good morning and welcome to squawk box right here on cnbc. we're live at the nasdaq market site in times square. i'm andrew ross sorkin along with leslie picker this morning and mike santoli becky and joe are both off today but that doesn't stop the train. we've got a lot going on and the train has left the station on the news front this morning because there is a lot of it. let's show you. u.s. equity futures right now where things stand. dow not moving around too much. it was just in the green about a moment ago. now you're seeing a little bit of red. but the nasdaq up about 79 points. looking at the s&p 500 up about four points. all of this coming after stocks climbed yesterday recovering now some of monday's losses. the dow up by 3/10 of a percent. the s&p up by 9/10 of a percent. the nasdaq had risen by about 2%. now take

a look at nvidia because it rebounded by about 9% this after monday's losses which were steep 17%. and lots of questions continue to persist about the implications of this emergence of deep sea, the ai model coming out of china. we'll talk about alibaba's model in just a moment, because that's also adding to some of the questions that people have about how this is all going to work in the future. treasuries. right now, let's show you the ten year and the two year. you're looking at 4.5% on the ten year, the two year sitting at 4.193. and then bitcoin, to the extent that it is going to be our signal of animal spirits or maybe of tech bros or something like that, you're looking at 102,419. so that's actually stayed modestly in the same place as yesterday. but of course, we had dropped below 100,000 on the back of the deep sea news as the entire sort of technology complex seemed to fall apart. >> pretty tenacious bid.

>> in bitcoin. >> on any wobble. >> and you know, you hear these. reports of yesterday was retail investors. >> rushing in and saying here's. >> my chance to. >> to get. >> the i trade. >> at a discount. and whether that. means it's. >> a durable. >> smart money buy the. dip type of response. >> or, you know, just. >> muscle memory. we'll have. >> to see. >> but it is kind of interesting. >> bitcoin moves along. >> with a. lot of. that type of type of flow. >> and institutional investors as we talked about yesterday. really were a huge composition of the selling a lot of nervousness and kind of calls into question what that means for the ai trade as a whole, especially. >> if. >> retail is making up a large portion, a large portion of. >> the rebound. >> and it. >> raises the stakes for all the earnings we're going to hear. and so. >> now all of a. >> sudden, you have an extra layer. >> of scrutiny. >> on, you. >> know, what are you getting. for all. >> the capex? >> does it change your thinking? >> has it not? and of course, now microsoft. >> the news this morning may be checking to. >> see if. deep seek, you. >> know, utilize. >> some.

>> things developer. >> tools that may. not have been. properly have access to. >> we'll see and what they. >> can do. >> about it. >> yes. >> yeah is a big question. a federal judge has paused an order by the trump administration that would have frozen existing federal grants and loans until agencies vetted them. the judge's ruling came just minutes before the freezing order was set to take effect at 5 p.m. yesterday and lasts until monday, pending more hearings. the trump administration's order is part of an effort to cut spending that does not. >> comply with his. >> efforts to purge, quote, woke. ideology from government programs. >> and separately. >> the. >> trump administration. >> is offering millions of federal workers the option to accept buyouts through a government wide deferred resignation program if they resign. >> by. >> february 6th. >> those who accept the offer. >> will receive pay and benefits through september 30th, according to a draft email obtained by nbc news. a senior administration official told nbc that the sweeping buyouts are being offered to make sure all federal workers are on board with the administration's plan to have federal employees in office and adhere to higher standards. the buyouts are being offered. to all full time.

federal employees except military personnel, postal workers, and roles related to immigration enforcement and national security. >> but lots of confusion still about who's really eligible, who's not. some mentions in the letter, apparently, that, you know, we still can't promise you that there'll be a job on the other side of this. we will still do, you know, work with you. >> if you don't. >> take if you don't take it right, if you don't take the buyout, we can't promise you what's going to happen. so you could keep your job. but, you know, it's possible that your agency may get eliminated in six months from now. >> and then you don't get the eight months. >> of severance, and then it's done. well, it's unclear. they talk about trying to deal with people with dignity in the future. but, you know, you offer eight months now and six months later, i don't know, eight months. i was trying to look on a sort of privatized basis. eight months actually is a lot. >> that is. >> yeah, it is. >> but what does. >> it mean? >> do you surrender your. >> accumulated retirement benefits? >> well, and none of that is none of it's clear, right? the email, interestingly, and i

don't know if you guys have followed this is very much like the email that elon musk sent. yes. >> right after the buyout. >> right after the buyouts. it to his own team. so i don't know if he drafted it himself. i don't know if somebody just took his email and said we'll send something like that. >> well, it's this idea of, you know, there's a new chief in town. if you're not on board with what we're doing here, you should resign immediately. and they make it very easy. by the way, in the email, you just have to reply, resign, i think. yes or yes? opt in. >> yes. no, i think it's resign. just resign in the subject line and you're. >> good. >> and you're good. >> no. well, the question is, are you good? and that's that's the other piece. >> although, you know, in fairness, with a. >> corporate buyout. >> plan, that is also sometimes the implication too, like if we don't get enough people signing up for this buyout, there's going to be layoffs. so that. >> maybe isn't that different. >> what i think. >> is, is maybe worth. >> another question is, okay, so if you. >> don't resign. >> you implicitly say. >> i agree. >> with the back. >> to office policy. >> full time. >> do you agree with. >> everything else. >> that.

>> the administration says federal employees are supposed to adhere to? in other words, you. >> know. the trump. >> administration has said that they believe they can enforce a. >> lot of policy and. >> ideological rigor. >> within the civilian workforce. >> and so what. >> is it? >> what are you actually signing up. >> for if you stay? >> also? >> i mean. >> i think. >> it's fascinating because the. savings are not. >> huge, right? >> they're talking about $100 billion. i have no. >> idea where you can possibly get to that. >> if 10%. >> of the. >> civilian, nonmilitary. >> non-defense department. >> were, you. >> know. >> workforce gets there. >> it's kind of an. >> amazing thing. they seem like. >> their doge wants to sort. >> of the shortest. path to. >> declaring a win on making the government more efficient. of course, the. government can. >> become more efficient. >> and everybody would agree. >> with that. >> but the idea. >> that it's. chunks of money that. >> are material. >> to the federal budget is. >> but i do. in question, i think that the elon musk strategy for the way he's been running his businesses is just it's an all out assault on whatever the thing of the moment is, and that he thinks the drip, drip, drip approach meaning not to say that it's not thoughtful one way or the other, but the

approach that maybe some other people would take. doing this would take a much longer time, and you might get to the same result or maybe worse. and so maybe it's just a rip the band aid situation. >> absolutely. >> it's motivational. >> in addition to. >> simply being. >> about cost discipline. >> it's also. >> self-selecting, though in a sense, because, you know, if you if you have everybody resigning who follows one ideology, do you get the risk of this kind of groupthink mentality where everybody who does remain. >> a different. has the right? >> or if. >> it's the. >> people who. >> who have private. >> sector job. >> prospects and they're the. >> ones. >> more likely to take. >> the buyout. >> and who are you? i mean, look, the big the biggest issue is just whether you're going to actually be able to maintain, to the extent that you believe that there are talented people, hopefully, who are working honorably for our government on behalf of the citizen citizenry of america, if the talented people decide, i'm not, i'm not doing this. that unto itself is when the whole thing sort of becomes complicated. >> it's amazing. it's also percent and a half. >> of the total. >> national workforce. >> like it's really. >> not a lot of. >> of people in aggregate. >> but understandably. >> we. >> get the we get the attention. >> on it right from the.

>> get go. all right. now to some corporate news, we are watching shares of. starbucks earnings and revenue beat estimates, but same store sales declined for the fourth straight quarter. >> ceo brian niccol. >> said the company has seen a positive response to the early steps it has taken, including removing extra charges for nondairy milk options. focusing its marketing on its. coffee and cutting back. on menu options. >> niccol will be on squawk on. >> the street at 9 a.m. eastern time today in a cnbc exclusive interview. >> the initial. >> stock response was positive. and then. >> have you seen the new commercials? yes. do you like them? i do with the song they call my name. you know, i'm not going to do the song. no, no. >> i get it. >> you know the song. are you ready for it? >> yeah, but i was hoping. >> you would say you want to do it. >> no, i think you should. >> it's like they call my name. they call my name, they call my name jane. and then they do the different names. and you're seeing them sign the. >> the cup. >> the cup. exactly. >> trying to get back to some kind of. >> emotional connection. yeah. and interestingly, at the end, the starbucks coffee company, it

was starbucks. that's right. the starbucks, which was the real name. right. but it was also it sort of had this old school coffeehouse vibe to it. yes. i thought it was very interesting. >> yeah. >> it sort of back to basics. >> we'll see. >> meanwhile, dutch semiconductor giant asml reported. >> a big. >> jump in fourth. >> quarter net. >> bookings up 169%. >> from the prior. >> quarter thanks to strong demand for its advanced chip making tools. the company's ceo. >> told. cnbc that the arrival of low. cost ai models. >> such as deep seek. >> would drive more demand. >> for semiconductors. >> not less. >> he said the lower cost of ai. >> could mean more. >> applications. >> which would mean more. demand over time. >> the stock with an initial. >> pretty positive. >> response after. >> a rough go. >> it's up 7%. >> what do you think? is this like, you know, i mean, it's just like asking, you know, as warren buffett says, you don't ask the barber when you need a haircut. you know, i don't know when they stop using scissors and they started having the buzzer cut, did they say, well, that buzzer cut, that, that buzz that makes it more efficient? we're going to have a lot more haircuts now. >> and just because there's more demand for semiconductors doesn't mean that the. >> urgency of building new data

centers and buying more of. >> these. >> you know, machines. is going to ramp. >> up from here. right? >> right, right. >> so meantime, salesforce ceo marc benioff, weighing in on the market's shock waves caused by the launch of china's deep sea kai. here's what he said last night on mad money with jim cramer. >> the majority of the models are american models. but here we see now the chinese also coming in with not only an aggressive competitive model, but one that's cheaper and lower cost. so it just gives everybody. >> the motivation. >> to keep. >> going and. >> going faster. >> you know, i'm saying the deep sea would not be the last chinese ai model. and to expect a lot more innovation to come in artificial intelligence to some degree. you could argue he's a winner of this because he has not invested the same kind of capex that a lot of the other big technology companies have. and so everybody, including apple or salesforce, anybody who hasn't really won this game or played this the same game, at least that some that the googles of the world and some of the

others are playing, i think are looking at this and going, it's a win. >> the market immediately. tried to just. >> impose that. rotational trade on. >> and say, okay, whatever. companies actually. >> touch the user. >> the customer. >> and therefore. >> if ai is going to get cheaper and be. more utilized. >> we're going to go down because everyone. in the. >> back of their. >> mind realizes. >> that that transition always. >> happens in. >> these. >> technology movements. >> is that what it is or is it a rotational trade, or do you think there's a real basis for it in the sense that. >> i think it's both. >> they don't have that same pressure in terms of just showing the roi for these enormous capex numbers, and therefore they're able to, you know. >> look, if you can have the same if you can somehow have a product that is somehow even close to what the other guy has, and you don't have to spend the same amount of money. >> good enough is good enough sometimes. and i. think that's the idea. or that, you know. >> again, we always know. >> that eventually. >> it moves. from hardware building. >> to foundational. >> technology and models to applications and software and just the devices that. you have in your hand. and so people just. >> decide, okay, that moment is

here. >> whether it's true or not. >> yeah. because the market wrote them out for so long. it was so easy to switch that to. >> turn that. >> switch back on. >> yeah for sure. meantime, the u.s. navy has now instructed its members to avoid using ai technology from china's deep sea in a warning issued by email on friday. the navy said deep sea was not to be used in any capacity that's in quotes due to potential security and ethical concerns associated with the model's origin and usage. >> fascinating. new this morning, chinese tech company alibaba releasing a new version of its quen ai model that it claims surpassed the latest model from deep sea. the release caught some people off guard because it came on the first day of the lunar new year, when most chinese businesses are closed for the holiday. in the release, the company said quen also outperformed openai's gpt four and the latest version of meta's llama. you have to wonder, guys, the timing of this all is fascinating, given that it is all coming out. it feels like

this week in the sense of, you know, trump has been in office for a week and a half now. there are geopolitical implications like. >> dig deep, seek, wait a week or two. you're saying to release their model. >> i don't. >> know if they. >> if they. >> waited a week. >> it went live. >> on january, happening the same week. and the fact that there is a holiday, the lunar new year, where most people would not expect any announcements and they're coming anyway. not to mention not to be all conspiracy theorists about it. i don't know if that's the case. you've got the big tech earnings this week. i mean, they're just feels like a lot of crosscurrents. >> from the timing of the idea of this. so there's this idea that these models, including deep tech, possibly some of these others affected, are ripping off openai's models or ripping off other people's models. they use this word distillation or distill. i made a point on twitter last night. is distilling somebody else's model like basically training on, you know, copyrighted content? exactly. so, you know,

the content media world has been complaining about this for quite some time. these people now seem to be complaining a lot that somehow their. >> karma. >> their work, is being distilled. yeah, just an interesting word. it is interesting. >> i obviously i don't know enough about exactly. >> the mechanics of it, but whether there's a way to detect. >> if. >> you know, they've kind of poured. >> it over direct. you know, you know, kind of code or shortcuts that a openai has. >> arrived at, of, of distilling something is that you basically ping the other. model and effectively just you're almost like, it's you're asking it a million questions about, yeah, about how it works. and it's telling you how it reasons, how it does this, how it does that. and so but with code. so you're sort of understanding the underlying how it's working in each area. and you're just doing it constantly. >> so then is that copyright infringement or is that just. >> look in a business that the entire ai models are built on, off of copyright infringement? i think we can say that empirically. i know that some of my friends in i don't believe

that, but it seems to be. yeah, it's all been distilled. the world has been distilled digitally, but i don't really like that word have been stolen digitally. maybe that's. >> that's a. >> more poignant word. >> closer to reality. coming up, the fed's latest policy announcements due this afternoon. and there are some key tech earnings out after the bell. we're going to break it down. we've got the squawk planner coming up. and don't miss our special interview with linkedin founder reid hoffman. he's one of the i ogs. we're going to get into all of this with him. squawk box coming right back. >> you can contribute up to $7,000. >> $8,000 if you're 50 or older into a traditional or roth ira by. april 15th and still have it. >> count for the 2024. >> tax year. traditional ira. >> contributions are generally. >> tax deductible, but roth ira contributions are not. for cnbc, contributions are not. for cnbc, i'm sharon (♪♪)

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>> let's talk ai. ai in china versus ai in the united states. >> deep sea. one of. >> the companies within. >> china. >> it's. >> been reported at least. >> that they. >> have a cluster of. 50,000 nvidia gpus. >> deep sea. >> their model. >> is actually the top performing or roughly on par with the best american models to see the deep sea new model. it's super impressive and it's supercomputer fishing. >> we're not just about managing. >> information. >> we're about supplying digital workers. now we're. craig here pays too much for business wireless. so he sublet half his real estate office...

to a pet shop. there's a smarter way to save. comcast business mobile. you could save up to an incredible 70% on your wireless bill. so you don't have to compromise. powering smarter savings. powering possibilities. switch and save with comcast business internet and mobile. find out how to pre-order and get the new samsung galaxy s25+ on us with a qualifying trade in. call, click or visit an xfinity store today. generics now. >> only $1. >> per. tablet@resmed.com slash 30. >> that's what it says. >> on today's spacewalk planner. the fed. >> concludes its policy. >> meeting with. >> a rate announcement due at 2. >> p.m. eastern. the central. >> bank expected to. pause rate cuts, leaving them steady. >> as for. >> earnings. >> a few notable reports. >> this. >> morning. >> including t-mobile, norfolk southern and nasdaq. >> nasdaq ceo adena. >> friedman will join us. >> after that report. that's a first on cnbc. >> and after. >> the closing bell, we'll hear. from some big. >> ones ibm. >> meta platforms, microsoft. >> and tesla. and for more on

the markets. >> let's bring in jim. >> paulson, author of. >> the newsletter. >> paulson perspectives and former chief investment strategist. >> for both the loophole. group and wells capital management. >> and jim, it's great to see you this morning. >> thanks for coming on. >> you bet. mike, great to see you. >> so talk about i don't know. >> how the first. >> almost month. >> of the year. >> has unfolded. >> both in. >> terms of, you know. >> collective expectations. >> for this. >> magic combination. >> of a pretty sturdy economy and maybe rates off their highs and with room to cut and earnings are growing. >> it seems as if. >> kind of all cylinders firing on the bull case. but you think maybe there might be a little bit of a of a scare along the way? >> i do, mike. i think one of the reasons is just what you bring up. i think in some sense, the sentiment and the feel today is calmer than it's maybe been in this entire bull market. and this bull market has lived under the haunting image of the fed tightening all the time. it's constantly, chronically had imminent recession forecast

almost always in place, kind of climbing a wall of worry. last year, you know, we had a war in the middle east, a war in ukraine, a war for the white house. and a lot of those seem to be calming down. and there's now a new era with a golden era with the new president and good feel. and there's a sense the economy not only is not weak, it's almost too, too good. and it just bothers me a little bit that sentiments kind of got there. and that tells me that it could be upset if it comes in a little differently than that. i'd also point out that the third year of a bull, which we're in historically back to 1945, mike is not that great. historically, returns have been about 5%. the frequency of corrections are. >> much higher. >> in the third year than they are in the first and second. and then lastly, what concerns me the most is. >> just. >> you know, economic policies have really been tightening a lot lately. you know, not only bond yields up a percent since. the since the mid september, but also the dollar. the real value

of the dollar. >> is almost. >> at an all time record high now, dating back to when it was first. >> floated in the early 1970s. >> money growth is just a little over 3%, which is insufficient to support a. >> 5% nominal. >> gdp, and fiscal juice has been flat. >> even though the. >> economy has continued to slow, which means that it's gotten tighter. so i think we're going to slow the economy down, and i don't think we're going to have a recession, but i think we might reignite some recession fears. and if it i think it's going to come as a surprise now that everybody thinks that the water is safe, so to speak. it's interesting. the fed. >> obviously. >> you know, they've cut. >> three times. we're going on a sort of a hold pattern for the moment. it would appear in part because they feel as if. >> the economy doesn't. >> need any help and they want to allow inflation. maybe if it's going to continue to come down to do so, or if we do get a little bit of a spark, whether it's from policy or elsewhere to inflation to perk up, they can maybe just hold things here for a bit. do you think that there's

risks involved in them pausing because, you know, historically if the fed's going slow, if they've just done some adjustment rate cuts and then let the economy breathe, it usually. is okay. but you feel like that's a little risky. >> i do a little bit. you know, this fed has kind of been behind what all the other policies have been doing throughout this cycle. mike, you know, they they inflation started rising over half a percent in mid 2020 to 9.1% by mid 2022. and while bond yields went up and the money supply came way down and fiscal juice tightened and the dollar went up, the fed didn't start tightening until the inflation rate was 8.5% in april of 2022. and so it kind of eased all the way up while everybody else was tightening. then when inflation came down, every all the other policies started easing and the fed kept tight. and i think kind of now the fed started easing and all the other policies were tightening ever since mid september when they started their easing campaign, everything else has been a tightening force. and i'll tell

you what, it's been more important if you followed the other policies than to follow the fed. that is to say, you know, the other policies have been right and have kind of shown the path ahead, not the fed. the fed's been behind the other policies and been wrong. so in some sense when the fed when the fed didn't tighten, you want to be prepared for tightening and slowing. and when the fed was tightening you wanted to believe there wasn't a recession. and now again i think the fed is behind the curve still. and i think this time with the economy now slowing down to 5% nominal gdp growth, it's risking staying too tight too long, particularly when all the other policies are tightening as well right now. so i just think we have a chance here that we're finally going to get back to a recession scare before this year is over. have a correction. i don't think we're going to have a bear market because balance sheets are too strong and liquidity is too ample, but i think we could have

a pretty good recession scare, maybe a 10% correction. >> yeah. well, we. >> skirted that last year. it's rare. >> to go two. >> years in a row without at least that kind of correction. jim, appreciate the time this morning. thanks a. >> lot, mike. thanks for having me. >> all right. >> coming up, shares of lvmh are falling despite better than expected results. we'll dig into the numbers next as we head to break, though. check out shares of jetblue and call that some turbulence there. they tumbled 25% in yesterday's session after the company said it expects an increase in revenue this year, but also an increase in unit costs. squawk box will be right back. >> most power players on wall street rate. nvidia a strong. buy today. yet why, then. >> are. >> so many. 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's 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. >> and. >> interactive brokers pays up to 3.83% on instantly available cash. in your brokerage account. how much interest can your bank or broker pay? interactive brokers conservative and prudent risk management uniquely positions us to pay up to 3.83% on uninvested instantly

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>> time now for the executive editor. shares of luxury giant lvmh are falling in european trading down more than 5%. right now, the company reporting full year growth of about 1% versus the prior year, fueled by solid demand from perfume and cosmetics. but sales in china lagged and sales declined in several of its businesses, including fashion, leather goods and wine and spirits. other. other luxury stocks, including caring and christian dior, are falling in sympathy. i guess they didn't quite get the boost yet from the taylor swift at the super bowl. that's right. donning her louis vuitton. >> last year, you mean. >> or in. >> two weeks or not? sorry, not at the super bowl. at the playoffs. >> oh, in the playoff game. >> yeah. i was i was jumping to conclusions. i don't i don't know what she's wearing. >> who knows what she's wearing. >> a week before. >> a week. >> after next. all right. >> exactly. >> coming up, we'll take you live to the house republican retreat in miami for reaction to today's top political stories, including buyout offers from most federal employees right now, as we. >> head. >> to break, here's a look at

yesterday's s&p. 500 winners. >> and losers. >> it was a bit of a recovery day for big consumer and tech stocks. >> the. >> executive edge is sponsored by at&t business. next level by at&t business. next level moments need the next at&t has a new guarantee. because most things in business are not guaranteed. like a distraction-free work environment. -yeah,i'll circle back around. -get those steps in, kevin. your coworkers keeping things confidential. [phone ringing] oh, she's spilling all the tea. ♪♪ or office etiquette. yeah, that's not guaranteed. i know you can see me! you know what at&t guarantees? connectivity you depend on, the deals you want, and the service you deserve. can i get that logo bigger? or we'll make it right. that's the at&t guarantee.

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>> (800) 600-7011 five live better, debt free. >> good morning. welcome back to squawk box. we are live at the nasdaq market site in times square this morning. a little bit of red on the dow. but the nasdaq powering back again after powering back again yesterday after that awful day on monday. s&p 500 up about two points. we are watching shares of novo nordisk the company's drug of course ozempic approved by the fda to treat chronic kidney disease in those with diabetes. a late stage trial finding that ozempic reduced the risk of kidney failure, declining kidney function, or death from kidney or heart causes by 24%, that is, versus a placebo versus, i should say, a placebo. >> remarkable. the use cases keep climbing. house republicans meeting in miami at the 2025 issues conference, where speaker mike johnson spoke to the group last night. emily wilkins joins

us now with more. hi, emily. >> hey, leslie. well, yeah. during their time in miami, one thing that's become really clear is that house republicans are sticking very close with trump, even when he kind of infringes on their congressional powers. remember, congress. >> is supposed. >> to be the ones to control the purse strings in d.c, which programs are funded? but almost all republican lawmakers that i spoke with yesterday and that other reporters spoke with backed trump after his administration proposed halting hundreds of billions in federal grants that could threaten payments and programs that would impact millions of americans. now, the white house did eventually clarify that many of those programs are not going to be impacted. and then just minutes before it was supposed to take impact, a federal judge temporarily blocked the order before it could go into effect. and a little after that, speaker mike johnson told reporters that he fully supports any halt in funding that trump wants to make, saying that any pause would likely be a short one.

>> this is a, i. >> believe, a common application of common sense. >> we want to. >> make sure that the executive orders. >> of. >> the new president are being fully complied with with regard to these programs. >> of course, johnson and the house have incredibly narrow margins. this congress, which means that republicans are likely going to be relying fairly heavily on trump to help them pass major legislation and make sure all lawmakers are on board. remember, they've got that big package they're working on that has a number of priorities, including expanding energy, bolstering border security, and extending current tax cuts. and we're expecting to get a little more information on what that package is going to look like and, more importantly, what it's going to cost next week. >> with regard to those tax cuts and the extension of the tax package specifically. emily, what's your expectation? are you hearing relative consensus from republicans on that, or is there going to be a bit more debate to be had? >> so i think in a number of areas there is consensus. it seems like a lot of republicans

are fine keeping corporate tax rates at 21%. and you got a little taste of what republicans are looking for. last year when they moved that bill with expanded child tax credits, as well, an r&d tax credits for businesses and other things to help out a number of businesses and smaller companies. and so those things they all agree to. but there are some sticking points. we know that that state and local tax, that cap that a lot of members from new york, new jersey, california are pushing to raise that that could be a potential problem. we're also, of course, trying to figure out exactly which provisions trump has pushed could make this final bill. remember, anything that they decide to add to it, such as no tax on tips that's going to increase the overall cost of what's being paid. and i think that's where you're going to see one of the biggest debates. if they come out with a proposal and say, hey, this could add 1.5 trillion to the deficit like they did in 2017. you could see some of the more fiscal hawkish members say, hey, we can't support that. and of course, with tight margins, even 2 or 3

members voting against the legislation is going to be enough to kill it. >> fascinating. well, tax is a key part of this policy and what it means for the economy. emily. thank you. >> okay. coming up, we're going to get you ready for tesla's earnings. that's due after the bell. plus reaction to the latest headlines from elon musk's washington job as head of doge. that is next. and a reminder you get the best of squawk box in our daily podcast. follow squawk pod on your favorite podcast app and listen anytime. we're coming right back. >> it's not if the markets will turn, it's when at howard capital management. >> our. >> proprietary family. >> of funds, actively. >> navigates complex. >> market landscapes. >> while seeking to. >> safeguard your tomorrow. >> we aim to empower investors. >> delivering opportunities. >> with. >> a tactical mathematical

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ways to eliminate costs and deliver the aircraft earlier. a pair of boeing 747 that will serve as the next presidential aircraft are more than $2 billion over budget. the company has attributed that to design changes, labor constraints, also some of the supply chain problems. so hopefully we'll see those planes sooner or later. they have a different livery, as you know, in terms of the look on the outside, a bit of a darker blue, a little bit more of a richer red, this sort of light blue kennedy esque. tiffany. tiffany. blue is not the case anymore, right? >> hopefully more updates than just that. you would think. >> hopefully, yeah. >> meantime, tesla among the first of the seven to report this week, the stock up nearly 60% since the november election. joining us right now is tim higgins, the wall street journal business columnist and a cnbc contributor. good morning to you. tim, i think there's going to be a lot of people trying to watch to understand what's going on, especially given that elon musk has decamped to basically run tesla from the white house.

>> yeah, absolutely. i think that's one of the top. >> questions that. investors have, is just how much time is he going to be. spending focused on tesla in. >> the months. >> and years. >> to come, now that. he's spending so much time. >> in the swamp. >> if you will? >> and what do you think the answer is? and how do you how do you imagine it's going to impact the numbers one way or the other? i mean, clearly it's impacted the stock price in a very positive way. yeah. >> you know. >> i don't expect a lot of clarity. you know. people who are invested in tesla. >> know kind. >> of at this. point that they don't get elon musk exclusively. >> on valentine's day. >> i know he's a guy with a lot. >> of. >> companies, and now. >> this is an extra job. >> i think what. >> they're probably. >> looking for. >> is what they're. >> always looking for is kind of the tone of his excitement for the months ahead. >> is he. >> optimistic that tesla can return to growth, that kind of growth. >> that has fueled that stock price for so many years? or is he. >> cautious and worried about the months ahead. >> which would be very. >> negative. likely on the

stock. >> remember this is a growth story. >> this is a growth stock. and tesla. >> has not been growing. last year deliveries fell. >> for the first time. and that is. >> unnerving for a lot. >> of folks. and likely you know there a lot of. attention will be on you know, will tesla. >> grow 20. >> 30% this year? >> as elon said. >> last year. >> in terms of full self driving, how important is that piece of this versus, you know, there's been talk about are they going to redesign the actual vehicles, which obviously have not been at least fundamentally redesigned in quite some time? >> yeah. >> self-driving is. the kind of story of the stock part of the. >> belief that why the stock has gone up so. >> high since he, since trump won, is. >> this idea that. >> tesla will perhaps benefit. >> and the way it would. >> benefit with the elon's close relationship with the white house is in the realm of self-driving. that technology that allows the car to drive itself. there are. >> some regulatory. >> questions. the states tend. >> to kind of. >> police this area. elon has talked about the importance of

perhaps having a federal solution to allowing this. >> technology to roll. >> out in an easier fashion. that's definitely one of the questions that i think is out there, and people will be looking for any kind of color. >> in that. >> area, but the other part of it is tesla has to show that it can actually deploy this kind of technology. >> so where where are you on the robotaxi front? i mean, clearly it's being deployed in a whole bunch of cities. now. some of it's pretty remarkable, i have to say. but there is this question mark of, you know, will you be able to buy a tesla and effectively put it on an uber network and turn it into a robotaxi? it's even something we talked to a dark horse about in davos, and he seemed, you know, for so long the timeline was always, you know, 2 or 3 years out. he even said he still thinks it's sort of the fundamental change may not take it may not come for another 5 to 10 years. >> yeah. if you look. in san francisco where i. >> am. >> you see these. >> self-driving cars, these waymo's on a regular basis. so it is technology that is real now. >> you know, a few years ago.

>> when you and i were talking about this, it was still in the horizon. it is something. that i could go out and do now, but we haven't seen tesla kind of get into. >> the same kind of. >> operational aspect that we've seen waymo do. and that's probably why some people think it's. >> still going to be years away. >> before this becomes technology that really throws. >> the driver. >> out universally across the country, because. in the back end, there's still a lot of operational things. waymo has people kind of monitoring these cars, stepping in when needed with various technologies. there's cleanings, there's. >> charging these cars. >> so it's not as simple as just putting a robot on and just letting it go. >> straight up. since you've been in the waymo cars, you spend a lot of time, i think, in and studying these these tesla vehicles. tesla obviously still, you know, does it all with cameras. no lidar, which is sort of these lasers going around. obviously waymo does. who does it better straight up.

>> well right now the. >> answer would be waymo because they're the only ones that are operating robot taxis for the public. >> and therefore you think that even the technology that tesla has not it's not in the same league. >> well. >> that's i think there's some people who think that it is or and even better, i've heard other people say they think tesla is even more advanced than waymo. i don't know if that's true. >> i don't know if that's true either. time will. >> tell because we. >> haven't yet seen them deploy that technology. >> so if. we're asking. >> who's best in the world right now. well, waymo is demonstrating that they can they can operate these vehicles as a business on the roadways. tesla has talked a lot about it. there's a lot of excitement about the technology and the way they are doing it. there's a lot of reasons why it could potentially leapfrog waymo. but it gets down to the proof's in the pudding. and tesla doesn't have a robotaxi at this point. >> one last question robots. they say that 2025 is supposed to be the year of robots. between ai and finally getting

robotics going. elon was early on robots. we've seen a number of different demos with robots. how far out is that? and is that part of the bet? >> yeah. >> that's part of the gamble here on. >> tesla that that is going to be a. huge opportunity for them, a huge market in the future. you know. >> a lot. >> of interest in these early ones that he said are going to go into production this year to see what they can do. what the cost of those is going to be. it's all going to be about the functionality as it always is. and that is kind of one of the big questions that i think is hanging over this is what can they actually do? >> okay, tim, it's great to see you. we'll see what those numbers look like. and i'm sure we'll talk to you soon. >> thank you. >> all right. >> coming up, highlights from the first press briefing from the new white house press secretary. that is next and later. don't miss our interview with linkedin co-founder reid hoffman on everything from artificial intelligence to politics. squawk box will be right back.

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progression in the us and customer satisfaction higher, and importantly, employee engagement and employee satisfaction higher. so there's signs of progress. it still looks like it's going to take a long time to kind of normalize. and importantly, it's going to cost a lot of money. and i think that's kind of the key message from last night is they haven't settled on the exact amount it's going to cost across the different pieces of their business, but it's going to cost a lot. >> yeah. and do you think investors have patience for this because, you know, as you mentioned, the turnaround will take time. it will be costly. do you risk kind of losing the attention of investors who have been kind of through this, this volatility over the last few years? >> as long as he continues to deliver upon his promises, which include, you know, getting the average transaction down to about four minutes or less in the us, you know, and doesn't disrupt, frankly, the labor model too much for the

employees. i do think that investors will have some patience here. but look, as we've seen in the past, across the whole landscape of restaurants, as long as sales are progressing in the right direction, then investors will give them time when, when and if sales begin to, you know, stumble a little bit, whether within their control or outside of their control. there will be bigger questions, and that's when the stock likely begins to come under a little bit of pressure. >> what do you think they should do with the business in china? and do you think the best capital optimization is, is maintaining that presence there? >> it's a great question. we've done some work behind it. it doesn't look like there's going to be a ton of value creation. if they were to say, go license it or turn it into a joint venture. all that being said, it likely makes a lot of sense for them to focus the majority of their energy and capital on the us and perhaps other markets that we're not quite aware of today that might provide greater opportunity over the long term. this the volatility in that

market and frankly, the competitive intrusion over the past five plus years has really diminished, at least the from the outside, what appears to be the opportunity for the brand in that market over the next several years. and i don't think investors really want to hang on for that ride using company capital. they'd much rather have a joint venture model or some sort of licensed agreement in that market such that, you know, you're just clipping cash flow rather than having to deal with the ongoing ebit swings. >> yeah. not to mention the geopolitical implications of, you know, potential tariffs and retaliatory tariffs. >> and exactly. >> you know, the degradation of american brands that are kind of going through those trade spats, if that ultimately comes to fruition. but speaking of tariff squabbles, we did see a very brief spat with colombia over the weekend. longer term, though, are you concerned that the trade relations worldwide could lead to higher coffee prices that could cut into the

margins of starbucks? is that something that you've been studying and are concerned about as you model out this company? >> yeah. look, they they spoke last night to the current impact from coffee prices. and they have a decent amount of inventory at least to work their way through the fiscal second quarter here, they said, is going to be about a roughly penny headwind to their earnings right now. beyond that, it's a bit of an open question mark. it's not a huge piece of the puzzle, at least from the store level operations. however, they also have coffee in the grocery aisle, and that's probably where consumers are going to see it the most. they have partnerships there, and they're likely going to pass along pricing. they're expecting in that case, that volumes in the grocery channel are likely going to fall for them as that pricing goes through. beyond that, some work we did going into this quarter suggested that the current rise in sea prices was something like a $190 million headwind to their ebit over the next 12 months.

they wouldn't bless that last night, but it does seem like it's going to be a pressure, and the company is committed to holding the line on pricing at their stores for fiscal 25. so it's going to be a bit of a balancing act from a profitability standpoint. if they stick to their guns of holding to no pricing in 25. and what that even again, means for fiscal 26, because zooming out, you know, one of our takes is that the pricing and the affordability for the average consumer has been an issue here for the brand. and if you have to take pricing again in the next 12 months or so to offset some of this inflation, that's likely sending the wrong signal to the consumer. >> yeah. yeah, absolutely. could be a headwind for that turnaround effort there john. thank you. appreciate your time today. >> thank you. have a great day. >> you too. a quick programing note starbucks ceo brian niccol will be on squawk on the street for an exclusive interview at 9 a.m. eastern time today.

>> it is literally 7 a.m. we don't usually hit it exactly like this. it's 7 a.m. on the east coast. you're watching squawk box on cnbc. i'm andrew ross sorkin, along with leslie picker and mike santoli. joe and becky are off today. got so many stories to tell you about though. a federal judge now pausing an order by the trump administration that would have frozen existing federal grants and loans until agencies vetted them. the judge's ruling, coming just minutes before the freezing order was set to take effect. that was going to happen at 5 p.m. yesterday and lasts until monday. that's pending some more hearings. we'll keep our eyes on that. the trump administration's order is part of an effort to cut spending that does not comply with his efforts to purge what he calls, quote, woke ideology from government programs. meantime, we are watching apple supplier cuervo after its latest earnings report. the stock under some pressure this morning after reporting better than expected quarterly results. but investors seem to be focused on some of the comments from the company's ceo. he's warning of weakness in smartphone parts, and it is fed

decision day. expectations are the central bank will keep rates unchanged, not moving anything around thanks to continued strength in the labor market and some progress on inflation. the rate announcement is at 2 p.m. eastern time, and of course, we will be waiting to see whether president trump has any comments about that, given his efforts to persuade or maybe influence or jawbone or something else. demand fed to lower those rates. take a look at futures. right now we're looking at some green on the screen. the dow which was in the red marginally just last hour now up about ten points. looking at the nasdaq up about 84 points. the s&p 500. looking to open about five points higher. want to get straight over to dom chu. he's got a look at this morning's premarket moves. dom. >> hey good. morning andrew. good morning leslie. >> good morning mike. >> so let's start. >> off with shares of. >> alibaba moving higher as the chinese tech giant releases. >> a new. >> ai model. what else. >> on this the lunar new year, claiming to. >> surpass deep. >> sik's latest. >> update across. >> several major benchmarks. >> now. >> alibaba is saying. >> that the queen 2.5. >> max language model is

competitive even with ai products from. >> open ai. >> and meta platforms as well. >> so heating up an already. >> contentious ai race between. >> companies and of course, china and. >> the us. so alibaba shares. up roughly 2.75%. checking in on cybersecurity stocks rallying. >> this week. standing out from. >> that deep. >> tech market meltdown. as security concerns take. >> center stage. >> in the. us-china ai arms race. >> crowdstrike coming off all. >> time highs but giving. >> back some of those gains this morning. but crowdstrike, palo alto networks, zscaler, fortinet, okta, all. >> names within that. >> ecosystem, that will. >> be. >> a big focus given all of. >> the. focus on ai. >> and then. >> asml shares are surging. >> as the chip equipment. company posts. >> a huge jump. >> in. >> its net bookings for the quarter, signaling. >> that that ai chip demand shows no signs of actually slowing down, even as chip. >> stocks tumble. over the. >> course of the past few. >> days. >> the chip. equipment stock was hit hard by deep. seek and had struggled with the past year with slowing. >> chip sales. >> but asml ceo is telling cnbc that lower ai costs provide a

great opportunity. those q4 results brush off deep seeded. concerns on pricing and power. >> demand as well. so asml. >> on the european. side of things, the us listed shares up nearly 6%. andrew, i'll send things back over to. >> you guys okay. >> thanks, tom. appreciate it. fascinating. >> all right. >> nasdaq just. >> reporting results. >> the company earned $0.76 a share. that's a penny better than estimates. revenue came in at 1.23 billion in line with expectations. nasdaq realized $28 billion of net inflows into the nasdaq index products during the fourth quarter. nasdaq ceo adena friedman joins us just after the break, and later, a preview of howard lutnick confirmation hearing for commerce secretary. squawk box commerce secretary. squawk box will (♪♪) the booking app i used didn't have agentforce. so an ai agent didn't know to move my reservations inside... ...or know what i like to eat, which is not that. what's up, my brother? oh, hey, bud! we really needed this rain.

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>> welcome back to squawk box. we are at the nasdaq as you know, and the nasdaq reporting earnings itself this morning. the company earning $0.76 a share. it's a penny better than estimates. revenue coming in at $1.23 billion. that's in line with expectations. joining us right now is adena friedman, nasdaq chair and ceo. the stock moving marginally higher. but it's a good report pretty much across the board. you did telegraph that this is what was going to happen though. so people aren't like going you know they're not throwing parties just right now. >> yeah. well we're really. >> really you're throwing a party. >> really pleased with the results for the year. and when we think. >> about it. >> we had 9% growth for the year, 10% growth for the quarter. and it's really been. >> a transformative. >> year for nasdaq. you know we had a significant. integration of ardenza. we've created. >> this. >> new fintech. >> division where we have very deep relationships. >> with the financial industry. >> today to help them. >> solve their. >> biggest risk challenges. >> to drive. >> capital markets

infrastructure into the future. and it's showing up in terms. >> of. >> how we've. >> engaged with. >> our clients and the results, in. >> addition to the. >> fact that we also have great. great performance in our index business. we had 31% growth in that business. we reached new records in our. trading business, 12% growth in the quarter, 4% growth for the year. so overall, you know every element of nasdaq feels great. and we're growing and we're delivering. >> and i'm. >> i was going to say though, the financial crime management technology part is just like flying. >> yeah. so we had again 22% growth in our financial technology business. i mean, our financial crime management business. and that has been we had a new tier one that signed up with us in the in the quarter. so we're continuing to really grow and expand that business in really cool ways. we've announced that we're going into europe with that business now because we're really only in north america today. we have 2600 clients in north america, but we're now taking that into europe. >> and how many other kinds of businesses like that? when you think about you bolted on a whole bunch of stuff, basically leveraging the relationships that nasdaq has with so much of not just corporate america, but

the rest of the world. how many other kinds of businesses as a platform now do you think you can layer on top of nasdaq that are either adjacent over time? >> well, first, i think we have an incredible, powerful platform today. so we're really focused. >> on how do we solve. >> the bank's biggest risk challenges. so risk management, regulatory reporting, which sounds boring but actually very interesting. and the anti-financial crime, how do we drive markets into the future with capital markets technology that works in a modern technology framework? and then how do we help corporates manage their lives as public companies more successfully drive investors to make smarter asset allocation decisions? so in the spectrum of what we have, we have a lot of growth vectors and we're obviously showing growth across our platform. i think we are a platform company. we want to make sure that we're delivering that in a in a way that's very consistent. and over time we'll continue to find new avenues for growth. but right now we feel great about the growth profile that we have. >> are you. >> because of that focus implicitly long regulatory build up and complexity. >> so it's a great question. and

actually, no, because first of all, we believe that more and more efficient and effective financial system will drive more liquidity across the markets, into our own markets, into markets around the world. we are a provider. >> of technology. >> to 130 markets. >> around the world. >> so the more that we can drive liquidity across the world, the better our clients do, the more that they're going to modernize their technology and the more that they're going to partner with us. so and then banks, if they can grow instead of having to deal with with regulation, which we provide great regulatory technology around it. you know, we basically i think it's something like 1000 new rules that we have to integrate into our solution every year. it's a lot. yeah. but if they can actually keep more of that capital and drive more earnings, they'll grow more. so they'll go into new asset classes, new geographies. they'll need risk management technology to support that. and we can provide that too. so we look at it as we can be a great partner to them in all environments. >> how has your listings pipeline looking? and i ask because we had the smithfield foods debut yesterday, which was

kind of muted, downsized ipo following the venture global ipo last week on a different exchange but kind of same story of a downsized ipo that traded, you know somewhat modestly in their debut. what are you hearing from prospective listing clients about this revival. because the first two big deals out of the gate haven't necessarily overwhelmed the buy side. >> well, first. >> of all, every ipo is its own story. and so the buy side is going to make a determination of every single company that they evaluate. but the general theme is that investors finally feel like the general economic environment is a little bit more knowable. you know, we have continued resilience in the economy, continued growth, a more normalized inflation environment and a more normalized interest rate environment. so they're ready to put capital to work. and we've had a lot more companies getting prepared for the public markets with very concrete plans, you know, as opposed to while we might go out next year, it's more like we're thinking about april, we're thinking about june. and so i have to say, it feels very good. it feels like we should have a good year and a

very strong year for ipos this year, as long as the economy stays resilient. so i would i wouldn't look at two ipos and say that that's like portends for the entire year. >> yeah. can we can we persuade you to weigh in on the ai story of the moment, which is you've been you've been playing around with, i think, anthropic and openai and other things like that. but does this change the whole dynamic in terms of how you're thinking about open, open source models versus closed, like how is nasdaq actually doing this? >> yeah, no, actually we the way that we work is that we work with the cloud providers to especially, you know, those where we have our solutions already in cloud. so all of our software solutions are in aws or google or microsoft. so we you know, we work with them and we have. >> particularly all of your solutions in everything because they're all part of the nasdaq family. >> well, they are. >> part of the nasdaq. that's why that's. >> why we. >> work with our cloud. we tend you know, we like to work with people who work with us. right. but we do ultimately they are incredible. i mean, in terms of frankly, let's be honest, i

mean, they're all incredible platforms that provide a lot of great capabilities. so when we are working with models, we have a governance structure where we will do a lot of diligence on every model that we make available to our employees and to make available in our solutions. we then work with the cloud providers to make those models available to us, and we do work with both open source and proprietary models, but we do a lot of work ahead of time. then once we're able to use them, then we actually evaluate which one is the best one for the use case that we need. and so we actually, you know, it could be different. you know, certain models do better, you know, work better with certain data with certain use cases. so we'll actually evaluate it for the use case. we'll compare the models in. >> terms of. >> you. >> need and results. >> are you now expecting all of this to come down in price though like crazy levels because of what we're seeing? >> i mean. we've already seen we've already seen a massive reduction in price. i mean, it's been an incredible reduction in price just over the last two years in terms of these models. so i would have to say it's already the cost curve is already coming down. i believe i'm a big believer in

competition and i'm a big believer in american innovation. so i do think that this entire this is the dawn of a new era, new era of technology. there are going to be a lot of new players that come in. they're going to there's going to be a lot of new innovation that kind of drives change. but every industry is going to benefit. every industry is going to look at this as a way to drive productivity and earnings. and so there's going to be a lot of opportunity for everyone. >> and we're going to all have agents that are going to i guess. so is that how this is going to work? >> i keep i keep. >> kind of trying to struggle with like, how is this different than software always gets faster and smarter? i mean, it's just that accelerated. >> yeah, i mean i it is accelerated that that is one of the big differences is that the models are kind of maturing so fast, and they're driving new capabilities so quickly that people are it's like you almost can't keep up with what's happening. but that also is good in terms of having competition, because people are going to be really focused on how do they bring the next new thing into the market and make it even better as a as an operator, you know, as someone who uses the technology, we are finding a lot

of great use cases. so antifa crime, you know, we have this way of automating the entire workflow around researching potential bad actors, writing the reports to regulators. we've taken down the time to do that by 90%. so and then, you know, summarizing board books, kind of looking for new data, you know, finding new things and new insights and making it more everyone more efficient. and that's just with the models that have existed already. and then inside our organization, as you said, how do we introduce more agents to help our employees be more efficient? i mean, there's a lot to do, but it is it i mean, you think of it, it's like the dawn of a new technological age, and there's going to be a lot of, a lot of new things coming at us pretty fast, i think. >> dina, i want to thank you. thank you. congratulations on the earnings. thank you. we'll see you soon. >> see you soon. >> thank you. thank you. up next, congressman jim himes joins us to talk tariffs taxes and yesterday's confusion about state medicaid at those agencies. squawk box will be right back. >> time now for today's aflac trivia question. the american

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trivia question. the american version of the game, bingo, uses how many numbers? the answer 75. the united kingdom version uses 90 numbers. >> welcome back to squawk box. joining us right now to talk about tariffs, trade, president trump's executive orders and so much more. joining us right now is democratic congressman of connecticut jim himes. good morning. good morning. it's nice to see you. a lot there's a lot that's happened i don't know if. can you even keep up? can't keep up. you know what? actually here's what i want to start. what are you just just real quick? what do you make of the buyouts? because i think that's actually something that a lot of federal workers are waking up this morning trying to figure out what they're supposed to do, whether they're supposed to go to the office, whether they're supposed to resign, if they resign, are they really going to get paid? if they don't resign, are they going to get fired anyway, six months from now, what do you think is supposed to happen. >> here that we're watching right now? >> on the. >> one hand, you know, just the sheer volume and audacity of it is unbelievable. but then there's a serious side to this,

too. you know, as senator tim kaine said yesterday, there is no authorization for this program. there is no money for this program. and with no money, there is no program. and so what worries me right now is the sort of human toll, which is that a lot of guys, maybe in the federal government, who are two years from retirement, say that's a great plan. and take it, but there's no money. >> and so it's fake. you think it's vaporware? >> i think it's fake. yeah. yeah. i mean, again, this kind of program would require funds. and this is not a line item in the federal veto. i, you know, so what's going on here. do they not know that that's possible. they've done. other illegal things. or is it just that they're trying to sort of create this sense of uncertainty in this bureaucracy. >> that they explain this and this is like that? i'm just trying to grapple with and i say this, i try to say this as apolitical as possible. so we had ted cruz on a couple of days ago, and we were talking just talking about the law and just people. by the way, he's a lawyer. you said people that this this president is doing illegal things. you know, we were looking at, for example, this idea that that the president had fired these inspector generals, which, by the way, i'm not suggesting he's

not the executive and he can't do that. the question is the law suggests not suggest the law is that you have to provide 30 days of notice to congress. and there's like specific things you have to do. and then if you don't do them, you're breaking the law. what is happening insofar as not democrats screaming about it because some democrats are, but the republicans that you know, that you trust that you respect, who for, for whatever reason, don't seem to be willing to raise their hand at this moment. and i'm just curious, just as a as a human, what you think of that? >> yeah. look. >> donald trump is at his peak popularity right now. in fact, some early polling indicates that his negatives have gone up in one week. right. that's probably chaos. that's probably, you know, concern about the fact that organizations all over the country right now are not getting their promised federal funds, but he's at his peak political power right now. and as a consequence, there are very few, if any, republicans who are willing to get in his way right now, even though every single

republican ted cruz especially understands that the 14th amendment is pretty clear that you can't just say, sorry, no 14th amendment. this is the birthright citizenship. you know, you can be a sixth grade civics student and know that congress has the power of the purse. are the presidents. >> by the way, where democrats, democratic presidents have done things that ultimately have gone to court, where it's proven that they were doing things that are illegal. >> of course, every president does it well. >> the student. >> loan. >> forgiveness. >> for example. and so that so that's the that's what i was going with this. it was a little bit of a setup of a question, but there are presidents that have done things that have gone beyond the law. and part of what they do is they try to stretch the law. and the question is how the american citizenry is supposed to think about that. >> yeah. so every president tries to expand their presidential power and gets knocked back by the supreme court or by the congress. what's different about this is that this isn't even close. i mean, again, i'm not a lawyer, but i can read the first line of the 14th amendment and tell that the president's birthright citizenship is contrary to the constitution. and the other thing that's different is traditionally presidents have

said, okay, supreme court said what i did is unconstitutional. yes, sir. i abide by that ruling. what we're hearing from the maga people, the trump people, is that, you know, who are these courts, anyway that gets you into kind of constitutional crisis land. if they ignore rulings of the court, if they slag the courts in a way that further erodes their confidence. i think that's the big difference. >> when it comes to the remaining cabinet proposals. are there people you have concerns about, not concerns about? do you think they all sail through? what do you think happens? >> yeah, sure. i mean, by and large, you know, ironically, for a populist president who's standing up for the common man, he has populated his economic team with wall street guys. bessant. et cetera. now, these are guys who at least know what they're doing, right? you may disagree with them politically, but they know what they're doing. i actually think the economy is in relatively good hands. >> with those guys. can i just ask you because you just said something, you know, they know what they're doing. do you think the democrats and the biden administration made a mistake in the last term by having people who were not part of the private sector? is that something you

think. >> they didn't. >> have a legitimate critique? >> yeah, they didn't have enough. look, i think a good administration will typically have people who are very comfortable and knowledgeable about the private sector. i was in the private sector for 12 years. right. that's a huge advantage for me as i think about regulation in the financial world. so yeah, i think the right thing is a mix. and i think it's fair to say that the biden administration was dismissive of people with private sector experience. so again, you asked about the nominee, right? on the one hand, you know, jay clayton, as you know, southern district of new york attorney general, that's probably the best appointment you can make. i'm very happy with the cia director who i spoke with yesterday were former colleagues. on the other end of the spectrum. and, you know, i suppose we could have an argument about this, but there is no argument. kash patel at fbi. here's a guy who has promised to use the tools of the federal police force to prosecute political opponents. no law enforcement experience. so there's a spectrum of people who i think are qualified. >> and where do you land on rfk, which is, of course, the grilling starts today in the senate. >> yeah. >> look. i don't know. >> rfk health care is not my field. there is nothing about this nomination. a guy who's

sort of promoted obviously rebutted concerns about autism coming out of vaccines. there's nothing about this guy that feels like he has the prudence and care and experience. but, you know, not my field. the interesting question is how does the senate react? you know, this country has always been about checks and balances and a balance of power. you know, if guys like kash patel and robert kennedy just sail through what you know is that the senate is a wholly owned subsidiary of donald trump. and that's a weird world to be in. >> you mentioned financial regulation, and i know this is your forte as well as a former goldman sachs executive, there has been this notion that under the trump 2.0, we'll see these sweeping deregulatory actions take place, namely as it pertains to capital rules, as it pertains to the ability for some of their customers to transact through antitrust. what do you see transpiring? do you feel like in the halls of congress, there is a will to have this deregulatory regime that so many

people in the market are expecting? >> yeah. you know, interesting question on financial regulation. that's a tough question. there's always a pendulum, right? there's always a deregulatory moment, as there was, say, in 2002, 2003, followed by a 2007 2008 major meltdown because people realized, holy smokes, the regulation wasn't what we needed. so that pendulum swings. what's interesting about right now, democrats speaking here is that we are realizing, on my side of the aisle that the regulation that prevents build bridges from being built rapidly, that prevents the electrical network, which we need to triple in size, that the regulations that over the decades, whether they're environmental, being respectful of historical, you know, stuff, being respectful of native american kind of stuff, that all of these things together have resulted in a government that can no longer build anything. or if they do, they do it over 20 and 30 years. that has implications for things that we care about, like actually building out an electrical economy, building out the grid. and it has fundamental implications for people who say,

you know what? government can do some good stuff for you, right? we can build the interstate highway system today. it's almost hard for government to deliver. so guys like me get excited about the possibility of permitting reform and what that might mean for building stuff that actually makes people's lives better. >> i have two quick questions. i know we're going to run out of time. tiktok do you have a view? i mean, i think, by the way, companies right now don't know what to do. so apple and google say i can't keep it on the phone because they're scared. they say the law is the law. and tom cotton's out there saying, if you do this, we're coming after you. meaning if you keep it on the phone, but oracle and akamai are still operating this because the president has said disregard the law, folks. actually, i have 75 days to make a deal. and i'm going to therefore you're protected. are they protected? what should they be doing? >> yeah. look it's chaos. it's chaos. and start with where i am. i voted against banning tiktok. i'm the ranking member of the intelligence committee. i know exactly what the chinese are doing and can do. but it was inconceivable to me that the federal government, maybe for the first time in our history,

would tell millions of americans, you don't get to see this media platform, but. >> you voted against it. you voted against. >> against the ban. exactly. >> so you did not think the ban was right? >> i did not think the ban was consistent with freedom of the press and the idea that citizens should have access to the information that they want. >> which also suggests to me that you do not think that tiktok is being used, at least in this moment, by the ccp in untoward ways. >> it's not. >> it's not full stop. >> it's not. by the way, the government admits this in their argument to the supreme court. they say it's a potential threat, and they're not wrong about that. but my view is that if you're going to tell if the federal government is going to tell american citizens, you don't get to read this, it better not be a potential threat. it better it better be a clear and present danger, a real threat. >> i'm making this argument, by the way, for months. i get killed by the audience. but i'm so. but you actually know, you know. >> you know. exactly. i know it is a potential threat, but there. >> is not one immediate threat. >> there is no example of the ccp going to tiktok saying, give us this information, or going to

tiktok and saying, hey, show jim himes in connecticut. this image doesn't happen. could happen. >> save the tape, folks. jim himes, thank you for coming in. thank you. it's great to see you. appreciate it. >> all right. coming up, the fed meeting for the first time since president trump's election. well, since his inauguration, we'll have a preview of what to expect. futures right now showing modest follow through to the upside only on the nasdaq right now the s&p just about flat. it's down about half a percent week to day. squawk box will be right back. >> are you having. >> a. hard time. >> growing your sales. >> is it. >> tough getting new customers? try info free. >> com hot. >> sales leads. >> you'll get unlimited sales. >> leads. >> mailing lists. >> business profiles. personal search. >> email marketing. and free crm. >> i got four new customers the. first month. that's incredible. >> i can see all my prospects. >> on my smartphone. >> with one. >> click. i can make my sales

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for stakeholders in excess of that generated by the plan currently on file with the bankruptcy court. spirit filed for bankruptcy in november after years of losses, you see. frontier shares just down modestly on this headline. >> new antitrust cop in town. that's right. the fed concludes its two day meeting today, with president trump giving policymakers a lot to think about when it comes to the economic outlook. senior economics reporter steve liesman joins us now with more. hey, steve. >> yeah, dramatic announcements from the trump administration in just the past 24 hours have underscored the fed's apparent stance of waiting for greater clarity on fiscal policy before thinking about additional rate cuts, the fed already had to weigh the effects of potential tariffs, tax cuts, deregulation and deportations, but now it has to put into the mix well potential a potential meaningful decline in government spending and some portion of 2 million federal workers looking for jobs in the next several months. we don't know how that plays out. some of the elements of the trump policy suite could be

disinflationary, and could let the fed keep cutting others. for example, tariffs are a strong rebound in capital spending, could require the fed to remain on hold or even hike rates compared to how markets priced. the outlook for rate cuts after the december meeting. futures are now priced for a less of a chance of a cut in march, about the same even chance of a may cut, but a greater probability of that first cut this year coming in june and a second one in december. so keys to the fed outlook today will be whether the fed. fed chairman powell and the statement affirm that the direction of rates is still downward, although at some unknown time period expresses confidence that inflation is indeed still headed to the 2% target. and then you're going to have this sort of powell fiscal policy dance around questions he doesn't want to answer. but journalists will be sure to ask him in this context. it's sort of interesting, president trump's recent demand that the fed lower interest rates in davos is almost the least of powell's concerns. he could ignore that, but he and the fed

can't ignore is what might be coming down the pike from the trump administration in the next couple of months, or maybe the next couple of days, or guys, maybe the next couple of hours. who knows? >> steve, do you think this ultimately pushes into a place where he does respond to it? i mean, it was just last week where trump said, quote, i think i know interest rates much better than they do. and i think i know it's certainly much better than the one who's primarily in charge of making that decision. i mean, do you expect to hear chair powell respond? >> i don't i think that what's happened, leslie, is that was unusual for a president to make those kinds of statements, perhaps before the first trump administration. and now it's sort of been normalized. and as long as he's not out there sort of tinkering with the makeup of the fed or otherwise sort of interfering with their ability to make policy, i think powell has gotten used to it. i think he'll ignore it. and by the way, i don't think anyone argues that the president, united states, doesn't have a right to speak his mind when it comes to interest rates, whether or not

that's helpful. well, that's a subject of another story that needs to be done, which. so there is some research that shows the president talking about all this or, or meeting with fed chairs is not necessarily helpful to the inflation process. >> hey steve, no dot plot today, right? so you don't have to necessarily powell doesn't have to kind of try and corral the disparate views and try to explain the dots. but where do you think he does come down rhetorically on whether he has confidence that inflation is headed where it's supposed to head. >> i think he stays where he was, that he still thinks inflation is coming down. mike, as you know, they might get some help still from the from the housing data. there's been some private sector rental data that shows that that part of the cpi should still be coming down. there are some comparisons that are going to drop off from that spurt of inflation we had last year. that could be helpful to the fed. if we don't get another round of what they call residual residual seasonality, which is

maybe best explained in lay terms as stuff that goes up in the beginning of the year that we didn't expect to go up. that would be the explanation for residual seasonality. but, mike, you also put your finger on something that's kind of interesting, which is one of the questions to the chair might be, hey, are those dots from last december? are they still good? and he's answered that question in the past. you remember he said, well, you know, if we had to write them down now, they would be different. so that might be one of the questions he gets today and that might provide some guidance. you know, i'm thinking about like where the risks lay. this could be or should be a quiet meeting when it comes to the market reaction. but mike, as you know, the market finds something to trade on. and every word that powell says. >> and it's. >> for sure. >> that is true. >> all right steve thank you. >> great to see you sir. when we come back group one automotive stocks sitting now at an all time high. the company reporting just a short time ago. we're going to talk to the company ceo about the auto business. also tariffs and that impact and yes, the topic du jour. interest

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>> you mean. >> a smart. >> find an advisor at smart asset. >> com group one automotive reported stronger than expected results this morning. the auto dealership chain earned $10.04 a share. that easily topped expectations of 908. revenue increased nearly 24% over the prior year to 5.55 billion. joining us with more on auto sales and the overall industry, group one automotive president and ceo darryl cunningham. darryl, it's great to have you on. obviously, your results confirm that it was a very strong finish to the year for auto sales. what do things look like right now? i mean, does it actually have have some legs this trend or did we see a burst at the end of the year after the election that's going to dissipate? >> well, i feel. >> like we're. >> going to see a pretty good 2025. we all the forecasts. >> for the star are going to eclipse 16.5. >> million, some as high as 17. >> million, when.

>> the trailing 12. >> months or so is around 16. >> so we feel like there's. >> there's some good growth still there. the margins are healthy. inventories are in. >> in good shape. >> and it. >> feels like the consumer is holding up. >> and so our our oem partners are also. >> i think, reacting extremely. >> well to. >> a lot. >> of uncertainty, whether it be political or market. and doing. >> a great job. >> and i think that's. >> one of the. >> reasons that. >> everybody's seeing really good. >> sales these days. >> i did note that in terms of what customers are paying as a percentage of list price, it is on the lower side. does that mean there's lots of incentives out there, and how does that play through to your results? >> yeah, i. >> think there are some incentives out there more than we've seen. in the last, certainly in the last two years. and that's helping. >> and as. >> a as a percentage of a customer's income, it's back down into historical levels.

>> whereas the two. years prior what we saw was. was it was a reach. >> for some consumers. >> and during that period inventories. >> were very tight. so there was. >> there was. >> a more difficult decision. >> for. >> customers and. >> also for retailers, but. >> it's much more imbalanced these days. >> and we. >> hope. that hope that's a good thing. >> also. >> you know. >> the. >> used car business is critical to the new car business. >> and used. >> car supply is very tight. so that's. that's also. >> an incentive honestly for. >> retailing new cars. >> so we're all. >> trying. >> to source more used cars in our business these days. >> yeah sure. >> that's been an. >> issue i guess for some time. how are you thinking about the potential elimination of ev credits and tariffs and everything else that might kind of come in and complicate the supply demand picture here? i just point just specifically yesterday, the market had a very adverse reaction to gm's earnings and guidance, which both seem positive. but a lot of

questions about potential tariffs and the like. >> yeah. >> i think, you know, there's so many different. >> things going on right now. >> in terms. >> of changes. >> to tariffs. >> changes to income. >> tax rates, ev subsidies, potential interest rate changes, and how you factor that in as. >> either an oem or a retailer. >> i think what you've got to focus on is being able to react. >> quickly and. >> you've got. >> to be able. >> to. >> you know. >> serve customers in a. >> way that that. >> hits home with them. and i think. our oem partners. >> have done that. >> and i think that the retail community. >> and. >> the automotive industry. >> has certainly. done that. >> because we faced our fair share of challenges over the last. >> three years and. >> i think reacted very quickly. >> i think. >> we'll have to do the same thing over. >> the next year with all of these, all of these, the publicity around, all the. potential changes coming from washington. >> what are you seeing in terms of just customer preference at

this point, in terms of, you know, level of, you know, kind of premium packages, ev, hybrid, internal combustion, all of those things, how are they set up? and also, i guess, how does your portfolio arranged for it. >> hybrid is still very strong. >> and growing. ev is. >> is declining a bit. >> the good thing is the ev inventories are now in line with. >> what seemingly. >> demand is. but it's in the low single digits generally in most of the country. and but customers are still showing a preference for large trucks and suvs. >> in the united states. >> and so. i think we're. >> seeing balance. >> in our company. specifically, we have almost half of our mix is luxury mix. and then we're also very strong in in toyota and lexus. and that really helps with hybrid and really helps with on the luxury side, those customers that have a little more discretion in what they're buying these days.

>> for sure. daryl, really appreciate the time this morning. stock up a little bit, holding on to a 66% gain over the last year. >> thank you so much. >> okay. coming up, we got a preview of today's confirmation hearing for howard lutnick as commerce secretary will discuss that in a later. you don't want to miss this. a special interview with linkedin founder reid hoffman, one of the ogs of the world of ai. we're going to talk to him about a new book he's got, but we're also going to get into all of the headlines over the past week and a half that have been raised about the world of ai and big tech. squawk box will be right back after this. >> are you having. >> a. >> hard time. >> growing your sales? >> is it. >> tough getting new customers? >> try info free. com hot. >> sales leads. >> you'll get unlimited sales leads. mailing lists, business. >> profiles. personal search. >> email marketing. and free crm. >> i got for new customers. >> the first month. >> that's incredible. >> i can see all my prospects.

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investment objectives, risks, charges, expenses and more in prospectus at invesco.com world go round, information does. >> and cnbc. >> is the great economic equalizer because we provide that information so you can make the decisions that are right for you. >> welcome back. president trump's commerce secretary pick howard lutnick, will appear before the senate senate commerce committee for a confirmation hearing today. questions about financial holdings and tariff agenda are expected to be front and center. joining us now, republican senator eric schmitt of missouri. he's a member of the commerce committee. thank you for being here. what was your number one question for mr. lutnick? >> well, i think. >> he's had a long standing relationship. >> with president trump. >> he's had a. storied career, of. >> course, with cantor. >> fitzgerald, very successful, and everybody knows the story. >> after nine over 11.

>> and what. >> he did. >> to support the families who lost loved. >> ones on that day. >> that worked at his firm. so he's had this wealth of information, and i. >> think, you know, how. >> he's going to bring that to the commerce department. >> it's a. >> very. important department. >> i think. >> he'll. >> be a. >> close advisor of. >> president trump. >> clearly. as relates to trade policy, that's. >> going. >> to be front and center. >> but but i think howard's going to do very. >> very well today. i expect. >> smooth sailing. >> this will be. >> a committee hearing this. >> week that will go well. >> i think he's going to have the support and then you're going to have the. other ones, of course, with. >> kash patel. >> tulsi gabbard and robert f kennedy jr. >> that might. >> get a little bit more attention on the. >> evening news. but this. >> is. >> an important position. >> and really a great american. i think. >> that stepped. >> up. >> to. >> serve his country here in howard london. >> yeah, yeah it's certainly important for our audience and tariffs front and center here as well. we talk about it every day on cnbc. i too was born in missouri, born in saint louis. and i know that the farming community in the state is quite strong. and i'm curious what your constituents share with you about concerns surrounding tariffs, retaliatory tariffs and

the like, and how you plan to address those with the prospective nominee. >> yeah. >> i think the overwhelming. >> sentiment in. >> states like missouri. is that we just want to be treated the same way that folks treat us, right. >> i think. >> i think that reciprocal policies are important. you know, i think americans are kind of tired of being treated unfairly. by other countries, europe and particularly china. >> i think that you just see some of the developments. >> whether it's deep sea. or the panama canal. these one thing those things have in common is we are in this great. competition with china to win the 21st century. it's going to be defined by. >> who. >> wins this. >> there in space in a meaningful way. they're competing with us in ai. we've never had a competitor like this. that's a nuclear power. that's a military power and an economic power. we've never had that. the soviet union wasn't an economic rival. and so i. >> think. >> we're in a real. >> race with china. >> so the constituents back home and i think across the. country just want the american want america to be treated fairly and

have a trade policy that reflects that. >> so do you think tariffs are that trade policy that reflects that? and i ask because it was the commerce, commerce department that put forth those export controls on advanced chips that ultimately, i mean, it remains to be seen what ultimately happens with deep seek and kind of how they were able to do this and at what cost. but there are a lot of questions surrounding export controls and whether those were successful in mitigating the chinese competitiveness in some of these advanced ai models. and i'm just curious kind of what you think is the appropriate approach as we look to protect u.s. competitiveness in ai? >> well, i think targeted tariffs. howard's been on your show before and kind of explained his position. i think. that's president. trump's position to be targeted about this. widely speaking, i think. >> you saw the. >> impact it can have even. >> this weekend with the colombian. >> president who refused to. take criminals. >> from his. >> own country back. >> president trump threatened a. 25% tariff and to suspend visa applications, and. >> voila. >> they came to the table. so i think it's very effective as a

negotiation tool. but i also think. to level the playing field, it's very important, i think, on the chips specifically, that's a national security concern and i think certainly warranted we need to build more things like that here. we need to bring our supply chains. >> home to. >> the. >> extent that we can. i think that's. all part. >> of this overall. >> trade policy. but i do think tariffs shouldn't be a four letter word. they're going to be utilized under the trump administration. and i think they're going to be be very strategic about it. >> your colleague, senator elizabeth warren, has been probing letnick over ties to tether, which is a cryptocurrency that allows people to move money anonymously. and therefore, it's kind of seen as this go to cryptocurrency for criminal activities. i'm curious if that's a concern of yours as well. >> well, i think senator warren has taken a position. >> she really wants command and control as it relates. >> to crypto. and that's. certainly not where i stand. so look, she's going to have her questions today for howard lutnick. and that's what these committee hearings are for to sort of air this out, to have questions be asked and answered.

she's actually not on the commerce committee. i know that she's raised those issues. but i think the broader point here. >> is, you. >> know, a centralized command where you have social credit scores as it relates to crypto is not a direction we want to go. it's probably where china is headed. but i think america can be the leader in crypto. and that's the direction of this administration. >> how how can they be the leader in crypto? what do you think this administration needs to do? >> well, i think what you saw was these artificial restraints that. >> were. >> put in place under the biden administration, because they were very skeptical. but i don't think you want this sort. >> of, again. sort of centralized crypto. >> bureaucracy here in the united states. are there going to be regulations? of course, no. one's really arguing. >> against that. >> but i do. think china is headed in the direction where this. >> is a. >> this is also a way to control. your population. and i don't think that's sort of the american view of it. and i think president trump's been pretty clear about that on the campaign trail. and now that he's in office. >> broadly speaking, in terms of trade and kind of the more

protectionist posture, are you worried at all about inflation or economic growth as a result of those? >> no, i. >> think look, president trump did this the first go around and we saw record economic. we saw record wage growth. no matter your population, no matter your gender, wages went up for everyone. we were able to actually onshore more production. we saw our. dependency on china go from about 22%. of imports to about 14% of imports coming from china. that's a good thing. i think covid exposed. >> some of the vulnerabilities. >> in that supply chain. we're way too reliant on china for pharmaceuticals. we're way too reliant on china for things. we need to build. jets to build things that are in our military. so i think having a policy that's smart, that is about fair trade. and, you know, also you also have additional trade barriers that china puts in place, highly subsidized. they. >> you know. >> sort of flood the market, dump the. product and copy. >> i think. >> you. >> know. >> intellectual property protections are going to be important part of the discussion to that, howard lutnick, i'm sure will have. opinions on.

>> but i think we've. >> got to be smart about it. and i think we have to understand that china is hell bent. >> on. >> world domination, and our trade policy should reflect that. >> all right, senator schmidt, thank you for being here. appreciate it. >> good to be with you. >> okay. it is just about 8 a.m. on the east coast, about 10s before 8 a.m. janet yellen. you're watching squawk box on cnbc. i'm andrew ross sorkin, along with mike santoli and leslie picker. joe and becky are off today. among today's top stories, it is fed decision day. the us central bank expected to hold interest rates steady. fed chair jay powell is going to be taking reporters questions. that's going to happen today at 230 eastern time. you don't want to miss it. expect some questions of course on fed independence now that president trump has taken office and some of his comments about the fed and what he wants to see with interest rates. meantime, alibaba, the latest company now to claim an ai breakthrough this morning. the chinese tech giant saying the latest version of its 2.5 model surpassing a recent release from the new ai darling

deep seek, as well as advanced models. they're saying they're also beating from open ai and meta. you can take a look at shares of alibaba on the back of this news up about 3.5%. speaking of deep seek, bloomberg reporting that microsoft and openai are now looking into whether a group linked to the chinese ai startup improperly obtained data from openai. president trump's ai czar david saxe, telling fox news yesterday that there's evidence ipsec was developed using data output from openai's models, a phrase called distillation. they distill the model, also known as stealing. >> distillation. >> yep, distillation and stealing. so there we are. and we've talked a lot about how a lot of these models may have been. >> borrowing. >> repurposing, distilling a lot. >> of the ways. >> to characterize copyrighted content that effectively helped the model get created. >> jon stewart had a joke about this, saying that, like the ai job was replaced by ai.

>> yeah, i saw that. and he did very well. that was great. did you see it? we should be playing that. that's a great segment. >> let's take a look at futures at this hour. a bit of a mixed picture after a pretty volatile week. and you can see the nasdaq. the outperformer here implied to open about 65 points higher. the treasury complex is at least yields a bit lower this morning. the ten year around 4.52%. the two year 4.19%. let's get to dom chu with a look at this morning's pre-market movers. hey, dom. >> all right. so, leslie. >> andrew. mike, we're checking on earnings this morning. we'll start with shares of. t-mobile us. >> rising as holiday. >> sales boosted demand for. >> the carrier. >> the telecommunications. >> provider posting better than. >> expected annual subscriber growth. the firm also issuing some upbeat guidance driven by postpaid customer additions on demand for premium bundles and whatnot. so t-mobile us is up 6.5% in the premarket trade. >> then there's defense

contractor general. >> dynamics moving lower despite continued demand for military weapons and equipment, analysts like goldman sachs are downgrading the stock to sell earlier this month, saying that on top of growth concerns, uncertainty around government spending under newly formed department of government efficiency may weigh on the performance there. so general dynamics on the back of its report off about 1.5%. and shares of chili's parent company, brinker international jumping as same store sales rise 27%, driven by an increase in popularity for its chili's brand advertising and new value meals at the chain, bringing in 20% increases in traffic. that's according to what they saw in terms of their overall scheme for the quarter. so brinker is up 13, almost 14%. mike. baby back ribs. i got to think about. >> that now. i'm going. >> to have that jingle stuck in my head. i'll send things. >> back even more than usual. probably up 330% on a one year basis. dom. kind of remarkable for an old name. all right. our next guest says the current market dynamics have created significant valuation

dislocations in value oriented areas of the market. joining us now is john murray, cio and senior portfolio manager at nfa investment group. john, good to see you. >> good to see you, mike. >> you know, we could have said this many times over the last couple of years about, you know, the relative value in value type stocks. i wonder what you're picking up from the market's message recently though, because it's fascinating. monday s&p down a percent and a half. most stocks were up yesterday. s&p was up 1%. just about most stocks were down fitfully. the market is trying to see if it can make progress without the outright constant leadership of growth and tech. >> sometimes things can be changing below. >> the surface and. >> it's not fully seen yet. i'll make a couple of observations. >> the first. >> is that if you look at last year, very big year for. >> the. >> s&p 500, up. >> 24%. particularly after a big year the year before. >> and after that drawdown. in 2022. >> of 25%. >> momentum as. >> a factor was the single best

factor last year that drove the market. the last time we saw momentum that outperformed by that magnitude was in 2000, and that did not spell a great, you know, next. chapter for some of the stocks that have been caught up in that. the other time that momentum had a very good performance was in 2007. and i pull up both those because they're both interesting observations. >> 2007 was the shift. >> of the baton from value to growth. 2000 was growth to value. one more observation i'll make. if you look at what has occurred since the inflation reading july 11th of 2024 okay, value all the value indexes mid value, large large value, small value. they're all beating the s&p 500. the nasdaq is actually trailing the s&p 500. since july. and nvidia as an example of this is up just 1%. so i do think there are some shifts below. >> the surface. >> that maybe are not fully picked. >> up currently. >> those analogs, though, of

2007 and 2000 show you that those transitions didn't happen quietly, right. the s&p got cut in half both times. correct. a lot of other things going on around the edges too. but i wonder if you feel like we can do this, pass the baton at a full run. typically you need to see. >> volatility for the. >> baton to be passed. and i will say that you know what you saw on monday i think shocked everyone. it was kind of like sticking your finger in a socket and getting electrocuted. no one quite knows what to make of it. you know, what i would say is that if i catches a cold, there's going to be a lot of sneezing and there's. >> a lot of areas that. >> are already deeply discounted. i think some differences with some of the previous leadership shifts is you already have a lot of valuation dislocation in the value areas such as healthcare. such as materials. >> such as staples. >> these were all. >> flat last year. >> these have done nothing. in many. >> cases. for several. >> years, and you are seeing positive earnings growth out of these areas. one area i'll also point to, which did do very well last year, which looks particularly attractive, is banks. banks went through their.

recession in 2023 okay. and they've been rerating. you now have a steepening. >> yield curve. the fed. >> has pulled 100 basis points out. we'll see what they do today. the ten year responded by moving higher. the ten year went up 100 basis points. you have a steeper yield curve that's good for banks. >> they have strong. >> balance sheets. so i think there's a lot lining up in the camp for a dark horse play for value stocks. as we look into the back. well we're just starting the year. the year is young but it feels like a lot has already happened. >> i would say in terms of the idea that value is cheaper than it usually is compared to the overall index. in absolute terms. i mean, the s&p value index is at 18 times earnings. it's not like it's in aggregate value seems cheap. objectively, it just is way less expensive, i guess, than the very largest growth stocks. >> well i think it depends. >> that's one. >> way of. >> looking at it. >> if you look at price. >> to book. >> which i think is. >> another way to look because you have a lot. >> of. >> cyclicals and value have earnings that tend to be more volatile based on the economy,

like. materials for example, and energy on price to book. you're back to the levels that you've not seen since 2000. so does that matter? it's an important point. it's something that i think investors should be taking note of. and i do think this is where diversification plays a big role in investors portfolios. you don't need diversification when you have very concentrated leadership, but that's the time that you should be thinking the most about diversification. the other thing that i would point to is that if you look at, you know, small value that's trading at 12 times earnings. yeah, that's cheap. >> that's cheap. >> historically that's cheap absolute. and it is not participated. and you've got these companies out there mike that are like 3 trillion. you've got multiple of them. that's the entire market cap. >> of the. entire russell. >> 2000 value. and now you. >> have. >> a shift in the white house where you have potentially a more favorable backdrop for m&a. we've already seen multiple takeouts in the small cap arena. one just yesterday from bain capital with surgery partners. >> yeah. no doubt there's lots of orphaned parts of the market down cap. we'll see if that changes. john good to see you.

thanks. >> thanks mike. >> all right. >> coming up a can't miss interview coming up right after this linkedin co-founder reid hoffman all about ai and what he thinks could go right with the future. but next house ways and means committee chairman jason smith is going to join us on the trump administration's tax plan. and yesterday's funding freeze chaos. we're going to talk all about that when we come back right here on squawk. >> on. >> 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.

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>> thoughtful living. >> thuma. >> welcome back to squawk box, the house republican retreat in miami. wrapping up today, lawmakers have been focused on how to bring president trump's legislative agenda to fruition. a key question, though, whether the gop wants the package to package its top priorities into one bill or two. house ways and means committee chairman jason smith is with us this morning. we'll go right there. i want you to weigh in. there's obviously a massive debate about whether you put everything in one and hope for the best, whether you break it up and if you do two, do you get everything? what's what's what's your view strategically on this? well, andrew. >> the president was. very clear when he spoke with us that we

must deliver on the economic policies that he campaigned on to the american people and also the border policies and the energy policies that he campaigned to the american people. and they they ultimately. supported his agenda. that's why they sent a republican house, republican senate, and, of course, donald trump to the white house. so he came to us the urgency to get this done. and one big. >> beautiful bill. >> andrew, is the quickest and best approach to get as many of the president's economic policies, border policies and energy policies to his desk in a timely fashion. >> what is your sense, though, of just the fault lines, to the extent there are any within the party as it relates to folks who may be maybe more conservative economically or fiscally than others who may say, you know what, i'm going to i'm going to step up and i'm going to say, no. >> you know, without a doubt, we definitely have to thread a needle. and it's not going to be easy. whether, you know, it's 1

or 15 different bills, it's not going to be easy to push it across the finish line. we have the smallest majority in the history of congress. after elise stefanik leaves, it will be 217 to 215. if you lose one republican and republican priorities, you can't pass the bill. so unity is extremely important. delivering on the president's promises to the american people is extremely important. making permanency of trump's. trump's tax cuts, addressing no tax on tips, and the other tax provisions that the president campaigned on. we cannot lose one person. when you look at the tax cuts from 2017, andrew, we lost 13 republicans. we can't lose one. so that raises. >> the. >> question important. >> that raises the question, chairman smith, just about what what these bills need to look like in terms of dealing with the debt and dealing with the deficit. what kind of math is going to be applied to some of this? there's been some arguments already made that the math is going to be different. math even. i mean. everyone's

kind of saying that the math is not really your math. >> yeah. everyone's going to have to give. we have to look at the realistic budgetary numbers that affect the fiscal health of the united states. we have to look at real border and immigration policies, and we have to look at the real energy policies. all these things are extremely important to all republicans in the house and the senate. we just have to thread that needle. people have differences, whether it's various provisions of the tax code. we could talk about salt. we could talk about the debt and deficits from the members that are really focused on those provisions. but we have to thread the needle, and we all have to give and take. various members can't have all of what they want. no one's going to have all of what they want. you have to give and take to deliver for the american people. >> can you weigh in, by the way, separately on this email that went out to 2 million federal workers, a lot of confusion, lots of questions. i imagine people even that, you know, in the government who have been

employees of the government for a long time, getting an email, basically saying either come back to work or resign. if you can press, you can effectively just press reply and press resign in the subject line. how do you feel about that? and what about just all the questions that it relates to? we had a congressman on earlier who suggested it's unclear whether there's even a budget to pay all these people out in a buyout. >> you know, i think it's a very lenient email that the administration is sending out. if only 6% of the 2 million federal employees are showing up. >> to. >> work, that's that's unacceptable. and that is what what is being provided is that only 6% of 2 million workers, if they don't want to show up to work, they don't need to be working for the american people. the american people deserve federal employees to commit and to sacrifice and to do their best job for the american

taxpayer. >> separately, i wanted to get your thoughts. we have reid hoffman coming on in just a little bit. he's on the board of microsoft. there's a lot of questions about tiktok. and i was looking at the way you voted on tiktok back in the day. what do you think of this sort of moment that we're in where the law of the land is that this company cannot be operating in the united states, companies like google and apple have decided that they're not going to allow this to operate effectively on their platform. and yet oracle and companies like akamai are taking the president at his word that he's going to somehow protect them despite the law later down the road. who's right? >> well, what you have to look at. >> part of. >> the provisions of the laws allowed the tiktok could exist if it wasn't owned by the chinese communist party. so if it comes under new ownership, that is a real possibility that they would not be banned in the united states. and there's a huge concern about the

involvement of the chinese communist party when it comes to tiktok. and so that has to be addressed in. >> order to disagree about that. >> i think the. >> the question is. >> the question, chairman, is what do you think should happen in this particular moment, which is the law has been put into place? the supreme court has upheld that law. you know, folks like tom cotton are out there saying to the technology companies, if you host this, you've got a problem. and by the way, it's not just a problem today. it's maybe the democrats come into office, by the way, 4 or 5 years from now and look back at these things. right. it's that's that's the concern. if you're a company that you're saying the law is the law, but the president is saying, please disregard the law for now as i try to figure this out. >> andrew, i voted for it. the law is the law. 357 i think house members voted for this. and the law is also clear. tick tock, tick tock can be available if it's not owned by the chinese communist party. and that's something that the president's

been pushing, is that new investors come in and take ownership of tiktok so it can run run effectively in the united states. congressman, what is the conversation down there about the president's attempt to just freeze spending that has been authorized by congress across so many different agencies? obviously, it caused a lot of confusion and chaos yesterday. and in the medicaid portals and elsewhere. i mean, this is something that obviously is in the law. the money is there, and yet it's not getting spent as dictated. the president has been crystal clear on how he's freezing spending. he's freezing spending according to what the law requires. for example, the hyde amendment says that the money cannot be used for abortion. these are things that he outlined saying that the money should not be sent if it's violating the hyde hyde. hyde amendment similar with die and also the green new deal priorities. these are things that were not approved by

congress, but it was approved by the prior administration. and the president is listening to the people who sent him to washington saying that money should not go to the green new deal, die and defund abortion. >> chairman smith, i want to thank you for joining us. we hope to talk to you again very, very soon. thanks. >> thank you sir. coming up, former council of economic advisers chair jared bernstein joins us on the trump economy, or at least what we know of it in the first week and a half of this administration, then linkedin co-founder reid hoffman will be with us for a wide ranging conversation on ai. stay tuned. you're watching squawk box on abc. >> across the. >> globe. >> industries are transforming. >> and businesses need. >> to navigate. >> the changing. >> landscape to stay ahead. >> when you partner with. >> barclays. every change. >> leads to a. >> bold possibility.

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computation at the edge. distinctive efficiency, limitless innovation. make smart decisions with precision and agility. now publicly available. trade today. blaze. life on the edge cnbc live. ambitiously. >> let's talk ai. ai in china versus ai in the united states. >> deep sea. one of. >> the companies within china. >> it's been reported at. least that they. have a cluster of. 50,000 nvidia gpus. >> deep sea. their model. >> is actually the top performing, or roughly on par with the best american models. to see the deep sea new model. it's super impressive and it's super compute efficient. >> we're not just. >> about managing. >> information. >> we're about supplying digital workers. >> now we're. >> making this. >> transformation of digital labor. >> welcome back to squawk box. take a look at futures right now. we are off now about 50 points on the dow. it had been in the green before. we're actually now off about 62 points. the nasdaq down about

four points after also being in the green quite materially. s&p 500 off about 14 points right now. >> our insurance giant chubb giving an early indication of the cost of the california wildfires. chubb said it expects a pretax net cost of $1.5 billion to impact its first quarter results. several estimates have pegged the wildfires as the most expensive ever in the u.s. wells fargo and goldman sachs projected the disaster could cost insurance companies $30 billion in total. >> up next, former biden administration, council of economic advisers chair jared bernstein will join us. stay tuned. you're watching squawk box on cnbc. >> are you. >> having a. >> hard time growing your sales? >> is it tough getting new customers? try info free. >> com hot. >> sales leads. >> you'll get unlimited sales. >> leads. >> mailing lists, business. >> profiles. person search, email marketing. >> and free crm. >> i got for new customers. >> the first month.

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fiduciary financial advisors@smartasset.com. >> welcome back to squawk box. among today's top business stories, frontier airlines is making another attempt at a deal for rival discount airline spirit, which is currently in bankruptcy. the two carriers were planning to merge in 2022, but jetblue made a higher offer for spirit. that deal fell apart last year under legal scrutiny. you see frontier up about 2.3% on that news. we are also watching starbucks after the coffee company reported fourth quarter earnings. same store sales fell for the fourth consecutive quarter, but by less

than analysts had expected. now, don't miss an exclusive interview with starbucks ceo next hour on squawk on the street, and shares of luxury giant lvmh falling in european trading. revenue in china lagged and sales declined in several businesses, including fashion, leather goods and wines and spirits. those shares are off 5.4%. fellow luxury giant kering, which owns brands like gucci and alexander mcqueen, falling in sympathy. >> and it's been less than two weeks since former president biden left office. his former chief economist is urging the new administration to be careful in dealing with inflation, saying if the trump team's instincts are wrong, the costs will be high. joining us now, former white house council of economic advisers chair jared bernstein. jared, thank you for being here. you know, so given what you know about the economy, the perch you set in the economy that the trump administration has inherited, what are you most concerned about? >> well, thank you for having me on. i would say.

>> i'm. >> most concerned about the kind of uncertainty that's generated by the. policy lurching that we've seen over the past. >> few days. >> along with. potential inflationary effects from sweeping tariffs and potentially deportations. >> i've long been concerned. >> about fed independence. >> but i think. >> that the economic. >> team over. >> there. bess and kevin hassett, those are folks that i know of. but especially kevin. these are good economists, and i. >> think they don't. want to. >> see interest rates or inflation go higher. so part. of this is a matter of. >> who wins those arguments internally. >> and how do you distill kind of the rollout of everything. because there are certain policies that could factor into the economy a little bit quicker. i'm thinking of, you know, potential tax cuts, for example. but then other areas like deregulation, even tariffs and kind of the back and forth there a bit more uncertain in how they work their way into the economy. so how do you think about the tug of war between

these policies and the overall implication on the economy? >> i think there's a much. bigger threat from not just tariffs, but again, sweeping tariffs, you know, targeted tariffs. >> something we did in the biden administration. and actually the first trump administration. targeted tariffs can be potentially. >> useful and effective. sweeping tariffs used as. >> a kind of proxy for foreign policy that can be very damaging economically. it's also, i. >> think, problematic geopolitically. let me say one thing about tax cuts. if the trump administration extends the trump tax cuts, there's. >> no fiscal. >> impulse there. that doesn't. >> change the economy's. >> trajectory at all. >> because it just keeps something. >> that's here. >> in place. >> what it does do. >> is it significantly. >> hurts our fiscal outlook. >> and that can be. >> a potential problem in the bond market. >> and for interest rates. >> and i think we've already seen the bond market kind of raise its eyebrow at the fiscal outlook. >> given some of. >> these potential. >> fiscal paths.

>> certainly some who are supporters of tariffs have mentioned that they believe they'll be revenue generating. do you buy that? >> i'm skeptical. >> i mean. even if. >> you take the most optimistic tariff generating numbers. we've seen, they pay for less than half of. >> extending the. >> trump tax cuts. so i think those are way too optimistic. one of the things that, you know, trump hopes, i think, is that the. tariffs will discourage imports. well there goes your revenues. so i would i would discount some of those numbers. >> what do you make of the whole deep sea phenomenon that we saw this week. and the how it exposed essentially the fragility of this ai trade, the potential fragility of ai competitiveness and exceptionalism when it comes to ai. what are your thoughts on that? >> well. >> let me answer you first as an economist, which is that if. somebody figures out a way to do something that supposedly costs tens or hundreds. >> of billions.

>> for, you know, tens of millions, that's, you know, an unequivocally. positive development. now, add geopolitics and the risk of a potentially problematic country developing a tool that could be difficult for us. of course, that's in the mix. and i know over there you're. understandably concerned about market dynamics. but at least when you get to sort of the economics of technology, if the folks at deep sea have figured out a. >> way to. >> do this without sucking up tons of land and energy for data centers, you know that at least that part strikes me as potentially positive. and injecting a level of competitiveness. you know, when we hear these numbers 65 billion. no, we're going to spend 85 billion. i don't think any of us, except. maybe some of the experts really know. what kind. >> of context. >> we're talking about here. i always thought those numbers seemed kind of inflated, such that it's just a contest to see who. could pledge more. so this

type of competition could be positive with a, you know, a definite caveat for geopolitical implications. >> jared, i wonder how you're trying to account for what the potentially might happen with deportations and labor market response to this and how it really filters through to, obviously, labor supply and things like wages and inflation. and i mean, we talked about rent effects. obviously, this was a core campaign promise of the president. he's following through. but as somebody who's a scholar of the labor market, what are your your main issues or concerns? >> well, the labor. >> market looks to me to be pretty. well aligned right now. and that's very important, both in terms of inflation and probably even more so and topically for today. from the federal reserve's perspective, if you deport a lot of folks and not just broadly speaking, but in particular sectors and industries, that

disproportionately higher immigrants and probably undocumented ones. so construction is a good example. certain parts of retail, parts of restaurants, then you can see real potential supply shortfalls. we know what that does on the wage side and that can feed into inflation. so i'm concerned that the combination of tariffs deportation is potentially inflationary. if you then start to screw around with fed independence you have a real problem. >> jared, what do you expect to hear from chair powell on the subject of inflation later this afternoon? >> what i. >> think we might hear is some version of what we've been talking about today. when it comes to the economy. and my last response to those policy questions about the trump administration, that is, i think the fed's view of the macro economy is, is pretty much unchanged. team trump comes in, you get probably a little bit more animal spirits, a little bit lift there on the business side. >> but. >> a lot more uncertainty on the

policy side. what i expect to hear from chair powell is that we're pausing because we want to see what these policy ideas, the types you were just talking about, what kind of impact they might have on inflation and on interest rates. you know, i think chair powell is careful not to wade into political waters, but he's already said, and i think correctly, that these policies can be impactful when setting interest rates. so what we should listen to is how they're thinking about the potential threat to inflation, in particular from from trump tariff policies. >> maintaining that optionality these days. thank you very much, jared i appreciate it. >> thank you. >> okay. coming up next, an interview you do not want to miss. linkedin co-founder reid hoffman, one of the i ogs, is going to join us for a wide ranging conversation. yes we'll talk i tech leaders flocking to the government so much more. he's got a big new book out and we're going to discuss it all after this.

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cnbc. >> and. >> welcome back to squawk box, china's deep sea scrambling part of the narrative around american ai supremacy. shaking the stock market earlier this week in his new book, our next guest is asking, quote, what could possibly go right with our ai future? joining us right now is reid hoffman, partner at greylock, co-founder, of course, of inflection ai, and most importantly, linkedin. he was an early investor in facebook and open ai. he's on the board of microsoft. the book is called super agency, which he coauthored, and it is out this week. and i am holding one of them, including an ai generated picture, by the way, of myself on the back. i don't know if we should show everybody, but there you can check it out. it's kind of cool. reid, it's great to see you. i want to talk about the book, but let's just let's just

talk about this news because it relates to all of this, which is to say deep seek, you know, gets announced, it emerges, has it totally scrambled the market in your mind for software, ai, for the chips, for the energy space, or is this overblown? what's happening here? >> well, it's definitely overblown. i do think. >> it's overblown. i think. >> yes, the. >> level of. >> reaction is overblown. there's a bunch of different things. so one, for example, i think that you i actually always knew that we were going to get to a bunch. >> of smaller train. >> models that have higher efficiency and targeting in certain ways. and part of the way you do that is by training them from. larger models. right. >> like part. >> of what's obviously quickly emerging is, well, part of how this got trained this way is by some kind of access to a larger model. right. great. and by the way, that's part. >> of the reason why the larger. >> models are useful. >> and part of. >> what we'll see this year, next year. is the use of. >> large models. >> from the hyperscalers will be

to train a bunch of. >> different small. >> models and compose them in different ways. that's not news, or at least not news to most. of us technology insiders. but i do think that the thing that is news is, well, look, as we've been saying, china is in the game. this is actually, in fact, a game on competition. and it was resoundingly demonstrated that way. and there is good, useful work that comes out of it. >> does it change the dynamic, though? i mean, we've looked at obviously the nvidia stock piece of this, for example, chips energy. if all of this can be done in a much more efficient way, it seemed to me, tell me if i'm wrong, that for the most part, everybody, at least in the us, was in just let's just we're going go big or go home. we're just going to try to keep advancing these, these platforms without necessarily spending all the time on the efficiency piece. these guys seem to focus as much on the efficiency piece as anything else. and does that change the dynamic? >> well, say. >> for example, you. >> can train a model. >> on 1000 gpus, but you can make it much better on 10,000 gpus. you will, in a lot of cases, always spend for the

10,000 gpus or the 100,000 gpus, because if your coding model is even 20% better with that, and you think that there is, you know, billions of people who could be using and engaging that. around the world, that's actually worth it in that kind of cost. so the fact that you're trying to do efficiency, that's a good thing. all of the american companies will also get to points where they're. >> focusing on efficiency. >> i think there's things that we can learn from some of the stuff that chinese are doing, but that doesn't mean you don't want the large. >> models of the open versus closed source issue. and the reason i raise it is, you know, you look at an apple, all of a sudden people say, guess what? apple has not spent nearly the kind of capex that others have, and they're going to ultimately have access to something just as good. you could argue they do with open ai today inside the phone, but it's a different story in amazon. there are people who people are looking saying they're the winners of this because they're not investing the same amount, but they're going to be able to have the same outcome. >> well. so the real. >> question comes down. >> to how do you integrate these technologies into your business and franchise? and open source

will be useful for a number of things. but just as startups tend to start with a bunch of open source and then add to them as they get bigger for things, usually open source doesn't help you solo. by the open source power, you're much larger franchise and business. and what's. >> more. >> as i think these, you know, whether it's, you know, open ai, anthropic, microsoft, google as they get to the large models and training the small models, that will create a actual, in fact, a much more higher performance system that i think most of the open source will get to. >> we're going to hear from microsoft later today, and i imagine there's a lot of questions for satya about whether he's still going to spend $80 billion. i know you're on the board. i don't know if you can speak to that. do you think the investment case and thesis for major infrastructure is going to be the exact same today as it was a week ago? >> yes. and part of it's because like just to reiterate the earlier point, to get to the really high quality smaller models, you need the larger models, right. and the higher

quality larger model will also mean a higher quality smaller model. and so you still want the large training customer, but part of an addition to the large training cluster, part of the thing that you were doing is that you're also creating a something that's also used for a lot of inference. and so as the demand for these ai services go up, you also have the compute for that, right? >> can you speak to the whole stargate situation from last week? you obviously have a great relationship with with sam from openai, obviously a great relationship with microsoft, given that you're on the board. but there were some people, including people like marc benioff, who said this is a demonstration of the of a fissure that's happening between these two companies long term, because sam is going to want to go his own way. he's going to want to have his own compute. and microsoft may ultimately have to go do something else. i don't i don't i'm just curious what you think about that. >> well, i definitely don't think it's. >> the they just put out a picture i should say on twitter. yes, yes. saying everything's great. so i don't know. >> yes. well, the picture, you know, for a thousand words is

like here, here's the two of us just meeting smiling a lot. right. to answer such frankly, you know, somewhat spurious claims. i mean, i think the openai and microsoft obviously have a very good partnership. they also they they both cooperate and compete. i think that the this move that's going with stargate has been something that's been in months of discussion, and microsoft has been in the discussion. so it's part of the partnership. >> right. but but you brought inflection to microsoft. you know, mustafa runs runs the ai program at microsoft. by the way. i should also say marc benioff said on the air, i don't know if you saw it. he said, you know, mustafa and sam don't love each other. i mean, it was a very interesting to hear the sort of dynamic. >> the days of our squawk box. >> yeah, the days of squawk no. and the question is longer term, whether you think microsoft's going to ultimately have to build its own frontier models. obviously satya right now is saying that he doesn't want to basically double up and replicate what openai is doing.

>> yeah. that's correct. they want to focus their compute on one. they have a very good partnership with openai. mustafa wants to build the best models to power the best agents for billions of people around the world. that's mustafa's goal. it's how he gets. >> there. while we're just in the microsoft land. let me just ask one other related question. president trump commenting recently that he would like to see microsoft, or he says that microsoft is in negotiations to buy tiktok. you're a linkedin guy, social media guy. does that make sense to you? there was a period of time where microsoft and if i remember oracle and walmart were all together in the old trump administration talking about buying tiktok. >> fortunately. >> i don't know. >> a lot, so i can't say a lot. >> okay, you don't know a lot. so usually it's when you know a lot, you can't say a lot. but if you don't know a lot, i guess you can't say a lot ever. yeah, you can't say a. >> lot either. >> i want to talk about super agency, because the other thing that to me is fascinating about

what you, what you talk about is this idea that, you know, you may have an incentive to almost not, i don't want to say over promote ai, but to think of the best sort of use cases and outcomes of it. but you make an observation early on in the book that basically you think your incentive is actually the opposite. why do you say that? >> well. >> partially because you know what? what? the way i spend all of my energy and time, which includes kind of economics, is how do i build stuff that are that is good for humanity, right? it's also like like the company you missed, actually, in your your bio introduction is manus, which. >> is well i want to get there too. i got that's on my list. >> yes. but it's, it's how do we help elevate, you know, kind of the human condition as best as we can. and by the way, that's one of the things that's great about the progress of business and technology innovation and so forth, is that's what it does. >> and just to explain to the audience this is effectively something you think is going to change health care change, pharmaceuticals, change, change, all of that. yeah. >> so target curing cancer, best

of ai, best of science put together on that. speed up the clock. have identified a bunch of different cancer targets. you know, starting with, you know, various forms of breast cancer and other things. and then, you know, accelerate the process of finding cures for those and getting them to market. that's the that's what manus is about. >> how much, you know, one of the other things that we were talking about in davos last week with, with dario mody, who runs anthropic, is just how quickly we are getting to either agi or something super close to that. and you know, he's always been i thought actually relatively not not skeptical but like a realist. and he became sort of much more optimistic last week saying that, you know, even the last six months, all of a sudden he he sort of sees what that frontier looks like. do you see that same front? i mean, he's talking three years out, sort of a fundamental change in our society and that we're just not even like we're not even in the

game, like we're not talking about this the right way. well. >> i think, look, i have this kind of somewhat interesting double vision of both being extremely positive and optimistic and thinking that there is a bunch of things coming in society that we're not talking about, but not quite the. usual science fiction description that's made. it's like, oh, you know, everyone's going to be able to be, you know, pursuing their hobbies because all the robots are going to be doing all of the work, which is 100% not the case within call it the next ten years and probably much longer than that. and so you go, oh, three years, like, well, that's actually not the way it's actually going to work. on the other hand, it's going to be a magical transformation of productivity in the cognitive industrial revolution. and part of that's because when you get to solving like, this is the year of coding and everyone's really working on how do you get a coding assistant? and of course, that'll end up being, you know, create a bunch of productivity increase for software engineers. but what it

doesn't fully track is that all of us get essentially a coding copilot on our pcs, on our phones, and that enables all of us in doing our own productivity in ways like, look, since we've never even been close to it, most of us don't have the thought about, what if i had an engineer that was always kind of sitting there kind of going, hey, would you like me to code up that analysis query that you were looking for to do a much better detailed way of doing this, and maybe compile 20 different information sources into the thing that you're trying to look at that will be there this year. >> how much do you worry, even as an investor, that both the models themselves become so commoditized because they're all relatively now similar, but also that it becomes harder and harder to actually invest in new spaces because the defensive moat that ostensibly would be around one of these businesses can be broken at any moment by any of these commoditized models.

>> so i think there's two things. one is i think there will be some new moats, and i think some traditional moats exist. network effects, for example, with marketplace, social networks, etc. enterprise depth of integration. i think those things will still exist even with this. and so the fact that you have a different product surface that's opening from the kind of the open weight models is, i think that the is i don't think changes. it may change the product landscape. it doesn't change those things. >> you don't think that in the future i'm just going to either talk to the phone or live in. oh. >> i think. >> one one surface. yes. effectively is then either either through apis or now like operator because it doesn't even need an api. it can just sort of like go surf the web itself. it goes and does it does whatever. and so therefore all of these brands and all of these apps and all, they don't matter to me in the same way. >> well, i do think that we will have multiple agents, including perhaps, you know, like andrew's primary agent. right. you know,

in these things, i think that will change some of how the brands operate. but the. >> brands will take all. >> well, that's the thing. that's always been my question. given the amount of investment is it kind of is does the payoff have to be a winner take most scenario? >> well, i do think there's multiple ways in which technology companies in a connected universe tend to get to more of a winner take most. so my book, blitzscaling i describe these as the glengarry glen ross markets. right. first prize cadillac, second prize. steak knives, third prize. you're fired. and the problem is, when you have universal connectivity, like everyone can get there. the thing that's 5 or 10% better will then attract 70% of the people. right. and so that's part of where you get more of that in connected environments. now, that being said, you know, i don't think that that means that like for example, it's a question of how it will evolve of do you have a set of unique assets that's plugging into the agent, and what's the deal by which it plugs into the agent? like, say,

for example, you had a yelp, you know, kind of secondary agent and says, look, your agent can can connect to the yelp agent. but part of the protocol of that is when your agent comes back and talks to you, it says, oh, the yelp agent brand told me this about where you might want to go for dinner. >> right. can i ask you this? page 192 you write. i will also impact conceptions of freedom. yes. what do you mean by that? >> well, so i think the question about, like, just as the phone opened up our sense of freedom, of when we're in contact, never getting lost in a city again, like, i don't kind of look at a map and where i'm going and, you know, and i go to dinner, i go, how am i getting home? i just pull out my phone, etc. it's also a sense of freedom relative to what i describe in the book as kind of an informational gps, which is what i is, is like, okay, well, am i just anxious or nervous about health conditions? i can get information about it, you know, like that sense of what a space i can operate in,

what i can understand. right. that that creates a sense of freedom. >> i have a political question for you. you spent an extraordinary amount of money and were quite public about your support for originally president biden and then vice president harris. clearly, you were on the losing side of things. a number, if not most, of the big tech silicon valley ceos had better seats at the inauguration than president trump's cabinet members. and i'm just curious how you see that, how you view that, how you think the american public should view that. does that make you excited? does that make you scared? some people say they're they're bending the knee. others say, this is this is fabulous, that they are connected to this administration in a way that, frankly, president biden and a whole number of other presidents were not. >> essentially more the i think it's extremely important, if you ask me this, should the american president, should the american government, any, you know, kind of western democracy leaders be

deeply connected to the tech industry? i think the answer is yes. it's how we're creating the future cognitive industrial revolution. what is that going to mean? you know, energy, climate change, a bunch of things, all of which i think is a technology answer. so of all the industries, i actually think it's most important to be connected to the tech industry. obviously energy matters. obviously finance matters here. i am in finance land. right. but but i think that is an extremely important thing that actually i've seen as mostly under commented. >> because you think this is a good thing. yes. and you're not concerned about it? no. interesting. i thought he was going to come out on the other side of that. reid hoffman, thank you. the book is called super agency and it is worth a read, an optimistic read on what's going on in the world of ai. but i think fairly skeptical. but i think you raise all the issues about that we also need to worry about. so thank you. it's a great book. >> pleasure. >> when we come back. trump media on the move this morning. company announcing a partnership

with a big financial player. we'll tell you which one after the break. squawk box returns 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 (grunting) at morgan stanley, old school hard work meets bold new thinking. ( ♪♪ ) partnering to unlock new ideas, to create new legacies, to transform a company, industry, economy, generation. because grit and vision working in lockstep puts you on the path to your full potential. old school grit. new world ideas.

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>> granger for the ones who get. >> it done. >> check out shares of trump media group surging after announcing it is expanding into financial services with a new fintech band or brand. i should

say truthfully, the company planning to invest up to $250 million through charles schwab and be allocated to customize separate managed accounts, etfs, crypto assets and more. charles schwab will also broadly advise on truth fees, investments and strategies. so you. >> have certain coin will be there. >> charles schwab you know i don't i that is the coin that will remain nameless because i always. >> s coin. >> i always feel like if i mention that there's a coin out there, people will go. >> i do wonder if this is a i mean, schwab has a huge business in all registered investment advisors, other intermediaries that just sort of, you know, use schwab as their platform, it seems like truth social, but that's interesting that. >> they decided to do that. i don't know if you saw visa, by the way, is now hooked up with x. yeah. so but there's sort of. >> a payments platform. >> interesting political question of whether certain certain others. i wonder whether charles schwab was the first one to get in there, how that all worked. >> well, the whole decentralized finance concept, the d banking issues that some conservatives have been alleging.

>> so final check on markets before we hand it over to the folks on squawk on the street. they've got a whole number of big interviews you do not want to miss. this morning. the dow off about 62 points. you're looking at the s&p 500 off as well about 14 points nasdaq after it was in the red. and now in the green up about 20 points leslie and mike thank you for hanging out. see you tomorrow. make sure you join us tomorrow. squawk on the street with all those big interviews coming up right now. >> good wednesday morning. >> welcome to squawk. >> on the street i'm carl quintanilla. >> with jim cramer. >> david. faber at post. >> nine of the new york stock exchange. >> it is. >> a. >> big and. >> important day. >> a fed. >> decision a. >> meta microsoft tesla tonight confirmation hearings for rfk. jr and howard lutnick and. >> the confusion. >> from tuesday's federal funding. >> freeze now blocked ten years. >> for 52. >> a road that begins. >> with the eye. >> trade, though openai accusing chinese rivals using its work. >> for. >> their apps. >> nvidia shares. >> waiver premarket. >> and big tech as we