking forward to guys, over to you. >> very, very cool we are psyched and looking forward to all of it, becky. we will see you tomorrow again, your evening, our morning. but folks shouldn't miss it. >> thanks. >> got about a half hour left on today. adfocoming up, we'll get you rey r tomorrow's inflation data what it could mean for the fed's next move. "squawk box" coming right back

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welcome back to "squawk box" right here on cnbc take a look at the futures you know, we had some green on the screen now it's a bit of a mixed picture. dow basically -- dow off -- i should say, dow basically, the s&p 500 as well. the nasdaq off about 11 points >> moderna shares falling on some new vaccine data. meg terrell joins us now with the details. meg? >> hey, melissa. well, moderna is giving an update on its vaccine programs today. and as part of that, a look at its flu vaccine. this, of course, in phase iii trials saying this morning that a phase iii study in the northern hemisphere didn't yet accrue

enough cases to allow it to have a readout for potential early success there. so, the independent data monitoring committee recommended that that keep going in order to get enough cases to look at the efficacy so that is, you know, a little bit disappointing to the street. they were hoping to see that efficacy analysis now. and an analysis of the immunoenginenicity or the immune response did show superiority against influenza "a" and non-inferiority against influenza "b," which is really important. a study in the southern hemisphere did not hit that statistic for flu "b." this does looks slightly better than what we've seen, but we are seeing the shares decline a little bit 5% there in the early trade. the company also provided longer-term guidance for its respiratory franchise, saying that by2027, it's looking at between $8 billion and $15 billion in revenue, just from respiratory product sales. and they are expanding into many different areas. you know, the street is essentially saying, they don't see a lot of visibility out

there. that is positive, but people not sure whether to trust those numbers as of this point and guys, there is a big milestone coming up this weekend to look out for. the company is going to be presenting data at a cancer research conference for its personalized cancer vaccine. that's on the 16th so monday morning will be an important day to watch moderna, as well. mel? >> meg, we know how hard the flu is to deal with, because it mutates so quickly every season. and even when, you know, for years, we've heard, it's 10, it's 40, it's 60, only 60% effective. is that what's happening here? it's not a question about the mode of action of the moderna vaccine. it's just the software, if you will, that they're putting in on the code for the influenza is that what the problem is. in other words, can they do better in terms of generating the right vaccine? >> well, the hope is that you could basically shorten the

timelines that you need in order to choose the strain and design the vaccine. right now, they're still working under the existing construct that's used for the egg-based vaccines, which take longer to manufacture. so what they're doing is comparing, you know, their vaccine to the existing vaccines you know, on the immune response basis, at least against flu "a," they do look better. but we have to see how that translates into protection against, you know, cases of flu. and that is what is sort of delayed right now. but hopefully, as this sort of, you know, establishes itself, we can shorten those timelines and maybe get better matched flu vaccines, using mrna technology. but we have to see that in the future >> okay. >> all right, meg, thanks. meg, terrell >> thanks. markets are always waiting, aren't they? and in this case, that's tomorrow's inflation report. but they may have overlooked some progress, not from prices, but from the job market. senior economics reporter, steve liesman, has more. hey, steve >> hey, joe, this is an interesting story.

the u.s. hid a post-pandemic milestone the past two months when the prime age of participation rate, that's the percentage of 25 to 54-year-olds in the labor force, it surpassed the level of before the pandemic in february of 2020, and that could eventually be good news for inflation. the labor force has grown by 2.2 million, the past four months. january, there was a statistical change there, but 800,000 have come in, combined, in the past two months well, what's happened there is that's pushed up the overall participation rate with the prime age workforce surpassing, you can see there, the pre-pandemic level at long last. goldman sachs writing, labor supply has now fully recovered to trend after declining substantially in the early part of the pandemic, an underappreciated success we're appreciating it right now. there's no single reason people have come back to the workforce in greater numbers it could include things like pandemic savings running out, inflation being high and forcing a second person to work.

higher wages may be a big thing that's attracted people. raising the opportunity costs of not working. the influx of workers creates the possibility that the u.s. is at or near a wage level or eque equilibrium level where labor supply and demand are more balanced and that could mean wage growth doesn't have to go up as high from here as it has been going up that's been actually the trend we've seen adp has a nice measure of wage growth for job stayers and job levers for job stayers, it's fallen from a high to 6.9% now. it's still high, but it's going in the right direction and falling a little bit more quickly. here's the key the impact the greater supply has in the service sector, that's where wages are the biggest part of costs and where fed chair powell says he's watching it most closely more supply and more wage gains could mean that service sector

eases. but it may not happen right away it could be in the coming months we have seen some data like the ism service sector that showed wage gains easing a little bit >> we know the fed's ration now is to somehow slow demand, maybe even across the board with higher rates if labor -- if the supply and demand in the labor market finally are matching each other, anything the fed does to slow demand, that should work that should be -- i mean, i think that's in the back of their mind >> it should help, right >> that's what they're trying to orchestrate. >> it should totally help, joe >> but the service -- the point you make about service, that's been the point all along that's just a much stronger area of post-pandemic -- maybe we should have figured that out, too, that it would be? >> yeah, and we didn't know, joe, is what it would take for people to get back to work people might have been uncomfortable going to work and now they're comfortable again. it may be that they didn't have

the child care situation in the right place. we've had an influx of child care workers we were 100,000 short, now we're 50,000 short that could play a role but the main thing is, you get to a supply and demand meet at the right price. god, we know that's what we do here every day and wemay be close to the righ price here now, there could be some workers that want to still get some compensation for high inflation. some labor markets could still be tight here's the thing you don't go down from here. you just say okay, this is the wage level $25 an hour, $30 an hour, where we can also, we can agree that we're going to come to work and have enough supply here. one issue could be, you could have a compositional effect on wages right now. the first people to come back to work were the higher wage workers. right now, it seems to be lower wage, less educated workers are the ones who are the ones coming back into the labor force. >> all right, steve. we're going to talk more about

this with our next guest for more on the wage trend, the fed and this week's inflation data, let's welcome nathan sheets, global chief economist at citi. i don't know whether you have comments about steve's report, but if we're finally matching supply and demand and labor and the fed keeps raising rates, that should work then, because then, the demand goes down, we got enough people ready to work, wages moderate, unemployment goes up, and mission accomplished oh, my god, that's a horrible term >> well, i think steve is describing a fib irile scenario from the fed's perspective and i think he's right we're seeing some labor supply but my wrreckoning is that the demand side of the equation, the demand for labor right now has remained very brisk. and i think the jolts data highlight that and i think in that environment,

we're going to continue to see tight labor markets, yeah, wage growth has been a little bit softer, but still higher than the fed would like and i think that's going to continue to put upward pressure on inflation and i think we're likely to see some of that in the cpi print tomorrow >> are we at the high end of the participation rate, nathan how much higher could we go? sky's the limit? >> when i look at these data, it feels to me that with the kind of prime age, so-called prime age, 25 to 54-year-old workers, we've had a nice recovery, but when you look at workers, 55 and over, that is still very depressed. and i think that the next kind of round of expansion in the labor force participation is likely going to come from that

cohort from some of the older workers, who maybe think at the moment they've retired, but over time are going to be beguiled back by a tight labor market, favorable wage conditions, attractive employment terms, and they will gradually return over time >> if -- i want to characterize people, put them in a box, but the people who say there are too many good reasons to stay home, if you totally took those away in a way that was equitable and fair, what would the normal participation rate be in the view of these people, do you think? how high could it get? how under -- how low is our participation rate based on some of these government programs >> when we compare labor force participation rate, particularly for men in the united states, relative other countries, it is remarkably low

and i think a huge question that i struggle with is why is that the case and i think there are a lot of factors, maybe some government programs, some sociological and so forth that are at play. probably imprinted from the opioid crisis that we're facing. so i think that there is a lot of work to be done to better understand that part of the participation rate our participation rate for women is more comparable to that internationally, but i think that that is another place where there's probably also still, if we get our arms around child care and some of these other issues, where there is some upside potential so from here, it gets harder with the exception of maybe some of those older workers coming back but it's a challenge and it's something that i think public policy and congress should be thinking very

carefully about. >> yeah. so there really is something to that argument. do you think where interest rates are right now will just overall demand start to slow >> i think we are getting very close to a place where the fed is sufficiently restrictive. when we think about, you know, what's happening with the consumer, still some strong demand for services, that's not going to last forever. you know, it's likely to require, you know, a little bit more fed rate hikes, my sense is, that they're going to get into the 5s. but i think now the big question that the fed's wrestling with is how to think about the financial stresses and pressures that we've seen and i think the acute phase of that is abating. but i think we've all got to put on our seat belts and watch over the next likely over the next

several months to see whether we get into a tightening credit environment that could be characterized as a full-blown credit crunch. i think that's the big question going forward that the fed is going to be wrestling with in its upcoming meeting >> because they did 25, they're going to probably do another 25. does that mean they would have been doing 50 without the each time so it's worth at least 50 basis points the credit tightening from the stress i strongly believe if we had not had these banking stresses, the fed was signaling it was going to do 50 in march. and i think that they pulled back in an effort to balance financial stability and inflation fighting and did 25 and the way things were going earlier in the year, before the banking stresses, 50 in may was

certainly on the table so i think that, you know, what is the impact of the banking stresses, the financial stability? but that's just a guess, and the effects of this could be markedly more severe than what i just described >> excellent summary of everything, nathan nathan sheets, global chief economist at citi. just spanning the globe. thank you, nathan. >> coming up next, the new york stock exchange with jim cramer, what he's watching this morning. and programming note over the next two days, you'll bring you some special interviews from the leadership summit in kiawah including george pine, billionaire investor mark lasry, alex carp

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let's get down to the new york stock exchange with jim cramer who's joining us now. i don't like macro >> well, what people say, you say, hey, listen, it's good or

it's bad you know and i know that there's a lot of subtlety to that. some things are good, some things are bad but most of our viewers are not hedge fund managers. >> right >> they're just not. i mean, maybe we want that, but they're not. >> so it helps to -- it helps to, you know, can use to help -- >> right unless trading the qqq i think we have to take a presumption that there are people who watch the network who own stocks and aren't doing whamma jammas in the futures if you look at that, they're undervalued. >> what are we going to be talking about the rest of the week what do you think of buffett going all the way to tokyo to find good value? >> i think it's going to be considered -- people will say our market is overvalued i'd say it doesn't matter where he goes. i'm not saying he's lost his edge and i know he's got a new

guy. and maybe japan is relatively cheaper. but i don't know what to do with it i'm not going to be able to do what he does i just think there are a lot of stocks after the banks tell us things are bad, you're going to be looking at stocks figuring out what to buy, not what to sell. i don't think anybody going anywhere other than america is going to have a very easy time of picking good stocks. >> nobody can do what buffett does in terms of being really good also, some of the terms he's gotten in the past were like, i would do that if i could, but i can't. >> absolutely. he's earned that i'm not jealous of it. he's earned it i don't think he invests like us >> i know that that's fact. thanks, jim. we'll see you in a couple minutes. "squawk box" will be right back.

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so they can do more of what matters. benefits. payroll. compliance. trinet. people matter. a little more than a half hour in opening bell nasdaq will be down by about ten points let's talk about the markets

with joanne feeney great to have you with us. are you putting fresh money to work here ahead of earnings season >> hey, melissa. it's certainly a rocky time ahead of earnings season we do expect bumps in the road we don't think that's a reason not to be fully invested in the equity market at this point. we're pretty selective about the stocks we put together for our clients. right now it's a pretty good time to mix. stocks that offer potential with stocks paying higher than average dividends to help get through this bumity time. >> in deciding which stocks are good, are you looking at valuation? is there a magic number there relative to the s&p's valuation? >> you know, it depends. we're garp investors, looking for growth at a reasonable price. in the tech space you have a broad selection on valuation m metrics and growth potential with pcs, as we heard from apple

news and smart phones suffering a cyclical decline, this might not be a bad time to look at something like a qualcomm, probably at a cyclical bottom. it's below 15 times forward earnings and offers a hirer-than-average dividend yield. >> is apple or microsoft, are they garp in your view ubs is cutting estimates it believes azure growth estimates on the street are too high going into the quarter. there's doubts about whether they'll give the growth part of the garp >> i can see how investors with a shorter horizon might be nervous about this quarter there's a lot of news already out there. i think investors have the right expectations this quarter is going to be tough. if you're an investor looking out two or three years and you look at the growth potential of these companies relative to their cost, relative to earnings over that time period, yes, these are both garp

opportunities. we don't think you should be as exposed as, say, the index is, the market cap s&p which is why we don't like index investing for our clients. you want to be careful about that exposure. over the multiple-year period, these are two companies with entrenched end markets and could be good opportunities for a long-term investor. >> lennar, is that one you've liked for a long time or do you want more clarity on where rates will be heading? >> obviously the higher mortgage rates were a headwind for all the builders we've owned it for a long time and it's done well over that period right now we're starting to see a turn in residential building the highs of the mortgage rates have come down a little bit. yes, we could see an increase in the fed. we're expecting that in may. ultimately if you look out a year, rates are likely to be lower than where they are today. we're seeing the ten-year down below 3.3, 3.4%. that portends well for mortgage

rates. ultimately we have all these millennials that need to get if their first homes. lennar specializes in first home purchases and one step up purchases. they're right in the sweet spot of where demand will be maintained in the housing market for a long time to come. >> i'm curious what, if any, role does what's happening with banks and future tightening of credit play in your outlook? >> we're all trying to handicap whether they're going to get a recession and how much rates are going to rise. the tensions in the bank industry certainly feed into that narrative what we have to do along with the fed is wait to see how tight lending conditions have become and how much that might impinge upon economic activity wurn thing we do know, there are a lot of companies out there with very strong balance sheets who have the cash, who can continue to invest in expansion of their manufacturing

capabilities, their services, et cetera it isn't like we would expect to see a broader deep recession should those lending conditions tighten a lot further. it does, though, speak to the idea that you've got to be very selective anywhere you look for opportunities in this market look for the companies with the good balance sheets and the cash to be able to maintain that expansion and look for the end markets where that expansion is likely to continue data centers, for example. the housing recovery is another example. >> joanne, thank you joanne feeney. we've got a big show tomorrow on "squawk box. don't miss a special interview with warren buff ett life from tokyo. we'll talk to him and his heir apparent, potential successor greg abel. becky quick in tokyo for three hours. a final check on the markets before we hand it over to our friends on "squawk on the street." looking at a little bit of a

mixed picture. bitcoin, by the way, over 30,000 that's its own story the ten-year note, looking at the ten-year and the two-year as we flip the board around 3.396, two-year at 3.983. a quick oil board? do we have time for an oil board? maybe we don't make sure you join us tomorrow so you'll have time for warren buffe buffettment. "squawk on the street" is now. good tuesday morning i'm carl quintanilla with jim cramer david faber is back. stocks biding their time ahead of cpi tomorrow. bond yields continue to rtal around in a range, 10.34 bitcoin back above 30k, a ten-month high roadmap begins with stocks treading water investors awaiting key reads on the economy. new york fed president williams says he sees nsi