tv Squawk Box CNBC January 27, 2022 6:00am-9:00am EST
million. it seems like it might be more important than someone wanting to listen to "heart of gold. it is thursday, january 27th, 2022 you heard the expression squeaky wheel gets the bacon there is bacon "squawk box" begins right now. good morning welcome to ""squawk box" here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. you complain and get bacon >> i picked a bad day to start that diet. it's like from "airplane." >> bad day to give up sniffing glue
>> atkins, joe think of it like atkins. >> that will work for me i can eat as much as i want. you have an atkins doughnut diet, sorkin >> i want to say to keep myself honest i stayed off the sugar and carbs for the month of january so far. i'm a week away from success. >> someone needs a delivery of doughnuts. i'll get that on grubhub >> other people give up alcohol during january you give up doughnuts. who you are? homer? powell spoke yesterday and the markets quaked if you watched, things looked good early in the session. nasdaq up 3.5% yesterday until jay powell started talking and explaining just how aggressive they plan on being did not give too many specifics.
he did not take anything off the table. >> it closed up. >> it did. after dropping 3.5% from earlier in the session if you watched it, it happened with the dbig tech stocks. microsoft was doing well after earnings then in fact the stock was up 6.9% it came back down and closed up 2.9% it lost at lofty levels. same with texas instruments. and u.s. equity futures. there are red arrows dow futures down by 100. if you are just waking up, you think that's pretty concerning that is because you were not up four hours ago if you are watching dow futures, they were down 400 points a few hours ago. they pulled back up. we are in positive territory and same with the nasdaq down 2% earlier with the
futures. that was three or four hours ago. it climbed become up if this tells you anything, this storm is not over. we are still seeing lots of volatility the ten-year is concerning the yield for the ten-year is down to 1.839% the two-year is up to 1.196% you never want to see that happen that indicates not great things to come for the economy. >> these are small moves >> quarterly, you are not looking frequently. >> we will talk to steve, i know there is a major, you know, people on one side of jay powell and people on the other side of jay powell the journal. a lot of people say, oh, my gosh he was hawkish other people say really? we'll see. it is nice you are saying you will do these things you are not -- you could have
ended asset purchase you could have left 50 basis points on the table for march. you didn't they got the excuse ready. it is the wealth effect. we don't care about the rich people we care about the employment picture. >> the trickle down wealth effect >> we are not coddling the haves. we are worried about the have-nots. they have the cover ready to go. i know liesman will cover it >> let's talk to steve he has 18 hours or less than that 12 hours to add more perspective to all of this and get his take on the fed's decision. the big changes in the outlook for the rate likes this morning. steve is standing by up early mr. liesman, what do you think of what joe had to say and what mr. powell had to say, more
importantly? >> can i say what i think and what anybody thinks for a second here i want to show you what markets think which is a little bit more important and will change the conversation markets sped up and increasing the outlook for fed rate hikes in the wake of the meeting with the fed increase in march and balancing after that powell did not rule out consecutive hikes or limit the number of hikes. he had greater concern over inflation. he said there is scope to tighten policy without hurting the labor market powell said the fed needs to be nimble the market had been priced for quarterly hikes this year, that's four of them. futures now see a hike probability of the meeting in march and the fourth in september and now a fifth in december hold the chart up there for a
second thanks for the graphics department we had to make the template this morning. thank you, graphics department the break in june through september could be because the fed could halt hiking rates while it begins balance sheet redu reduction. this chart would bring from zero to 1.25% for the fastest hike in years. bef before the meeting, $180 billion in runoff. $2.8 trillion over three years reading comments this morning. i think the market is pencilling in more. we may have another survey step back. the change here is the virtual withdrawal of further guidance that einsured the low rates whil the fed moving on.
that likely means ongoing volatility for stocks. andrew, i think we're in for an interesting ride i don't know the hawkish ideas are right. i don't know the fed means to do these things what i do know is that when the inflation report comes out, we will have to adjust the fed outlook to that inflation report when the jobs report comes out, we have to adjust to that jobs report it is meeting to meeting and report to report now >> my question heand it goes to the market and wealth effect maybe i'm wrong on this. the whole point of what he is trying to do is reduce demand. that is the only tool the guy has. the question is how much does he care about the market? the market was like a roller coaster the past couple days everybody had the same question. is he watching the market? is this going to change what he's going to do i'm under the impression he will
not do anything unless it was a completely out of control situation. that's where he is is that wrong? speak to the wealth effect issue that joe said? >> i think powell cares more about it than he really does i think he is focused on the real economy and focused on getting the inflation under control. the fed has to normalize policy in any event it has an inflation problem on top of that. there is collateral damage in the stock market which is not a primary concern. i don't think he wants to see stocks go down that is not an intention of policy it is a fallout he is filwillino accept at david zervos said that the
put price is something the fed is willing to accept it will not step in to bail out the market with a 10% decline or 15% decline. it will step in with systemic risk or cumulative wealth effect and other fallout from the declining stock market sdp. >> that is because rich people have a lot of house money. 99% from the pandemic lows, not only does powell have room -- he said we have a lot of room to raise interest rates he got a lot of stock market gains where you can give back some of those. more than what we have given back so far and still not be accused of derailing the stock market we have huge gains since what was that april or march of 2020 >> joe -- >> i don't believe it. i think if we were down 25% on the nasdaq, i think, they would
be under enormous pressure from the biden administration and everybody else to take it easy maybe that's the strategy you are talking about. >> if you take it from the pre-pandemic high, right, i have the s&p up 30% and nasdaq still up 40% your numbers are spot on i have 993% from the pandemic low. if you put all of your money in on that day, you are up 98% and down 16% on the nasdaq from the all-time high. there is still a lot of wetalth out there. you have to think about calibrating policy for the economy. 3.9% unemployment rate maybe a lot of people on the sidelines, but maybe they nare not coming back. maybe powell is waiting for that that is likely not going to happen the employment market is the one that they have right now
they have to deal with it. look, let's be clear there is an upside to the story. he talked about the i sdea of ls fiscal stimulus and tighter policy those things could combine to reduce inflation they could combine to allow the fed to go slower the market may have gone a little far in with a hawkish fed. i don't know at this point >> it could set up for a scary situation. none of us thinks inflation is going to 10% if inflation got worse and the market started going down, you see why people would never accept a job it is too damn hard. i'm worried there is feet of clay and talk is tough if inflation needs to be addressed and the market is really in a dire straits, what
do you do? do you continue with the policy or do you blink? that's what i'm worried about. volker didn't blink. >> he didn't signal what he is going to do. it is the shock and awe theory. >> we're so low. >> the other thing is powell has a lot of political support from both sides of the aisle to fight inflation. >> until he doesn't. >> i think there is support among the american public. until he doesn't i can't argue with that. he could have the rug pulled out if he has a huge decline in stocks joe, the other side of the coin we haven't talked about is earnings we talked about earnings going up with inflation. companies have been able to keep pace so far. you have a good earnings season. that is another support to the market i'm not saying it is all doom and gloom. it makes sense for the fed to normalize policy
we do not have the pandemic economy. it is also painful >> going back to the volker comparison volker did not signal it if jay powell thought inflation is out of hand, maybe he raises it by a couple of points maybe they have the room to move more quickly not a quarter or half point if he gets worried and then you do it then there is not time for anybody to slap you around for the job you are doing. >> becky, i'm going to push back a little bit on that the fed will surprise, i think, if there is some policy advantage or benefit to the fed surprise >> that's what i'm saying. not in this environment. if inflation got out of hand, i could see them taking a more aggressive stance. >> i have here the two-year
yield now 70 basis points higher from when fed share powell pivoted on the 30th of november with his speech. that was the moment where policy officially became hawkish. the fed has not raised rates one bit. in many ways, powell is getting the reaction in the market that he needs in order to tighten financial conditions i have 70 bips on the five-year. that may be something they work with the point is the fed is getting the reaction it needs to the policy it had so far i don't think he needs to change in terms of surprising the market here. it's a hawkish outlook that is what powell wants. i think people made a mistake yesterday thinking that powell had anymore reason to be dovish.
>> all right, steve. thank you. stick around get out of my basement stay out of may basement >> joe joe! i got to tell you something. i'm reading a lot of commentary on the fed the unfortunate abbreviation for balance sheet is >> i can figure it out >> it is a drag to right all of these reports. i keep seeing the abbreviation for balance sheet. >> you know what we need to always realize in the background half of what we're talking about might have that abbreviation, too, and be full name humble. we will talk tesla and throw bs into that the company will put off new models to focus on delivery of the current lineup i want a new s i want a cooler one. he will not do it for me he doesn't care. the earnings parade rolls on
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the earnings and revenue beat estimates. we have phil lebeau with us. >> joe, i think investors will come away seeing great numbers what do you have in 2022 it is focusing on more cash what they have. we will not go over the numbers. the focus for 2022 are a couple of things people caught on the call when elon musk got on we supply chain limited with capacity under utilized that is the case in 2022 the focus on driving efficiency and greater profitability with what they are making there are no new model annou announcements. here is elon musk. >> we do expect significant growth in 2022 over 2021
you know, comfortably 50% growth in 2022. >> look, if you are a tesla investor, that's what you want to hear. 50%. they said a couple of quarters ago, we will grow by at least 50% every single year. that's what they did last year the estimate for 2022 is deliveries of 1.48 million most were between 1.3 million and 1.5 million. what about the cyber truck we thought we would see it at the end of last year then by the end of this year that is starting to change over the last couple months. elon musk said it is unlikely to happen it won't happen this year. as for the $25,000 car he hinted in the past. here is what he said yesterday >> we are not currently working on that $25,000 car.
you know, at some point we will, but it is not on our plan right now. >> as you take a look at tesla, some people are focusing on what they did say they are working to develop. that is the human robot. remember when they announced this a few months ago and a guy in a morph suit and elon said we want to develop a human robot to assist us in the factories he talked about that last night. i know there will be some people who heard that news and they said i'd rather have a car than a human robot. that is what musk is focusing time on developing in 2022 that robot is to assist them in the factories as far as manufacturing and greater efff efficiency
>> human robot hubot. >> a bot it looks like a human. moves like a human >> give me a truck give me a $25,000 car. push back the human robot. you had a guy in tights that looked like "pulp fiction. >> i was ready for you to roll that video out. >> it looked like the gimp out everybody left he was back -- no, wait. i think he was dead, too thanks, phil joining us now is john murphy he has a price target on the stock. john, i do love cars i do i grew up in the old days where you can expect cooler models coming out i'm a little bit tired of the top of the line tesla. i love it.
it's a great car i wish he would do that and the truck. i wish he would do anybody more. he has come a long way to get t where he is now. it is not a demand problem he doesn't need to engender demand he needs to work on supply and getting that done. he's in a rush, but not that big a rush this is a supply issue >> joe, thanks for having me that is interesting. the new product cycle in the auto industry for the new company like tesla are really important to drive consumer demanded and long-term growth. if you are looking at tesla and you are an uber bull, you will see 10 million units plus. the average selling price in the fourth quarter was 59,000 plus
what elon is doing is maturing the company. he said i have to spew cash flow and not invest in the future so i can build my balance sheet to invest nmore aggressively in the market it is a shift in the maturation of the company this product is weird. we estimate 29 other ev models launched in the market the market is coming for him he will lose a lot of market share. we expect he will lose 50 points in the market share in the next three to four years. >> just with competition i'm sure the battery strides that continues at pace that is important. i do go more than 500 miles. i don't want to sit around the idea is put the charging
station at a waffle house. i'll happily spend it there. that 40 minutes. you have to fill up twiceto go 600 miles. you have to charge twice to go 6 600 miles? >> you do. the per charging destination works well i don't think the charging is getting factor on ev it is a question of cost how many people can buy a $52,000 vehicle? less than 10% of the u.s. market the industry, including elon, has to drive cost down significantly. you know, i hate talking about government intervention, but the build back better plan would be helpful to the u.s. auto industry in the transition to ev i'm not a big fan of government intervention, but this would make sense >> it is still weird tesla wasn't there yesterday
the other ev makers are there showing up for the biden administration they know it is in their best interest regardless of how they feel politically it is weird tesla is not there elon is pushing away the government and same time embrace the benefitsof what the government has done for tesla. >> they have been favored in the past with incentives with loans. in the early days, heelon got a lot of breaks. there was a lot of help there in '08 and '09. we are in a race for europe and china on this ev future. the last thing you want to do is lose independence on the middle east and oil and ramp up depend answer on other parts of the of the world like china for evs it is not just an industry
focused package, but america left, right and center make sure we don't lose. >> we have to go, john your rating is based on emerging competition or all of the above? >> all of the above. pressure on the stock. >> all right i used to work with a john murphy i thought about him. i wonder where he is he used to be our technical guy. thank you, this john murphy. netflix shares is rising on what bill ackman bought in on the dip. and earnings with tractor supply with better than expected earnings we will talk to the company's ceo telar this hour. "squawk box" is coming right back !
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welcome back to "squawk. bill ackman taken a stake in net netflix. 3.1 million shares after the stock plunged last week. ackman said i admired the company he and his team built. we are delighted they presented us with the opportunity. in a letter to investors, ackman wrote about the investment he said we are all in on streaming as we love the business model the industry context it owns 10% of universal music group. he gained that stakes after the deal for the spac fell apart interesting irony. that deal looks like it has been a great boon for him
we talked about the spacs that have not done well protecting the little guy against making money finally >> bill could have gotten in on netflix for 10% of where it is after the sell off if he wasn't playing around with jc penney. he had a chance to buy netflix like the rest of us five years ago. six or seven years ago now he is paying it is up ten times what it was when he was passing out the buttons. remember the buttons >> you find a way to critique him at every turn. warren buffett got into apple late c he could have bought it when it was nothing. no one saying warren buffett is a dope. >> in hindsight, he looks smart.
>> we will see if bill ackman is smart or dumb. >> they were some the greatest buys of all time past performance isn't indicative of the future he has more money than any of us will ever think about having >> you can look -- >> when buffett bought into apple, people criticized him after what happened with ibm it is only later now the stock has come up. >> that is what i said 51%, areyou are doing well we are doing this as arm chair quarterbacks we have the best job in the world. we don't have to be right about anything perfect. we're the financial middleman. keep trying, andrew. when we come back, spotify siding with joe rogan after siding with joe rogan after receiving an ult
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to spotify he didn't want his music on the platform spotify says the policy is in place and has removed 20,000 covid related podcast episodes the company has a bet on rogan it signed a deal worth more than $100 million i don't know if they are rogan podcasts, but not necessarily related to covid clearly, they made a bet on rogan. the question i ask, guys, if you think other musicians and a band of musicians come together, when i say a band, not one band lots of bands. we're not cool with this having said that, it is hard
given that a lot of songs have a lot of lyrics that people find objectionable. people want to be creative musicians are in a tougher spot to object to some of this. having said that, you know my view on vaccines you may get infected, it would have saved 163,000 people in the past six months. >> they stood up for joe rogan in the past. not just about this, but other issues that infuriated employees. they're in they're all in with joe rogan. >> i think neil, he is a legend. i listen to him all the time still. you will lose me pick between me and joe rogan. if neil thinks he has the juice to kick rogan off.
tell spotify. >> i don't know if he thought they would kick him off. neil young is making a point with his music. >> a lot of people like to do that make a point >> and he was still in negotiations with the record company and spotify after this happened who knows how long before he will be back. >> if you had taylor swift and adele. name your top five artists that are played on the platform if they band together and say no go you have to think about this in a different way. >> critics haven't spoken up >> you have artists saying first amendment people >> that's why i said it. >> very pro-first amendment. i have seen neil say other stuff. i listen to his music, but not
him when he talks. this goes back years "harvest moon. dow futures indicated down by 25. we will continue this wild ride in the futures today down by over 400 points early in the session. in positive territory. now down 21. s&p futures off by a point nasdaq in positive territory after down about 2% several hours ago. we're not done with the volatility yet we'll talk more about the big take aways from fed chair jay powell and how the markets indicate "squawk box" will be right back >> announcer: currency check is sponsored by interactive brokers. the professionals gateway to the world's markets.
it's been a wild ride for the markets this week with sduning and revoers als that has people rinvestors wondering. you are looking at the wild moves from monday and tuesday. dow fightutures were down by 40 points this morning. they moved to flat line. the moves keep coming. let's talk about the markets with kristin bitterly. the head of the citi global. and the chief investment officer from hbsc. kristin, let's start with what we heard from jay powell yesterday. obviously it kicked things into the decline. you had seen the nasdaq up 3.5% right until he started talking then we lost about all of that by close what did he say that was so
disconcerting? >> i think it was more what he didn't say, actually the market was expecting the fed to be hawkish. i think comments around the dovish statement i don't think anyone was expecting that we expected rate hikes we expected quantitative tightening we wanted less ambiguity for example, no mention of gradual. no really in-depth discussion around inflationary pressure and the rate hikes and combined approach of two tools at once for what it will do for inflation on the demand side, but also the supply side the ambiguity and not the message that induced more volatility and market pull back. >> jose, you have been advising
cline clients they should buy on the dips what are you thinking? >> a lot of clients are saying where is the long-term value there needs to be long-term value with the markets we are seeing if you think longer term, some of the stocks and discounting earnings going forward and the cost of capital has gone up. some of the opportunities look more interesting to us in particular in the world of technology we like financials energy shares are poised to do well last, the consumer we see the economy reopening >> those are different stories energy stocks are the ones that have done well since the start of the year. you think that those prices as i saw overnight with brent breaking $90 a barrel. will that trend continue in. >> not necessarily on the price
hike demand will pick up. summer driving season and covid cases coming down hopefully toward the spring and consumer rebounding the services sector that is far from reopen. that used to be 2/3 of consumer spending as the consumer reenters the economy fully and people reenter the labor force and energy demanded >> kristin, what should investors be doing with investments right now? >> i think there is opportunity in the volatility. one of the things we have been doing -- we started doing this in q3 and q4 last year leaning into quality trying to delineate what stocks are benefits from the fed put. i have been talking on the program this morning about the fed put being further out of the money. if you want to be invested in the companies that price is
reflective of earnings and earnings growth. we have been adding positions in quality dividend growers these are companies that have strong balance sheets. they have strong earnings that they have been consistently growing. they have strong dividend growth adding the benefit to the portfolio of the yield that is not sensitive to duration. the part of the equity market. you can see that to the year-to-date performance this is off 6% with the broad base market is high single digits that is an area we continue to add exposure >> kristin and jose, thank you so both of you i think this volatility will continue we could use your advice as we continue to see the moves. thank you. >> thank you >> thank you okay coming up, tractor supply reporting better than expected earnings and hiking dividends. we talk to the company's ceo to breakdown the numbers and what it means for the larger economy in just a moment
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welcome back to "squawk box. home improvement retail tractor supply beating estimates for the top and bottom line for the latest quarter all of it coming ahead of news of the investor day. good morning to you, courtney. >> hi, good morning, andrew. it's good to see you yeah, i'm joined this morning by the ceo of tractor supply. it's a big day for your company with your earnings just out wrapping up the career but also looking ahead many years down the road here in just a few hours with investors one point really stood out to me you say that tractor supply is substantially stronger now than before the pandemic. how is that possible with inflation at the levels that we're seeing and the supply chain still very constrained >> hey, courtney, and thank you for having me on the show this morning. it's good to see you and first off i'd like tathank our 46,000 team members for the grit and determination that
they've demonstrated over the last 22 months and across a myriad of challenges and, you know, tractor supply has always been a consistent demand driven needs-based business we've got 30 consecutive years of positive revenue growth and during the downturn we benefitted from numerous structural trends. in addition, we've been investing in our business over the last two years, and as we emerge over the last 22 months our business has never been stronger >> you've talked before about sort of the migration pattern of some consumers this rural revitalization that's been led by millennials in some cases fleeing maybe bigger cities for more rural communities during the pandemic. is that something that y you foresee continuing or is that sort of done? now we're in this new normal and tractor supply needs to continue
to serve the consumers who are there? >> i certainly anticipate it'll continue perhaps just to a lesser degree. we've got the millennial generation, the largest generation of the country that's postponed many of the normal generational trends over the first maybe five years of their adulthood, and i think we're seeing them adopt those trends now, and that includes household formation, includes pet ownership, includes getting married, includes having kids, purchasing a house if you look at the home market right now with less than 900,000 homes on the market, new home sales at 1.6, 1.7 million annualized i think we're going to see this trend for quite some time it's not to say cities are dying. you've got a whole other generation of gen-z graduating from college and moving to the urban environments and moving in that way but i think you're seeing the millennial generation finally
beginning to embrace kind of traditional generational norms that includes moving out the suburbs, ex-urbans and rural and in many cases the lifestyles they've lived in the urban organic, recycling really fits that lifestyle really well plus home prices are much more affordable in ex-urban and rural. and you're seeing a strong move out there. we've seen great retention rates with those customers and we expect to continue to see growth on the new customer side and continued retention side as we move forward >> my cnbc counterpart does report lowes is looking to pilot putting petco shops. you also own a pet sense chain
is this going to be a competitive threat for tractor supply in. >> tractor supply was founded in 1938 we're an 84-year-old business. it's an ever changing environment. i did take note of that today. we compete across a broad number of companies we don't compete just in the pet category or just in the animal category or tools or garden. we compete really as a lifestyle retailer, and we're meeting all the needs of the rural lifestyle and that competition comes from us in many ways. >> hal lawton, ceo of tractor supply, thank you so much for joining us there's a lot more we can say but i know you've got a big day ahead and the hour is approaching shortly. >> love that place
i love all the clothes >> are you a car heart fan, joe? car heart is pretty popular with millennials especially these days >> are you calling me a millennial that's nice, courtney. i think i might be a couple millennials. at least 1 1/2 >> i'm an elder millennial myself >> i like those shirts that they're not -- i like them i don't know if they like me anyway, coming up earnings alert. we are waiting for results from mcconlds and comcast those numbers are straight ahead.
futures and global markets under pressure as the fed gets set to raise rates we'll get you up to speed on everything you need to know ahead of today's trading session. investors unimpressed with tesla and its record fourth quarter results as elon musk lays out the challenges for the company in the year ahead. and earnings from cnbc's parent company comcast and dow component mcdonald's we've got the numbers and the market reaction. the second hour of "squawk box" begins right now
>> good morning and welcome back to "squawk box" right here on cnbc going to show u.s. equity futures real quick but we've got earnings coming in as we speak dow up 6 points, s&p 500 looking to open up just marginally but the parent company of this very network >> bells and whises going off all around me right now. comcast out with numbers, the parent of nbc universal and cnbc earned an adjusted 77 cents a share for the fourth quarter comcast also raising its dividend by 8% to 27 cents a share, increasing its stock buy back program by $10 billion. the company says on almost every
metric comcast was able to outperform expectations. some interesting comments from the company about what -- you know, adding customers in certain areas like broadband net additions 1.34 million that's for the fiscal year, and 212,000 in the fourth quarter. that's the highest level of customer retention on record for a fourth quarter and then they point out that at&t added a total of 60k broadband customers, verizon 236,000 in all of 2021 together just 296,000 versus 1.3 for comcast. the video turn does continue and i saw the numbers 300,000 plus
>> 312 >> but comcast saying we're not chasing unprofitable business but you keep adding it up 300, 400,000 you do see why people say cord cutting is something that's still happening and maybe even accelerating to some extent, whether it's with all the diversified businesses comcast has, whether that's a major concern, that's up to some i guess discussion the theme parks kind of interesting. you guys see that? all-time but still, you know -- >> most profitable fourth quarter on record for the theme park strong domestic attendance and spending per guest both in the united states and in japan just talking about globally how consumers do have things to spend on things they want to spend it on. they did have new attractions with super nintendo world in japan and orlando pets in
hollywood. >> they don't break out butter beer and don't break out squawk unfortunately. >> exactly the two most biggest drivers of a lot of this. >> the other thing i was going to mention was peacock because that's been something i think a lot of investors have been focused on the good news is they added 25 million subscribers, the less good news, at least, and by the way this is the news every streaming company is dealing with is that it is impacting the adjusted number, and that's clear. you're looking at results 335 million in revenue, adjusted 559 related to peacock i think a lot of people are going to be looking at what the ininv investment in peacock looks like when you start to look out, though, over the next couple of quarters and some of the content i believe starts to come onto the service universal films and other things that have been held
back so far you might start to have a good base there i know that's the optimistic view >> that's the monthly active accounts at year end >> i'm sorry monthly active accounts. >> you can see the stock right now, though. up >> yeah, it got hit yesterday and i think there was an upgrade from the day before from somebody peacock i'm on a lot because of yellow stone i'm done with season 3 do i need to get paramount plus or something it really does matter what you're showing i mean, i did not -- that was not on my bucket list i've got to get paramount, but now i've got to get poweraramount >> i will say i'm not ever good about dropping anything. >> there's companies that help you drop things you don't know you still have
classic. >> mcdonald's also out with results and kate rogers joins us right now with how the dow component performed for the quarter as well. >> becky, good morning it was a mixed quarter for mcdonald's, eps coming in below expectations at $2.23 adjusted revenues basically coming in line with estimates at $6.0 billion in the u.s. coms increased 7.5%. on a two year basis compared to pre-pandemic levels they were up 14%. mcdonald's pointing to its menu and marketing promotions including the mcrib and crispy chicken sandwiches as well as the loyalty program for this quarter. what's unclear right now is how traffic is fairing
global coms up nearly a 2 percentage up beat global comes up 10% on a two-year basis international market coms up that's also a beat with some offset there the digital business continuing to grow here exceeding $18 billion system wide for the full year in 2021 and that is up from 2020 back over to you, becky. >> it looks like, again, you kind of talked a bit about this, but it looks like they're able to maybe raise prices and have those prices stick based on how they're doing some of these promotions so i guess mcrib is more expensive. >> yeah, that's right. it looks like they're doing it on certain items consumers may be willing to pay a bit more because mcconlds is a lower
price point than some of the other qsr names like chipotle. so much of the business is drive-thru, so we're not quite clear if that's really negatively impacting any of these trends but it looks like the moment consumers are willing to pay more there >> stock is off by about 1.6%. kate, thank you. >> thank you >> we're going to get over to dom chu right now. >> you mentioned the earning results from comcast and also mcconlds with kate just now. first of all on the transportation side of things sout sout southwest airlines it's about a $26 billion market airline united airlines is down just
0.5% right now it's been fractionally higher, fractionally lower southwest comes out with earnings and revenues that both come in better than analyst estimates on a consensus basis it does, though, see some pressures on cost continuing in 2022 it also may be not surprisingly updated its forecast and upped its forecast for fuel costs in the coming quarter as well but southwest did point to some better trends in leisure travel at least around the holidays and a continued pick up in business travel, so hopefully those trends stay in place southwest airlines down fractionally in the premarket trade. another one down last night is tesla. inintraday trade and premarket trade has been fairly volatile so far this despite the electric vehicle giant coming out with profits and revenues that both topped expectations. the company did say and elon musk did say they see continued pressure on some of their supply chain issues coming up and affecting their production in
the coming years so tesla shares down by about 0.75%. we're down nearly a decent amount in terms of a $1.2 billion market. so tesla shares in focus and one other place to watch is netflix, a company that's lost almost half of its market value since the record highs we saw this past fall this after perching square and billionaire investor bill acumen so they've purchased over 3.1 million shares of the company and makes them a top 20 shareholder in netflix after the company lost a lot of its market value on subscriber growth concerns maybe some under appreciation there for future growth. anyway, that's got those shares up by 4.5% right now southwest, tesla all making
headlines this morning coming up the feds signaling rate hikes the futures are okay nasdaq up 60, s&p gaining 10 before we go, look at blackstone the investment firm just reporting and the results $1.71 a share well above estimates and we've got that stock up 4% president and coo john gray is going to join us in the next hour to talk abouthat d tan other things we'll be right back. what happens when we welcome change? we can transform our workforce overnight out of convenience, or necessity. we can explore uncharted waters,
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saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business: powering possibilities. it is not possible to predict with much confidence exactly what path our policy rate isgoing to prove appropriate. so at this time we haven't made any decisions about the path of policy and i stress again we'll be humble and nimble. we're going to have to navigate cross currents and actually two-sided risks now. >> that was fed chair jay powell at yesterday's meeting joining us now to talk about the biggest highlights and time line of a rate hike is peter, also a cnbc contributor and peter, i've been reading your notes and you are very critical, i believe, of mr. powell what is going on here?
>> well, it's just a very scatter shot approach to monetary policy. they're very quick to throw money from the sky in ease obviously during stressful times. and they are very, very slow and way overstay their welcome on that easing. so here you are with the most note worthy thing from powell yesterday is that they are going to be double tightening again. and remember double tightening is what they did in 2018 when they simultaneously shrank is balance sheet and raised interest rates and here we are again. qe was specifically meant to ease financial conditions, in other words raise stock prices, tighten credit spreads now we have the end of qe and now qt that tightens conditions >> do you believe this is an
effort to quote-unquote normalize the situation or this is an actual effort to tamp down demand given the supply issues in this country both in terms of actual supply chips and products and what not but also labor. >> well, it's definitely a combination. and, you know, the supply and balances i know the fed likes to say it's mostly on the supply side but we see the fed and fiscal policy have full pedal to the metal on the demand side yes, by tampering down demand. look at the housing market where prices are up almost 20% year over year. if mortgage rates were 4% instead of 3%, if the feddidn' cut rates as much as they did and leave them there for so long housing prices probably wouldn't have been up that much so, yes, they need to -- >> how much do you think jay
powell cares about what the stock market is saying to him or not. >> he is history is focusing on financial conditions that's the third mandate so while yesterday he needs to talk tough and deal with inflation because it's running at 7% and they still have rates of 0 and saying i'm not going to worry yet about financial conditions but if the s&p falls a lot, high yield credit spreads he'll for sure focus on it and that will lead him to a fork in the road. which path will he take? will he try to defend markets or continue on a path to tamp down inflation? that's going to be an interesting decision >> and what do you think the answer is? >> i think, unfortunately, initially they'll focus on where the s&p is and where credit spreads is -- credit spreads are. >> and so look to march. how many times do you really think he's going to hike this
year >> i think he wants to get at least two under his belt so he'll hike in march, hike in may and then they'll commiserate again, see where the yield curve is which is now flattening and based on that they'll calibrate when do we start qt and mix that in. now they're left with a situation where there are characteristics of the economy right now very late cycle with very low unemployment rate, with a lot of stresses we're seeing in parts of the economy, with saving rates now falling this is not the first and second end of the recovery. >> fair enough peter, always good to see you and get your perspective on all of it. we'll see what he does in march and i'm sure we'll talk between now and then
thanks still to come this morning, neil young fans want to search for the heart of gold somewhere other than spotify and tesla beating both the top and bottom lines elon musk giving a product road map saying the company would not be releasing any new models this year >> and then ceos meeting with president biden yesterday to talk about the economy, supply chain and his economic agenda. we will speak to the ceo of seaman's u.s. who attended that meeting. "squawk box" will be right back. >> time now for today's aflac trivia question. what is the most expensive dog breed in the world the answer when cnbc's "squawk box" continues when you feel right, you coach right. i know that's right! prime never believed in double coverage,
both and spotify chose rogan the streaming giant granting neil young's wishes and has taken down his entire music library from the platform after the rock and roll star called out spotify. and podcast stars like joe rogan for spreading disinformation about covid-19 vaccines. young had boasted over 6 million monthly listeners on the service. joining us now sarah fisher, axios media reporter a lot of high flung intentions being ascribed to both sides as well as just down and dirty profit mode and i think probably a bit of both, sarah i mean, spotify, they paid joe rogan a lot of money it's very profitable for spotify. but they could certainly say artists like rogan have a first amendment protection and we're standing up for the first amendment. and then i could see neil young
saying, well, i have a first amendment right as well and the free markets for me means i don't want you to take my music down so maybe the free market is working. i'm sure you have some comments and color on how to look at this >> yeah, i think it is working i think it worked exactly right. neil young makes this demand i want you to take my music down, spotify complies and that's the end of it. i think the big picture here is whether other artists follow neil young and then it could become a business problem for spotify. if you take a look at the numbers here the issue is that joe rogan is by far the most strength podcaster on the platform podcast is good for spotify because it's good for advertising. by comparison i think they'd probably be fine with neil young taking a hike if it means they can keep their most star business player on the platform. the question that i have is where is spotify going to draw the line in the future they said in a statement yesterday they took down 20,000 podcasts related to covid-19
misinformation since the start of the pandemic. well, why aren't you taking down joe rogan's? i think the answer is they're paying $100 million in a multmu multi-year contract for joe rogan. but they're not going to be able to waver for long. >> do you think neil young expected this outcome -- i mean the woke virtue signaling at twitter are twitter happy. i think neil was like they'll listen to me and take it down, do you think he was surprised? >> it was definitely an ultimatum and he had to have been willing to ultimately have his music come down. you don't issue an ultimatum
like that without the expectation. he was absolutely going to make a splash, and he knew that i think the question is does he think some of his colleagues especially older artists with backlog catalogs who don't need the branding anymore are going to follow him. i actually think those are conversations he's having right now with a bunch of his peers. >> sarah, the other question given your affiliation with axios, how does washington you think react to this? we've had conversations over the years about section 230, platforms, misinformation and the like and this is a tricky one >> yeah, i think washington has not caught up to audio they're focused so much right now on video and texts on, on facebook and youtube they've not talked a lot about misinformation on spotify and youtube. you know who has, the medical community. so i think they're going to
start paying a lot more attention right now. in terms how spotify plays into section 230. section 230 right now the debate is around algorithmic distribution, not necessarily take something down or leave something up but how you amplify it i do expect at the end of this battle washington is going to be talking a lot more about joe rogan, but it's not going to be, you know, in spotify affiliation, not going to be in the same realm of a conversation as facebook and google and twitter. >> is this so unique, sarah, that we shouldn't think it's a bad precedent for artists? i mean, you know, artists are artists, and sometimes some of their views are kind of mainstream sometimes they're just wackoes if they decide -- if a young artist decide who knows what the cost could be do this or you're not going to beable to play my music, i don't want to say just
play and don't talk, but a lot of people do say that. i just like your music i don't care about, you know, your personal opinions about things but i guess everybody's got a right to that. >> yeah. i think the precedent it sets is that for the first timei think spotify has had to make a serious decision on this as it pertains to the music side of its platforms and the podcasting side of its platform that has big advertising potential. they probably had conversations with them behind the scenes bullet ultimate lay they decided not to concede they have set their own precedent here, their own line moving forward i think you might see other artists and other podcasters start to make these kinds of demand on spotify and as they make more and more of these calls you're going to see how their line shifts. i have not seen that much of a decision making progress in spotify yet. >> if it happens with the beebs
i'm going to have to take a stand, of course >> i'll support. >> obviously because that's going to be totally unacceptable as a belieber. that goes back to the monkeys and we're losing them sadly. sarah, thank you and i'm trying to think of one artist where i really would care i don't know if i can come up with one maybe taylor swift still to come reports of stocking and misuse of apple air tags prompting the company to release new safety guidelines, but is the technology causing more harm than good? john is going to weigh in. i bet you he's got both sides covered plus much more on wall street's wild week and yesterday's comments from the feds stay tuned "squawk box" will be right back.
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this is bob minetti and his wife wendy. in 2016, he was diagnosed with pancreatic cancer. bob participated in a clinical trial that included cutting-edge radiation therapy and surgery. he's been in remission since completion. i am so glad i learned what was possible for me stand up to cancer and lustgarten foundation are working together to make every person diagnosed with pancreatic cancer a long-term survivor. visit pancreatic cancer collective.org. welcome back to "squawk box. apple releasing a new personal safety user guide this week as reports mount that stalkers and thieves using gadgets like
apple's air tags to track people without their knowledge. is the tech worth the trouble? that's the question of the morning. john ford is here to weigh in. >> finders keepersturn into stalkers and creepers really fast and this tech isn't worth it often women are discovering they're being electronicically stalked using air tags a swimsuit model said a stranger slipped an air tag into her coat in western new york. she didn't realize it until hours later. a man who kidnapped his ex-girlfriend taped one to her bumper before he kidnapped her i think you can understand how dangerous this is. this is like a tracking device from action movies but in real life and they cost $29 each.
apple is uniquely positioned to offer this kind of tracking that follows someone far away because it relies on pings from other ubiquitous iphones to look at the tracker, and that's why apple really should thought this down, andrew >> okay, that's scary, and i appreciate that. but how much scarier is it than digital tracking >> well, on the other hand, this is scary but at least apple is providing ways to detect if you're being tracked think of it this way if an air tag is near you for long enough your iphone tells you an air tag that isn't registered to you seems to be following you around are there more steps apple can take to thwart stalkers, sure. if you want to track a moving item far you should have to disclose extra information about who you are and why you're using the tracking here's the sad truth you're being tracked already by companies, not vinyls.
google is some other companies with apps that track location are watching where you physically go. ad networks are watching where you go online. and most of us just shrug that off because it's on a screen, doesn't feel real, but it is here's what we should expect whether it's digital or physical we should have the right to know we're being tracked and the ability to turn it off just like apple is doing with these air tag. >> okay, this is a private investigator's dream if you think about it shouldn't there be some kind of legislation or something in terms of the same way legislation about recording phone calls? >> yeah, i think that's exactly right. when you look at the police reports and dealings with these kinds of things people are charged with very minor crimes for actually stalking and tracking people digitally because they haven't necessarily physically done anything yet that seems especially in this era like there could be some kind of new law to deter this sort of thing and to make sure
that people have a pretty serious record if they've done it >> is there any way technically that you've come up with that would make this whole thing work a little bit better? >> well, here's the struggle i think is the very same issues where you'd want to be able to track your car or, you know, a bag if somebody stole it, right, slipping an air tag into it, the same issue that you have with stalkers doing it to somebody else that was my little brainchild my idea if you're tracking something that's far away from you that's moving, right, maybe you should have to give apple more information so that if that person then complains, hey, i'm being stalked, they have that, you know, extra information in hand to hand over if need be now, of course, if you make it too easy to thwart then as soon as a thief steals something you've got an air tag on they're going to track they're being tracked and shut it down i think it's an information
problem on the technology side and a legal problem. >> we've got to go you're hearing the music, but just so we're clear this is an apple issue but also there's products like tile and other products similar out there that haven't gained the same type of traction >> there's not a bunch of iphones pinging them and telling everywhere you're stopping >> it is a longer discussion and we'll be debating i'm sure both hands in this one for quite some time becky? when we come back tesla beating on both the top and bottom lines but saying supply chain issues could persist through 2022 we're going to talk about what that means andthe company's outlook after this dow futures now down about by about 81 points. mcdonald's had weaker than expected numbers s&p futures down by about 2. the nasdaq, though, indicated up by 26.
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is john mcneil he's a ceo and former tesla sales president. and john, you know the situation pretty well. you know the company pretty well the earnings may not be what people are focused on because the numbers were better than expected but you did have elon musk talking about trouble with supply chains specifically getting more chips, how that's been an issue of every auto maker. tesla not excluded from that and that's going to impact how they rollout now vehicles, meaning they're not going to put out any new models this year >> despite the hand waving around the supply chain and the issues around chips, they've delivered a fantastic quarter in a year as you said they beat on revenue margins, bet on eps, deliveries. they put up an 87% annual growth rate in hardway. this is not adding servers like software this is a very hard work of adding factory capacity and supply chain capacity.
and while their peers like gm and ford struggled in 2022 or 21 with growing capacity issues, they're growing revenues and as they talked about their reason for not releasing new models it was due to a focus on two other things driving and the optimist robot which they believe is going to increase their capacity >> let's talk about driving first. it is something that's come under fire in a lot of quarters specifically california dmv saying they're concerned with the use of the term. but they have 6,000 beta subscribers signing up for this and testing it outright now. what are some of the pros and cons when it comes down to it? >> i think the full self-driving focus was a bit of a surprise. it was announced elon was going to be on the call to talk about future product and product road map and i think people myself included were expecting a new
update on releases instead he was talking about driving and how that's going to change des lu's economics. and this isn't well-known, but ride share companies calculate that a fully autonomous robo taxi may be worth $250,000 a year, and that i think is what elon was pointing to if tesla with can extract that kind of value, that completely changes the economics of the car business and it won't just be tesla, it's any that can produce a self-driving vehicle at scale. as you mentioned this is a very, very difficult technology to bring to market. it feels like we've been a year away for about ten years from realizing the benefits of full self-driving >> i think the key is it's not full self-driving right now. it does a lot, makes the car much safer, but as the california dmv points out you can't tell people it's full self-driving while you're also telling them it's not really and they shouldn't take their hands off the wheel or eyes off and do
some of the things they've been videotaped doing on roads like sleeping in the back seat, reading, not paying attention. >> yeah, the technology is not ready for that yet >> but that kind of gets to the issue. how long off do you think it is? obviously i would say people are safer using the assistance programs they have ones not quite as good as the other companies producing some of these things more help is probably better when do we actually get to the point it is full self-driving? >> that's the billion dollar question, and i think, you know, as you mention these automated driver assistance programs or safety programs are helpful. tesla's program is very good and improves all the time. but it still seems like we're several years away this is more a compute problem
than it is a software problem in that the chips aren't fast enough yet to make the calculations, to make the decisions in realtime that you need to make to really replace a human driver >> so why don't you just call it something else and stop irritating the regulators? >> i think that is the topic now in california and maybe in other states as well >> what do you see when you look ahead to the robot, the human robot? what does that mean? do you think it's a good idea to kind of be expanding in that direction versus bringing out new models >> i think, you know, right now it may be a profit story with the robot. tesla's profit is at the gross margin level is twice gm and ford's already their gross margins at tesla are approaching 30% whereas gm and ford are already 14% and that's approaching apple gross margins which are at 38%
with that kind of profit margin advantage already ford and gm have to produce twice the number of cars to produce the same cash flow as tesla. if tesla can further automate its production in other tasks in the factory in their service system, they can expand that profit margin. they're doing that by automating the factories, changing the ways they're producing cars and really relying on software software carries a very high margin and becoming a bigger slice of revenue as is insurance. and that's a huge benefit versus competition. and so with both the way they're able to manage the supply chain and the -- their advantage in margins, they're really starting to pull away from competition. >> and maybe that's part of the problem, too maybe you don't call it full self-driving or call tesla a car company because it's a lot more than that. >> that's right. it's clearly a technology company and a very advanced
manufacturer it was surprising over the last few days to hear the ceo of vw say tesla is the bench mark of manufacturing. they've clearly overcome that, and they're much more than a car company now. >> so how do you kind of sort out the winners and the losers when it comes to the ev market alone? what does it take to be somebody who's going to survive any potential shakeout >> i think there might be a shakeout coming because tesla appears to be pulling away from competition, but there are others doing a great job, too. "a" in a long-term perspective there is enormous growth here. evs are only 3% of car sales now. as they become close to 50% some of these companies can become 15 times their current size but to win you have to have three things you have to have an attractive product, ability to produce and a quality product that has to work gm right now if you look at
them, they have the ability to produce but there's real questions about the attractiveness of their product and really their equality. they had to recall all their bolts last year because the battery tech last year didn't work you look at ford, ford seems to have all three sorted out. they've got attractive product, reel a solid production and quality. they sold over 29,000 mustang es, becoming number two to tesla. and ford has $40 billion of cash on hand, so they likely will be at the front of this race maybe right behind tesla if you flip to somebody like rivian, it's got attractive product but production is super hard and amazon drivers are reportedly having issues, having to trade battery range for
running things hike air-conditioning so amazon is hedging with other manufacturers. >> yeah, thanks for giving us the run through on all of this it's great to see you this morning. >> great to see you, too, becky. thank you. coming up president biden meeting with ceos some yesterday to promote his stalled build back better bill got to change that name. it's too many bs and to talk about the state of the economy we'll hear from one of those ceos that were in the meeting yesterday. that's next. and a few stocks to watch, comcast parent of nbc universal and cnbc earn an adjusted 77 cents a share for the fourth quarter, 4 cents above estimates. mcdonald's reporting per share they were just below the earnings expectations at an adjusted 223 analysts were looking for 234. that stock is down 2%. "squawk box" will be right back.
the move to try to push his agenda forward president biden invited ten major u.s. company ceos to join him at the white house. the president focused on ways his build back better plan would help the u.s. economy and lower inflation in his view in the long-term. joining us now with the details of the meeting is president and ceo of seamans u.s., attended the meeting at the white house,
and over the years i've seen a lot of meetings at the white house, and it's funny the way depending on who the president is at the time the ceos are going to get flack one way or another from someone out there although, everyone should go and listen to what the president has to say without having a preedetermined idea of whether they're going to be for it or against it when you walked of there, barbara, were you sold did he convince you this is something we should do >> well, joe, you may be surprised to hear that actually wasn't the way the president ran the meeting. he actually flipped around and asked us what's important to us. so it was a real privilege to be there with my colleagues and then to represent the 40,000 employees and 24,000 suppliers of siemens u.s. really talking about the things important to us it was an opportunity for us to share with the administration our belief that this is a decade
for climate action and that siemens is ready for the technology that will help us make the transition, help us bring manufacturing back to the u.s., and yes, help us bring high-speed rail here >> there was some business groups that, you know, were positive about the meeting there were others that pointed out some other provisions of the bill they see would be head winds for business, whether it's the corporate taxes or some of the other provisions in the original build back better plan may be small business, origination could be hurt which things do you think would it in your view you'd pass the bill as it was or you'd pick the parts that you think would be favorable not just to siemens u.s. but corporate america in general? >> i think the president has been talking to americans about the fact there are pieces of this more likely to pass in
this -- basically in the congress that we have today and what we anticipate for the future so i believe this is one of the primary reasons for talking is to say what are the most important things to pass right now. the president is absolutely committed to his full agenda but what i heard and again what i voiced is that we really think the climate provisions are some of the most important. and the provisions that deal with building the new infrastructure especially for rural america, bringing folks online with both power and high-speed communications so they can participate in the digital economy, these are the things that if we invest now they will pay dividends for americans for decades to come. >> that gets the blanket overall push back also that you hear from certain sectors is that the economy, 3.9% unemployment, the fed, obviously, it wants to remove some of the stimulus
because it doesn't think it's necessary. there are a lot of people saying we've on a fiscal side already outspent and done more than we should have in the past and there's no need for additional stimulus you buy the notion that this is going to be not only not inflationary but it's actually going to bring -- you buy into that line from the biden administration, it's going to help inflation in the future years. i don't know a lot of people that just nod when they hear that from the administration >> the president shared, of course, the analysis by nobel lauriates that indeed it is anti-inflationary. what we do recognize is that there are two factors that are really important to business right now. one is in the tax code to make sure that we're creating a level playing field with the rest of the world. we want to see investments in research and development we want to see investments that will allow us to continue to innovate the second thing is everyone is
very clear on the fact that we need a work force that is prepared for the digital future that we're all creating. so i think that any policies here that help us advance our work force get more people back to work, and frankly, we need people to work in order to generate the results that we're counting on. so i would say it was a very common theme on the policy >> i that. not all nobel laureates i can give you a joe stiglets and paul crewman and people that -- you're not even in the same sport less the same ballpark >> i understand. >> not a real nobel prize anyway anyway that's neither here nor there. thanks for coming on, barbara.
good morning stock futures swinging from positive and negative over the past few hours futures are moving quickly the dow coming off yet another midday swing this time prompted by fed signals on interest rates. meantime tesla shares volatile after the ev giant reporting fourth quarter earnings. the good news record yearly profits. the bad news, ongoing supply chain issues and we're now about to get our first look at fourth quarter growth new gdp in just a few minutes away as the final hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square
i'm joe kernen along with becky quick and andrew "hercules" sorcan >> i'll take what i can get. >> he just want you to call him adonis >> i know what he wants. adonis, tell us the u.s. equity futures. >> honestly calling me adonis is like calling a bald guy curly. u.s. equity futures at this hour as you can see now in the green. i think we're like a salve, a squawk salve for what ails you >> dom chu alerted me to it. >> he's up in the middle of the night. with golf gill because he's always out there
treasury yields we can see at this point did move a little bit yesterday from some of the comments from the chairman, 1.83%. we're going to talk a little more about that later in what was said >> the two-year at 1.2 so the yield picking up there. >> that's what they were talking about yesterday, seth, belly under performance, belly of the curve that was in the notes. and as i said i get accused by that by people at the gym, belly under performance. it does. >> it's the hardest thing to work on with age >> it is let's get you caught up on some of the stories we've been talking about this morning first up nbc universal and cnbc parent comcast beating analyst estimates on both the top and bottom lines the company announced an 8% dividend hike, the stock at this point down by about 2% and mcdonalds, the dow component also out with fourth quarter
results. the company missed streak profit and revenue expectations they weren't able to rise prices as quickly as their expenses were going up. that's part of the story with inflation trying to figure out who has pricing power, who doesn't. right now that component down by about 1.75 and netflix up on news bill acerman's firm bought 3 million shares he said in a tweet it created what he thought was an attractive buying opportunity. and that stock up by about 4.5%. and new this hour alphabet's google cloud division is gearing up to win business in the block chain as head of strategy at google, google cloud telling cnbc the company plans to hire a slew of people with block chain expertise. if it's successful this effort
would help to diversify google's revenue streams. it's also possible google cloud could accept payments in crypto in the future. we'll see. back to the broader markets because we are coming off another busy session driven by the fed's messaging. mike joins us with his take on where things stand right now >> yeah, andrew, the s&p 500 lost a 2% rally as put the market on the up side on a potential rate hike path was really more than the fed thinking trying to soothe market nerves however, we still are kind of within this zone we've been trading enfor a few days right now. it was the lowest close since october. not a lot of lift from there,
but also if you wantto take a look at a five-day version of the s&p 500 index fund we are above monday's intraday close. sometimes you have a lot of these kind of whipsaws and reinterpretations of what the fed does and the morning after sometimes there's another rethink of saying maybe we can absorb this. here was that monday low, and during that sell-off you really had a tremendous amount of concentrated liquidation, massive volumes. a lot of people saying some of the sentiment surveys also showing profound negativeness among professionals and retail investors. all that to the good but still a bit touch and go because you always need some kind of a retest or even worse than that because we are now in a situation where the investors have to start thinking about whether the fed is going to shoot s into this late cycle mode that's what the yield curve is at least hinting at. take a look at some sectors that really support that notion energy is operating on its own
dynamics obviously the supply demand story is supportive right there, and geopolitics everything is going its way. other cyclical sectors, transports and home builders they're actually feeling the brunt of this idea we have consumer fatigue as well as interest rate sensitivity working against us they're not falling apart but definitely a little challenged right now, and you have to see it perhaps we get a bit of a rerotation where people say, look, we're going to reaccelerate this economy as we come out of omicron. a lot of push complicating the tactical situation, andrew >> okay. we will -- we're going to be watching we've been talking about tesla all morning. i know you're always watching tesla. you got a take on what's going on here? we're about to go to phil lebeau here >> what i found with tesla its most dramatic moves happened outside quarterly earnings windows. we know production going in. it's not so much about cash flow today or tomorrow.
it's 100 times this year's earnings or 90 times it's not so finally tuned to how the quarterly performance is but the sentiment what comes next, tell me about the next thing you're going to wow the world with, i think that's what drives the short-term as well which obviously have been in reteat the past few weeks >> thanks so much, man joe? >> now let's officially get to tesla, the second mega-cap report this earnings season. ev maker and so much more. >> it is, joe. and i think mike's right it's so much of what happens with tesla is the anticipation of what's next and when you look at 2022, elon musk during the conference call last night said, look, they're going to be constrained due to some supply chain issues here he is during the conference call >> the 2022 supply chain will continue to be fundamental
output across all factories. the shortage while better than last year is still an issue. >> okay, so what are analysts expecting from tesla in terms of annual sales they're expected to hit almost 1.5 million, and their market share, look, they sell three out of every four evs in the u.s they did last year that's likely not going to change a whole lot in 2022 remember you've got the tesla factory building teslas but not yet building them. they're finalizing those vehicles we expect production to begin in earnest and deliveries to come out of there relatively soon, and then there is some question of what will they be concentrating on in the next year they gave us a hint of this a few months ago remember this when they had a guy in a morph suit come up, and people at the time thought this a nice little gimmick, you're trying to attract people to work on ai.
oh, no, elon musk says the optimist humanoid robot is a priority >> it's a priority of products i think -- i think actually the most important part is actually the optimist humanoid robot. this i think has the potential to be more significant. >> more significant than the vehicle business over time by the way, they plan on using that humanoid robot if they can get it functioning to a degree to help out in the factories where they can grow, make it useful and greater efficiency. the automotive gross margins when you talk about efficiency, guys, in terms of driving profitability 29.2% in the fourth quarter, better than people were expecting.
so let's see what happens with tesla shares today in terms of conference calls and i've been on them for years, this was interesting but it was not one of those where people came away going, wow, guess what tesla is doing this was more of a case f, okay, great. all right, thank you thanks, phil just working on something we'll do in about five minutes it should be good. talk about some of the comments on what the fed had to say yesterday. kind of interesting versus what he was saying last summer. also when we come back three key economic data releases including the first look at the fourth quarter gdp plus much more on the violent market swings we've seen every day this week including this morning.
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last hour we had a quick conversation with legendary -- legendary, we use that a lot maybe uber legendary, he pointed out last fall i read something he sent me on the air when the ten year was at 1.36 and everyone was aying, well, bond prices are saying this, bond prices are saying that, we're trying to figure out and he said at that time the bond market was saying nothing, and he wasn't predicting highe yields he was merely saying there was no believable message from the bond market due to all the fed manipulation what i find so exciting about yesterday is if the fed now behaves as chairman powell suggested they will in the months ahead we can now heed the message of the bond market again no matter what it may be and pre the tampering period the
bond market and yield curve were certainly much better predictors of future economic trends and 95% of economists. the dropping of forward guidance will give the fed the flexibility to follow the data in a timely manner slaungz the fed follows through on this i will once again be listening to the bond market in the months ahead as i did in my first 35 years in the business i initially got excited, becky, because you know what it means it could be -- >> the bond vigilantes is that what you were going to say ini thought the same thing this is huge news for him to say they're back in the business, you can watch the market because we've always said the bond market is smarter than the stock market, they figure it out more quickly but he's right i hadn't really put any of this together it's been crowded out by just the fed's huge presence in the market you couldn't tell what investors in the bond market were thinking in mass numbers one way or
another. if this is the case it's pretty important, and we were talking before what that means in terms of the yield curve flattening, the two year going up, the ten year coming down ever so slightly not a big deal yet if you get to the point where the two year yields more than the ten year that's a pretty sure session >> there have been others, our friend out in chicago rick santelli that talks about the price discovery. you don't have good price discovery if the markets do what they don't want to do. how do you get price discovery when the fed is buying so much every month? and if you've got someone sitting there waiting all the time then how do you know what's real and what's memorex. because we're old. >> we used to use film
everything comes back. people are buying vinyl records and cassette tapes again and now we're going to listen to the fed again -- i'm sorry listen to bond market again. >> i want to say i saw a cover not too long ago about the death of the bond vigilantes >> what's scary about that, if they really did come back and if things really do get pretty bad, they can be pretty nasty i mean we could see some dislocations that the equity markets might not like if the bond vigilante came back in earnest. >> june 9, 2021. >> let's talk to somebody right now who spends a lot of time focused on the price of debt, blackstone out with fourth quarter earnings just a short time ago the private equity giant posting distributable earnings per share of $1.71 compared to consensus estimate and record cash inflow
is helping there so far take a look at this, blackstone stock has underperformed the market, but nonetheless we're going to talk about the market, the results and a lot of recent deals. jon gray is here jon, good morning to you i want to get to this conversation about inflation is what jay powell is doing but let's talk about the earnings report first because it seems like a positive one in a very big way, but then you look at where the stock is and there's a little bit of a disconnect and i'm curious what you think is going on. >> well, andrew, it's great to be here. i'll start with the results, which were amazing for us. it was the best quarter in our history, caps our best year. we had $155 billion worth of in-flows put that in context, that would be a top ten alternatives firm by itself.
our aum was up 42% in the last year, and it's being driven by strong results for our customers. that's the most important thing, best appreciation in our history across a bunch of verticals. and then also we're broadening our platform we're serving retail and insurance and tell our clients reinsurance are now 49% of our aum and that's leading to record financial investments you saw. the question on the stock, the way i look at that is the market is just nervous generally, nervous about asset prices, interest rates, inflation. we're focusing on executing. we've got a ton of momentum. we feel really good particularly how we positioned our portfolio, we think the stock will take care of itself as we continue to deliver. >> in terms of what you do next, so let's go to inflation here because just in terms of the operating businesses but also
what you think the fed is going to do because it may change i imagine your outlook in terms of what you're going to buy and the metrics around that. >> well, if you step back thinking about the macro, what's happening now we're in a really interesting moment we're seeing both a demand shock to the economy and a supply shock. on the demand side, you know, the government, fiscal, monetary authorities put $10 trillion into the system, and that's driven a lot of spending, housing, autos, travel, people and companies have a lot of money. at the same time we've got this supply shock going on. so you've got some of the supply chain challenges, longer term structural shortages in things like housing and labor and energy and all of that's leading to this elevated level of inflation. and so when i think about it from an economics standpoint, if you thought about inflation on
this and growth here we're in that upper right-hand corner we're in a higher inflationary environment. the fed needs to tighten the growth in our companies remains remarkably strong. as we think about investing we're thinking about that environment. >> tell us where you're focused but i'm also curious about being able to pass on some of these costs to your customers and what margin you think looks like over the next year or two >> yeah, well, if you think about where you invest and it ties to this, maybe i'll start with where you don't want to invest, long duration fixed income, loaning long bonds or assets that feel like that think about owning an office building with flat rents for the next decade. that would not be great. you also want to be wary of companies that have a lot of exposure to input cost, rising labor and materials cost and you they can't pass on the pricing. thing about potentially a food
manufacturer the good news for us we don't own a lot of heavy industrial companies. where do you want to invest? you want to own floating rate debt as rates go up that's where our credit portfolio sits. you want to earn hard assets so you think about infrastructure assets, own transportation infrastructure where roads and airports, as demand comes back, or real estate short duration rental housing or logistics these are things we're very focused on and in the corporate world you want to look for areas where there's really strong growth, secular trends in terms of what's happening in sustainability of green energy it could be life sciences, the recovery in travel, what's happening in-housing you want to think about the fact as rates move up, that puts pressure on multiples, and therefore the way to get growth and value is to own companies and assets where cash flow will
grow, and that is really our real focus >> and jon, i was struck by a comment you made about office. you started your career investing in real estate, oftentimes in office famously actually buying on this week and i think there's big questions about return to office, what that looks like, therefore rents and the like you don't want to be in office anymore? >> no. what i was saying was long duration of flat lease that feels like a bond, that's something you want to be cautious about i also think older office buildings face some challenges in terms of the obsolescence and the office market is weaker as we come out of this. i do think people will ultimately return, but i think you want to be focused on cities where there's a lot of tech and creative talent and newer office buildings.
the difference between being in a building that's 60 years old and a new building is pretty material you're seeing price deferentials which seem to be accelerating coming out of this pandemic. >> in terms of sales is this one of those moments you start to think maybe i should start to harvest? and do you look and say to yourself it's going to get tougher the next couple of years? or is the next couple of years really opportunity for you in terms of buying? >> i think, yeah, look, buying and selling it depends on where you are, what markets. in general obviously in the last couple of weeks in the equity markets things are choppier, so you'd be a little more cautious in terms of public things you may own and wait for some of this volatility to go away on the other hand, that volatility can create opportunity. nasdaq stocks on average are off more than 40%. that could create opportunity. in the real estate markets we're still seeing a lot of strengthen i think some owners in real estate are trying to sell
because they may be nervous about rising rates it varies i would say by markets and geographies. and for us the nice thing is we're not pressured to sell nor are we pressured to deploy capital. and that's really been the beauty of this model i think it's one of the powerful reasons why we've been able to deliver such strong returns for a very long time >> and finally i don't know when you heard what stan had to say are you a fan what jay powell is doing? do you think he's actually going to move? >> i think i'm a fan that the fed has decided to tighten and step back, you know, from expanding its balance sheet and moving toward shrinking. if you went back to just two years ago inflation was running around 2% and short rates were 2% today inflation is running at 7% and short rates are 0% so the idea of normalization of policy i think makes a ton of
sense. obviously that'll create some bumps in the road, but it also will create opportunities for investors. and i would say to investors out there take a longer term view. if you own a great business, you hold onto it if you went back to the 2000 period which was much frothier, if you held onto amazon or apple or microsoft, you would have done very well we are transitioning into this higher rate environment, but it still means there are opportunities and may just be in different places >> jon gray, always good to see you. thank you. congratulations on the quarter look forward to talking to you again soon and coming up more former dallas fed president richard fisher is going to help us break down some of the language from the u.s. central bank anhow d it teased interest hikes. stay tuned "squawk box" will be right back.
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and definitely higher than the last week of last year when it was 1.55 million, and that was, of course, post-covid low. if we look at durable good orders down 0.9% transportation it jumps up 0.4, a little more than expected. unchanged but revised up 0.3 from 0, and durable goods transportation last month also upgraded along with the headline, so it's more of a balancing act over a couple of months and finally, gdp first look at fourth quarter is 6.9%, much, much better than the 5.5 and it harkens back to
pre-thoughts before omicron hit at the end of the year obviously they overstated the effects in the economy that is a good number. and if you look at the annualized q over q at 6.9 versus last look at 2.3 we're probably the best annual year over year gdp since 1984 if you look at consumption 3.3 versus 2.0 last time here's the biggy, the gdp price index up 6.9%. we're expecting 6.0. 6.1 is the current high. that's the highest going back to '81, so we are definitely pushing the envelope there and the personal consumption expenditure quarter over quarter core a favorite, 4.9% versus 4.6. these numbers on inflation embedded in this some of the fed's best and favorite barometers for inflation are definitely running
hot, hot, hot. and if we look at interest rates, well, we're down at 183 in tens. but we're at 118 in twos, which had been higher. the yield curves flattening dramatically and listen, the feds shouldn't be pleased about flattening dramatically what do you think every headline in every newspaper is going to be recession, of course so tens and twos roughly the flattest since the five years a real finance rate that's the flattest since early 2019 and of course right now everybody seems to be paying attention to what's going on with regard to russia and the issues geopolitically. you know, we have this new airlift now financial gas that harkens back to the berlin air lifts after world war ii i want to know who's going to airlift us at some point in the future because build back better
have the same underpinnings that have europe in trouble with no energy andrew, back to you. >> actually, i'll take it, rick. quick question gdp price index, how is that calculated >> the price index basically is looking at the amount of horsepower in the economy and the price associated with it to give us the final level numbers. so if you look at gdp, there's a dollar amount in comparing that with regard to how the pricing components pushed it up there. and then when you look at the core personal consumption expenditure, of course core is ex-food and energy, and some of those numbers historically have been very accurate than other numbers that continue to change. >> we wanted to talk to you about what stan said i'm told we don't have time right now but we'll definitely get to it tomorrow so good to see you
steve liesman joins us now with more pretty incredible numbers when it comes to the economy. >> yeah. i think that's a good -- that's an important point there going into a very weird moment here where we're going to have these negative numbers or detractions from the growth numbers because of omicron and actually of all the data points i like i'm give you the top two. not gdp, it's the jobless claims numbers. if we went into this downturn because labor is hard to find the extent to which companies would hold on to this labor during the omicron wave. and the idea we didn't go up, still some seasonal distortions in there but we're not going up, that's an important part of what we're going to see the next number i like the best is the durable goods numbers,
ex-autos and ex-transportation being up 0.4 we know that's a good number i'd love to see them worked out here in the autos department and boeing has issues on its own working without those things we still have some good capital inment going on in the economy third, is gdp. better to have strong numbers behind you i will point out a big chunk of this was inventory and with what he said very quickly paul told me yesterday the era of leverage beta is over and this is now the time for alpha. >> okay. steve, thank you very much good wrap up check it out dow futures up by 56 s&p futures and nasdaq futures higher, too. when we come back former dallas fed president richard fisher is knowing to join us to react to today's flood of data d atanwh we heard from the central bank yesterday. stay tuned "squawk box" will be right back.
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richard fisher now a senior advisor to barclay and serves on the board of tenant health care and a cnbc contributor i think it's great to have a number like that it obviously includes a reopening boost we're getting from the pandemic. but it does throw, you know, the continued bond buying even after yesterday's tougher rhetoric still buying didn't cut that off. and now we know about march. we know maybe they know every six weeks, but -- and then i also think the build back better plus 6.9%. we want to be just spending like drunken sailors on fiscal and monetary side of things with this, richard? 7% inflation >> well, speaking of drunken sailors, the chairman of my dallas headboard was -- and also laid claim to being the biggest bourbon drinker on the planet. >> and yeah and smoker >> but we always say you don't go from wild turkey to cold
turkey overnight well, we've had a wild turkey run here and both with monetary policy, fiscal expansion, and we just saw the numbers, fantastic numbers. but it comes at a cost that cost is higher inflation, and as the chairman pointed out yesterday, jay powell, inflation we know hurts the fixed income and lower income groups. so they've started the process of detoxing and reversing the sign, no more accommodation. the addition being added here to march i think was just in the range of expectations. we'll have almost a $9 trillion balance sheet. and now the process of changing direction has begun. i find nothing surprising about it you could argue they're behind the curve, but again in terms of the markets they've made it very clear with the direction and the markets are just going to have to digest this >> inflation hurts those people, but they don't benefit from
asset inflation the fed has engendered they're hurt both ways hurt in the years we prime the pump too much and hurt when you take it away because of inflation. and we have a lot of people on the left side saying be careful what you do raising rates because you're going to hurt -- as if they don't realize all this asset inflation which has hurt income inequality, that's part of the problem. you need to raise rates. >> look, go back to what santelli said before the break, and by the way he was on fire this morning >> he was hot, hot, hot. >> hot, hot. but look we have full employment, 3.9% we have more people trying to find workers than there are workers available. that gives labor and workers prying power however, their real income adjusted for inflation, inflation increasing around 4%, inflation running at the number we see right now, they're
actually losing money. so it hurts the lower scale workers in particular. and you just have to make sure inflation doesn't destroy their income and they're buying power and undermine the economic woes of this country. >> some of the other things wave been talking about, richard, is one, okay it sounds somewhat hawkish but they didn't do it immediately. seemed to down-play a 50 basis point move in march which may be called for that's one side of things maybe they weren't as hawkish as they seem the other i find is that there is no guarantee that they have the fortitude to follow through if there's some type of a market break they can see will hurt the health wealth effect and we don't know for sure whether he has feet of clay or the fed has feet of clay do you believe them and believe where the dot plots indicate what's going to happen now do you believe it?
will they follow through >> when i joined the fed in 2005 we were in the middle of a rate increasing cycle we had ran for 14 different terms consecutively. look at that history because it took a while to then dent inflation because there's a lag. and when monetary policy impacts the economy they know this, they're going to have to proceed deliberately the worst thing you want to become if you're a share is -- at the same time you don't want to squash the economy. the markets this is why i believe they're going so deliberate in adjusting what they're going to so the market can adjust let's face it, i want to come back to the alcoholic metaphor we started with. the market has been wearing beer bottles for the longest possible time everything looks beautiful because money was free and they just assumed the fed's going to bail them out
i think the strike price on the fed put has moved significantly. and unless we have a dramatic turn in the markets that indicates it can affect the real economy, i don't believe under this chair in particular has a credit market background, that they will be weak in following through with what they pronounced >> that may have been canceled i think. >> i feel it the same way today. >> i used to hope the other people were wearing beer goggles, but they weren't, unfortunately. so we can believe it again and believe the bond market again and then we had a discussion maybe the bond vigilantes will be back. and then i thought you know what if the bond vigilantes did come back and inflation really is hot and gets hotter, then things can
get out of hand quickly if they vote with their feet and then you worry, you know, that growth could slow, you cut off the expansion and inflation gets out of hand we raise rates, and it just could be a bad scenario as the bond vigilantes come back. maybe they should, but it's not pleasant when they do. >> no, it's not. and actually we push so much money out into the marketplace that the fed has less control than it did in the old days. but telling us already we're going to get four to five moves, we'll have to see, and the bond vigilantes have a lot of power however, there's a lot of room as well because we're down fully employed, have more people trying to find workers as i said earlier than work is available and this growth number that just came out, it may be revised a little bit, but it is astonishing. nobody expected something this
strong, nobody that i know >> am i going to see you next week why don't you try left-handed putting maybe with a long putter have you tried everything? have you just -- >> i've tried -- >> you've tried everything nothing worked can we see you next week are you going to come on the show >> i'd be happy to >> well, we're going to call you then you only got to get up at 3:30 >> i'll bring my putter with me i have actually my father's putter from the 1940s and it is more accurate than the stuff we have now >> but it's the putter not the putter thanks, richard. coming up, apple set to report earnings tonight after the closing bell we're going to talk about what you should be watching when the aysults hit. st tuned you're watching "squawk box" on cnbc nching tons of polygons here!
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goat down to the new york stocks exchange now. that was a good gdp number it at least puttings the fed moves and fiscal moves -- we need to shine a light on these things how hot we want it to get maybe. >> yeah. we're in that good news/bad news period dick fisher said he's so thoughtful he was saying it has a lot of room if it overshoots yeah this is one of the moments what happens is the machines come on and machines meaning algorithm and blitz any buyers i'm urging people to not pay up.
you'll probably get a better price because there's some people and machines that just say you have to sell because what the fed is doing. it's a shame not distinguishing between good and bad you know that, joe they're selling everything. >> do you -- i know you listen to powell. take him at his word he's human do you think there could be a lot of pressure coming if the, i mean, we have big gains in the market but you know how it gets with a couple if it was 10, 15, 20%. do you think they follow through or they use the wealth effect excuse to say no we're going to pause and end it on the height gain. >> i think -- >> is the put really dead, jim >> yeah. it's dead. >> the put is dead >> yeah. >> way out of the money? >> yeah. i think he's tired of anything that is excess what is excess in our market, obviously, the ipos and we know
the spaks. cathy wood stocks. they are excessive in the environment. you have to have a buy back and dividend boost who is doing that? mostly oil companies we haven't been in the situation where you have a stand drop below market and people say i've had it do we revert to 2018 in october of 2018 to december? i think no i think what you said is true. powell looks and sees there's a lot of damage. but the tenor of the market is angry. so any time you see the futures up, you know the sellers -- like last night dom chu was talking about how much the market was down at 1:00 a.m. and 2:00 a.m we know this is ridiculous 1:00 a.m.? i mean, why are people so desperate at 1:00 a.m.
what do they know? the answer is nothing. >> right. >> you see that. >> you had a great guests this morning. the guests are saying be careful. >> yeah. >> hey, jim. how much of that is options activity, too? how much of those get exaggerated because of what is happening onputs and calls >> i think what is happening so you a lot of people who view options and people do etfs and there's not enough time. i think there's a lot of people who are trying to buy something well above where the sellers are willing to sell. they're automatic. you have the kind of weird imbalance. we used to see it more someone would be bitting 34 for the stock. the machines are willing to sell it at 31 they cut through there's bidder beneath 33 or 32. you know the stock has won and no one is down there to be able to buy it. because it happens so quickly. the sell programs are overrunning the buy. we've seen it happen a couple of times in our careers
it doesn't mean that stocks are bad. it means you should be a little bit more prudent don't bid so close and don't pay attention to what the futures are doing. pay attention to what you like they'll get you a great price for what you like. we have a lot of stocks that literally you can get them for far lower than they should because the machines are destroying them. >> we'll be listening in a few minutes, jim. >> your show is fantastic this morning. >> thank you, jim. looking forward so seeing you. the big earnings on tap today is apple joining us now with what we should be watching is martin yang martin, you have an outperform rating on the stock. for the current quarter, you're a little below the census. you're looking for $1.86 what is the most important thing today in. >> i think, number one, be included what we like to hear more of the
supply chain issues, whether or not apple is completely -- or can perform better than competitors regarding supply chain crunch in the first half of 2022. another key issue, in my opinion, is apple store policies they are under various pressures with governments to opening up the apple ecosystem itself potential downdraft on the app store fee that will be something will be watchful. >> the entire market is looking at technology stocks and repricing them ample shares have done well relative to the rest of the group. they're down 9% for the first month of january does it make you feel it's a bigger buying opportunity or say wait a second, the momentum and mentality may be changing and i need to be cautious. >> i tend to think that the apple in the longer term is still in the market. i would agree with you that this is a time to be a little bit
more cautious. another term is the pressure place on the tech sector. >> of all the names you cover, what is your favorite? >> my favorite right now is more of a valuable name it's more than the company reported earnings here today the stock is up more than 10% largely because people are concerned on the stock before the quarter some of the major issues with the display industry and now the results marginally reduce people's fear of displaying the downward pressure as well as management laid out a confident outlook at optical investment cycle that would last well over two years as you know, working from home has pressure on the network infrastructure and that will drive a lot of investments into
good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with david faber and jim cramer we have supply chain warnings from tesla and mcdonalds and others road map begins with the return to fundamentals. a slew of corporate earnings and a flood of data crossing the tape futures point to gains at the open. >> plus returning to profitability. southwest airlines posting the first positive quarter of the pandemic outgoing ceo will join us. and tesla is going all in o self-driving elon musk calling it, quote, nutty good from a financial standpoint." we start with elon