and wow, there's a lot going on. squawk box begins right now. >> good morning, everyone, and welcome to squawk box right here on cnbc. we're live from the. >> nasdaq market. >> site in. times square. i'm becky quick along with. >> andrew ross. sorkin joe is out today. let's take a look at what's. >> been happening with the us equity futures. >> andrew teed. >> this up. you are looking at some massive. shifts this morning. >> in what the. >> market is assessing when. >> it comes to ai. deep seat really changing things. we're going. >> to talk more about that in just a moment. but check out the impact. >> on the major averages. dow futures. >> are indicated down. >> by about 430 points. >> right now. >> you've got the s&p futures indicated. down 160. >> points in the nasdaq.

>> down by more than. >> 1000 points. >> and this is coming. >> as the markets. >> are just coming off of some pretty record levels. in fact this morning the s&p has indicated down by 2.6%. >> the dow. >> has indicated off 1%. the nasdaq is where most of the damage is being felt. it's down by 4.5%. but you got to remember, the mag seven makes up a huge portion of the s&p 500 too. and so any impact on those stocks are being. felt pretty horrifically across the board for the s&p 500 as well. >> the s&p 500. >> actually touched a record level on friday's trading. it ended up closing down by less than 1% from. >> the all time high. >> you had the dow and the nasdaq both less than 2% from all time highs. but again, you can see how the market is trying to reassess what to make of all of the potential capital spending that's going to come the way into the mag seven, and many of the other big chip stocks and other equipment makers that were benefiting from this ai boom. if things can be done more cheaply, we'll talk more about that in just a second. there are questions about what that means for the other major averages. don't

don't forget we've got an fomc meeting fed meeting this week to determine what they will do with rates. and as a result this is what you see with the treasury market this morning. ahead of that the ten year is back down to 4.5%. yields down across the board. the two year yield is back below 4.2% at 4.18. and then you've got bitcoin tumbling today as well as it tends to do when it comes to the tech stocks. when tech stocks suffer bitcoin tends to do that too. and this morning bitcoin is off by about 6.3%. it's back at 98,454. >> let's talk about deep. >> sync because it is. >> mind blowing. and it is shaking this entire industry to. its core. the emergence of deep sync now putting pressure on the u.s. tech names. we told you. >> all. >> about it last week in davos. the buzz. started growing about deep six latest ai model being more efficient while running on. >> a lot. >> less, a lot less advanced nvidia chips released last week. it's already being called what is a major breakthrough as the app shows its work, its

reasoning. it answers users prompts. i, by the way, was spent basically all weekend playing with it. it is the number one app, i believe, on apple right now. the product overtaking chatgpt today as that on the app store. that way, deep seek, which was created by a chinese hedge fund manager, also capturing the attention of leaders. as we mentioned at the world economic forum last week in davos. >> i think we should take. >> the development out of china. >> very, very seriously. >> what we found is that deep seek, which is the leading chinese ai lab, their model is actually. >> the top. >> performing or roughly on par with the best american models. >> if the. >> united states can't lead in this technology. we're going to be in a very bad. >> place geopolitically. >> now, you can take a look right now at the ai related stocks. so nvidia, arm, amd, microsoft meta. interestingly on that list, given its open source, we got to talk about the open source closed source bit of this as well. >> and then you have a shocker.

>> to see. >> nvidia down. >> by more than 12% right now. >> absolutely. and then you have global chip stocks also in the red across the board asml holdings and others. there is the question i. >> will say. >> alexander wang made the point last week. and it's to become. sort of. >> the. >> question mark about. >> all. >> of this, which is, you know, he suggested. >> on our. >> air that it. >> is possible. >> that they were using some of the highest performing nvidia chips, perhaps as many as 50,000 of them, to build this model now. and they weren't supposed to have those chips, right. if that's. if that's if that's. >> true. >> not the. >> size of the dynamic is different. if it's not true, then maybe all bets are off. >> it's possible, by. >> the way, even. >> if it. >> is true. meaning even. >> if they use. those chips. >> to create this. >> or at least partially. >> to create this, it is still a significantly more efficient and better model. i think everybody. agrees that right this moment. i mean, i don't know, did you get to play? it is mind blowing. >> it looks really great. i

mean, it feels like it's that it's open source so people can. >> test this. >> out themselves. >> but i can tell you. all the tests that. i do. >> just to see. >> whether you ask. >> whether i think the writing is better, whether i think that it can answer certain questions. i mean, it was not only. >> faster. >> it was more human. >> the reasoning. >> was is shocking. i mean, there were moments where i was like, oh my god. this we are, we are so much. you could feel the step change as a person. >> it was it. >> i will also say, as exciting as it was, there was an element where i became scared because i thought, oh, you know, i had the opportunity to talk to all these people last week and they all said, the future is here, and da da da da da. and then you sort of see it and you go, oh, okay, i feel you in a, in a different sort of visceral way. so yes, i think this is all happening at a level that i when you, when you mark your sort of ai history timeline in life. i think this week, this past week today and everything else will be on it. >> i think mark andreessen put

it really succinctly and really smartly. >> when he said. that this. >> feels like the sputnik moment for. >> the ai. >> race where china is really stepping in. so not just what it can do, but what it means for american dominance in ai, what it means for the chinese being able to step in and to have the chinese actually open sourcing it, meaning that that is going to be what goes around the world, and to have the cost factors that go into this huge, huge step up and change and puts us a little bit on our back foot in trying to figure out what this means, i actually wonder, satya nadella, would he tell you again today that he's still good for the $80 billion? >> i think they still are good for the $80 billion. i think they're i think actually everybody i think the processing power issue is there's an element of which you're going to still have to have the current sort of efforts underway. i think the question longer term, i think it's a longer term you. >> recoup your investment. i mean, can you recoup your investment if that's the case? >> well, i think this is the big

issue. >> and i think. >> at one, to pay for it. >> if at one point and i don't know if we talked about it on squawk or it might have been on worldwide exchange, one of the things that i was hearing that was fascinating out there is there were so many ceos who were saying, you know what, i'm using open ai and i'm playing around with anthropic to figure out what i need to do. and then, which is expensive for us, and we don't really love that. so we're playing around with what we need, and then we're trying to figure out whether how much of it we can replicate using lama, which is the meta version of it, but it's open source and effectively therefore free. >> well. >> and you can have some control over. >> it. >> too, as being open source. you can do things that you end up this way. you're not so beholden to openai. >> but but to me that's the issue. so here we have a situation where if people are already starting to move towards open source models, and i don't think that had been talked about publicly, really. that's a that's a whole kind of paradigm change. >> just back to the question on microsoft. microsoft shares down 6.8% this morning. is there a

point where satya says, okay, maybe i'm not good for the 80 billion? like. >> i don't know, i don't know. i think he's still going to need this technology over the next five years. the question is can yes, can he go? is he going to start using deep sea? by the way, there's a separate question, which is, you know, if we think we have a problem with tiktok. >> oh, i thought this instantaneously. >> if we think we have a problem with tiktok, do we have a problem with this? now, interestingly, this is an open source model. and do your own stuff. put it on your own. >> so they're. >> not computers, right? >> unless there's something in it that we don't understand. >> you know they talk about project texas with. >> but i. >> thought you can have it on your own. >> tiktok looks like posers play compared to what this could potentially be. although this is open. i mean, this is open ai. so you can take it and source it yourself and figure something out from it so you're not storing it on their servers. >> anyway. it's fascinating. i think if you're i do think, well, i don't know, i, you know, let's we should call satya to get him back because the truth is he does need some form of ai, you know, for his copilot and all of his other software. >> but does. >> it have to. >> be does it have to be open

ai? >> and is there a way to do it more cheaply and not have to spend $80 billion? >> i think the question is. >> probably that. >> over time they're going to have to spend less money. i don't know if you saw he put out a tweet just overnight called the i didn't know about this. it's called the jevons paradox. and he links to a wikipedia page, which i'll read to everybody if you'd like. in economics, the jevons paradox, sometimes referred to as the jevons effect, occurs when technological progress increases the efficiency with which a resource is used, reducing the amount of necessary necessary for any one use. but the falling cost of use induces increased demand, enough that resources used is increased rather than reduced. >> could be. but does he still need to spend $80 billion to get to the same place? could he spend $50 billion and still get the same out of it? if you again, if you can find ways to do this more cheaply, if the architecture structure is such that you can actually get more efficient with all of these things, maybe it doesn't have to spend the $80 billion. >> i think he may still need to,

just because of the abundance of how much processing power. i mean, look, the guys who are i mean, this deep seated, for the most part, people are now running on their own laptops and doing all sorts of things. so their their computers are not overwhelmed. but if you decided you were doing this in the cloud or there was gonna be a cloud based version of it, you'd still need a lot of processing power. i will say, just on top of his tweet. and this was just five hours ago, he says the jevons paradox strikes again as ai gets more efficient and accessible, we will see its use skyrocket, turning it into a commodity. correct? we just can't get enough of, though. and so they just can't get enough of piece of. it may be the thing that hopefully helps them longer term, but still i think it's very it's the big question, right. >> and if you're doing it so that consumers are basically doing this for free, it's just who's paying the way on this, is there going to be are companies going to pay? are they going to find cheaper ways to run some of this stuff themselves? to just a lot of questions, this raises also raises the question again as to whether the $100 billion

that's been promised by larry ellison and sam altman and amazon, is that going to still materialize? because they're still have to raise a lot of this money right to. >> so i think actually, that is more that is the is the right question. i mean, even the bigger. >> question that that is going to be a tougher one, because who's going to give them money for this? satya may still have a lot of money that he's going to be spending to find his way to find microsoft's piece of it, and that's different. it may or may not be $80 billion. he may not need it. but who's going to raise money for this other openai project that is exclusively supposed to be openai? but from everything i've read and heard on this too. so lots of questions about that. there were questions already if they had 100 billion, let alone to 500 billion. now what? now? what do you do with this? but bigger issue is going to be for investors today how this changes the landscape. because you can see broadcom and video micron constellation energy just changes across. >> the spectrum. and by the way the it's the i mean that's what you're thinking about like

constellation. needs the energy needs change. >> the energy needs that go along with all of this. because we had all these questions. and by the way, we've been saying all along, energy is going to have to be more. we're not going to be able to do these things. and everybody says there's always technological change that comes along. they thought it was going to be for the grid. maybe it's just for the ai needs itself. a lot of questions there. we're going to be talking about through the course of the morning. when we come back, we will talk much more about the sell off that we are facing. here's a look at the tech names that are dragging down the nasdaq 100 this morning. it's down by a thousand points right now the nasdaq futures. that's because you're seeing a drop in constellation energy of 14.8%. marvell technology down 13.5. broadcom is down by 12.75%. nvidia is down by almost 12%. micron shares down by 10.4%. this is a tectonic shift that we're seeing in technology stocks this morning. and we will continue to see how this plays out as we get closer to the opening bell. up next, we will look ahead to a potential market catalyst this week. that would be the fed's next rate

announcement that is due on wednesday. former fed vice chair roger ferguson will join us next. >> if you have a child or a dependent under 17, you may qualify for the child tax credit. you could get a benefit of up to $2,000 per child. if your income is under $400,000. for married couples and 200,000 for other filers. those with higher incomes may get a partial credit for cnbc. i'm sharon credit for cnbc. i'm sharon epperson. carl: what's up, carl nation! it's your #1 broker with the best full-service wealth management skills in the biz. tech asst: actually i'm seeing something from schwab. (uh-oh) producer : yeah, schwab lets you invest and trade on your own. and if you want they can even manage it for you. not to mention, schwab has a team of specialists for taxes, insurance, and estate planning. both producers: all with low fees. carl: we're experiencing technical difficulties... uh, carl... schwab! schwab. a modern approach to wealth management.

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>> all right. welcome back everybody. markets are gearing up for the federal reserve's first policy meeting of the year for insights on what the fed might do and say about rates. this week we want to bring in roger ferguson. he is former fed vice chairman, also a cnbc contributor. and roger, normally i would be asking you what the fed's going to do, what they're watching in the markets. i have to start by saying, if you were still vice chairman and you saw the moves you're seeing in the markets this morning, based on the potential shift in ai and the competitive landscape, how would you be factoring that into how you felt about any rate determinations for this week? >> look, i think it's. >> too early to. >> factored in. >> in a. >> narrow sense. i think the real question is, you know, is this ai going to unleash, as we hope it does, another productivity boom, which would make things increase the potential growth rate and the fed would have to manage through

that. and so i don't think it's a short term question. i think it really is. is this a tectonic shift, as with the last productivity boom that gives the fed some more flexibility, and one can hope that we can have higher growth with lower inflation. so that's where i think about the ai. >> question okay. that's really interesting. so this is something that's going to play out over time. how long did it take to really figure out that we were in the productivity boom, that we were in the last go round? >> well, it's very. >> interesting question. actually. >> alan greenspan. >> figured it out before others during his tenure. there are a couple of well respected governors who wanted to tighten policy, thinking that we were on the verge of an inflationary pressure, and he slowed things down quite a bit and proved to be right. and so i think this one is slightly different in that it's much more visible. and we're starting already to see some of the impacts. so i think this will play out much more quickly for reasons that you've talked about. businesses are adopting this technology, using it to change how they do

business in things such as call centers. so i actually expect this to play out relatively quickly. and so much in the news that i think all of us will be able to see it and measure it for ourselves. >> you know. >> a week ago i would have said that i would have expected the fed to pause at this go around. they kind of set it up for such. we've seen the rate cuts. we've seen a lot of questions about what comes next. and i thought the fomc was kind of in a good position to just pause and look around. then you've got a new president, a new administration coming in. and that president has been very vocal about how he wants to see rates lower, not only here but the rest of the world, too. what kind of additional pressure does that add, and what do you think the fomc is going to do this week? >> look. >> it obviously add some pressure to have such a vocal discussion on interest rates from the very top of the power structure in the united states and indeed in the world. however, back to your first point. you know, the fact that it was so widely expected that

they would keep rates steady at this meeting. pause and look around, as you say. i think they're certainly going to be inclined to do that. i don't think they want to be seen to be changing strategy or tactics based on outside pressure, and i don't think the numbers would support it. so i think their own credibility and the wiser move is to continue with the status quo, as already suggested. pausing, looking around, waiting to see how things unfold. >> you know. >> that makes sense, i get it. but then you watch what happened with columbia over the weekend, when the pressure really came down, and the quick about face that columbia's had to do, do you anticipate that there will be some sort of massive amount of pressure coming from the white house, coming from the bully pulpit at that point? and how does the fed react? again, if that's the case, if they get immediately publicly rebuked for not cutting rates? >> look, i think they're

probably expecting that to occur. so it won't be such a surprise. i think it's very important for the fed to position itself not in opposition to the administration, but rather focusing on the real economy. and so i think they're going to, during the press discussion and other places, emphasize fed independence. talk about how incredibly important that is for the stability and growth of the united states economy, which we all want. it's very important for the ability of the united states to continue to issue debt. and we haven't yet seen, you know, the how the first reconciliation plays out. and so i think they're going to ground themselves in, you know, an independent fed, being data dependent at this stage is better for everyone. and by implication, you know, better for the president himself. that's not going to stop the president. and i don't want them to get into a tit for tat war with the president. but i think they're going to have to stand their ground in terms of being an independent agency, taking a

long look and keeping inflation under control, while also, you know, focusing on on maximum employment. >> but but roger, your feeling is right now is the economy is arguing for a pause, not not a move in any direction. >> i think that's right. you know, everyone is recognized, including chairman powell, that inflation seems to be moving sort of sideways. we do seem to be having growth that's, you know, at or slightly above potential and unemployment rate at 4.1% used to be considered full employment. none of that sets me up or i think sets them up for a cut in the immediate future. on the other hand, you know, inflationary pressures while, you know, sideways have been moving down and we're waiting to see what the new policy prescriptions are in terms of fiscal policy. so i think wisdom at this stage and the view of the fed is, let's wait and see a great deal of uncertainty. let's have some of these clouds of uncertainty clear before they take the next

move. >> roger. thank you. >> thank you. >> coming up. a lot more on squawk box this morning. colombia and the u.s. pulling back what from what seemed like a trade war that might have cost us a little bit more for coffee. we'll talk about that overnight. plus, as we head to this break, take a look right now at the price of bitcoin because as we've seen the tech stocks fall off, we've seen the price of bitcoin fall off as well. down close to 6%. $98,000. right now just under $100,000. of course, that had been sitting up at about 103 104 before squawk box coming right back after this. >> powering sustainable growth in a changing world. powering financial. solutions that transform. >> industries. >> powering innovation. >> with access to capital. >> powering critical. decisions with. precise data.

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>> new overnight. the u.s. and colombia pulling back from the brink of a trade war. at issue is this president trump threatened to impose 25% tariffs and economic sanctions on colombia. that was in retaliation for the government there refusing to allow two military planes with deported migrants to land in the country. apparently, they had been authorized originally and then were turned away. trump said he would immediately impose the 25% tariff that would increase to 50% in a week. but then late last night, the white house announced that colombia had agreed to president trump's terms, including the unrestricted acceptance of illegal aliens from colombia returned from the united states. colombia's president had earlier condemned the military deportation flights, saying he didn't believe there was dignity involved with it. colombia said he would welcome home deported migrants on civilian planes, and offered his own presidential plane to facilitate their, quote, dignified return. there were questions about how much

coffee would cost, given that, of course, coffee beans. capital of the coffee bean world. starbucks, by the way, relies on so many of them. and so there could have been an all out trade war of some sort. the president in colombia at 1.1 is going to put tariffs on the us. i mean, it was sort of a wild situation and appears, at least for now, to have subsided. and the question is does. >> colombia i think is even tweeted out the white house's press release. >> and does the message therefore get sent to other countries about the return of migrants? how that's all going to work? >> apparently some of these closely. >> at this, some of the other south american countries, though, are apparently now talking to each other about sort of banding together in terms of how they're going to accept migrants back, how they're going to work on these things so they have some more leverage. it's interesting colombia had very little leverage with the us on these things. >> i think it's our third largest trading partner in south america. >> but if but if all of them get together and decide that they're like a bloc, then it gets more complicated. so it's very interesting to see how all of

this stuff. >> happens in such fast time, too, because usually you go through the bureaucracy with this. this would be something where different departments, whether it's ice, the state department, all kinds of different departments would be kind of coming up with plans for this, presenting them over the span of days and weeks. this happened instantaneously. while president trump just said, here, i'm going to post what i feel about things. it all carried out pretty publicly in social media and very rapid time. so a very different way of going about things and doing business. we should tell you at&t is out with its quarterly results, earnings. >> at the. >> company coming in at $0.54 a share. that's $0.04 better than the street was expecting. revenue was $32.3 billion. and that also beat expectations. at&t reporting 482,000 postpaid phone net adds during the quarter. i think that that is versus 427,000 that the street had been anticipating. fiber net adds 307,000. they say that's their best ever. mobility

services revenues up 3.3% over the prior year to 16.6 billion for the full year. at&t is now saying that it expects adjusted earnings, excluding directv, somewhere in the range of $1.97 to $2.07 a share, and consolidated service revenue growth in the low single digit range. you can check out the stock right now. it's indicated up by about 1.8%. i spoke with pascal desroches, who is the cfo at at&t. he talked a little bit about what they're seeing for the year. they reduced their net debt by about $9 billion to roughly $120 billion. so they're now at under 2.7 times leverage. and they say that they are on track to get to two and a half times leverage by the middle of the year. still talking about share buybacks, $10 billion of share buybacks. they see 20 billion over the next three years in share buybacks and about $20 billion in the next three years to in dividends. so a lot that they've been paying out over all of this time too. just in terms of what they're

seeing in the overall atmosphere. pascal says we feel really good about the overall health. you did see verizon beating expectations last week, too. so both these companies performing well, and right now, at&t shares up by about 1.8%. the ceo of at&t, john stankey, will join us live in the next hour. squawk box will be right back. >> my clients. >> deserve someone who understands. >> their. >> world. >> someone who. >> listens. >> who has their best financial interests at. >> the center of every decision. >> our business. >> is. >> built around. >> being responsive. >> to our. >> client's ever changing needs. >> as an advisor. >> as. >> there are a custody. services provider. >> i see my. client's success as my own. >> because when they grow. >> we grow with them. >> for over. >> 25 years, we've been committed to rias. >> and that's why. >> i chose tradepmr. >> home, the place where you create those. >> special moments. >> we celebrate. >> the home and. >> the. >> way you live in it. at three

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>> amazing and is something. >> that we. >> get to. use every day. >> good morning, everybody, and welcome back to squawk box. we are live from the nasdaq market site in times square. if you take a look at the futures this morning, if you're just waking up, you better sit up and pay attention because we are looking at a pretty big pullback across the board. dow futures are down by 423 points, but on a percentage basis it is the least affected by this. the s&p is down by 150 points. the nasdaq is indicated down by 920 points. as you can see the dow futures. that's really just a decline of just under 1% for the s&p 500, though, which did touch an all time high in the middle of the session on friday. before closing down a little bit, it closed down less than 1% from an all time high. and it's now indicated off 2.5%. this morning, the nasdaq, which closed friday down less than 2% from an all time high, is now indicated off by more than 4%.

and the problem is take a look at stocks that are dragging things down. the problem is across the board when it comes to technology and questions about ai, all the high fliers of ai being rethought after this deep seek, ai is really changing the perspective of things and raising questions about whether there's going to be so much money that needs to be spent on ai that's rippled across the board. nvidia shares lots of the chip companies are down. you saw constellation energy down as questions about whether the build out would need to be as expansive as we'd imagined, and even some of the big tech names amazon. meta, microsoft. those stocks off to microsoft right now down by about 6.3%. but the declines have been broader. if you're looking at broadcom, if you're looking at asml if you're looking at nvidia those stocks down in many cases by double digit percentage points. >> so if you believe it i mean here's just the distinction. so openai founded now a decade ago has 4500 employees and has

raised about 6.6 billion that it spent out deep. sikh founded two years ago, 200 employees developed for less than $10 million. >> if you believe it is the question, if you believe open. >> source, believe. >> that people trying to. >> figure out the fundamental question. >> about all this. but no question, people are taking it very seriously in silicon valley who have been trying to figure out exactly how this works and how to replicate it. >> meantime, i'll tell you a different story this morning, because republicans heading to miami today for their florida retreat meetings, expected to start later this afternoon and go into wednesday. emily wilkins joins us now with more on the gop agenda. good morning to you. >> good morning. hey, andrew. yeah. you know, trump had. >> this. >> record setting. >> first week in terms of what. >> he got done. >> but a lot of his. >> agenda. >> it really. cannot move forward without having action from congress. and that's the top goal for house republicans that are heading to. >> trump national. >> doral in miami to make progress on. this massive package that's really set to

impact. >> so many different things immigration, the border, energy, health care, it's all going to be in here. and senator lindsey graham told meet the press with kristen welker yesterday that without congress approving some funding, some of trump's plans just. >> can't happen. >> here's the question for the republican party. we talk about doing this, but we don't have the resources. we haven't given the trump team the resources. tom homan, the border czar, said yesterday. without money from congress, i can't do this. he needs substantially higher, more ice agents. he needs to finish the wall and technology. he needs to go from 41,000 detention beds to 150,000 detention beds to make this work. >> jim jordan, who. >> chairs the committee. >> that. >> oversees immigration, said that lawmakers are going to. >> have. >> to pass funding for things like more detention into making progress on their

legislative priorities. lawmakers are also scheduled to hear from trump tonight, and i will be reporting live from miami with the recap tomorrow, guys. >> okay, emily, thank you for that. we'll keep our eyes on all the news that emerges out of those meetings. thanks. >> when we come back. europe's largest low cost carrier ryanair posting some solid results but warning about its traffic goals and issues with boeing. we will talk to ryanair's cfo next. and a reminder for you, you can get the best of squawk box in our daily podcast. just follow squawk pod on your favorite podcast app and you can listen at any time. we'll be right back. >> nothing stands still. not technology, not the market, and not franklin templeton. we've been a firm in motion for over 75 years, always innovating. today, we are a leader in public and private markets, digital assets and custom tax

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>> welcome back everybody. ryanair beat expectations for its latest earnings report. but europe's largest low cost carrier cut its passenger traffic goals for the year, blaming boeing 737 production delays. it's not stopping the stock. this morning it is up by about 2.5%. and joining us right now is ryanair cfo neil sorahan. neil, first of all, let's talk about what happened for the year. you guys had better than expected numbers. and i think a big part of that were people who were booking over the christmas holidays. >> yeah. the quarter ended up strongly, as you said, 149 million profit, up from 15 million last year. traffic is strong, up 9% to 45 million in the quarter and fares a bit better than we'd indicated back with the half year numbers in november, where we thought fares would be modestly down. they finished marginally up 1% per passenger. costs continue to perform very strongly within the group, so about a 1% per passenger reduction in costs over the course of the quarter

as well. and then, you know, it would be wrong not to highlight that there was an easy comp in that last year, the online travel agents took ryanair off sale in november december 2023. that's pretty much in the rear view mirror now, and i think we saw the benefits of that coming through in the quarter. >> you are warning that your passenger numbers aren't going to be quite as robust as you had been thinking before, but that's because you're not going to be getting as many planes from boeing as you anticipated. walk us through what you're now seeing and how many planes you expect to get delivered. >> yeah, we had 172 of what we called game changers, the max eight 200 at the end of december. i think we'll get another nine of those. so we'll have 181 of those aircraft in our fleet for the peak summer period. we anticipated that we would have had about 25 of them into the summer. so, so well behind the ramp up after the strike has been a bit slower than we would have hoped for. but that said, myself and michael o'leary were in seattle

a couple of weeks ago. i'm definitely seeing improvements on the ground, having been there last september and this time last year. the quality of fuselages coming out of spirit and wichita is much improved. disappointing that we'll be behind on the traffic this year. we're only growing to 206 million passengers instead of the planned 210 million, but i'd have a high degree of confidence that we'll get those nine additional aircraft before the summer. and then that leaves 29 aircraft in our current 210 order book with boeing for max eight 200. and again, i'd be disappointed if we don't have all of those ahead of the summer of next year, which will enable us then to ramp up traffic to another 215 million. so we'll catch up on the opportunities, albeit a year later than we'd hoped to do. >> so the street again doesn't seem too surprised. i think everybody knew that you weren't going to be getting all these planes. so the stock this morning is up by about 2.5%. for

the one year, though, it's down by about 9%. is that because the recognition of these planes not coming in is kind of gradually developed over that time? or do you think this has more to do with the back and forth skirmish you had with the travel agents? why do you think the stock is off 9% for the year? >> for, for the year? well, i mean, a lot of it's down to the, the pricing in the first half of the year where we had higher for longer interest rates in europe, which meant we had to stimulate fares more than we would have anticipated. it also took longer than people would have expected to integrate all of the online travel agents. that's fully done now. so i think having seen fares down 15% in q1, down 7% in q2, we've turned the corner in the current quarter or the quarter just ended, where fares were up 1%. easter will be a drag into q4, but we're now guiding full year profits in a range of ■k71.55 billion to 1.61 billion, behind last year. but

but still our second best year ever. and q1 into next year looks like it'll be relatively strong just because we've got a full easter in there and thereafter, you know, a little bit difficult to get based on limited visibility, difficult to give an idea of where fares may go from there. >> hey neil, there are so many people in so many industries that are waiting and watching boeing, hoping that the turnaround there is really taking place. you got a chance to be on the floor, as you mentioned. what did you see? great that you think there is a real turnaround that's happening there. but what did you see and what can you see in a quick visit there that makes you feel like things are really in a much better place? >> well, what was very different to when i was there, for example, in september or indeed this time last year, i saw a full factory nose to tail aircraft on the production line. very important. i saw an enthused workforce, although they have got a big pay increase so that that has to help. but i did see a workforce who are very keen to get things done. and

more importantly, i saw fuselages which are in much better shape than they were. i think spirit used the strike to address a number of the quality issues that they had. the quality of the fuselage is coming through is definitely much better than it was. that leads to a faster build time in seattle. and then importantly, i didn't see as many wings and engines and everything else out on the ramp as i'd seen last time. now they've been actually hung on, on on aircraft, which is important. >> that's great. neil sorahan neil, thank you for joining us this morning. we really appreciate it. >> pleasure. thanks, becky. bye bye bye. >> okay. coming up, some key members of president trump's cabinet sworn in over the weekend. we'll bring you details after the break. plus, we're going to take a closer look at today's sell off. here are the worst pre market performers in the s&p 500 right now. the technology sector just getting crushed nvidia down. by the way 12% is a deep seat has emerged as potentially at least at this

moment the most efficient open source version of ai. and raising some big questions, profound questions about spending. >> energy. >> the energy complex, the chips, the mag seven, all of it. and of course, as we mentioned earlier, bitcoin and everything else getting hit. we're going to else getting hit. we're going to talk all about it. ♪ empower ♪ so handsome. oh, i can't buy this. hang on there. actually, you can. your empower investment account has performed well. and this whole off-white-ish cantaloupe thingy is really working for you. so... so...? so... (♪♪) hot to trot! nobody says that, what? get good at money. so you can be a little bad. empower.

investors quietly ignoring that advice and instead selling the stock hand over fist? every billionaire on your screen has recently sold nvidia. some have offloaded millions of shares. in fact, hedge funds are quietly selling all of their tech stocks at the fastest rate we've seen since 2016. my name is mark chaikin. during my 50 years on wall street, i helped build three indexes for the nasdaq. that means i know how to recognize these signals from the tech market, and exactly what they mean for you and your money. i explain everything in my new free market briefing, including the truth about what's going on with nvidia today and the specific stock i recommend you buy. instead, simply visit you buy. instead, simply visit the website below to get the ♪♪ ♪♪ ♪♪ ♪♪

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today@hims.com. >> welcome back to squawk box, former fox anchor and army combat veteran pete hegseth has now been sworn in as defense secretary. vice president jd vance breaking what was a 5050 tie in the senate. it ends weeks of uncertainty over president trump's pick to lead the pentagon. the closest vote ever on that roll. meantime, the

senate confirming kristi noem as the new secretary of governor and was sworn in on saturday. lieutenant governor larry rowden will serve out the rest of noem's term as governor. and lots of questions about what's going to happen to the defense department under hegseth. and i don't know. >> yeah, it's a big change. >> is there a lot happening? >> big changes that are taking place and still other nominees that we're waiting to see what happens as well. when we return. we have much more on the deep sea selloff, including a look at the slide and the chip stocks. amd shares are off by 5.25% micron, down by close to 8.5%. nvidia shares are down by 12.3%. broadcom is down by 14.3% and marvell technology 15.7% decline right now. so you are watching this play out. it's impacting the broader averages as well. the nasdaq is indicated down about 912 points. you've also got declines across the board for the dow and the s&p 500. on

a percentage basis though it is the nasdaq that's really taking it on the chin. it's off by just about 4.2%. the dow has indicated off by less than 1% a decline of 9/10 of a percent. s&p futures are down by 2.5%. later. don't miss an exclusive interview. we've got at&t ceo john stankey joining us after that company came out with earnings that were better than earnings that were better than anticipate (vo 1) when you really philosophize about it, there's one thing you don't have enough of, and that's time. time is a truly scarce commodity. when you come to that realization, i think it's very important to spend time wisely. and what better way of spending time than traveling, continuing to educate ourselves and broaden our minds. (vo 2) viking. exploring the world in comfort.

legendary investors quietly ignoring that advice and instead selling the stock? hand over fist, every billionaire on your screen has recently sold nvidia. some have offloaded millions of shares. and mark my words, this is bigger than nvidia. hedge funds are quietly selling all of their tech stocks at the fastest rate we've seen since 2016. it begs the question what do they know that you don't? my name is mark chaikin. i help build three indices for the nasdaq during my 50 years on wall street. that means i know how to recognize these signals from the tech market and exactly what they mean for you and your money. i explain everything in my new market briefing, including the truth of what's going on with nvidia today and the specific stock i recommend you buy. instead, i'll give you its name and ticker when you visit the

website below. nvidia has been the most talked about stock in the market, and for good reason. it's led the ai revolution that has taken the us stock market by storm since they announced their ai powered computer chip in 2023. nvidia stock has been on a history making tear, officially surpassing microsoft to become the world's most valuable company. today, however, many investors are worried the tide is changing. nvidia's day in the sun may soon be coming to a dramatic end. and as a result, i predict a different, under-the-radar stock is primed for big potential gains from this moment on. to get its name and ticker 100% free, simply visit the website below. >> there have been no new

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i think you know we had the word rattled sort of on our list. i think it's more than rattled at this point. china's deep seek and the competition in the ai arena just rewriting potentially the whole space at this moment. are you looking at the dow off about 421 points. the nasdaq down 914 points, the s&p 500 off about 150 points. joining us right now, stephanie link hightower chief investment strategist. did we all miss it. did we all miss it on the chips on the mag seven on the energy sector. and this little chinese company that's done this for next to no money with 200 employees, somehow has outdone everybody else. >> well, andrew, i mean, it's really an interesting day today. the reactions are i understand why the stocks are down so much hyperscalers and the i semis and all that. but there are still so many questions. is the technology from deep sea really

that much better. will they be able to take share. will the us tighten export controls further on on chinese companies in general? and which companies are going to use deep sea to launch their massive ai initiatives? i'm not saying that they can't take some share, but i think the pie is big enough for all of these companies to not only survive, but to thrive. that being said, though, in the past two years, the s&p 500 is up 20% plus, mainly because of the mag seven. and so i wouldn't be surprised to just see a little bit more of volatility in the names. i think you want to look for opportunity. amazon would be the one i would look for. i wouldn't be running out today, but it's more than an ai story. you know it's an e-commerce story operating profit story. operating income is going to grow in 2024. last year, 85%. and it's going to grow another

probably 60% this year. so that would be the one i would look there on the ai semis. i don't own nvidia, sadly, because it's had such a nice run. it's still up 133% in the past year. i own broadcom. broadcom is a little bit more diversified. they do have an ai bent to them for sure. but they also have a software component with vmware. and they also have their non ai businesses the cyclical businesses that are troughing. so that would also be one that on a pullback i would look at. and then one last thing i would say really important if you believe in ai in general, which i think we all do, you do need data centers. and we only have 11,800 data centers in the world. we have 5400 data centers here in the us. and that number is probably going up to at least 10,000 over the next several years. and we are going to spend money on the grid because we haven't spent money on the grid in 50 years, $4 trillion between now and 2050 on electrification spend. 70% of our electric

transmission lines are over 25 years old. so i get today, i get the reactions. let it settle and you pick your spots. >> stephanie, here's the question. i think there's a couple i just want to embedded here are three different issues. one is if you actually think that open source, putting aside just the deep sick of it all, if you actually think that open source wins over closed, that raises profound questions just off the bat, because it means that the actual technology itself becomes a commodity. it's something that satya nadella was effectively tweeting about last night. he did say this could become commoditized. the good news, he was arguing, is that it will still create an enormous amount of demand. okay, even if you don't think deep seek is better than open ai or one of the other closed models today, you could argue it's at least at least as good. which if you're a business today and i was talking to becky earlier on the

broadcast, i talked to so many ceos in davos who were talking about how they're using some of these closed source advanced frontier models, like an open ai, like the stuff from anthropic playing around with it and then going and trying to replicate as much as they can using llama, which is created by meta. but by the way, meta's not making money doing this because that's an open source model. and so long term, if it becomes an open source business, there's some economic issues there. but the second piece, which is even bigger, i think, is the idea that deep seek works on this laptop right here. the processing isn't in the cloud the way you're talking about it could be, it could be, but it doesn't have to be. and that is a fundamental change. the amount of processing power required to actually operate these things may not require necessarily. you will still need. i'm not saying you're not going to need any data centers at all, but the sense that you're going to necessarily need massive data centers, the way we've been talking about could actually get

upended. no. well. >> i mean, so maybe you don't get you don't go to 10,000 data centers here in the united states, although i still believe that to be the case by 2030. so let's cut that number in half. you still need them. number one. number two, we don't even know about the security aspect for deep seek right and open source models in general. so that's a big thing. and i just don't think you're going to see big fortune 500 companies going to use deep seek because of a just what i just mentioned, the security piece of it all. so let's come back to the other piece, is the hyperscalers are going to spend $270 billion this year, up 41% on ai. okay. let's scale that back as well. but it's not going to go to zero. and i totally believe what the ceo, what the ceo of microsoft said in terms of okay, if it becomes a commodity, then we don't spend as much, okay. but the demand will still be there. the demand may well offset the

price decline. so i mean, i still think there's just so many questions. >> stephanie, here's the thing. >> you just have to jump it today, right? >> i agree on a lot of what you're saying. i just want to say on the security piece, what's so interesting about it is unlike a tiktok, which is a closed model, obviously with its own algo controlled by a company that's based in china. when you're an open sourced product, you can actually see the entire science of it and you can run it locally. as i said, on your laptop, literally. and so when people say, well, there's going to be security concerns, they they almost are ameliorated very quickly insofar as because it's open source, you can see everything that's going on. it doesn't have to be operated in the cloud. sitting in beijing somewhere. so and even if you decide that the world isn't going to use deep tech for whatever reason, to not believe that others are not going to be able to replicate deep seek, now that we understand it and it's open source within months from

now, i think is a big miss. i think we are at a moment where clearly, whether it's deep seek or somebody creating a new version of deep seek in an open source model, i think it raises profound questions about the whole situation. >> well, i mean, you make very good points, andrew, and it's hard to argue in terms of the replication of it, the speed of which i mean, the fact that deep sea took them such a short period of time to build it is really pretty remarkable. so i definitely give you that. and the competition and those that again will replicate it, i think it will take time. in the meantime, i don't think the hyperscalers are just going to sit back and let this happen and not figure out their own competitive sources as well. so i just think that there are a lot of moving parts at this. at this point in time. i don't necessarily think this is all of a sudden going to go from a 250, $350 billion total addressable

market today to zero. i just don't i don't believe that at all. but that's not to say from a stock point of view, from an investment point of view, that you run in and jump in today and buy these stocks. i think you pick your spots and you pick where you can have a diversified revenue stream, not necessarily a pure play in terms of i. >> stephanie, it is a it's a big morning. there's a lot of questions. and it's going to take us a while to sort out what the real answers are. thank you. appreciate it. >> thanks. >> you bet. meantime it is just about 7 a.m. what are we at 7:05 a.m. on the east coast? you're watching squawk box right here on cnbc. i'm andrew ross sorkin along with becky quick. joe is off today, but boy do we have a lot going on as we mentioned. and morgan brennan is here. she's got some breaking news for us because an activist investor is now going after u.s. steel demanding some very, very big changes. what's happening? >> yeah. so this is all happening right now in real time. more drama with it, more questions about the future of

u.s. steel shareholder and activist investor. and cora releasing a 12 page letter to the board announcing it has nominated a majority slate of nine candidates and is calling for the ouster of u.s. steel ceo david burritt. now. and cora is putting forward for ceo alan kestenbaum, who most recently was the ceo of stelco, which was sold to cleveland-cliffs last year. in the letter and cora calling on the steelmaker to abandon its deal with nippon steel, collect the $565 million breakup fee. this is a deal that, as we know, was blocked by president biden, is now going through the court process. the investor asserts that it, quote, prioritized deal advocacy at the expense of financial and operational performance, since he collectively stood to gain $100 million from that sale going through. and cora says it slates quote unquote, foremost priority is pursuing a public market turnaround of u.s. steel, not trying to solicit alternative bids and sell the company. that statement may be what's actually sending shares of u.s. steel lower, down about 1% right now in premarket on this news. now u.s. steel already out with a response,

saying, among other things, that quote, we remain confident that our partnership with nippon steel is the best deal for american steel, american jobs, american communities and american supply chains. breaking down the details of the deal, u.s. steel's partnership, quote unquote, with nippon steel, is the only path that enables the necessary know how technology and investments to secure the future of u.s. steel. now, the company is also claiming a core its interests are not aligned with shareholders. that u.s. steel is, quote, also concerned about the motivations behind these nominations given and cora's and kestenbaum's recent dealings with failed bidder cleveland-cliffs. it's a small industry, right? cleveland-cliffs has not been shy about its interest in u.s. steel. cnbc reporting just earlier this month that it may partner with nucor for a bid, as frank cora $10 billion firm. it's known for campaigns in norfolk southern r&b global and barry global among others. u.s. steel disclosing that ancora has a less than 2/10 percent stake in the company, and cora already batting that down, saying, hey, you gave us a tight deadline for

a nominee and we're amassing a meaningful stake as we speak. so let's let the drama unfold here. >> we you have seen activist investors with very small percentages that have been successful rarely in the past. but against exxonmobil, there was the case where that situation played out and they were successful in going through with it. there are so many accusations about how every side is compromised in this, from the management side to the activist investors and what what are they saying that they were involved with cleveland-cliffs before? >> yes. so and let me just also say that later today we are going to have alan kestenbaum, who is the ceo, nominee. nominee by and cora on closing bell overtime exclusively. so we're going to dig into all of this further with him. but kestenbaum actually took over the stelco assets, which are former u.s. steel assets up in canada, turned that company around and then sold it last year to

cleveland-cliffs. >> okay. but they are saying up front that they're not looking to renew a bid with cleveland-cliffs or with anybody else. >> they want. they were very clear. they're like, it's front and center. first page of this letter. this is about them being about a turnaround and keeping u.s. steel as a public company. >> the biggest issue with u.s. steel and with the deal from nippon, has been that they're kind of appealing to president trump, the incoming administration saying, we know that he campaigned against it on the campaign trail, but we think he's a business. i mean, the ceo of u.s. steel has said that he thinks he's a businessman, and he can appeal to him with the logic for the deal. so that's kind of a long shot. anyway. >> it's a long shot. you've got basically a six month extension by cfius to not enforce that executive order that was put in place by biden. so this can all go through the court process. also worth noting in addition to suing the u.s. government, nippon and u.s. steel, they are suing cleveland-cliffs and the union, the head of the union as well. because, to your point, all of the back and forth and

sort of allegations of conflicts of interest and drama that this deal has elicited. obviously, japan, a key strategic ally of the u.s, the fact that that the question was raised and the deal was blocked by the former president on national security grounds has raised questions, which is why i think this is even going through the court process, not to mention the fact that with the structure of the deal would have stayed a wholly owned u.s. subsidiary and u.s. steel. bottom line, end of the day, is in need of some sort of turnaround. it is in need of an injection of cash to update its processes for making steel. and that, i think, is why all of this has become such a big battleground. because you're talking about. right. a very famous, quintessential 124 year old american company that has assets that need to be invested in and looked at perhaps a little bit differently. and everybody wants a piece at it. everybody is looking to do it a little bit differently, but this is all going to play out here over coming weeks and coming months. so we're not anywhere

near the end of this. we may not be near the end of this until summertime. >> so there's a lot of rancor that's involved with this, which is almost a jumble for ankara. with an x-ray. we'll be looking forward to this interview that's coming up later today. morgan. thank you. >> thank you. >> all right. let's get a check on the futures this morning. you are seeing a pretty broad sell off that's really focused in the technology sector. we're off our worst levels of the morning, though. the nasdaq was indicated off by about 1000 points earlier. now it's indicated down by 850. dow is off by 427 points. and the s&p 500 is indicated down by about 142. let's get over to dom chu. he's got a look at this morning's pre market movers. and there are a lot to the downside dom. >> yeah. and it's mostly technology focused mostly ai focused. so let's start with those major tech stocks moving lower. as chinese ai startup deep seek releases a new open source language model that claims claims to beat out even open ai and deep six ai system is currently running on less money. older nvidia chips challenging maybe. perhaps u.s. ai dominance in general. all of

this, especially as big, expensive investments in that space capex, continue to pour in deep sea concerns, sending all of the mag seven tech tech names lower, especially nvidia, which is right now down about 11.5% in the premarket trade. it would be the worst performance we've seen going all the way back to 2020. microsoft, meta, alphabet, amazon all down about 3 to 6%. so keep an eye on that. now the chip stocks are taking an absolute beating this morning, as those deep sea concerns spell a big sell off for the u.s. semiconductor stocks. all china ai, robotics, etfs, things like that. ishares semiconductor etfs, global x robotics, global x, china robotics, all of these names moving to the downside, as well as china's chip giant semi semi manufacturing is also moving lower on deep sea concerns. so keep an eye on all of those. and then for an earnings story let's talk about at&t which shares are up about just about three quarters of 1%. the telecom giants posting better than expected results

profits and revenue both beating expectations as 5g wireless and fiber demand continue to bolster revenue. so at&t story positive in a sea of red. now of course, we will be talking to at&t ceo john stankey later on this morning with you guys for squawk box. must watch interview there. so becky a lot of red but one speck of green out there. i'll send things back over to you guys. >> okay dom, thank you very much. we will see you in just a little bit. >> okay. we're going to have a lot more on this morning's tech selloff in just a moment. but up next, former dallas fed president robert kaplan is going to join us to discuss the fed's rate path ahead of this week's meeting. maybe all the stuff will be deflationary in the end, depending on what happens with ai. we're going to be right back after this.

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feel amazing and is something that we get to use every day. >> welcome back to squawk box. the federal reserve meeting this weekend is likely to hold interest rates steady this time around, despite president trump's calls for rates to drop immediately. joining us right now is robert kaplan, goldman sachs vice chairman and former dallas fed president. good morning to you. let's just start right there. is it the is it the right call to stay steady at this point. and then we'll get into the trump of it all? >> yes. it's the right call to stay steady. inflation progress is maybe not stalled, but it's going sideways. and you've got 4 or 5 big structural changes underway and about to unfold. and so that, yes, the right thing to do is to do nothing in this meeting. >> okay. but getting to some detail about what you just said there, which is you said there's about 4 or 5 things that are about to unfold. what's on that list for you? >> so first of all, you've got a potential government spending cuts or an ability to bend the

curve of government, so-called doge, and a shift away from government directed spending. i think we people know that's coming, but they don't i don't think they realize that's likely to be disinflationary, and we're going to have to see what they're able to do and how that unfolds. you're going to have the beginning of a regulatory review economy wide. in every industry that is intended to improve productivity growth, you're going to have an effort to improve the efficiency of the whole energy sector, not only encourage more drilling, but pipelines processing. et cetera. but on the other hand, they're all of those three things could be disinflationary. the two that are got to watch one. we're deporting illegal immigrants. some fraction of them. we just don't know how far that's going to go. and is it going to go so far as to make costs in the labor force, particularly

service sector costs sticky? are we going to actually shrink the workforce, or are we going to just limit the growth on the margin. and we don't know the answer to that yet. and then on tariffs, is it a negotiating tool. are we going to do them across the board. and the big question for me on tariffs if you're going to do tariffs on certain countries i think it's essential that we leave open this corridor between canada and mexico in the us because many us companies use mexico, for example, for intermediate goods that allow them to domicile here. but the point is we don't know what the decisions are on that are going to be. and so we've just got to wait and see how it unfolds. >> robert, i agree with virtually everything you just said, though. i'm surprised that you're raising these issues, in part because one of the things that jay powell and i think so many members of the fed board like to say at least, is we can't really try to project out what's going to happen on the

fiscal side. we don't know what congress is or isn't going to do. we can't really try to anticipate what president trump is going to do. we need to watch and wait, in which case you will invariably be 2 or 3 months late on just about anything, because you need to sort of watch and wait to see the numbers come through. >> yeah. so and he's and they're right. so privately i would be in my former seat and in my current seat i'd be talking about all these structural changes actively with my team. and as i'm doing right now with clients and our own team here at goldman sachs. however, in terms of policy, i want to wait until i'm clear on what's going on before i leap into it, because it's uncertain. i think what trump, as you can see, is trying to do is get the fed to look through some of these changes. and i think what i think is important to do for the fed is be patient. don't act until you

have confidence about what the picture looks like, and i don't know how long that will take. i know it's not january, and i'd be open minded about when it will be, but i know it's not january. >> robert, i don't know if you had a chance to see face the nation yesterday, but jd vance was interviewed and specifically was talking about trying to bring the price down of groceries, specifically spoke about trying to bring the price of oil down, arguing effectively that if you can get the price of oil down, therefore the cost of shipping and delivery and everything else goes down. do you think that's going to happen? how quickly is that going to happen? how should how should folks in the market be thinking about that? >> i think they're absolutely going to try. and so they're going to ease permitting for refineries. they're going to ease regulation for refineries, which process gasoline. they're going to make transmission, if they can, easier, you know, through pipelines. they're going to encourage not only the industry here, but saudi arabia to drill more. the tension there is going to be the industry is

happy to drill in the 80s or high 70s, not as happy in the 60s. but i think this administration really wants to get the price down into the 60s or below. so there'll be some tension. but yes, i think they are very determined to do that. >> and then what do you make, though, of the sort of, i mean, the sort of jawboning piece of it, which is about jay powell, about the fed. you've now heard a number of times where president trump has come out and publicly declared that he should have lower interest rates. i know you're going to say he's independent, but how much of that just can, can live rent free inside the heads of people who are on the federal reserve? >> yeah. so this is where, for me, the best way to approach this is to take it one meeting at a time. keep an open mind. what what what trump obviously would love them to do is speed their analysis, speed their assessment of these new policies and act sooner even than than

what they're comfortable. and i think that the job of the folks at the fed in this case is to do their analysis and don't act until you have confidence. the other issue is inflation progress is going sideways. and so i think at four and a quarter, four and a half, i don't think there's i don't think it's wise to cut any further. and so that's another reason to pause. having said all that, if you really see progress soon on government spending cuts and other actions, i think the big surprise may be yet people are concerned about tariffs and i am too. and about labor force growth. i think the surprise may be more organic capex versus government directed capex may turn out to have a more positive effect on inflation than than we believe, but we don't know yet, and we have to let it unfold. >> robert, i'm going to throw you one last curveball. and i don't i don't know if you saw it

or not, but on friday night, president trump was in los angeles talking to the mayor about the fires and everything else. and at the end of a what was a public meeting, an angeleno raised his hand and said, mr. president, i could really use your help with interest rates, actually, as it relates to insurance companies and banks, you know, they're capturing a huge net interest margin over and above the treasuries. and we could use your help, mr. president. and he effectively says he doubles down on what he said about bank of america in davos. he says bank of america. they're not nice people. this is not nice. they're you know it does a whole thing. but then he says we're going to do a number on the banks. i didn't really get picked up that largely. and i wonder whether you think that he could effectively jawbone interest rates down not by jay powell, but by the interest rates that actually banks provide to consumers. >> so let's talk about what could happen. and then we'll get

back to what he said. so the obviously the fed controls the fed funds rate, the big rate that i'm much more worried about right now. and you've heard me say this before, is the ten year, the five year, the 30 year, what's going on, at least before this morning, is the term premium has been inching up, i think mainly because people around the world and in the us are concerned about buying duration. i think it's not strong economic growth or inflation concerns. i think they're worried about the supply and demand of treasuries. and are we going to show fiscal discipline? and that's why a key piece of this puzzle, which i think the administration intends to do, is show they're serious about fiscal discipline. it may be controversial, but i think they can have a meaningful effect on the curve by demonstrating that they can do spending cuts. and i think if they do that, a lot of these other issues he's jawboning about may well fall into place.

>> okay. >> i kind of thought what he was talking about was potentially on the campaign trail. he had talked about limiting how much they could charge in interest on credit cards. i wonder if you do that through the cfpb or someplace else, because he has not removed biden's head of the cfpb. rohit was on with us last week, and i wondered if it was something along those lines that he was referring to. >> it was just interesting to me to hear him in davos directed at brian moynihan and then to name check jamie, you know, people think or think thought that somehow the trump era would be fabulous for the banks. and then to hear him on in la say, we're going to do a number on the banks. i don't know what a number on the banks mean, but it's something that i think if you're in the banking world, you've got to think about. >> agree. all right. when we come back, minnesota congressman and house majority whip tom emmer will join us from miami. he's there attending a gop retreat. the president is expected to speak there tonight. right now, though, as we head to

a break, let's take a look at shares of a results. the numbers were better than expected. the stock is up by about 2% on a rough market day. across the board, the ceo of at&t, john stankey, will join us in just a couple of minutes. >> how's the quarter coming along, kate? >> he thinks your name is kate and hates when people correct him. >> pretty great. >> define pretty great. >> we added koopas. i powered total spend management platform. so we're finding new efficiencies and multiplying margins. >> so you can mind your business. >> so you can mind your business. >> no, no that's not what i meant.

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message to investors. power lunch wednesday, 2:00 eastern. cnbc. >> there we go. the scary animation with the bear. let's get a check on the markets this morning. you are seeing quite a bit of pressure on the futures this morning cna based open source large language model that competes with us giants like nvidia. actually, they're competing with openai using nvidia chips. the question is, have they found a way to do this more efficiently. and is that going to change the demand picture when you look at the products for chips and other things that go into this. and so it is having some pretty big implications this morning. right now you're looking at the dow futures off by just under 1%. it's a drop a pretty significant drop on the points. but from a percentage basis only down by 1%. s&p futures are down by about 2.3%. because remember the

mag seven make up a big chunk of the s&p 500. and they can move it pretty rapidly. the nasdaq is where you're seeing most of the pressure though amd shares are off by 4.3% micron down by 6%, nvidia off by 11.5%. broadcom down by more than 12%. if you're taking a look at all those chip stocks and where it's kind of played out. bitcoin also down by about 6% the last time i looked. it's below 100,000 at okay. it's now it's down by 5.75%. $98,988. >> when we come back a lot more on squawk box. high income earners are fee epperson has that exclusive report. we will talk to her next. don't go

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amazing and is something that we get to use every day. >> the american consumer is showing some signs of stress. credit card delinquencies are near a five year high, and higher earners are under more pressure. sharon epperson joins us right now with the cnbc exclusive report. and sharon, this is kind of counter to what we've heard from most of the big banks recently. absolutely. you know, borrowers are having a lot of trouble increasingly paying their bills on time. and delinquencies are near their highest level in five years as consumers have. >> fallen behind on auto loan,

credit card, mortgage and personal loan payments. last year. that's according to a new vantagescore report for higher earners people earning more than $150,000 a year. the delinquency rate has more than doubled since january 2023. we spoke exclusively to vantagescore ceo silvio tavares, and he explains why. >> and we've seen significant increases in services costs like home insurance, like auto insurance. and that is hitting the high income consumer harder than most. and that's what's driving that delinquency rate. >> overall, tavares says consumers are being cautious with credit, while credit card balances are about 2.9% higher than a year ago, that's still in line with the rise in inflation, and consumers aren't at their limit. >> credit utilization actually decreased on a year over year basis. it was actually down about a full percentage point to about 51.6% credit utilization, 100% credit utilization would have mean the consumer is maxed

out. but they wereney actually had a lot of available credit. they just chose not to use it. >> and that, tavares says, is a positive sign that consumers are exercising self-control and are more credit cautious as we start the year. you know, despite last year's strong stock market gains, concerns about inflation and unexpected prices remain, he says that's especially high among high income consumers. and becky, there are other reports out bain and company and others pointing to upper income consumers saying that their intention to spend is less going into the start of the year. a lot of them kind of perhaps spooked by the pullback in the market at the end of last year. this is a significant headwind, though, perhaps for the year ahead, because if the upper income consumers are spending less and discretionary spending is down, that could have impact more broadly. >> it's just that it's counter to what we've heard from a lot of the big banks that have reported earnings in the last week or so. they say that americans are still kind of very strong, especially what we heard

in the fourth quarter as we headed into the holiday season, the end of december, beginning of january were pretty strong for some of those things. i guess there are hidden costs, like the insurance costs you mentioned that are popping up that are catching people too. >> i think things are catching people by surprise, and these kind of income adjusted prices, where the more that you earn, the more that you're spending, the more that other ancillary expenses are adding to those delinquency rates. and that's what vantagescore says they have been seeing. the other thing, some other cautionary flags that people should be paying attention to is now credit reporting agencies are getting the information about federal student loan payments that have not been paid. and so that could have a significant impact on credit scores, tavares says. as much as an 80 point drop in what we've seen because credit scores, because those loans. >> under the last administration, people thought they were going to be forgiven, they're not going. >> to be and they're not going to be probably. exactly. and then also the wildfires, that $40 billion in insured losses, those insurance rates going up, that's something else that could

impact delinquency rates for high income consumers in particular. as far as sharon. thank you. sure. >> coming up next. president trump expected to speak tonight at a gop retreat in miami. house majority whip tom emmer is at the retreat. he's going to join us next. and then at&t ceo john stankey is going to join us to stankey is going to join us to talk quarterly help us retire. it's a simple ask of our elected leaders. but the tax treatment we rely on to grow our 401(k)s, iras, and other retirement plans could be on the chopping block in congress. any policymaker who makes it harder to save for retirement is standing against the financial well-being of 120 million americans. it's time to prioritize our retirement savings. learn more at help us retire dot org. help us retire is sponsored by the investment company institute, representing asset managers serving individual investors. world's largest portfolios for

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wealthy become ultra wealthy robert frank's high net worth perspective. join the list at cnbc.com. slash inside wealth. >> welcome back to squawk box. republicans heading to trump national doral in miami today for the florida retreat meetings expected to start later this afternoon and go until wednesday. items on the top of the agenda, of course, include reconciliation and tax policy, tariffs and so much more. house majority whip congressman tom emmer joins us now from miami. good morning to you. i want to talk about crypto and all the issues that have been going on. but i do want to talk about what just took place over the weekend on two fronts. both the hegseth confirmation, which was so, so very close. and then also this back and forth with colombia on the illegal immigrants being being sent back and what turned out to be a potential debate over tariffs. and whether you think this is just the beginning of what we're going to be seeing in terms of debates with other

countries. >> well, good morning. >> and happy. >> new year. great to be with you for the first time this year. i first, when you talk about colombia and the little back and forth that we had over the last day or two, it actually proves donald trump's point. i mean, initially they said, we're not taking these illegals back, which the question is why? what's wrong with them? and then donald trump did what donald trump does, the master negotiator guy. they have now agreed to not only take back the illegals, but to come up with their own transportation and deliver them back. and to your question, i don't think it's going to be like this every time. i think it only takes a couple of times for people to be reminded that donald trump is a very serious leader. and if you're going to work with the united states, you're going to have to work with the united states under his terms. >> talk about his terms. one big question that's emerged even over the last call, it 72 hours,

has been this issue of firing some of these inspector generals. and there's no question he has the very right, congressman emmer, to do that. the question is, legally, there's this 30 day period with which he is supposed to provide according to the law. and whether someone like you agrees with this approach of effectively bypassing that. >> well, i'm not going to say the executive doesn't have the authority. i'll let the courts decide that. clearly, you started off by acknowledging that these are executive agency positions. who's in charge of executive agencies? the executive. these attorneys general served at the discretion of the president. this president has come in and said, we are you are no longer going to be employed by this administration. yeah, there's some pushback. but congress's job is oversight. i that's that's what it is. it's oversight and budgetary. and frankly, congress has to get back to doing its job. the president clearly is doing his. >> but what about this 30 day

period? so that's what i'm saying. it may may very well be that he has the absolute right to do it. the question is he's he's supposed to, according to the law, provide 30 a 30 day sort of notification period. and if you don't do that and you're not following the law, what does someone like you think of that? >> well, i'm going to tell you one, i haven't read the law, so i'm not going to like i said, i'll let the courts tell us how they interpret whatever it is that they're relying on. but i'm going to say this to you. it's not going to change a thing. this is this is a much ado about nothing. the president of the united states has the complete and absolute right to determine whether these people are going to stay on with the administration or not, regardless of these details that you're talking about 30 days here, it won't change a thing. so president trump exercised his authority, and i respect that. >> talking about his authority, i do want to also talk about tiktok for half a moment if you'd indulge me, which is clearly congress on a bipartisan basis, decided that tiktok was a national security threat. the

supreme court upheld the law. and it appears that there's now a real debate about what's happening, which is to say that the president has said that he's trying to figure out a way to sell it and thinks that he has this 90 day or 75 day period. by the way, apple and google clearly don't agree insofar as they've decided that they're not going to be hosting this app on their platform because they look at the law and folks like tom cotton who say, we have a law, it's in place. you can't do this. >> well, for me, i respect my colleagues who had the top secret briefings and came out. it was the house energy and commerce committee, which has two ends of the political spectrum amongst their 54 members. i mean, it goes all the way from the far left to the strident right. they came out after a after a top secret briefing and voted 54 to 0 for

the law that we're talking about. so i side with that. i believe that the communist party of china should not be allowed to collect data. world war two, we wouldn't have sold the new york times to the germans, right? i it's the same thing when our adversary is collecting all of this data, detailed data on american citizens. now, on the other side of that, when you talk about president trump, if there's anyone that can get this done, if there's anyone that can convince the chinese to get out of this and allow the platform to continue as a free and open platform, not as a surveillance device, it's donald j. trump. he's going to do whatever he can to make sure that happens. >> the question that i would ask you, though, is what should american companies that currently would otherwise be hosting this service do? meaning the president has said, go ahead. i'm granting you the option to effectively continue to host this. not even the option. he's saying go do it. and companies like oracle and akamai are doing that on the assumption that the president is

somehow going to protect them. meantime, apple and google are not because they're saying the law is the law of the land. what do you say? >> yeah, i think apple and google are sending a message to the chinese communist party, which is, hey, look, we believe that you're going to be out of business in the united states with donald j. trump and the white house, and we're going to choose not to play a either side of this. we're just going to stick with the law the way it is and send you a strong message that if tiktok is going to survive as an open and free platform in this country, it's going to be without the surveillance side of it from the chinese communist party. others that choose to run it based on the idea that you've got a 60, 75, 90 day window, that's entirely their business decision. so i don't see this as a conflict. i think it's more the business. the market is sending a message to the chinese communist party. >> congressman, i don't know if you've followed it, but over the weekend, and really, even

starting last week, there's been a whole new emergence around ai, this thing called deep seek, which comes out of china. it's now the number one free app on apple, potentially upending the entire world of ai, open ai, anthropic, all the big tech companies that have invested in it because they've managed to do this in an open source way that's a much more efficient. you may not need as many chips to do it. you may not need as much energy to do it. but given the advantage, it appeared that the united states had in ai, which was supposed to be our big economic advantage literally a week ago, and where we are today. so many questions have emerged. what do you think of that? >> well, it is so many questions that have emerged. i have a lot of questions. i believe we are still ahead of the chinese. i know what you're talking about. i don't know the details. we're going to have to get down into the minutia to understand exactly what we weren't talking about two weeks ago, and that will happen, no doubt, at the at the retreat that we have over the next three days with the republican conference, but also when we get back to washington

next tuesday. and i think everybody recognizes how significant this is. it's having an impact on the markets as we speak. but like much with ai and blockchain and all this new world that we're in, this is the greatest sci fi story that we read 30, 40 years ago. so every day people tend to be afraid of what they don't understand. i think at the end of the day, it's going to turn out very well for the united states of america. >> congressman, i wish i could talk to you forever. i know we got to go, but i do i do want to just talk about this retreat real quick. reconciliation taxes. whether you think your party is going to stay together as it relates to taxes, in terms of bringing in income at a time when people are trying to deal with the deficit. i know you're excited about the eo on crypto and things like that, but biggest thing you think is going to come out of this meeting? >> well, i think it's a it we're already unified the republican conference, regardless of what

people on the outside of our conference want to say, based on statements from our members, etc, we are incredibly unified. i mean, there's 219 soon to be maybe 217 already of us. and frankly, when you've got that small group, you have to understand each other. you don't have to agree, you don't have to like one another. but when you are together, we've got a job to do. and i think what this next couple of days, president trump will speak tonight, vice president jd vance is going to speak at some point, but the discussion amongst the conference is going to be how do we enact this aggressive timeline that our speaker, mike johnson, has set in place? the first step would be to vote on a budget resolution in the first week of february. that is what unlocks the ability to do all the other stuff with with the reconciliation bill. and yes, we're going to have disagreements about what happens when you make trump tax cuts permanent, when you extend extend the tcga that was signed

into law in december of 17. but the whole thing is, again, i think this is not as the whip as a member. it's much ado about nothing. we are continuing current policy going forward, and that shouldn't be a cost. >> congressman emmer, i want to thank you for joining us. i hope we have an opportunity to continue this discussion as things progress, and hopefully we get to talk to you on the other side of this meeting. thanks. >> thank you. >> up next, at&t ceo john stankey joins us. that company reporting results earlier this morning beating on both the top and the bottom lines. we'll be right back. >> welcome to reinvented with accenture. today i'm here with margherita della valle ceo of vodafone. you were employee 25 in vodafone italy. today you're the ceo of vodafone. what is your strategy and vision for the future? >> we are changing our. >> culture to really focus on

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welcome. it's great to see you this morning. >> good morning becky. it's good to be with you. >> let's talk a little bit about what you're seeing. the numbers came in better than expected on every metric that i'm looking through here. earnings per share. revenue. free cash flow, postpaid phone net adds. and the full year number was better than the guidance that you had just given the street in december at an analyst day meeting. what happened in the last weeks of the quarter? >> well, i think you kind of touched on the important thing is we set out some guidance for the year and across the board we consistently met or exceeded it. and that's exactly what we set out to do, which is to simplify the business and get ourselves into a position where we're executing more consistently and have the confidence that we can deliver on these things. and that's one reason why i at the analyst day that you referred to, we laid out some three year objectives of what we think we can do. and i think effectively, what you saw in the fourth quarter is that the business continues just to perform extremely well, and we're very disciplined. and when you're in

that position, sometimes you get a little bit more momentum and that's what you saw in the numbers. >> so demand for 5g and demand for fiber looks strong. verizon had stronger numbers last week too. what would you say about the overall operating environment right now? >> i think what you're seeing is that, you know, the products and the services that we put out to the market are really critical and important, and it's a combination of the value that consumers get out of them, the utility that they're able to use them for. and then we have kind of a secular dynamic going on here where connectivity and networking is becoming more and more important. things like upstream bandwidth because of what's happening with user generated content. workloads that are going up into the cloud are becoming more important. that all plays into our strength. and so, you know, we feel pretty good about the dynamics of what's happening overall and how the economy is structured, how technology is moving. and that helps a business like ours. >> does that continue into the first several weeks of january, too?

>> well, it's you know, obviously i don't want to announce something that isn't public. but, you know, we continue to see customers want to use the product in a strong way. there's always when you come out of the christmas holiday season and the sales that go on, there's always a couple of choppy weeks that occur right after that as everything settles back in and we're seeing that same dynamic go on in the market right now. but typically we have a pretty good handle on how these quarters play out once they they run their full cycle. and i don't expect anything different here. >> john, your stock is up by better than 2.5% this morning in a down market overall there's a whole lot of questions about what to make of this new ai competitor that's on the scene from from china. and people are trying to figure out what this means for us. what kind of capex spending we're going to continue to see in these areas. if there's a way to do it more efficiently, more effectively, i realize this is not something that impacts you directly, but you play in the data centers. you you know, what's going on in

the tech business. what's your thoughts on what what we've seen so far? >> well, look, i i'd step back and say we're at a seminal change right now. it's just as significant as kind of the commercial founding of the internet at the end of the 90s. if you want to go back to the mobile revolution, this this is going to be a major seminal change. and we're in the very early innings of it. and there are issues that have to be worked through to commercialize it effectively, whether it's power consumption or the number of chips that are available or the best way to structure models, there's going to be a tremendous amount of innovation and change that comes through the latter part of the game as we move through it, especially given that we're in the early innings. and so i think we're going to see chapter after chapter where we wake up one morning and somebody has a better mousetrap or does something a little bit different. and we should expect that, because certainly the internet and the business models on the internet today don't look the same that they looked at like in 2000. so this is just going to be the dynamic. and the

pace at which this occurs is probably going to be a bit accelerated over historical levels. >> i mean, how do you adjust accordingly to that? and i ask kind of in the context of a deal you did last week, you did that $850 million sale of the leaseback transaction, where i think you're taking 13,000,000ft■!s of space, 74 properties that were old data centers that you're not going to need as you get away from some of the copper lines on some of these things, and you sold that off, and i think you get a continuation of that piece, it's a little different than what verizon is doing. i think they're trying to turn those into data centers that can use for ai. why don't you talk about your strategy and what you're doing there? >> yeah, it might be a stretch to call some of those properties data centers and many instances, they were central offices with pretty old telecommunications equipment in it. and i think what we're attempting to do and what we will do is we're we're very cognizant of where we need to keep traffic aggregated in the network so that we're able to manage latencies over time.

those critical properties where we think they have needs over the long haul, we want to make sure we're investing in them to be able to take advantage of the round trip times that we can deliver on our network. we'll do something different with those, but in this case, we had what i felt were some underutilized assets. you know, we've got thousands and thousands of these things. many of them are out in hamlets all over the united states. and we think we can probably do some things better with them. and more importantly, the arrangement doesn't cause us to leave those facilities. they allow us to use them in a different way, so that we can still operate our business from them. >> hey john, i have a question about the regulatory climate and mergers and acquisitions over the next four years, which is to say in a post, lena con world, do you believe that some of the big cable providers, for example, that will compete in some way with you, will be allowed to merge? would you be able to do deals that you wouldn't otherwise be able to do? and in the emergence of a

starlink and potentially a kuiper, which is going to be the next development coming from amazon into space, does that change the dynamic with which we think about what the landscape looks like in terms of connectivity? because all of a sudden there's more players in it than there used to be? >> sure it does, andrew, and good to see you. i would tell you that i sit here today and believe the policies that have driven investment in our industry have been the right policies, and what you've seen as a result of that is consumers have choice for different ways to get on the internet. now, whether it's through fixed wireless technology that they can buy or is it satellite or what they can get with fiber, with record investments in fiber this past year. so the policies that have been pro-investment have been really critical. does that afford the opportunity for asset reconstruction in the industry as a result of that? my guess is probably yes. i wouldn't be surprised if we see some players that we compete

with making some decisions that say that they need to bolster the strength of what they can do from the broadband side and the kind of infrastructure they have, and the importance of marrying mobile with fixed technologies. in our case, we feel really good about where we are. we have a set of plays we started running four years ago. we got a great nationwide wireless network. we've got the leading fiber network in the us. we're investing at a clip where we can organically grow. i'm anxious to continue doing that and kind of continue running the plays that we're running. but i do expect there are going to be others in the industry that step back and say they need to maybe change the, you know, their hand a little bit and restructure things. >> john, let me ask you just about the debt position. i know you reduced leverage in the year, reduced the debt by about 9 billion to close to 120 billion. you're under 2.7% times leverage, 2.7 times leverage. at this point, i think you're on a path, according to pascal desroches, to be at about two and a half times leverage at the

middle of the year. what kind of progress are you making on that? what do you want to tell the street about? >> we're absolutely delighted. teams worked really hard. to your point, we're under 2.7 right now, which is great. and we do expect we're going to by the midpoint of the year, will be around two and a half times adjusted net debt to ebitda. and as a result of that, that's going to drive a change in our capital allocation profile that we communicated in our december analyst day. we feel real comfortable at that level, especially given the remaining portions of the balance sheet, which are structured at very long maturities and very low interest. so that's kind of a competitive advantage if you think about what we've got in debt structure right now that we're using to invest in key long term assets like fiber, that's a healthy combination for leverage over the long term. and as a result of that, be able to take more of that cash now and return it to shareholders, continuing with our strong dividend and then adding to that, a share buyback where, you know, we'll probably do about

$20 billion over the next three years. so it's a really important point, really a lot of work by the at&t team to get here and couldn't be more pleased with what we accomplished in 24 to make that happen. >> and john, i see you've got the at&t pebble beach pro-am logo on your shirt. i take it you're headed out there directly. and what is it you've got scott shleifer and jordan spieth both making their debuts for the season out at this event. >> yeah it's my one week a year wardrobe that i get to wear, so i've broken it out. and unfortunately i got a few things to do before i can get out there this week. but i will eventually make my way out there and we're excited about the tournament. i talked to jordan last night. he's ready to go. he feels really strong about where he's at, and we're excited to see him return and compete. and maybe i'll be able to realize my dream and hand him a trophy at the end. >> well, we look forward to seeing all of that coverage over this week and this weekend. and john, thank you very much for

joining us today. >> thanks for having me on. >> all right. let's get a check on the markets right now. stock futures are the big story this morning as that low cost chinese deep tech ai model throws fear into what's going to happen with some of the ai american tech giants. a lot of questions around that. we have seen improvement over the course of the morning. the nasdaq was indicated down by over 1000 points earlier. it's now off by about 820 points. dow futures are down by 336. the s&p 500 off by about 133. we'll continue to tell you which of the stocks are getting the hardest hit this morning. it's the chip stocks in particular that are taking this hit. let's also take a look at what's been happening with the treasury market. we do have an fomc meeting this week. that fed decision coming later in the week. and ahead of that you're seeing a little bit of pressure on treasury yields. the ten year right now at 451. the two year is sitting at 418. >> coming up we've got much more on this morning's big stock slide. mike santoli is going to join us at the new york stock exchange this morning. we'll

take a look at what investors need to be watching. given what does seem like carnage when it comes to the world of tech and ai. and then later filmmaker and anti die activist robby starbuck, responding to jpmorgan chase ceo jamie dimon's bring it on challenge regarding policies at his company and making some news over the weekend that he's going to be targeting costco and other companies as well. this is the guy that corporate america shakes in their boots about. you don't want to miss it. robby don't want to miss it. robby starbuck will join us ♪♪ well would you look at that? jerry, you've got to see this. i've seen it. trust me, after 15 walks, it gets a little old. ugh. i really should be retired by now. wish i'd invested when i had the chance... to the moon! unbelievable. stop waiting. start investing. e*trade ® from morgan stanley.

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on the markets and all the carnage around us. want to get straight over to mike santoli at the new york stock exchange? as a lot of investors rethinking the whole tech, the whole tech thesis, the whole ai thesis, the whole energy thesis, sir. yeah. >> all of it. >> kind of gradually, then suddenly, you know, a lot of this stuff has been in the air for a little while, but it definitely is now coming to bear on an s&p 500 that last week did finally pop to its first new record high of 2025 after getting 57 of them last year. and we're going to have a test of that breakout. this is the etf that tracks the s&p 500. the spy it got above 610. that's 6100 on the index. and this area right here 5950 has been sort of where we held for a while bottom of this recent range. and it also is sort of lined up not too far above 58, 50 or so, which was the pre-election highs. now

i and all of the earnings associated with they're not the only reason this bull market has existed for two plus years. but it was the main accelerant. and it also allowed the s&p 500 to hold a premium valuation and get two straight, 20% up years at a time when the majority of companies were not producing very much earnings growth. so that's why you have this bit of a rethink. the question is, can the market separate out potential winners from losers here? we've already been trying to do that. take a look at the bank index relative to the big three of the s&p. also the big three of the nasdaq. that would be apple, nvidia and microsoft against the bcs. this is a three month chart shows you those three stocks on a net basis are down, in fact, or at least nvidia is deeply negative and apple as well. and what we've also got to recognize is those three stocks are equivalent to about 20% of the market cap of the s&p 500. so sure, you can have a broadening out of the market. and you have the majority of stocks do well

because earnings are now going up. but it's very tough for the index as a whole to make a lot of headway. if these stocks are not participating. and that's why a broader market is not always a stable or more strong or safer market. it can be, but it just is a higher bar. the math gets pretty tough. if these stocks don't work, i would say we are just testing some of those ranges. we were up 3.7% on the s&p year to date. coming into this week, we're not going to be down but 2% at the open based on that. now the ten year treasury has a bid right now down near 450. and what's interesting here is that's kind of where this little uptrend would take it to. since we got to those lows and yields late last year. so interesting to see if we get a little bit of help from the bond market when yields have come down. it's enabled the majority of stocks to go up even if the big caps don't do so. so here's a dynamic to watch today guys. >> mike i'll give you an interesting stock. and i don't know if we can put it up on the screen. take a look at apple though this morning. so

everybody's getting crushed. apple not getting crushed in part i imagine because they never fully invested in ai the way some people frankly had wanted them to. maybe they made the right decision ultimately, because if in fact they can use an open source model longer term that's more efficient and that they don't have to necessarily rely on themselves to figure this all out. yeah. boy, does that change the dynamic. >> that is absolutely true. they were perhaps getting penalized for not having that direct leverage and that credit for being a big spender in ai. also, the idea of the device is going to be the way consumers get whatever ai comes to comes to be and how it gets there. and so apple can be a little bit flexible in terms of how it delivers that. i think the other piece of it is it is also a defensive stock. it has had this really tough run in the last few weeks. so it looks like a little bit of a, you know, it's going to get a benefit of a little bit of a migration. >> i don't know, i'm just thinking i was playing, i was telling becky i was playing with

with deep sleep all weekend, you know, you can basically run it on a mac mini or on your laptop. i mean, that's and that changes. i would imagine everything when it comes to data storage, data centers, energy, the whole thing. obviously this big nvidia question with the chips i think still remains probably question number one, which is was this actually created with some of the highest end nvidia chips that they weren't supposed to have access to, but actually did? >> and was it a much bigger budget than anybody's letting off. or about a half million dollars? or was this was this all secretly funded? and they've been working on it a lot longer. >> but what we don't think, though, is that there was a quarter of $1 trillion behind it, and that's how much the platform companies are slated to spend this year. before stargate was announced on data centers and related capex. so obviously, there's somewhere in between this idea that cheaper models maybe are good enough for a lot of people. and this idea of supply constraint from nvidia and everybody dumping as much as they can into nvidia, and we capitalize those earnings at a high rate. that's been the game for a while. we have to question some. >> of that. and mike, we're

going to get killed. but for me asking this because they want us to go bitcoin falling under 100,000, is that just in tandem with because everybody who owns bitcoin also. >> owns continues to look like kind of leveraged big tech as opposed to anything else at. >> this point okay. yeah. mike santoli great to see you sir. thank you. when we come back a lot more on squawk box this morning. former house financial services committee chair patrick mchenry is going to join us on president trump's first week back in washington, a week filled with headlines. we'll talk about them all after this. >> individually, each of us. >> is great, but. >> from here you. >> can see we're one. >> big team. >> at atlassian. we believe real progress takes all of us working together on new sources of energy, cars that drive to the future, even pizza deliveries. together, we can go beyond where we've ever been collaborating from anywhere on everything. atlassian makes software for teams to do what is impossible alone.

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that's my secret to better odor control everywhere. >> welcome back to squawk box, our next guest. fresh from the halls of congress after a two decade career there. he joins us on president trump's first week in office. confirmation fights completed now still a number ahead. i want to welcome former u.s. congressman patrick mchenry of north carolina. he most recently served as chairman of the house financial services committee. and he's still wearing his bow tie. and we are very pleased to see you, sir. well thank you. before we get into anything, just because it is the topic du jour this morning, the markets are selling off on the back of it. this deep sea news china i model that now seems to have upended at least a lot of our ideas around whether they should be open source, closed source, whether you need the chips, whether you need the energy to do it all. what do you make of this? just from a, i

don't know, a national security perspective, a technology us being ahead or behind. >> is this our sputnik moment or no? >> well, marc. >> andreessen said this, but. >> but we don't know. we're we're living in this moment where we don't know if this is real, whether or not this is effectively screen scraping. right, which is taking the best of our open source and their intelligence community. using access to our closed source. is that a component of this build out? we don't yet know. we also don't yet understand fully the data transfer that's happening with with this new app. what we do know though, and the fundamentals here matter. >> are transferring meaning are people's information at risk with going back to the chinese. >> government? is this a more sophisticated tiktok right. is this a much more sophisticated? >> this could be. >> a mousetrap. >> so most of the people that are online don't don't necessarily because it's open source. they think they can see inside. they can see the programing. they can see. now, i don't know, maybe that there's some clever little mousetrap in

there that nobody's spotted yet. >> we don't know. but what is devastating, though, is if you have a new model that requires less compute, less chips means less power, less infrastructure. this has a massive ripple effect where faster, better, and cheaper still wins, no matter if it comes from a communist state or from an open society. >> look, it's probably good news over the long haul. devastating, perhaps, for the companies that have built up so much on this expectation. >> right. and if you're a company like microsoft or apple, where you want to build the best widget and you have capacity to distribute it to your current customer base, this may be a fantastic thing for them. but stepping back, though, this is so complicated. we are an open society with a rule of law competing against a closed society with no rule of law in china. and so we think the fundamentals, i think the fundamentals of an open society and rule of law make us so much better to adapt and change. what they have just done with a closed society is bring

something that's open source, open society. it is such a different, different outcome than anyone expected six months ago, two years ago, five years ago from china. >> i mean, to be fair, you can't criticize xi jinping or ask this ai to do it. you can't ask them about tiananmen square. it's not authorized to do any of those things. >> no, but that's what every american national who does business in china says, that that's the entry price. you can't criticize the regime. there are all these limitations on civil liberties and civil rights, human rights abuses, obviously. >> deep. >> deep seated, but deep, deep, deep seek. but what i mean is anything china is this. but let's step back. there are two additional pieces here. one is u.s. capacity to ban things that they don't like out of regimes they don't like. the president has broad authorities, not just on tariffs, but on export controls that are meaningful, powerful and are the death penalty for firms. >> so would you block this? >> well, let's see. let's see what was actually happening

here. it could be blocked. but but getting back to the fundamentals that doesn't that doesn't bring the globe to our regime. our rule of law speech rights regime, open society regime. it actually leads the rest of the world to go a different direction for us. but that's one point. and so the president's capacity to take action here is massive against an app or an adversary he doesn't like. we see this in tariffs. we're seeing this in tariffs moment to moment hour to hour. and that will continue. but when it comes to export controls the authorities of this administration like the last one are very broad, very deep and quite meaningful. >> let me just ask you about sort of rule of law, because i think there's a fundamental question as it relates to tiktok right now, when we were actually talking earlier to congressman emmer about this, which is there was a bipartisan rule put in place, a law put in place, the supreme court upheld it around tiktok. there is now this sort of period of time. we don't know what this period of time is, where the president effectively

says the law is not the law, and we're not going to worry about it. and if you're oracle or you're akamai, you're saying, sure, i'll host tiktok based on the assumption that the president is going to effectively overrule the law or somehow change the law or do something. and the apples and googles of the world are listening to the tom cotton's who said, this is the law, folks, and you can't do anything, so don't do anything. what should be happening here? >> the courts still matter. the rule of law still matters. the president's opinion is powerful and meaningful in our regime for a period of time, but the courts and the law will persist and will remain. and i think that's the case here. congress acted in a bipartisan way. after a lot of contemplation on tiktok and trying to understand much more deeply about the data transfer and the risks associated with tiktok being in our society, not just the social media, is cancer risk, but but the fundamental risk of the data transfers. so the law is a law it's unlikely to change. and all that's happening right now is tiktok

buying for time via the president's opinion. >> put your your former financial services hat on. i'm very curious what you think of the president believing publicly to brian moynihan and others that banks like bank of america and he name checked jamie as well, jamie dimon, jp morgan are banking conservatives. whether you think that is something that is meaningful, persistent in a systematic way. and when the president says, quote, as he did on friday, i'm going to do a number on the banks, right? we're doing numbers on the banks. what do you think that means? >> those are two separate issues. i hear them as two separate issues. and if i were still in congress, i would see them as two separate issues. there's the issue of d banking, which is real. it is persistent. look at operation choke point and choke .2.02.0 was was focused on crypto. and that is in fact the case. you had crypto firms and those that have major crypto assets get debunked. >> i don't i don't disagree, but the reason they were getting debunked, i think at least, was

under the auspices that these were bad credits, meaning because of crypto, because of aml rules, that's anti-money laundering and other things that the banks felt that they were going to be on the hook if these clients were part of their firm and something went wrong. >> okay, we have. >> and they would argue it wasn't about the politics per se. it just happened to be that actually crypto folks who love crypto, there happened to be a more sort of libertarian conservative group, i think. >> yes, but also and choke .1.0, it was a set of disfavored industries across america that were targeted, actively targeted by the obama administration. the biden administration picked up where the obama administration picked up with a different. >> group, the administration forcing the banks to do this through the regulatory. >> well, yes, because you have you have the banks being pressured by their regulators under the current rule of law on aml, bsa and now a new beneficial ownership bsa bank secrecy act, which is which is a misnomer because it tells it gives the government access to your bank account and major

distributions from your bank account, either incomes or distributions. so there is the rule of law issues that have to be fixed on aml, bsa and the beneficial ownership regime. that is a legitimate policy set that the president is speaking of around banking and the complicated nature of technology interacting with banks. that is a legitimate policy concern. the other policy concern the president has is a is the populist one. elizabeth warren has talked about this. the president talks about on the campaign trail, which is a rate cap, right, that i, as a free market conservative, am against. i think competition should bring down the interest rate and a competitive marketplace should lead consumers and small businesses to have more options. the president looks at this credit. >> card. >> rate caps. right. >> you said the same thing. >> sorry i. >> but okay that was a that was freudian. i started i'm sorry but that that is a populist bent. this is the reason why rohit chopra, head of the cfpb

appointed by joe biden, confirmed without republican votes, still remains as the head of the cfpb. >> he's going to stick around for a while. >> i'm not sure. i don't know that director chopra is super excited about having donald trump as his boss. >> he was on friday and sounded fairly enthusiastic about the idea that there are areas that. >> they well, there are. this is where the populist right and the progressive left meet, and it is a complicated place. and for banks to think this is a pure win with a trump administration dream on. >> okay. you got to come on back, in part because you have to teach us about how to do a bow tie. there's a lot to talk about there. but this was fabulous. and we can continue this. >> well, if everybody wore bow ties it might impact your your viewership. so i don't want you to risk too much okay. >> i might start wearing them. we'll see. i don't know what it'll do. >> it's more of a threat. >> thank you. it's good. >> to see you. >> he's impinging on your territory. look out. all right. when we come back with deep c c

sparking market fears this morning, we're going to hear about one vc fund that is diving head first into ai technology. you might recognize the founders last name. we've got that story next. when squawk box comes right back. >> bitcoin is the best performing asset. but its volatility has kept many on the sidelines until now. introducing the world's first 100% downside protected bitcoin etf capture bitcoin's upside potential while staying protected asset management at a time of disruptive change. calamos today for tomorrow. >> meet venue. on the nyse american symbol venue disrupting a multibillion. >> dollar live. >> music industry venue owns and. operates upscale music venues, outdoor. amphitheaters with seven revenue. sources $166

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the complex simple. his coverage of the stock market is so broad. he brings the ideas and he tells you how to do your own homework and decide whether a stock is right for you. >> get invested. join the club today. go to cnbc.com. slash join jim. >> thrive capital has emerged as one of the most prolific venture capital firms of the past decade. it's thriving in the i era. kate rooney has more on the fund's latest investments and its founder, josh kushner. hey, kate. hi, becky. >> good morning. so thrive has been at the center of the biggest deals lately. think of openai and databricks, for example, highlighting founder josh kushner's influence right now in tech circles. i've been talking to people close to kushner. they tell me he is really the secret to some of that deal flow. really, all of that deal flow. it's a small new york based team. but kushner has a vast network that includes nba players. he's a part owner of a team and celebrities like kim

kardashian. i'm told he's also a close friend and advisor of openai's sam altman, the ceo there. thrive led openai's $6.6 billion round back in october. it was also in databricks, as i mentioned, robotics company physical intelligence sierra, run by brett taylor, and then the film company a24, which also scale i. plus, they were early investors in stripe, spotify, instagram, skims, robinhood and anduril for a $23 billion fund. that's how many assets they have under management. thrive really does not actually do that many deals. most venture firms live by something called the power law, meaning most of these bets are going to fail, but the big winners will make up for those people familiar with thrive's strategy, say that it tends to do fewer, much more concentrated deals with larger checks. one major smudge, though, on kushner's investing track record so far is oscar health, the startup he co-founded. it struggled. it ended up needing to leave some major health care markets. and that failure did come up a couple of times in

conversations, but not in the way you might think. it's actually a core reason that founders tend to relate to kushner. he ended up seeing that company through those losses. one founder that's backed by kushner told me he gets it and that he's one of us, that kushner keeps a low profile in politics. despite his brother jared kushner's seat in trump's inner circle. he has publicly supported democrats, but i'm told he's largely staying out of politics. >> becky is a smart guy and an interesting guy. kate, thank you very much. when we come back, prominent anti diversity, equity and inclusion activist robby starbuck will join us on the wave of companies rolling back dei efforts. stay tuned. you're dei efforts. stay tuned. you're watching squawk box and this is help us retire. it's a simple ask of our elected leaders. but the tax treatment we rely on to grow our 401(k)s, iras, and other retirement plans could be on the chopping block in congress. any policymaker who makes it harder to save for retirement is standing against the financial well-being of

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definitely much happier. >> it started today with a prescription that's right for you at wrexham.com. >> welcome back to squawk box. the national association for business economics out with its latest survey. steve liesman joins us now with the results steve. >> good morning andrew. yeah. respondents to the latest nabe survey. >> grew more. >> confident in the economy over the next year and indicated less pricing pressure. for now, though, more expect to be hiking prices in the next three months. a warning sign, perhaps, for inflation. the first quarter survey from the national association for business

economics shows a significant drop in the recession outlook, 82% of respondents putting the probability of recession at less than 25% last quarter. just 56% were that optimistic, and just 15% see the odds as greater than 1 in 4. now, over the past three months, the net percent raising prices came in at 22, down 11 points, but 35% saying they would be raising prices in the next three months. got to watch that one. the net percent with higher material costs rising five points, but there's less wage pressure you can see there and also less net hiring going on. layoff intentions, however, were muted, capital spending rising seven points to 19. that's a good sign when it comes to the new administration. 69% say they have not adjusted their hiring or capital spending plans as a result of the election. just 27% have, and that could be because of policy uncertainty, 61% saying fiscal policy uncertainty is one of their top

downside. economic risks followed by recession, global instability, higher interest rates and tighter credit conditions. so while firms are optimistic there won't be a downturn, they're not yet confident it would appear enough in future policy to make changes to their investment or hiring plans. that is, until, guys, there's more clarity on policy from washington. becky. >> okay, steve, thank you very much. let's get back to this morning's pre market sell off. we've been watching this morning with the dow off by about 328 points s&p futures are down by close to 130. the nasdaq now down by about 760 points. joining us to talk more about this what to expect from the fed this week is bob michael. he is the chief investment officer and head of the global fixed income currency and commodities group at j.p. morgan asset management. bob, let's start with the fomc meeting, because i don't know how closely you're following the tech moves that are here today. >> oh i'm watching them pretty closely. >> so what do you do. >> i'm sure the fomc is glad to

see there's other news. >> in the market. that's not. >> just them. this meeting. >> should. >> have been easy for them. go in and point to the soft landing playing out exactly as they had hoped. you have unemployment just above 4%. they meet their objective of full employment. you look at inflation. we look at the three and six month annualized run rate of core personal consumption expenditures. they're 2.3%. that looks pretty good. that's close enough to the 2% target. and then you also look at perhaps the real fed funds rate is a little bit higher than they'd like to see it. but inflation is not quite at their target. that looks okay. and then you have all this policy noise coming out of washington. and that's the big issue for them. how do you deal with that. how will they weigh that in their decision making process. >> well they do you think they will bow to that? i mean, the market is kind of anticipating that they will. and i think you think this is the case too, that they will pause and this will be

an extended pause. >> yeah. they'll they'll pause. they've made no indication they'll do anything but pause. and they should wait out the next couple of quarters, see how the data plays out and be comfortable where they are for them to cut rates further from here, they'd have to see material weakness in the labor market, and that doesn't look like it's coming. >> if they did cut rates this go around, what would you think? given the political pressure to do so? >> i'd be really surprised. i'd wonder how committed they are to their inflation target of 2%, and how could they ignore the policies that are being talked about in washington. >> ignoring the policies? i wouldn't anticipate that they would ignore policies, but it's kind of hard to make policy decisions based on policies that haven't really been formalized at this point. >> and yet, cutting rates is making a policy decision, doing. >> nothing, standing pat, doing. >> doing, doing nothing. to me, is the obvious thing for them to do. the economy is in great shape right now. they probably would have stood pat anyway,

regardless of the noise coming from dc. >> okay, as you mentioned, it's not just noise from dc, it's also noise coming from the markets this morning. when you see not just tech stocks that are down double digits, but also energy stocks as well, everybody reassessing what it means to have deep seek out there. >> yeah. and it's also good to be a bond investor when there are yields back in the market again. because they can serve as the anchor in the storm. that's what we've seen this morning. there was a flight to quality the safe haven. the treasury dropped 1213 basis points to 450. it's hard to do that when it's a percent. >> so you're feeling pretty good just because it's making your wheelhouse look like a better place to be. >> yeah, it's making our clients lives a lot easier. they've under allocated to fixed income over the last couple of years for very good reason. they were getting good yield in cash. equities were doing well. why put money into a fixed income market which had low yields and where yields were rising. now they see higher yields. they could put money in the aggregate

bond market at 5%. they could put in high yield at over 7%. you can go into bank loans at 9%. that helps them achieve their objectives. >> because technology may not be the generator that we've seen in stocks over the last year. plus. >> well, from a fixed income standpoint, it could also be disinflationary. and maybe that's what we're seeing from deep sink that there are cheaper ways to do things. bond markets will like that. >> yeah i guess you look to what happens longer term with this to what it's going to mean for productivity. >> it should be a really good. the fed targets wage gains of three and a half to 4%. we're kind of in that sweet spot now. they think 2% of that three and a half to four is inflation. the balance of one and a half to 2%. they'd like to see from productivity gains. it looks like we're going to continue to see those okay.

>> so happy days for you. >> feels like. it certainly today. >> bob michael thank you for being here today. we appreciate it. >> happy to be here. >> okay. coming up next, an interview you do not want to miss if you're the ceo of a company in america or somebody who invests in one, here we come. dei activist robby starbuck on what jpmorgan ceo jamie dimon told us last week in davos. stay tuned. we're coming right back after this. >> in a world of uncertainty and disruption, how will your investments stay resilient? we've been navigating change for 125 years, always looking forward, anticipating risks and trusted to manage over $1 trillion in assets worldwide. solving for the needs of investors today and tomorrow. investors today and tomorrow. that's the power of (vo) it's half-time, time to open the frig.

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>> the owner called me and said, would. >> you like to be an. >> ambassador for skechers? and i said, yes, try. >> skechers slip ins. >> there's been a vibe shift. we talked about it a lot here in davos, a rebuke of esg, a rebuke of dei. robby starbuck is out there going after companies. you now have a couple of activists going after your company. really? >> not that i'm. >> aware of. are you aware of this? >> bring them on. i'm not aware of it. >> well, that's what i was gonna ask you in terms of what you think your approach should to dei should be, given that we've seen a whole number of companies effectively end these programs in large part under under pressure. >> but we're very proud. >> of what we've done. and what we've done is. >> lift up cities. >> schools, states, hospitals, countries, companies. and we're going to do more of the same. >> so you're going to tell these

activists to go pound sand. >> i don't know what you're talking about. if they've got something that we're doing wrong, i'd listen to what i have to say. >> that was jpmorgan ceo jamie dimon with us in davos last week. following that interview, activist, investor, dei activist, i should say robby starbuck releasing a video of his own, angling for a debate with diamond. >> you can defend what you guys have. >> done, and then we'll. >> let the american public. >> decide if dei. >> at jpmorgan chase has been done in a way that is fair, compliant with the law, and certainly just all above board. >> right now, i want to bring in the man behind that video. i don't know if we're going to get a full on debate, but we're going to try here. activist dei robby starbuck, robby, it's good to see you. we got to talk a lot about some of the work that you've been doing last week in davos, just given the number of companies that have ended a lot of the dei programs. i'm curious. i was looking at what jp morgan has done, and i think there's lots of different definitions of dei. i think there's quotas on one end and affirmative action, which i think a lot of people think maybe have gone too far. there's

some of the things in terms of supporting transgender and other kinds of activities, either for employees or other things that i know you've you've argued against. but then i was looking at this, jp morgan put out a release. this is a couple of years ago. it said jp morgan chase commits $350 million to grow black, latinx and women owned small businesses. and i sort of looked at that and i thought, you know, maybe that's a that's a different version of dei that you would support insofar as perhaps and maybe it's good faith, i would hope it's in good faith that that jp morgan thinks that by investing in those markets, they can grow those markets and therefore grow their market. and how you think about that? >> well, first of all, using the term latinx is something that's wildly offensive to most latinos and hispanics. and i think that the election kind of showed everybody the evidence that latino are moving away from a party that continues to use that kind of terminology. so if i were jamie, i'd be embarrassed for using that. but beyond that, i would say, you know, anything you do as a company should not

be considering race or ethnicity. and i think that's sort of the basis of the civil rights movement. right? so if you want to be sort of compliant and believe in these things that we always talked about, like equality and fairness, then we should be doing things fairly above board and not singling out people by race. >> well, so but here's a question for you. and i ask it in good faith. i was thinking i was talking to some ceos actually last week in davos who were talking about how one of the things that's happened in the last four years is they've expanded where they look for new employees. a lot of them have expanded after george floyd's murder. in truth, to look at some of the hbc hbcus, i'm thinking of morehouse and other places like that, they say, because they wanted to expand and find more talent. do you look at that and say that that's an affirmative action program, or do you think that that could be done in good faith? >> i look at this and say, this is an affirmative action program. this is a jp morgan program called black pathways fellowship, and they have one for latinos as well. and the

actual result of that is that 67% of their interns are minorities. okay? we live in a country that's vast majority white. still, that obviously tells you that these programs are having a, you know, preferential treatment basis for these other groups of people. and i'm not saying that people of all races shouldn't be represented. they should. but i think proportional to society, you would expect it to be if it was occurring naturally. it's not occurring naturally. this is something very clearly where they're putting their finger on the scales. and if you look at sort of the laws on the books, that's something that should be, i think, by any reasonable person seen as illegal. >> well, let me ask you this. so ken frazier used to be the ceo of merck, african american, one of the most prominent african american ceos in the country at the time. and he talked on this broadcast about getting an opportunity, getting a chance that he said he thought would have otherwise been unavailable to him had someone not sort of said, you know what, i'm going to take a chance on this guy because he did not look like everybody else. and i think

there's also an argument to be made that once he got that job, he created opportunity for lots of other people who looked at him, african americans who looked at him as a role model. and i'm just, again, in a good faith way, curious again, because i'm trying to wrap my head around what the right answer is here, whether that should happen. because if it doesn't happen, it'll never happen, right? it becomes a self-perpetuating thing. >> i would say this i think people need perspective. my family came from cuba. my mom was a penniless refugee. she came here not speaking english, and they lost everything to communism, everything they ever worked for. and so for me as a kid, i grew up in america knowing that i was incredibly lucky to be an american because we had actual opportunity here, that that wasn't going to happen to me. i wasn't going to have the state come down and steal everything i ever worked for, and i wouldn't be able to advance. so i believed in the promise and opportunity of america, and i never needed a leg up. i never used some special program to get somewhere in life. i believe that with opportunity, if you put your mind to anything, you can achieve it in this country. that

is a blessing to all of us. so anybody who wants to pretend that we have it so bad in america, or if you're a minority, you can't make it. it's the types of excuses that perpetuate victimhood that keep people down. so embrace the opportunity we have here in america. make the best, make the most of it. anybody can achieve what they want to achieve if they put their mind to it. in america, there's not this artificial barrier that people would like to believe there is. >> let me ask you a different one. and i spent a lot of time, i think, like you do, because we've communicated on x. and there was an interesting i don't know if it was a meme or just a whole bunch of threads going around around jd vance, who obviously is a very smart, very, very smart guy who got into yale law school and there was an argument being advanced, frankly, by by some conservatives, it appeared that he was a beneficiary of dei, not in the classic sense that you might think, but because of his background and where he came from, that if you were yale law school and you were looking to have a, quote, diverse group of people, not necessarily by race but by geography, for example,

and by background and history, that he was a beneficiary to some degree of that, we'll never know. what do you think of that? >> i think it's ludicrous. i've never seen this argument advanced. i think it's honestly kind of funny. jd vance is an american success story. i think he is the american dream. he embodies it. and to go from where he went in america and lift himself up to the vice presidency is a testament to exactly what i said, that anybody can do anything in this country to be born in the conditions he was born into, and you'd have this group of people within dei tell you that somebody like jd has white privilege. it was no privilege for him to grow up around a drug addicted mom, to grow up in an abusive environment and to lift himself up out of it. there are a ton of minorities born into much better positions in this country who make, you know, nowhere near that of themselves. and then there's other minorities who have the most terrible conditions they're born into and make an incredible life for themselves. >> i don't. >> disagree with you seizing

opportunity, robbie. >> you and i, i think, agree largely on a lot of things. the issue, i think, is, you know, i remember someone telling me when i was in high school, you know, your family should move to montana because if your family moved to montana, you'd have a better chance of getting into an ivy league school. i remember this, i remember the conversation. and why would that be? because i was in new york, where a lot of people, you know, on the east coast go to these schools. and the view was that if you were in a state where that a lot of these kids didn't come from, that unto itself would be considered diversity. i ask because i think there's a question about what dei is, whether we're talking about quotas and affirmative action, whether we're talking about something else. and as ceos are thinking about how to restructure these programs, in large part not just under pressure from you, but because of, i think, the sort of natural pressures that are happening in the country politically and otherwise, what the right answer is, and is there a way to do some of this, if it's in good faith to try to find the right next new generation of people

working at their firms, with not doing the things that may take it too far, meaning is there a middle ground? >> i think there is a middle ground called fairness. you know, the situation you just described is one that today is playing out very differently. that's a time long ago, you know, not not to say you're old or anything, but we're getting a little older. right. and that time is not the reality we're living in now. the reality now, if we're being very honest, is one where myself, my kids can check a box that says latino, or they can check one that says white because their mom is scottish. right. and we're very aware if they check the latino box going into college or going into the workplace, they have a much better chance of getting into school or getting that job. now, what does that tell you? that tells you that it is patently unfair to other people? this is racism in a different form by a different name. and as long as it is that it's wrong, because at the core of what we believe in, it's that we should all be treated fairly. it's that our color shouldn't matter, ethnicity shouldn't matter. and if you look at what these companies have become, i think

it's really a shell of what they can be, because if they embrace the american dream, that really was the envy of the world for so long, we can be again the most dominant, the greatest, without question, country on the face of this earth. it's this stuff we've gotten into, like training with the genderbread man, this is something jp morgan does, by the way. this is an actual training genderbread man, are we serious? we're adults here, right? we have a $30 billion commitment to racial equity. this is racism in another form, $30 billion. and you know, dylan mulvaney started the big bud light fiasco, right? guess who sponsored a dylan mulvaney event for children? jp morgan. that was recently. okay. these programs have gone wildly out of control. there they are a trojan horse for left wing policy. if we're being completely honest, that is what they have become. so if we want to talk about how we get back to fairness in this country, it's embracing the idea of the american dream. stop looking at each other by their skin color. stop looking at them as a certain sect. stop asking what their sexual proclivities are at work, and just get back

to fairness and judging people on merit. >> robby starbuck, thank you for joining us. a lot of people focused on your words, and we appreciate you joining us this morning very, very much. >> thank you. appreciate it. >> thank you. you bet. talk to you soon. when we come back, squawk box has a lot more we'll talk i and more after this. >> at capital. >> group we believe in the potential energy of fixed. >> income. >> fueled by. >> 50 years. >> of experience. >> our distinctive approach to fixed income investing has delivered strong long term results and could. >> power portfolios. >> to reach investor goals. all you have to. >> do to activate. >> this potential energy is. >> this potential energy is. activate (♪♪) car, this isn't the way home. that's right james, it isn't. car, where are we going? we're here. (♪♪) surprise!!!

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that we get to use every day. >> all right. welcome back everybody. let's take another look at the futures markets this morning. the dow has indicated off by just over 340 points. the s&p futures down by 127. the nasdaq down by close to 750. we are off the worst levels of the morning. the nasdaq was down by over 1000 points when we started the show three hours ago. it's off right now by about 3.4%. the decline for the dow, just three quarters of 1%. s&p is indicated down by about 2%. and of course, this all comes as people try and figure out what to make from this chinese entrant into the ai world, one that looks as if it is more energy efficient, more efficient, and effective in terms of using chips. and that's got a lot of people asking questions this morning. we still don't know a whole lot about it. it is open source. we will have many people who are looking at this, but you're looking at some

of the losers there this morning. nvidia is down by close to 11%. marvell technology off by close to 12%. broadcom down by 10.3%. we've also seen treasuries pick up a bid. and those yields come down as a result of all this to 453 for the ten year. that does it for us today. but we will be right back here with you tomorrow. right now it's time for squawk on the street. >> good monday morning. >> welcome to squawk on the street. i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. the deep sea freakout is in full display as china's free open source model throws into question the entire ai build out. nvidia briefly was set for its biggest one day drop in five years. a ton of earnings and macro definitely on deck for the week. a roadmap will begin with nvidia, broadcom and the chips in general plunging on as the broader market also is lower ahead of the open. on news that this chinese company has built a lower cost and possibly