tv Worldwide Exchange CNBC February 17, 2022 5:00am-6:00am EST
it is 5:00 on wall street. here is your top five at 5:00. is the fed going to get more aggressive another big bank joining the calls predicting a hawkish jay powell. and russia debunked? details that russia may carry out an attack. leaders weigh their response we are live on the ground in brussels and jim o'neill is here to layout what you need to watch. and charlie munger issuing a dire warning on the consequences
of higher prices. chip crush nvidia posting record sales for the demand for semis and pulling the plug on pay plan the ceo's multimillion dollar compensation it is happening on thursday, february 17th. this is "worldwide exchange. good morning, good afternoon or good evening. welcome from wherever in the world you may be watching. i'm brian sullivan good to be back with you i got good news for you. it is already february 17th. many people have a three-day weekend coming up because monday is a holiday remember, the stock market is closed and there is something else in there. i forgot 80 in phoenix. 20 degrees here. forget about that. let's get to the money and the
global markets stock futures are not looking like great news. dow futures off 145. nasdaq off it is early. we have seen exchange. market is down nasdaq has had a pretty good month. up 2.5%. maybe i shouldn't say anything out loud it has been a good week for tech stocks overall, stocks reversing in early selloff on wednesday on the back of the minutes of the fed policy meeting indicating they may not be as aggressive somebody says they will be more aggressive we'll figure it out. let's move on and talk about bond yields. ten-year above 2%. they have been there holding for a while. look at energy prices continuing to look at ukraine and russia situation. oil and natural gas are moving down just a bit. investors in that market maybe not as concerned as some about what might happen. wti crude is over $91 a barrel
cr crypto and bitcoin cannot get out of its way and nvidia topping expectations. introducing record sales nvidia is seeing exceptional demand not just good. that is as supply constraints were easing. the company supply of products would increase substantially in the second half of the year. gross mark bgins are flat from e first quarter. you heard our interview with the ceo yesterday from phoenix saying he did not see his market easing up any time in the next six montonths or so. let's see how things are trading all over the world with
julianna tatelbaum with the headlines from europe. julianna tatelbaum back in the living room. julianna, good morning >> reporter: good morning, brian. i'm sorry to hear you had to leave the sunshine i guess we''re both struggling. it has been a chopping day stoxx 600 trading lower. it is all about single stocks today. let's run through the highlights for you. airbus with a 4% rise of full year revenue a record net income. the aircraft maker says it is seeing recovery in the commercial and defense and space delivering 611 aircraft in the year the group expects the momentum to continue this year raising guidance and delivery targets and restarting dividend payments for the first time in two years. the luxury group is the second performing stock in europe with a 35% rise of full year revenue on the back of strong sales at
brands gucci and yse it has warning of price increases. we have ahave an interview comi. look out for headlines from the interview. finally, nestle. shares are little changed. the company says rising input costs impact pricing in 2022 much like all of the companies in the sector. the swiss food group reported better than expected full year earnings organic sales rose 5.7% in 2021. net profits rose 38% that was the story for nestle. a big day for single stocks, brian. >> julianna tatelbaum, look forward to seeing you anywhere living room or studio. thank you very much. let's stick with europe and your top stories this morning.
despite the talk of d deescalation, russia planning a limited attack on ukraine as it continues to stock up on forces on the border. the defense department says as many as 7,000 new russian troops may have joined the 150,000 already stationed right at the border over ukraine. this has nato defense ministers are set to conclude a two-day meeting in brussels and the foreign minister will send a response today about the security guarantees. let's talk more about it with silvia amaro outside nato hq good morning, silvia >> reporter: good morning, brian. the nato defense ministers have st started the second day of talks in brussels in the building behind me. and the message so far has been that they have not seen any
signs of deescalation from the russian side this is after the kremlin said they started to remove some troops that have been close to the border with ukraine. for nato, there is no evidence of that whatsoever in fact, the head of nato said that russia still has a lot of military capacity close to the border with ukraine and in fact it is ready to attack. in the context, i have to say i caught up with the canadian defense minister this morning and she said that nato is ready for any eventuality. brian, i have to say that nato is concerned at this moment in time about whether these tensions with russia will actually become the new normal for european security. >> any talk of potential
sanctions on russia from leaders across europe, silvia? >> reporter: there has been one of the main focuses and question ma marks. the united kingdom was willing to go as far as blocking russian firms from accessing capital markets in london. i have to say that the 20 european leaders will gather in brussels and perhaps we'll get more details with sanctions as well. >> silvia amaro, thank you very much outside of nato headquarters not just russia and ukraine giving investors uncertainty and reasons to pause wall street facing pressure from the federal reserve.
at least that's what we think. calls for more hikes are growing louder among big banks jpmorgan chase was the latest to boost target for rate hikes this year joining goldman sachs and bank of america. seven one quarter of 1% from the previous five. that would be under 2% banks says a number of factors play into the decision including the latest consumer price index and inflation data and hawkish data from the officials in the united states and around the world joining us now on this and more is former goldman sachs asset manager chair jim o'neill. jim, always a pleasure to get your views this is a critical time. we have three things the russia situation and central bank situation and china situation. let's first start with the former that is russia however this plays out, at this
point, it is hard to know he what to believe. what should investors be doing given all the uncertainty of what ultimately may occur? a are>> you know, on this one, brian, everything is very tomorrow re complicated. i remember chatting with you a couple weeks ago and the year is playing out exactly how i thought. there were so many complex and highly unpredictable issues that we even know about russia is just a new one each time i see a report about the words said about the troops, it is like a whole new way of thinking about conflict. we don't know how much game play is going on from our own security people never mind endless ones from russia i haven't got a clue who will
happen the only thing i say is it doesn't make a lot of sense that russia would launch a full-blown invasion of ukraine. i'm not security expert. the bigger comment for you in the context of the other issues is i find myself thinking if it turns out there there is no conflict and russia takes its troops away, the bond market will sell off. at the margin, it will add to people's confidence about growth not diminishing and bringing back fears of the fed. i'm not sure in a bizarre way that one can construct an idea of ongoing russia tensions mighting helpful because it would maybe central banks less hawk iraqi, i suppose. >> jim, jim. >> please don't say that is bizarre an because that's exactly how i think and what i
have talked about before which is you've got this weird dichotomy and where to your point, if russia goes into ukraine and the market may selloff a lot. it might in the near term. to your line of thinking and myself, if anybody cares, you are right. they go in which is unlikely if they do, fed suddenly can't be as hawkish because is it is uncertain world and pull back on the rate hike expectations and all of a sudden, you have the fed bid back in the stock and be bond markets it's not crazy >> it's nice to hear you rationalize it also. in the background, the issue of the fed policy framework and what appears to be marginally growing disagreement with fed members is a much bigger issue
for bond and stock markets it is not obvious to me it will go away any time soon. somehow market traders and investors have got to deal with it you know, just a few weeks ago when we spoke, unless you come from our generation, it is pretty difficult for people because they have not seen this before here we are with all this going on with the bond market at 2%. if we get further strength of data and concerns of inflation, you know, the bond market will selloff again and the fed will have to do what the fed will have to do you know, again, as we touched on and i have been talking about it in the uk with the critical policy framework what you see here, why are short-term rates so long for so
low? should have exited qe probably earlier than they have done and not being so aggressive with the pandemic hindsight is an easy thing to see. >> they were very aggressive on that side. you wonder if they will be as aggressive on the other side i know goldman and jpmorgan chase and others think this. i did an interview in phoenix this week with mark. he is a unique thinker he doesn't think there is any way they will go seven times because the balance sheet is too big and they don't want to screw up on the other side what's your take >> i sympathize with both views. i'm trying to keep an open mind and thanking that i'm not a trader or active participant every day anymore. it would be a nightmare. i think we get the first hint of
that in the fed. it is some members who bothered about too excessive tightening of financial conditions. you mentioned my old firm. what is it getting on for 25 years ago i helped the team create a financial conditions index as the lead indicator under greenspan and yellen they used that framework it will make some fed members worried that the economy will slowdown dramatically and worrying about deflation in a year it is a very tricky situation. at the end of the day, i think the fed framework still hasn't really clarified itself ever since the change of the formal bias of 2% inflation we don't really know what they think that means and how much of it they can handle
they will get moved around by the data and the markets unfortunately for those active in the markets day-to-day. you just got to deal with it it strikes me will get more volatility and at the more begbe margin, we will get weaker >> a bit weaker a few months out. jim o'neill, always appreciate your view. especially when you agree with me, jim. you are welcome back every day jim o'neill. jim, thank you very much cheers pleasure to get your views on that as well folks, seven rate hikes. we'll see. we have more to do when we come back on thursday, a key test on inflation. we just talked about it. walmart readying the quarterly results. what you need to watch in the numbers. plus, a crypto crash with a split with janet yellen and the
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switch to xfinity mobile and get connected to the most reliable 5g network. talk with our helpful switch squad at your local xfinity store today. welcome or welcome back. let's get a check of other top stories. including moderna's ceo offering a timeline on the omicron booster shots. silvana henao is here with that.
>> reporter: good morning, brian. the company is aim aning to hav that shot by august. moderna is still gathering clinical data to determine if the vaccine woul protection last month, the company began clinical trials of the omicron shot initial results from studies in monkeys show the jab might not only stronger protection than the dose of the existing vaccine. moderna could also have a r vaccine to protect against covid and the flu by august of 2023. division within the biden administration delaying the rollout of the policy on crypto including a potential digital dollar according to bloomberg, an executive order on the matter was expected to be signed off on the start of the year. the fight with janet yellen's
staff and the official on the economic council slowed the process. the senior administration officials have now completed a draft version that is ready for president biden's consideration. further action could be delayed because of the ukraine crisis. charlie munger ripping cryptocurrency as beneath contempt he issued a dire warning on inflation. adding that printing too much money leads to trouble. >> we do know from what has happened in other nations in you try to print too much money, you eventually cause terrible trouble. we are closer to terrible trouble than we have been in the past it may still be a long way off
on >> reporter: brian, munger also said it is stupid for the tensions with u.s. and china to escalate and continue to slam the wave of trading platforms driven by retail investors >> why we love charlie he calls like he sees it when you are 97, you earned to say what you think thank you, disilvana. on deck, it is deja vu all over again we will outline the key sticking points as we march closer to tomorrow's deadline. we are back in a moment.
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all right. welcome back let's hit the world outside of money and business and get headlines there with the changes coming to covid related mandates steven romo is in new york >> brian, covid updates this morning. cdc expected to loosen the mask guidelines the agency is considering basing the benchmark for masks on the
level of severe disease and hospitalization in communities many communities have eased restrictions including new york and california the third time was not the charm for shiffrmikaela shiffrin the greatest skier in the sport failed to finish her third and final event. her ski caught a gate which sent her tumbling during the slalom portion of the alpine. she has one more shot of gold in the mixed team parallel event on saturday. the los angeles rams celebrated their super bowl win with a parade through the city several open top buss es were filled with players and coaches. a rally was held at the coal see um coliseum it was the first par aade after the dodgers and lakers were
denied their due to the pandemic >> thank you lumber prices quietly, don't tell anybody, surging in recent weeks. maybe you don't care, but you do care about housing we'll give you a potential sticker shot rising lumber prices and what it means for homes. if you haven't already, follow our podcast stream it and download it and listen to it today. and today's futures are down a couple of points we're back after this. what happens if you ever need to miss work for a long period of time? why would i miss work? i don't know. you could sprain your ankle, throw out your back... get hit by a school bus. or a regular bus. get kicked by a horse. fall off a ladder. bathtub mishap.
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grab another coffee. a rocky trading day could be ahead as investors jugging the fed over here and russia and ukraine tensions over there. a tough crowd. record numbers and big supply news and it is all not enough. nvidia shares down a couple percent p. and how bad is inflation we may find out as walmart is set to roll out its numbers. it's thursday, february 17th this is "worldwide exchange. welcome or welcome back. good thursday morning. i'm brian. it is good to be back with you as well. let's get to thursday money. stock futures are down across the board. not a huge amount, but a couple
of tenths of a percent all coming in to a decent week for two groups nasdaq 100 is up about 2.5% in the first three trading days of the week we had some strength a lot of time left this morning. we will see if it rotates. keep in mind monday is a market holiday. in the bond market, yields sitting right above 2% on that ten-year as well you heard jim o'neill, former head of goldman sachs, he said if russia goes away and deescalates the situation, we could seea big move in the bon market i want to check energy it is moving higher. that market watching what happens. it is a natural gas than oil story. still nat gas and oil down about the same today those i talked to in that world, maybe not as convinced that putin and russia will go into
ukraine. everybody has their own view the oil and gas thoughts by the way, as oil and gas have come up, oil and gas stocks have made investors a lot of money in the last couple months look at the xle. the biggest energy etf it is up 24% so far. i do the power city indexes. 39 different markets 12 biggest companies i just looked back on my flight to phoenix it is not going to be close. unless something big changes, not only is houston so far above every other city, it is the only of the 39that 39 that's actualle this year. somebody call paul bunyan. lumber is up 30% this month. the reason it's a few things. including saw mills trying to keep up with demand. wildfires hitting inventory and tariffs on canadian territories.
maybe you don't trade lumber we'll call this a mini rbi i'm sorry we don't have one today. lumber futures over $1,000 the price, the average price of a new single family home, will go up by nearly $19,000. that is according to the national association of home builders lumber futures over $1,000 you will pay more than $19,000 on average if you buy newly constructed home of course, it goes into things like rebuilds and any kind of construction or home improvement project you want to do as well not just new homes. let's get to the markets and check on the other headlines including the senate taking things right down to the wire. and some push back on how much tim cook is getting paid silvana? >> reporter: let's start with
the senate chuck schumer says lawmakers are expected to hold a vote on the stop gap funding bill today. the measure would keep the u.s. government running through march 11th the bill has been approved by the house and it would avert a portion shutdown with the existing money set to expire at midnight on friday hasbro is facing a proxy fight from capital management which has a 2.5% stake in the toymaker the firm is seeking changes including a spinoff of the wizards of the coast and digital gaming business which includes games such as doungeons and dragons. hasbro says management and the board have talked with the company to understand the views. iss urging apple shareholders to vote against tim
cook's pay and bonus package the proxy advisory firm sicites the concerns of the ward last year cook earned $99 million in 2021 versus $50 million in 2020 iss says half of that is not tied to performance. cook's pay is roughly 1,400 times the average apple employee apple has declined to comment. they hold the annual meeting the first week of march. brian. >> we will pay attention maybe a push back. big story. silvana, thank you. call this good and not good enough nvidia shares lower. despite a good quarter let's find out what happened and bring in angelo zino at cfra
good, not good enough, angelo? >> i don't think necessarily as far as nvidia is concerned, this is one of those cases where to your point, i think typically the expectations are extremely high going into the event and they can never do enough as far as the numbers are concerned at the end of the day, this is the company that beat on the top and bottom line and provided guidance above expectations. when you look at the addressable market opportunity which has no boundaries over the next five to ten years, we remain excited about the broader nvidia story and we do think investors come back to the name here in the coming weeks >> okay. there is something there i was looking at your note
we know the industry itself, according to you, 22% last year. down to 9% growth this year. those are still pretty good numbers. data center on the upside. what is the risk to that growth? what is the market when you look at it and you are not as sure about this than the other things >> as far as the segments are concerned, this is a big that is being driven by the data centers and gaming side. you look at growing north of 70% for the quarter. gaining 37%. the question is sustainability of some of the orders we're seeing for nvidia and the broader industry as we look through 2022, especially on the data center side of things, where we are most vexcited about. the business can grow at a 30% clip that's really driven by the massive cap x cycle.
they are tied to the highest cash flow generators in the world with the alphabet and meta among others on that side, we remain excited. you know, the sustainability going into 2023 is where i think investors continue to have questions about it all good things come to an end in terms of the chip cycles. we're about nine quarters into the up cycle that lasts 8 to 11 quarters this feels like a different cycle. a stronger cycle we do think most companies right now are trying to manage a soft landing eventually when it occurs likely in 2023 >> yeah. i was out if phoenix at the conference, angelo i had the opportunity to speak with the semiconductor ceo he was bullish on that transition to cars he said he didn't think supply
chains in his market were going to get marketly better anytime soon does this come down the company's manufacturing or the type of market they are in >> i think it does have a lot to do with the type of chips. a lot of the trailing edge chips, the ones within the auto and industrial markets, the one. these chips go into the data center in other markets. that's part of the reason nvidia can't produce as many chips as they want to sell. a company like on semi, we think will continue to benefit from the greater content story within the auto space
our view is content will grow 5% to 10% annually here in the coming years at the end of the day, the supply constraints probably remain at least in those markets constrains going into 2023 at this point it's that bad from the sense that we're looking at a number of -- when you look at the channel, it remains depleted it will take a number of quarters to get where you need to get >> yeah. bottom line, stay long, stay strong you have the buy >> we have a buy recommendation. we continue to believe we're in the secular bull market which will last over the next five to ten years. >> all right making investors and listeners happy. angelo zino, thank you very much let's switch gears and time to go big. go big on retail go big on earnings and maybe go big on potential inflation
walmart is set to rollout their numbers. joining us now is rupesh parikh. senior analyst at oppenheimer. rupesh, welcome back what is the key thing to watch in the numbers >> i think for q4, the focus is the walmart comp search. the 5% increase in the quarter it will be about the guidance for the year a lot of concerns about cost pressures. the last quarter of walmart with supply chain headwinds secondly, the fears in the market out there on the low end of consumer and rising gas prices and significant inflation. there are woirries with the consumer. >> inflation is the biggest hit in tax and lower income tax
folks. everybody pays the same for gas segas. rupesh, they have pricing power. is it possible they will not feel the impact of consumer prices as an input cost? what they buy as much as every other store out there? >> yeah. i think walmart is better able to manage the inflation. our sense is you look at the grocery category they should pass through low to mid sale of food inflation to start the year general merchandise, we are seeing other suppliers raise prices in those categories there will be some pass through throughout the enterprise. the risk is walmart low prices there could be a delay of passing through the higher prices that is where you could see a short-term squeeze. >> rupesh, you see in the calls
that we are able to raise prices and our costs are up then members of congress are going after them saying this is corporate greed. does walmart need to be careful if it does have pricing power and i mean this from the investing perspective in how much it talks about something like that? >> typically walmart is careful on the call about rising prices. they are highlighting low prices on invest or calls everyone is raising prices from costco to kroger to albertson's. i don't expect significant push back we see it in the data every day. the latest inflation is the high single digits. i don't expect push back this time >> do we have any indication of how they're doing on the labor front? i was at phoenix airport and if you have been to phoenix airport, almost every restaurant
is closed. a couple are open. starbucks shutdown because it had no workers how is walmart doing they have 1 million employees plus in the united states. if so, how much are they paying them once you pay somebody more, you will not dial that back. >> walmart has been aggressive in raising wages they had increases last year the labor situation is improving. we did see impact around the omicron variant. walmart stores have been well staffed. retailers are calling out the labor situation improving. as we move past the omicron variant, the supplabor is not a concern and with the wage increases, they are in great shape. >> with the out performing the 150 target rupesh parikh, thank you it's going to be a long day.
>> thank you you're very welcome. some of the big money movers and including shares of one cloud software company getting crushed on the latest results. a second mystery chart for you. as we head to break, top headlines. a shocker in aerospace federal aviation administration chief steve dickson announced resignation. he is only halfway through his term he was appointed by former president trump after the two 737 max crashes. he cited long separations from his family as the decision amazon reached a worldwide deal with visa continue to accept payments with credit cards to its stores this ends a months long standoff. get ready to pay more for the avocado toast.
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let's get to big money movers. three key stock stories. stock one is cisco topping forecast they are raising earnings gu guidance for the year. they are rising prices over the global chip shortage and decline in costs adding $15 billion are to its stock buyback program. buybacks ls last year at the all-time record. stock number two is doordash after record gross orders and more than 25 million active users. on the earnings call, the ceo said he thinks the company has quote put to rest the question of what happens to the man when diners go back to eating in restaurants. stock three is fastly. the cloud software company reporting a bigger than expected fourth quarter drop. fastly predicting revenue growth
would slowdown more than analysts predicting this year. on deck, the course of calls for a more aggressive fed growing louder what really happens to stocks when rates and inflation go up phil palumbo is here with that dow futures off 134. nasdaq off a touch and we're back after this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so glad we did this. i'm so... ...glad we did this. [kid plays drums] life is for living. let's partner for all of it. i'm so glad we did this. edward jones ♪ i see trees of green ♪ ♪ red roses too ♪ ♪ i see them bloom ♪
welcome back we have breaking news and headlines right now out of russia and the kremlin around ukraine. i'll read them to you. it is a little bit, not confusing, but a lot here. i'll hit the headlines we'll let the market figure it out. the kremlin saying they are seriously concerned by a flare up in violence in eastern ukraine. that first headline seems hawkish. they are stirring the pot.
they add that they hope western capital and nato will use its influence to warn the ukrainian government against inflaming the situation. in other words, russia and vladimir putin doing what he does blaming ukraine for causing a reason why they have to bring forces to the border hawkish. however, they add these headlines which are more important to the markets, i think. they said it took weeks to deploy forces for military exercises. it will take time to withdraw. russia says time is needed to return to usual bases and cannot be done in a day they add the defense ministry has a clear timetable to withdraw forces after war games and they add with this, they hope that people will not believe what they call, their word, fake reports obviously referring to the united states about new possible russian invasion dates the first couple headlines
hawkish. the remaining headlines dovish russia talking about removing troops and it will take time and they heare not going to be rushd it sounds like they want to deescalate and knocking u.s. intelligence or u.s. government comments about timetables on an invasion a flurry of headlines crossing now. that's what we've got. i'm sure we'll get more. we will see if it matters to the futures. dow futures off a bit. let's bring in phil palumbo at palumbo wealth management. i want to talk about inflation and the fed, phil. i have ask you this. i tried to interpret them the best i could with the typical mumbo-jumbo of headlines from the kremlin. that said, if we see a serious d deesc deescalation, is that good for stocks >> it is sell the rip rather
than buy the dip the last three years. if it is true of what is going on with the kremlin, then oil could come down which could be helpful for cpi. if the opposite happens, that you can't trust what putin is saying, and this escalates, the price of oil will go up. oil is early where cpi is and inflation is, that's a big concern overall for markets and continue to create volatility and potential for another problem. >> we wait to see how the headlines play out they just crossed. phil, you put out a note to clients talking about inflation. as rates go up, stock valuations in many parts of the market have tended to come down. rates gone up and valuations in tech and others have come down do you think the market has sorted itself out by now in other words, are the rate hikes already priced into the
macro equity market? >> no. i think that what we will see is inflation is a problem every wall street strategist says peak inflation. like i said before f the price of oil is where it is and possibly do higher, retail sale show increase demand and all of that means inflation could push higher if inflation pushes higher, the fed has no choice to be more hawkish than he has been to create volatility around markets. if you look at the yield curve at the bond market, it is not bl believing the economy will continue to grow it is a potential the fed could make a we could go into recession >> all right talking about the end of the year. there's more calls and more people i'm reading are talking of major slowdown or recession heading into 2023.
i like the plain speak phil palumbo, mpleasure to have you on i appreciate it. >> thank you. that does it for us on "worldwide exchange. let's see if the russia headlines add to the dovish. i will see you tomorrow right here on "worldwide exchange. "squawk" and the gang will pick it up. dow is off and oil is wndo as well see you tomorrow have a great day
troops have been added and field hospitals and equipment in recent days. just breaking. the kremlin is now concerned about a flare-up in violence in eastern ukraine. earnings alert we will hear from walmart. and surprising from the leader from the faa steve dickson stepping down halfway through his term details ahead. we will get to see phil early. it's thursday, february 17th "squawk box" begins right now. good morning welcome to "squawk