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tv   Squawk Box  CNBC  April 6, 2022 6:00am-9:00am EDT

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yesterday's session. we'll get you ready for today's minutes. elon muffing has been buying twitter shares on almost a daily basis since the end of january and that reveals how much he spent on the stock. and a bidding war. jet bblue stepping in to buy spirit it's wednesday, april 6th, 2022. "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we're live on the market side from times square. i'm becky quick along with joe kernen and andrew ross sorkin.
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check things out you'll see the dow is indicated down by another 25 points. the nasdaq off by 113 this comes after pretty serious declines yesterday, especially for the nasdaq major indices were down after hawkish comments we're going to have more on that in just a few minutes, but when you hear the comments coming from them, they sound like they were coming from jim bullard not the case these are doves who are sounding much more hawkish. as a result, you saw a selloff nasdaq took it on the chin that was a 2% decline from the gain we saw the day before and if you watch the dow transports, this is something to pay attention to dow transports down by 2.8%. if you add it up, 7.4% from the all-time high and maybe you get back to the point where you talk about the dow transports being a indicator of recession
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especially when you compare that with what we've seen with tre treasury yields yesterday. we've been flirting back and forth with inversion right now it looks like the 10-year is 2.62% the two-year is 2.651% yields up across the board questions about what these going to mean for the mortgage matters. the weekly numbers, that's out at 7:00 a.m. and that will give us a little more insight on how this is all impacting the market. meanwhile elon musk has been buying shares on almost a daily basis, spending about $6.2 billion. twitter announced musk would join the board confirming musk has intentions to be more active in business unlike monday's 13g filing who isn't trying to expert control
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over his lawyers as of yesterday's close, muffing's o roughly 9% stake was worth more than 3% twitter said in the next few months it will test an edit feature it had been working on since last year. they tweeted now that everyone's tweeted, yes, we've been working on an edit feature since last year no, we didn't get the idea from a poll we're kicking off with twitter blue labs in the coming months to learn what works, what doesn't, and what's possible first of all, this man is either going to be the ceo of this company in six months or i would argue he'll not be involved in this at all. does that make sense to you? >> he might get done what he wants without that, and that's fine he might add the edit button but remove the censorship button
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he's solving all the world crises climate change, the traffic problem with l.a. and a boring company, resolve big tech censorship and he's made flame throwers much more financially available to a reasonable price than he ever has before. >> forget about getting the kids out of that thai cave. >> he solves all the world's problems one guy. you know who he's like >> ben franklin were you going to say >> the world's most interesting man, the dos equis guy >> the question i have, can he be passive in anything >> the new filing kind of clears it up a little bit oop, never mind. >> is he the kind of guy who will sit on a board of a dozen people no he's either going to want to run a thing or he's going to be in a
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meeting of 12 people and realize they're not aligned with him and he's going to say, i'm taking my ball and going home. no >> i think he'll accomplish a lot just by having a seat on the board. >> i think i know where you're going to it's always wrong to use mental terms freely asperger's he copped to that on "saturday night live." he seems to have a fairly healthy dose of adhd too he's unbelievable. he's a genius. how do you run tesla and at the same time you're developing the automated cars at the same time you're thinking about going to mars, landing rockets and not having them fall into sea at the same time you're digging tunnels? he does move from one thing to the next fairly quickly, fairly effec effectively. >> have we ever figured out the
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flame fthrower? it was possible to do it, so he did it >> i would guess so. the one most undervalued thing he does is not teen ideas -- and i know he gets a lot of grief from people who seem to come and go and they're fired he's actually getting good managers think about it he's involved in half a dozen projects or kpaerngs some multi-billion-dollar companies. >> it's pretty exciting. >> i don't know that saying -- gwen shotwell is running face ex-. good on him for finding her and putting her in a position and elevating her to run the company on a day-to-day basis. by the way, somewhat true with tesla. that's an amazing thing to find the right people time after time. >> i think it's kind of cool that we're contemporaries with this dude because we weren't
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with thomas edison or ben franklin do you know what it means to be on once in a generation >> like a mozart. >> he's something you never judge or check in hindsight. i mean poor mozart half of those guys, artists, they all died penniless. >> it's hard to think of anybody having as much influence as ben franklin only because there were so many developments and the country was so long, that you had the influence to signing the declaration of independence, creating libraries, volunteer fire departments, discovering electricity and going beyond yes, elon musk -- >> i used to compare elon musk to steve jobs. who has had more impact in the world? >> steve jobs.
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>> you think that -- >> in terms of my life who doesn't walk and with one of these. >> gates said 30 years ago we would be doing everything we're doing. >> who need as phone from apple? i've got a motorola that's so cool, small, it flips. >> sarcasm, sarcasm. >> who would have thought -- >> i was clinging to my blackberry forever now i can't imagine. i use this for so much more. i heard it raining, and instead of checking out the window, i looked at my app. >> you were like a holdout. >> i was move on. ukraine's defense ministry reported that russian air strikes continued in the besieged city of mariupol overnight. it said most of the 160,000 remaining residents have no communication, heat, medicine, or water
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meantime sources tell nbc news that washington plans to announce sanctions that would ban all new investment in russia it plans to ban state-owned enterprises as well as more government officials and their family members, and the eu is finalizing bans to import coal to russia, $4 billion worth a year when you're watching news and say this may be disturbing if you continue to watch, i think every print article should have this at the top. have you read the things that are going on >> the last several days. >> is that rogue and bucha are going against what their commanding officers are telling them what to do, or is this systemic >> but they've been targeting civilians from the beginning >> they've been doing all kinds of stuff not just targeting they're barbaric, rape, murder,
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and even doing things to the bodies of corpses and stuff. war brings out the worst. >> but these sanctions, you didn't think the sanctions could get tougher. they are putin himself has said it has directly led to this inflation russia is in inflation and that's going to have a serious impact the idea of not accepting coal is a big deal. with germany, not only are they relienld on gas coming from russia and coal. coal plants, they're now saying now they're going to get off the natural gas, coal plants they were -- energy plants they were going to shut down are going to be extended ir, that liarline there. they're going to have to rely on coal there was a story in "the wall street journal" yesterday
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talking about the gdp, how they'll have to spend as a bloc. something like 1.3 annually to try to twhooenls off the natural gas if you're doing it more by using the green energy with solar and wind, along those lines. so with that, they said they'll spend the defense. this is extreme spending. >> that's blackrock trending saying it's going to be much worse for europe than it is over here it's like okay i read one tweet and i think i know what the other 20,000 are saying. >> yeah. all right. when we come back, listen to this this is what it sounds like when doves cry. we're going to talk about the hawkish comments from two dovish members yesterday. when they talk like this, the rereality is it's coming.
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we'll get you ready. this is the first time the feds raised rates since all the way back to 2018 we'll hear what was said around the table at that point. jetblue offering $3.6 to buy spirit airlines. phil lebeau will join us more with that story. that's coming up at 6:30 eastern meti you're watching "squawk box," and this is cnbc >> announcer: this cnbc program is sponsored by baird. visit esg is responsible investing. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance. as active investors,
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fed governor lail brainard said they'll have to continue tightening monetary policy for increases by starting to reduce the balance sheet at a rapid pace as soon as our main me meeting. during the day mary daily said raising rates is is what is necessary to ensure that again you go to bed at night you're not worrying about whether prices will be high eric considerably higher tomorrow this f this is what the doves are thinking, you can imagine what the hawks are feeling raich now. joining us is peter book bar,
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chief investor and also a cnbc contributor. pete e when you heard these comments, did it change your opinion at all with the fed when it comes to rates? >> not really. i think the market has already priced in almost another 225 basis points of rate hikes with brainard i think it was what they do with the balance sheets there's lot of liquidity that's being taken out. i'm guessing 80 to $100 billion of shrinkage that will start next month in comparison when they shrunk the balance sheet in 2018 it topped out to $50 billion a month, but it gradually got to that it started out at $10 billion a
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month. then went up to 50 now they may start right away at 80 to 100. that's what rapid means, e believe, in brainard's comment. >> you know, deutsche bank on this news yesterday put out a note calling for a recession next year. 2023, one of the first major banks to do that they said to see because of this, rapid rate hikes, 50 basis points for the next three meetings, that they think all of that is going to hurt the stockmarket, bring it down 20% by next summer they're looking for unemployment to rise, i think, 5.5% by next summer this is deutsche bank making a prediction with it i wonder if any of it sounds too extreme to you or if you agree with that. >> a soft landing is a rare occasion greenspan putted -- pulled it
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off in 1994. the odds are they evening go to a recession and have a selloff piece. like i said, the rare occasion of it. it's even rarer this time around because you have such high inflation and the rapidity of this rate move is so sharp at the same time they said there's been a shrinking on the balance sheet. we know there's a very tight link across the capital. we cannot separate any of them o out. >> peter, when you hear the feds say, okay, we've got the tools to handle inflation, sometimes i can't really connect the dots on what those tools are i understand they're going to raise rates, but the absolute level is going to be really low. i don't see how suddenly that just cures, you know, shortages on all these things that -- the supply demand dynamics causing the inflation. if you go to 3% to 4%, i don't
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see how that suddenly solves it. and it seems like the things that the fed can orchestrate involves slowing down the economy and trying to force us in to maybe not a recession but slower growth. unemployment rises that's not ideal i would think inflation would be self-correcting itself, that people will drive less people are paying these prices it's -- they really -- what would you call it? it's inelastic they're going to buy them either way. i don't think it's going to work any time soon. >> i don't think they'll be able, to your point, control inflation without dramatically slowing the economy because monetary policy directly impacts the demand side. it's not going to affect the demand side. we know when rates were at zero and they were printing $120 billion a month, they had pedal
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to the metal on the demand side. it's sensitive rates like housing and autos. they were pushing the demand at the same time there weren't enough housing, homes and cars so we're already seeing in the michigan confidence numbers that buying intentions for autos and cars has fallen draw mastically because the prices are too high. you're seeing that self-correcting mechanism, but monetary policy is still way too easy they need to tamp down on the demand side. even on the supply side, going into the -- before the war, even though i've been talking about inflation for a while, i was getting more confident that a lot of these supply chain issues were about to's. now it's much more uncertain but i do think we're going to unclog as the year progresses that supply side but the fed has been left so off
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balance that their tools are only raising rates and shrinking the balance sheet. it's not any more complicate than that. the fed is going to tighten until something breaks and they're going to have to decide do we still tighten because we need to get inflation back to that 2% to 3% range or do we get scared because we don't want to tip the economy into a recession? that's a very difficult decision they're going to have to make. >> peter, look as you point out, a lot of these higher commodity prices because of the war, when you look at metal prices, grains, energy prices, they're not going to be able to fix it one way or the other. the demand side could shrink some of those things you have the covid shutdowns in shanghai 25rks million people not allowed to leave all of those things they can't fix. we did a poll yesterday, acorns and cnbc it was more than 4,000 people or around 4,000 people they talked to 81% of the people think there's
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a recession coming this year a lot of people are doing things like canceling trips they had planned, driving left to try to deal with the rising prices. maybe it's the despizitegist >> they have energy prices that are double the gdp than we have right now. they have natural gas prices that are eight times we're paying in the u.s. on an energy equivalent basis so if europe, which is a major economic region of the world, is potentially going into recession in q2 of this year, the same or similar consumer behavior could happen here, and i'm not saying we're going to go with any recession in the second quarter, but we're going to have a
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behavioral reaction to the sticker shocks that consumers have everyone single day that they go out and buy something. that's going to affect consumer spending when you break down gdp, the part is consumer spending. global trade is slowing, and you're sort of left with government spending that they're not going to spend in the last five years if companies are going to start making less because growth slows and cash flow is not as robust as it was, do they revisit the plants the favorite companies won't those working on software continue to roll that out. small to medium-sized businesses will say let me defer until i have more visibility in my business the result is an economic slowdown. >> the only thing i will say is that in itself could solve some of the inflation problems that are out there, and consumers here are not in the same situation as consumers in europe we're not going to see the same
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increase in energy prices. so we have a few things going for us too peter, thank you for your time today. >> thanks, becky thanks for having me. coming up, when we return, looking to buy a home. that is a question a lot of folks are it just got a lot more expensive. the average topping 5% as home prices climb and we will -- we're going to talk it. later we'll talk with barry sternlicht after this. >> announcer: this cnb program is sponsored by truist wealth where meaningful relationships matter most.
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we were talking during the
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commercial break, the average mortgage rate over 5%. this is from mortgage news daily. up from 3% a year ago. it's the first time it's crossed the 5% threshold since 2011 except for two days back in 2018 for home buyers, facing the priciest market, the higher rates are only going to be adding to the pain home prices in february were up 20% from a year ago. so we'll see what happens to home prices. they keep moving. >> this is the question. there will be a point where home prices have to come down. >> yep. >> but right now supply is still so limited that -- >> or at least plateau >> what's a high mortgage note. >> you've got to compare it to where rents stand.
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>> do you remember >> i was saying my parents hat an 18% mortgage rate if you look at the relative rise in gas prices, people are complaining about $4. >> that's the highs. >> but we'd seen prices on a relative basis with inflation. you'd seen higher prices before. >> 12%, 13% mortgage rates. >> my parents had an 18% mortgage rate in the '80s. >> seven-year a.r.m.s, 10-year, depending where you are, that bites. that actually bites. >> unless you think we're going into a recession the next year and the fed have to stop. >> it starts affecting things. you say, man, that bites jourjsd
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like beavis and butthead, don't you? >> i said it too that bites all right. in the meantime cnnbc learns that president biden has planned to extend the moratorium on student loan payments until august it took effect back in march of 2020 because of the pandemic nearly half of the 42 million borrowers covered by the freeze are at a high risk of delinquency when repayments start. some lawmakers have been pushing the president to cancel up to $50,000 in student loan debt per borrower the president said he believes such action must come from congress that's probably an uphill bat well an evenly set senate. i think it's $1.3 trillion when you add all of it up i don't know if you've been watching on twitter.
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alexander ocasio-cortez said, look, if they want to deliver these young voters, you have to do something like this i don't think there's a chance that congress can do this at this point. >> anybody that didn't do a lot of -- didn't buy the furniture they wanted to pay off their student loans -- >> -- they would be infuriated it would be infuriating if they paid down the loan there's a problem with the system that student debt has gone up so dramatically, but it has to be addressed at the college sfleevl do both. >> yeah. coming up, jetblue is looking to play spoiler in the bid for spirit air and frontier. phil lebeau will have the details. here's a look at yesterday's s&p 500's winners and losers
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>> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable, and secure oh, we can help with that. okay, imagine this. your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, like asap! so basically i can pick the right plan for each employee. yeah i should've just led with that. with at&t business. you can pick the best plan for each employee and get the best deals on every smart phone.
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welcome back to "squawk box. we're live from times square dow futures indicated down by about 170 points the s&p futures off by 30, and the nasdaq, which was down yesterday by about 2.25% is down another 150 points this morning, a lot of this coming as higher interest rates took a bite out of things. energy prices are ticking higher too. right now you've got wti up by 1.5% this morning back to 143.45 brent crude up to 108ant 05 and natural gas is up another 1.4% today. and jetblue making a play for spirit airlines trying to leave frontier on the tarmac phil lebeau joins us now with more hey, phil. >> hey, joe. you called this a spoiler bid. that's exactly what this is.
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here are the particulars of this proposed deal that was put forth by jetblue yesterday they came up with a deal that was announced by spirit and frontier last month. it's worth $3.6 billion and it would create the fifth largest airline in the united states in announcing the bid, jetblue says it firmly believes its proposal constitutes a superior proposal under spirit's agreement with froon tear and represents the most attractive opportunity for spirit's shareholders take a look at what happened with shares of jetblue after the offer came out again, it's 30% higher than the spirit/frontier merger agreed to on february 7th. it brought out a response from frontier, which an hour and a half after the proposal, frontier said, unlike the compelling spirit/frontier
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combination, an acquisition of spirit by jetblue, a high fare carrier would lead to more expensive travel for consumers, in particular an east coast overlap would reduce competition and limit options for consumers. caught in the middle of this is spirit, which the shareholders have to love where this is going. it looks like it's going to be going toward a higher offer. they're going to move toward the jetblue one or come back to frontier at some point they -- by the way, both spirit and frontier have already approved their merger. they say, however, they will evaluate spirit will evaluate the jetblue bid. they're going to do their fiduciary duty now we have an old-fashioned bidding war. jamie baker with jpmorgan may have said it best where he said there's a lot of interesting elements to this at this point he does not see the merits of a deal between jetblue and spirit
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that said, he made it very clear in his note to investors he wants to hear from robin hayes, analyst, and the media will hear from him later on this morning where he'll lay out the case for why jetblue is a better dance partner with spirit than frontier is with spirit. guys, stay tuned i think we'll hear a lot more today. >> i think you'll have an opportunity to talk to robin i wish i did i don't understand if i'm spirit, i actually discount the offer i discount the offer because i don't understand how in this environment and, frankly, in any environm environment, antitrust regulators should or could approve this. >> when i talk to people in the industry, e about said the same thing, which is not entirely sure that regulators will approve this that said when you look at their national overlap between spirit/jetblue versus
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spirit/frontier, there's greater overlap with spirit-frontier i've been looking at the numbers by analysts. spirit/frontier, 46.4%. >> you know what >> jetblue, the overlap is 29.2%. >> the board's in a conundrum here because how do you explain to your shareholders with your fiduciary responsibility that this 20% premium is not a good deal to take it's enough of a premium, all cash. >> correct. >> but they accept the deal. the deal doesn't happen. a year later it's worse than money in the bag ahead of you. >> good luck explaining that to shareholders who want to see a higher price tag you're caught in a very difficult position as a board member sure, you can say the long term is this, but do you know how you'll have shareholders infuriated with you for not taking the higher bid unless you
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can get someone to come back to the table and offer a higher bid. >> how many companies own a company with the jetblue deal? with frontier, it's like 48% does that matter >> that's a good point i'm not sure. >> exactly exactly. >> that's a good point. >> the big question is what's the breakup fee. >> would you want to own 48% >> $94 million, andrew $94 million. >> if you get forced out, you're going to be dealing with bigger tax implications but it depends on who you are as a shareholder. if you own retail and it's a little bit >> if you're trying to buy sprint and it doesn't happen and then you have to pay out billions of dollars in fees and the deal doesn't happen, everybody loses.
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>> explaining to people what might happen is a very tricky thing. you can do it for a 10% premium maybe. but for a 20% premium, you're going to have shareholders saying what are you doing? you could leave money on the table. >> you could have wi-fi with jetblue at least they can retrofit the planes. >> their wi-fi is good. >> i totally hear your point. >> look. there are going to be shareholders with lawsuits anyway. >> no matter what happens, i think they're caught. >> i think the board could make the argument one way or the other. >> truly they're trying to do that with their statement. >> andrew. >> yeah. >> one last thing you guys should keep in mind, if you're frontier and they brought this up yesterday front and center, if you are frontier, you are going back to spirit right now saying you think we might have some regulatory approval issues because that's already come up in terms of frontier and spirit
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because of the biden administration they're immediately pointing out to the spirit shareholders, good luck with jetblue because they're already dealing with regulatory issues with them. now you want to bring on even more regulatory uncertainty? that's going to be the argument you hear from frontier. >> the truth is the flip side is the market share that jetblue already has. so when you actually take the market share that jetblue has and you put spirit together with that, it changes the dynamic in a material way the truth is these three airlines are the last airlines that are keeping any of the majors in check at all, and clearly they're out of check already. and as taxpayers in america. i'm not sure why people are not more focused on what these deals mean given the complaints you hear every day going on in the skies. >> that's why you see a 20% premium being offered because it is the last. >> that's true too.
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>> one last look you know how this industry goes. when there's one merger, somebody looks around and says, whoa, whoa, woe, woe don't want to be left out if you're alaska and you're watching this, what does that mean it doesn't mean they're in a merger, but you look around. >> phil, you started it. you get your kicks on route 66 and you started it with the routes now we're all saying routes. route is what happens when we're beaten very badly. are we going with route or route? is it route 66 >> technically you're correct. >> what are we going to decide we've got to get this straight at some point. >> okay. we've got to go though. >> honestly, i like route. >> i've been given the look. >> oh, boy. >> phil, nice to see you thanks for indulging us in this debate
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when we come back, elon musk we'll talk about that. later, we're going to talk to senator roy blanlt who gng'soi to talk with us about the what's coming out of washington you're not going to want to miss this candidates matching your job description. visit
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to help you find opportunities, 24/7 support when you need answers, plus some of the lowest options in futures contracts prices around. [ding] get e*trade and start trading today. welcome back to "squawk box. elon musk joining the board. how the richest man might change the dynamic of it. good morning to both of you. joann, i'm going to start with you. i posited at the top of the show this guy is either going to become the ceo of the company in the next six months or he's not going to be on the board because he's going to take his ball and go home. what do you think?
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>> i heard you this morning. you make a good point. what tritter has just done, it's a grand experiment in corporate governance they've taken their troller in chief, the guy who trolls the most, taken him in their inner circle elon musk is a guy who doesn't play well with others. it's hard to see him we've never seen him in an environment where he essentially plays a team sport, which is what a board is. we'll see if he can have influence without leading it and how much frustration he would have if the board doesn't simply, you know, follow what he wants to do. so it's an interesting question. i don't know i don't know that it makes any sense. joe made the really great point earlier as well. he has his hand in so many things he has that adhd thing it seems like a terrible thing
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to have him added to being ceo of twitter with allthe other things he's doing. >> dan, you're mr. buyout. when you look at that board now and you think about elon, what's the chance that we see a tweet in the next six months that says funding secured? >> well, clearly since he doesn't care what the s.e.c. thinks and clearly by the way he disclosed this stake in the last 24 hours, there is a chance. the thing is, the way you hear things is he and jack are friends. jack seems to have wanted to walk away from running twitter. >> no. dan, i'm thinking of ee gone durman you look at that board and start to think to yourself they could get pocket change together and
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put something together. >> potentially they could. who would lead the deal? it would be unusual to have a buyout where you have elon and jack, these very strong personalities, all trying to go through. could it happen? absolutely silver lake came in a couple of years ago, which does mean abso. twitter has a little bit of a history. >> how much do you think elon can have specifically on this issue of censorship and whatever you think is a sort of conversation around free speech given the controls twitter has put in place by the way, jack dorsey was pretty emphatic how he has thus far at least approached that issue. >> yeah, clearly freedom of speech is going to be the biggest issue coming in. right, that's the one he's spoken the most about. he talks about it. he's a freedom of speech solutist the thing is he's talked about twitter being a de facto public
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square, which it is de facto public not it is not a private square it's a public company. it has rules it has rules in place. it does not always follow its own rules. i do think there's a risk if twitter rolls it back too far, if they allow disinformation, they're bringing russia back, bringing trump back, bringing people who are spreading purposely disinformation it could turn into much more of a cesspool than it already is. the other thing i wouldbr bringu here is the issue of harassment. there's an anti-harassment policy at twitter very lightly if not at all enforced we've been seeing this more and more couple news organizations have said digital harassment of their employees is a problem particularly for women and people of color. and elon musk seems to have absolutely zero-tolerance for
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any -- he's a troll, right so i do have some concerns about what might happen to those policies about harassment. but if it does -- if it does turn into this sort of cesspool, i don't think that's good for anyone it's not good musk, and it's not good for twitter to have this kind of free-for-all people will leave. >> i want to thank you we're up against a hard break. dan, it's a single question. is trump on the platform six months from now given elon musk's new role? >> no. >> no. we'll continue that conversation with both of you hopefully very, very soon. thanks joe? coming up big oil ceos are testifying on the hill this morning to rising gas prices across the country we'll be talking to a member of the energy subcommittee who'll be questioning the ceos and get eita othr ken what actions need to be taken. "squawk box" coming right back
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gasoline prices got leaders from bp, exxon, shell and other others going to respond to questions about the state of the market joining us now is a member of the energy subcommittee on oversight and investigation. and a question thanks for coming on i hesitate to say this but it reminds me a little bit of cosa blanka round up the usual suspects and ask them what's going on, why are prices so high put i don't know if anyone really can point to or has evidence or really believes
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themselves that there's widespread price gouging do you think there is? >> a long list of most americans, about 78% think that is the case. and the evidence is in you know, when we see that the oil companies made a decision not to produce anymore but rather to there crease their profits, and with that money to do things like stock buy backs, we heard from seven oil companies that decided to make about $25 billion in stock buybacks, and they decided to increase the revenue that they sent to their investors and to raise the salaries of their ceos and their top executives so that's the decision that they
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made >> as recently as october one of your counter parts he comes on the show a lot he was grilling chevron and exxon. are you embarrassed as an american company your production is going up while european counter parts are going down and with all due respect i'm very proud of the company and pressed on, will you commit right now to matching european counter parts in reducing the production of oil? so it wasn't until -- it hasn't even been a year from where many members of congress, 26 members of the house, i don't know if you were one of them voted to try the bill to ban fracking >> look, the question is what are the oil companies doing?
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yes, i am against fracking i think it's a real problem. >> did you vote yes on that? >> the question is that the oil companies made a decision rather in this crisis right now to raise the cost, to gouge the consumers, in some ways to, just to do what we say and the name of the hearing today is gouge and they have an option to do that, to increase their ability right now not to have to frac, not to have to drill more but simply their ability right now to raise the amount of gas >> congresswoman, we've all seen what's happened to the price of crude oil around the world, wti or ice brent and actually the president talked about it a lot and said it's nothing we did.
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it's because of the russian invasion of ukraine that sent the oil prices up above $100 a barrel so if the president can point to why are you saying it's the oil company? is it the oil company's fault we're over 100 or which is it? russia's fault or the oil company's fault? >> what actually happens at the pump is the problem of the oil companies right now. they could be producing more now, yes there is a war going on. war profiteering is happening right now. during world war ii when people were really suffering and the economy was suffering and our war effort was suffering there was an effort to pass legislation, pass gouging legislation to prevent that. and i think we ought to consider those kinds of things absolutely
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right now. i have legislation that there was price gouging during the pandemic and i want to extend that past the pandemic, and we are looking at efforts to tell them they could do that right now. they don't have to add to their ceo salaries and their buybacks as they have made a decision to do they could produce more oil right now. >> the hot inflation numbers that we're getting let's say it's not -- it's no one's fault, not biden administration's fault. it's the reopening from the pandemic so there are supply chain issues it's worldwide what's going on so you're seeing such widespread inflation across all sectors wouldn't you think that perhaps gasoline prices would go up as well with maybe about the same percentage a lot of the other
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components of the economy have gone up because of these we come out, we reopen there's a lot of demand, supply chain issues we hear that all the time. >> we see record high profits of the oil companies. >> not all-time. only in the last seven years and you know for ten years the oil companies have been severely underperformed the s&p because they can't get capital to expand, and shareholders -- the long-suffering shareholders of past ten years of any sector of the s&p. so it's not all-time record. >> you know they decided -- they call it capital discipline capital discipline was the idea that rather than produce more oil what they would do was give more money to their shareholders, that they would raise the prices and that they would raise -- >> congresswoman, you'd have to admit that democrats have tried
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to leave more hydrocarbons in the ground that's been something for years now that has been -- that's not true i just read what congressman khana said, will you match europe's cut backs aren't you embarrassed you're producing so much oil? you know that's where we were until about eight months ago >> you know, the oil companies have the capacity right now without having more uses, without doing more drilling to raise the amount of oil they're producing right now and made a decision not to do that so that they could make more profits, so that they could raise their prices, so they could do stock buybacks that is just a fact that that is the decision that they made. and right now at this moment when americans are suffering right now at the pump and are really especially low income people, the oil companies have
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made a decision. we have quotes from the head that, you know, the money is flowing right now because of the high prices of oil they're bragging about the money they're making right now, and this is a time of need where these oil companies have to do their part, and they could do that by alleviating some of the pain they see it as price gouging, and we have the evidence that it is >> okay, thank you congresswoman, member of the energy subcommittee. illinois, right? >> yes i'm from the chicago area. >> fantastic good to have you on. >> thanks so much. well, it is just after 7:00 on the east coast, and you are
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watching "squawk box" right here on cnbc. i'm becky quick along with joe kernen and andrew ross sorkin and we have to big line upcoming in the next two hours. we're going to be speaking with steve case, missouri senator roy blunt and ceo marcy frost. in the meantime check out the futures. they've been in the red this morning. right now dow futures down about 170 points, the s&p futures down by 31, the nasdaq 62 this is from the lass we saw yesterday. so some stock specific stories are driving some of the premarket action as the premarket trading volume starts to accelerate. we'll start off first with electric vehicles, and one of the smaller ones we always think about tesla but rivian is actually up in the premarket trade and off premarket highs. the reason is because after yesterday's closing bell rivian came out and updated investors and the public on some of its
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production numbers they made over 2,500 vehicles in the first quarter of this year, and maybe more importantly for a lot of investors who are looking down the line they say they're on track to meet their total production target for this full year 2022 of around 25,000 vehicles so those particular headlines driving rivian trade up about 2% intel the latest big company in the u.s. to suspend its business operations in russia you may recall just last month in they had already suspended shipments to places like belarus and russia now they're just suspending business operations. they say they've taken business continuity measures to ensure minimal impact to supply chains.
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watch intel shares they do condemn by the way russia's invasion of ukraine interest rates higher. 2.6% higher the last trade for ten-year note yields it always brings up a conversation whether valuations specifically in big tech companies are worth it at these levels nvidia down about 2% big tech a big focus as interest rates rise and then today is the kick off to bitcoin 2022. thousands of folks, experts all descending on miami april 6th through 9th. right now bitcoin prices up about 2% 44,900 thereabouts some of the smaller coins and tokens very much a big, big focus today. i'll send things back over to you. >> dom, thank you for that >> incentive to you just so i
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wouldn't ask dom about the masters and all you said was thank you, dom dom? >> i don't need to do masters. i don't need to do draft kings >> is he gone? >> i guess they're hoping he'll shut up. >> i'm just wondering one top ten pick give me your best top ten. who will finish in the top ten give me one guy. >> any people interested in the masters tomorrow >> i would say this i think tiger, i think he's taken the last several months to prepare just for this event. i am -- i'm a huge tiger fan and i'm optimistic he might even be top ten, maybe even give us some real story lines >> we have something called the
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golf channel >> you should do a little clinic on there dom's clinic >> nobody wants to see my golf swing. you do you're the only one that wants to see my golf swing >> because i appreciate your transition so good. all right, when we come back internet pioneer steve case will join us to talk elon musk joining twitter's board of directors and what it means for the social media giant and later don't miss our exclusive interview with starwood capital's barry sternwick on it markets, the fed and much more. interesting timing given where rates are headed we'll hear all of this from rrcong up. stay tuned you're watching "squawk box," and this is cnbc cody! hi!! hi! how are you?
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news of elon musk joining the twitter board of directors has rocked the tech world. for a look how musk could impact the social media giant and the tech sector in general let's bring in internet pioneer steve case steve's upcoming book is due out in september it's called "rise of the rest" how entrepreneurs in surprising
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places are building the american dream. great to see you it's been a while. >> great to be with you. >> let's talk first about elon musk and this idea of buying 9.2% of twitter and actively accumulating the stock since january. he's been actively talking about changes he'd like to make to twitter on the platform itself what do you think of the strategy, bringing him inside the tent is that the right thing to do? >> elon is obviously one of america's greatest innovators, a very significant public company but also an activist and investor $ 80 million followers it shows a commitment to twitter and the platform >> probably not looking at this as a typical activist investor, someone who wants to make a little money my guess is this is something he wants to make a change in how the social discourse takes place
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and how twitter tweets people, how it allows what kind of public speech it is allowing on the platform you've been in a position of having the social platform where everybody was communicating, and it's tough you've got a lot of people focusing on you. you've got a lot of regulators focusing on you and lawmakers. how do you win in this environment? what's the right way to kind of take twitter at this point because while you may want free speech and things to be there, a lot of that free speech can scare away advisers. >> it's complicated. 25 years ago when aol was the leading internet service, we had to deal with a lot of these issues that's actually when, you know, congress passed legislation that's known as the 230 rules around this, but back then it's a little different because people were posting things or message boards or typing messages into the chat rooms now because of the way all the
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social media platforms used algorithms, the bubble up content. different people see different things in their previous habits. it is a little different, but the platforms are playing more of the role essentially of publishers so it gets a little trickier i'm sure he'll bring his views to bear and he's already done that by tweeting about and now he'll be able to play a role by sitting at the boardroom table i think he'll recognize there's difference between being ceo of a company and being board member of a company >> he's got almost 10% ownership of a company and means to back up if he wants more. but, you know, i just feel like he is a major influencer and probably going to have a little bit more -- more sway than the average board member might have. >> oh, sure, no question but my point is when you're ceo of a company particularly you
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have quite a bit of flexibility to decide what to do when companies like twitter, you know, there's a broader kind of array of people at the boardroom table and different kind of approach to governance i think it really does show as you said a real commitment to twitter, believe twitter an important platform in the world and wants to invest in it and innovate around it >> touching back on your experience, going through this, having congress taking aim at you because you're in the biggest platform out there, the biggest internet platform at aol, is it worth the headache, worth the hassle >> of course they're significant businesses and overseeing a platform like that you have a broader set of constituencies and responsibilities spent some time with a number of folks there and they're focused on these issues. they recognize they have a role to play as well.
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>> hey, steve, we've been talking for the past two days since this happened about the implication or exposure potentially for tesla shareholders or shareholders of spacex or his other businesses i always admired what jeff bezos did in terms of buying "the washington post" and rebuilding that franchise at the same time i don't know i would be happy as an amazon shareholder that he went off and did that how do you think shareholders of elon musk's other companies should think about this given the political implications and by the way in spacex case in particular or in both cases there are huge sort of policy implications and actually the government in certain cases buyers of some of those products >> as you mentioned some of it is around a time commitment. how many things can a sea do and i think people recognize elon has a lot of ideas and has been
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doing things over the last several years. but you raise an interesting point, when you move into this world as jeff bezos found with "the washington post" including with president trump, you do become more of a target so that there's some risk associated with moving into the world of media influence. and so people have to wrestle with that aspect as well now, again, elon has been doing a lot of that over the last couple years it's not like he's been silent previously and suddenly he's going to be engaged. >> steve, real quickly, rise of the rest we'll have you on again to talk about this book before it's out. but the movement you've been talking about for years at this point got super juiced by the pandemic just by the idea you don't have to be in silicon valley to be running a tech company. you can have talent anywhere, and this has to be something you've been hoping for and predicting for a long time >> driving around the country and there are bus tours and it's
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fascinating to meet entrepreneurs and see what's happening in different communities. that's why i wrote the book. amazing story about entrepreneurs, building companies in places most people don't think of in terms of being start-up companies in cities it's not just innovation happening in a few places like silicon valley but happening in dozens of different cities and you said the pandemic has been and shaped the moment and dispersion of the capital giving more of these a possibility. so i think it's a very exciting time and i think they can unite in a small way a very divided country because part of the challenge we face is a lot of people in a lot of places are feeling left out and left behind, but the entrepreneurs are moving into the epicenter and playing a significant role and building a great company in
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places like richmond, virginia, or detroit or stored in atlanta or salt lake city and i look forward to coming out and telling the story and an optimistic view of the future of our nation >> do you talk to j.d. vance, still? >> i've not talked to j.d. in quite a while. i know he's busily working a somewhat controversial race. i stay out of that my view has always been it's part of the reason i was able to work on the jobs act ten years ago and do some work on innovation policy as i stay out of politics and focus on policy. >> right and it's great stuff, you know, to take some innovation to where maybe you don't think of middletown, ohio, or something i think that's where he's from and to make equal opportunity. you're not just then on two coasts >> you also can reduce the brain
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drain. a lot of people in parts of the country do leave because there's opportunity. how do you slow that brain drain of people leaving and create a boom rang of people. you have more venture capital, have more people in the community rallying for those entrepreneurs then you can start seeing those cities rise up, and that's what we watched play out over the last decade and clearly has accelerated because of the pandemic as becky said and now we're celebrating work and life people have more flexibility how they work and where they live, so i really look forward to having the book come out in september and being able to travel the country and really celebrate what's happening all across the country. >> steve, we look forward to hearing more about it before then thanks for joining us today. >> thank you all coming up, your morning headlines and i think he's got probably palm trees in kaua'i --
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plus starwood capital's barry sternlicht talks markets, real estate, supply chains. "squawk box" coming right back [sound of helicopter blades] ugh... they found me. ♪ ♪ nice suits, you guys blend right in. the world needs you back. i'm retired greg, you know this. people have their money just sitting around doing nothing... that's bad, they shouldn't do that. they're getting crushed by inflation. well, i feel for them. they're taking financial advice from memes. [baby spits out milk] i'll get my onesies®. ♪ “baby one more time” by britney spears ♪ good to have you back, old friend. yeah, eyes on the road, benny. welcome to a new chapter in investing. [ding] e*trade now from morgan stanley.
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this morning live from times square at the nasdaq market site treasury yields are holding near their highest level for the last those years following hawkish comments yesterday suggesting the central bank would move more aggressively in how fast it raises bench mark interest rates. minute meetings i should say from the most recent fed policy meeting and come at 2:00 p.m. eastern time a lot of folks are going to be watching that, and deutsche bank putting out a note saying they think is a recession is on its way. the biden administration set to extend the extension of federal student loan payments and an announcement on that expected as well now the extension has been in place since mid-march back in 2020 when the pandemic began it's currently scheduled to expire on may 1st. president biden set to sign a bill today that will give the u.s. postal service $50 billion
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in financial relief over the next decade. as part of that relief future retirees will enroll in health insurance. part of the prn with the post office has really been an accounting issue more than anything else. quick check on the futures we'll show you right now where things stand we are looking to open down. dow off about 206 points naz dock about 210 points. s&p 500 off about 40 points. we're right back after this. time now for tuesday's aflac trivia question. what three companies were the top three oil producers in 2020? the answer when cnbc's "squawk box" continues aflac! ohhh, mark is about to become a living piñata. luckily, aflac will help cover his unexpected medical bills. aflac? [whimpers] i don't think he has any candy in there. am i at least going to get hit hard enough to forget this?
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now the answer to today's aflac trivia question. what three countries were the top three oil producers in 2020? the answer, the united states, russia and saudi arabia. combined these countries accounted for 43% of the world's liquid petroleum products. still want to know what order. i think it would be saudi arabia, united states, russia.
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but i don't know for sure. in the meantime mortgage rates now topping 45% as the spring home buying season starts to take off diana olek joins us with the latest on mortgage applications and what's the numbers >> here's a scary number for you, becky total mortgage demand is now 41% lower than it was a year ago that according to the mortgage bankers association, and that is what fast rising mortgage rates are doing to the market. the average rate for 30-year fixed on conforming loans jump from 4.8 to 4.9 last week for loans with 20% down, and that's the weekly average from the mba, but yesterday it crossed 5% according to mortgage news daily which obviously runs the rate daily. now, that's both a financial and emotional line crossedmism higher rates caused refinance demand to drop 10% last week, now down a stunning 62% from a year ago that's the lowest level since the spring of 2019
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refis were half the rate a year ago and now 30% of the market. a strong job market is keeping the fire under buyer demand but the supply of homes for sale still very tight home prices are up 20% from a year ago, and fha demand, which is generally your first time buyer is dropping very hard. becky? >> i think this gets to the heart of it. we've been trying to figure out when home prices will actually come down. part of it it's going to be the mortgage cost going up, and that cuts into things but your point of the supply being the biggest question if it's still more expensive it rent -- what does eventually bring the cost of homes down and when do you see that happening generally prices lag sales by about six months and we've seen pending home sales. that is signed contracts on existing homes come down for
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about four months, so you'll start to see prices ease soon. and we still haven't seen it yet though those annual gains keep getting bigger, and we are starting to see supply in the new construction market increase so do builders start bringing their prices down a bit while high cost for land, labor and materials, so that's a big question as well but another component is with these higher mortgage rates a lot of people are no longer qualifying for a mortgage. if they can't qualify, they can't buy and sales come down. again, it all depends how tough this spring market is for those first time buyers and how much demand there is for the new construction market. >> we're going to need to hear a lot more from you. >> t >> good to see you coming up on the market, the fed, plus the latest out of washington with senator roy blunt. as we head to break here's a quick check on the markets you can see we are down
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get right to the markets,
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the fed and more with our big guest of the hour. oh, boy, high expectations for barry sternlicht has never, never disappointed in the past i dare say, barry >> good morning, joe how are you? >> good. we have -- let me just describe things and then you tell me whether this is true or not. so a lot of inflation, worries about interest rates, geopolitical concerns, just a lot happening, but would you say it's almost impossible to get a room or very difficult to get an open seat on an airplane i mean, things are great with all those other things as backdrop is that because of all the pent-up demand as we come out of the pandemic, barry? >> yeah, i mean the hotels and the golf resorts they're full and charging whatever they want.
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the consumer coming out of this slow down is not price sensitive. it's a very unusual recovery, and people can charge whatever they want, luxury goods. there is definitely pept up demand i'm actually astonished at the pace and rates hotels are able to charge right now, and that's not true of all hotels obviously domestic travel hotels are better than ones that still rely on international travel which has not really rebounded it is really something in l.a., new york, miami -- miami is up 36% year over year it's still booming, and people have time and obviously people not yet fully back in the office, and that is also kind of a u.s. thing it is different around the world, but the generation that
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doesn't want to come in for the new york and l.a. and san francisco and the rest of the country is coming back >> were you implying that -- we use the word for demand earlier in the show. are you implying the demand is just at the high end or even at super markets -- >> no. we're getting -- people are upset about inflation. there's good inflation and bad inflation. we all everyone i think wanted wages to rise for the middle class. so we should be delighted with a 36 unemployment rate we still can't find labor. there still isn't enough workers and everything in it country is driven by costs, right costs are being driven by wages, and that's actually good the democrats and the republicans i think should be
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pretty happy what we don't like are these supply bottlenecks and supply chape constraints driving whether its oil. you're going to see continued inflation. and the fed was way behind and they are way behind and now they might be overdoing it. >> that's sort of what i was getting to if the supply stays where it is and the demand is in elastic across the board basically because people are flush and they want to go out because of the pandemic i don't know how far the fed needs to go then because the fed's job is going to be harder if the higher rates going up with such lower rates, how do they get that to where it bites, where it changes peoples behavior where you slow down demand if demand is in elastic right now? >> i think people are going to return to a way of living.
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part of it is a party atmosphere coming out of the pandemic and seeing your family, childhood friends. i think companies are booking again for groups it will come back as companies come back. yes, the fed is going to have a challenge because i think the economy is slowing and deglobalization is real. imports from china and we're buying everything and all sitting in containers and warehouses are full. there's a lot of problems in the supply chain if you're building a building whether an office, hotel or apartment building if you can't find the materials you can't complete your project. costs are rising rapidly construction costs up 10, 13% year over year
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you either have to charge more or stop construction because nobody is going to pay you while i think they should do the 50 you're not going to stop this problem we have. it's just going to take time for the chain to sort itself out and for the economy to catch up to the bubble of demand that was thrown into -- you know, into the supply chain by everybody not only ordering but over ordering what you hear is people order too much stuff and there's no place for it it's in the rail yards or the yards outside of l.a. and the water tankers. it is getting slightly better, but don't forget there's another piece of stimulus coming there's a $1.2 trillion infrastructure bill. and they haven't started spending that. they also haven't spent much of the money of the recovery act
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and some of it hasn't gotten much into their hands yet. if they start building roads, bridges and tunnels we kind of want them to fix stuff up and continuing to have huge cost pressures and where are they going to find the laborers it's an interesting world. i was at harvard business school and speaking on monday and i looked around the room and there's flags of 40 nations, 50 nations around the room and our policy is we don't even let these people stay here anymore now we basically kick them out of the country, can't get visas and they go to companies that compete with our companies they have some really ridiculous policies, and it is somebody in washington has to fix the easy things because there's so many easy things to fix that would make this so much better >> immigration policy being one of them. i want to go back to the fed and your i.d.s about what a difficult place this is right
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now. everybody has said they're behind the curve deutsche bank has a note out today saying they're predicting 50 basis points this time, 50 the next time, the meeting after that and as a result they think we'll be in a recession by -- a recession by next year they're looking at next summer stock prices being down 20%. looking at inflation jumping back to 4.9% versus the 3.6% we just clocked they're doing a hard landing what is right? if they were to do 50 basis points this time would you say -- >> they didn't get it right on the way up i don't know if they do it right on the way down. i think we're going to have a significant slow down should be the fourth quarter there's different parts of the economy. i think the consumer is probably going to get tired and kind of bought everything he needed to buy. he bought his couch, a computer,
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a phone. and i do think the economy is going to slow. these prices can't keep up but, again, inflation driven by wages is kind of a really good thing. and building productivity, investments, there's so much bad karma, whatever it is out of washington, the whole discretion of tax we should talk about and how the 1% are paying their fair share and corporations are paying zero. i just wish politicians would tell us something remotely resembling the truth we have investments, we have have an energy renewables business and we rely on companies buying tax credits to invest in renewables which is what the democrats wants to see happen >> barry, on the tax front as you know i am not a big fan of taxing unrealized gains or anything like that, but we've
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long talked about it, and by the way you're a beneficiary of it carried interest is something that you don't pay and i effectively do or the opposite, if you will. same is true of the real estate issues and sort of benefits -- incentives we've given the real estate industry for quite some time you can go down the list are there things within that category you would be in favor of -- of working on? >> yeah, i think the 1030 changes. i don't really understand that it's a lovely thing i guess but trying to raise capital that's a lovely thing or something you don't really need. i do think, andrew, i pay a 34% tax rate i just checked and i knew i might be on so -- >> federal or that include state -- >> federal now i'm a tax player in florida.
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by the way, florida makes up with their low taxes by pretty low income taxes what we do is our values are building support to cities, the schools. we pay the property taxes which fund the police, fire, so you can tax these things and they will drop in value, and, you know, it will affect the payroll of municipalities and staffing of what we call services so i don't think real estate is an asset class and they're always going to take the brunt so they're always coming after -- >> do you not do what you do if you can get the carried interest benefit? >> carried interest is really delayed tax. we pay capital gains because we
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invest and like any other investment we invest would i not do it? i don't know >> you're paying a lower rate effectively on income than i'm paying >> well, it's not income >> that's what we have to decide >> on management we pay -- hold on like investments you make on your house and you sell your house, capital gains -- >> if you put your own money into your fund you should actually pay capital gains rates on that money. we're not talking about that and on your management fee you pay ordinary income. what i'm saying is the carried interest component which is a huge component of your income annually, you are paying a capital gains rate on that i am saying that's a fee that is
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not actually an investment >> i don't know if that's -- i'd characterize it that way >> by the way, the rooeal estate agent -- >> it goes up and down >> barry, the real estate agent who spends two years trying to sell a property, his fee is at risk it's either going to work for him or it's not. the banker who gets a bonus at the end of the year, that's at risk there's a lot of people who get income annually that's quote-unquote at risk. and for some reason we've decided that capital -- that private equity and venture capital is somehow a special class of person who should by -- who should pay a lower rate. does that make sense to you? >> it's a system i don't really have an opinion on it. >> you must have an opinion on
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it >> well, i think the system is fine the way it is, honestly it's not really where i focus. i want to talk about the democrats focus on people not paying taxes you know, i don't many people -- >> this is what they're talking about, barry >> no, this isn't what they're talking about. this is tiny piece of the pie. >> if you solve this piece which you think all these corporations -- >> you're paying a rate that's different than anybody else at this table, anybody else in america and you're at the highest end of the country to begin with, they say this doesn't make sense >> andrew, your party talks about companies stealing without paying any taxes you have the same approach to individuals. companies drive down tax rates by the vesting in renewables, playing solar tax credits. companies are really good corporate citizens >> by the way, i don't think we should ever blame an individual for not paying taxes or a corporation for not paying
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taxes. >> there's a policy the government produces a policy and want to support investment behind certain industries, and those are really important it's not everybody cheating. all you hear about from the democrats is everyone is cheating every company -- >> when elizabeth warren goes after jeff bezos or amazon and says somehow they're not paying their fair share, that doesn't make sense to me my view is you know who we should blame, washington >> let's go back to the economy because it's really interesting. >> i want to talk about housing with you >> can you -- i mean with the great resignation and everybody at home, you know, on zoom, how's office space
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>> it's coming back as you know but it's coming back pretty hard in places. people are back in the office. some companies are having a real hard time getting people to come back what i'm hearing it really is more of a u.s. thing london's full, the middle east is full. asia was full. that's -- that will sort itself out. san francisco is having its own problems but probably -- the one thing i think your listeners would like to talk about is really the housing market. i gave you guys some slides. we really underbuilt housing, and that's driving housing prices, rents and rents for single family homes to double digit increases, and that's probably an interesting story for real estate. >> it's because higher interest rates aren't going to slow that down that's the thing
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that was my initial point, that the fed is going to have trouble -- i don't know what the fed uses to cut down inflation >> this is a charter for rent increases. >> that the year over year >> that's year over year and that's 10% i can't see the heading -- that's actually probably 60% of it and 10% and the market is 20%. a delayed factor in the cpi going to continue going up for a while. >> i have to say thank you and "squawk box" will be right back. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit
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welcome back to squawk tech stocks are under pressure this morning the faang names all down now more than a percent each >> it feels like it's a bit of a roller coaster we're now moving in the wrong direction again. there was a period all of a sudden it seems like growth is actually going to come back even though we were worried about inflation and now we're worried about inflation again and here we are >> yeah, that's right.
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the best software companies on the planet it's down about 19% year to date it's something we're now living in that q1 the saseker and then if you compare it to the dow or s&p down about 5% year to date, if you drill into the numbers average multiple is hovering around 12.5 times right now. that's down from the peak last year >> do you think all these stocks are just going to continue to get crushed? >> yeah, i mean the fed has basically come out yesterday and said their best weapon of inflation is to raise rates, and we've got to stop inflation. you know, the bench mark i typically use for cloud software companies right now is microsoft. it's trading about ten times next 12-month revenue.
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if you compare that to the inin cloud at the peak it was about 23.9 in november it's now trading at 13 so that bifurcation between top growth stock companies that we saw in q4, it's totally shrunk, and we've redefined what growth means. i think with the fed saying they're going continue to raise rates throughout the year, we're going to see those multiples compress however, the really break out companies in the in cloud, those growing 40, 60%, they're still seeing multiples somewhere around 28. those are the best in class companies and i think they'll be able to grow through multiple rate increases as well as geopolitical instability in europe >> does that mean you're moving into them, or do you think there's going to be a real growth rate during this period, or doia sit on the side line if you've got money in them already
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you just hold? >> i-think there's a certain class of growth stocks worth holding your money in. those trading anywhere 15 to 20 times those have strong fundamentals, good market opportunities. the rule of 40 which combines not only growth rate but their ability to generate free cash flow in the future before let's call it six months ago we would have said put all your capital in the in cloud, and now i think we're seeing there's still valuable companies in that basket, but we really target those growing 30, 40, 50% and above. >> and what do you do with the microsofts of the world? >> those are great -- >> i guess what i'm trying to figure out is some of these seem to be great holds, but are there any point you say we're at a great entry point even in this moment >> if you look historically
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where we are now, i think this is actually a good entry point again, i would focus on the companies that have that combination of high growth, you know, profitable or at least break even and those that have strong fundamentals. >> anything short? >> i'm a venture capitalist, so i'm still short a deal getting done in our market in the 50x, 75x and sometimes even 100x. but in the public markets i think if you look at the best cloud software companies in the world it's a decent entry point. >> leave the conversation there. it's always good to see you.
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>> thank you it is just about 8:00 a.m. in new york, and you're watching "squawk box" live from the market site in times square. take a look at futures right now. we've got some red on the screen and continues. i would say worries continue about inflation and potentially recession. we'll talk about what deutsche bank was saying and s&p 500 off. >> let's get to dom chu, and keep in mind you are tossing back to me this time >> so i'm going to save the conversations and the nuggets i have about investment early into this let's get through the business first, the morning movers. let's take a look first of all of one of the big earnings movers so far this morning this is cannabis producer
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tilray it comes out reports a surprise profits. it also announced a distribution partnership for one of its subsidiaries with whole foods, which is of course a subsidiary of amazon to sell some of their hemp products in whole foods, certain whole foods locations. all of that imbalance led to a 2.5% gain for tilray cannabis companies have not had a good time over the last year also watch an update on mna talk and this time from that unsolicited bid by jet blue to jump in and try to buy spirit airlines wants to offer $3.6 billion in cash, and so there's this drama playing out, but all three of those are down in the premarket trade right now.
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reminder frontiers deal was a cash and stock offer for $2.9 billion so we'll see how they're going to do it and then a check on the most popular tickers search on our website from yesterday's full session maybe no surprise the ten-year yield is still up there, still up in the top ten. but wti crude slips a little bit down that list twitter, tesla and apple tesla and apple perennial on that list. elon musk is now a big stakeholder, a board member. he's by the way amended his filing on the ownership stake in the company to be not passive anymore. anyway, check those out, the rest of the top ten, highlights from the top ten as always on my twitter feed at the domino on twitter. i'll send things over to you >> real quick you saw that -- still in like the top 17 guys, but if you bet $5 on tiger and
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he wins, you would win $205. >> so you know us folks over at nbc universal we have a partnership with this company called points bet, right, and they'll feed a lot of the data that goes into golf channel with regard to the odds and that sort of thing a few days ago before the tiger headlines came out and now he's plus 4 to 5,000 so a lot of that money has moved that way even though most of the handles so to speak has already been put on tiger, he's now moved the line significantly given his announcement >> even when less than a year ago we thought he'd never much less walk but play again amazing. >> i would put victor hoblen so from a better perspective you and i like the numbers, joe. and it's always fun to see the
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odds kind of move in realtime. >> the bad news is that the 7:00 guy is still in my ear at 8:03 which i wasn't counting on we do that now earlier today we were up 4 or 5 after. >> nine. i was watching the market will be looking at clues. steve liesman joins us now with some of those expectations hey, steve >> hey, becky. yeah, big day. markets bracing for the release of the fed's march meeting which should provide new details about plans to reduce the balance sheet. rapid pace for a runoff but
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large caps or limits that will runoff a lot during the lot. more than doubling the size and $9 trillion in response to the pandemic and large amounts of treasuries in an effort to stimulate the economy and driving down interest rates after it already cut rates to zero and amounts to a really sharp policy reversal. the fed had been buying bonds up until last month now the fed's no longer going to replace bonds and moerms that mature and so-called runoff. the comments something the fed could reduce the balance sheet by as much as $100 billion a month we do were ate about the fed being too aggressive
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anywhere from 45 billion to 100 billion will runoff. the effect on the bond market, though, is going to be determined by the treasury they have to replace the fund in the public markets >> it was kind of amazing in the span of a couple of days we've gone from the fed is way behind the curve to oh, my gosh they're going to do too much >> yeah, we're definitely going back and forth it's a little weird, becky i'd been planning to do a story this morning before i knew what braynard was going to say or figured out what she said whether the market was paying attention to what we've been saying let's show you quickly from our fed survey about what the expectations were. we'd been for months
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chronicling. 1.2 in 2024 for about 2.7, 2.8 trillion total for about three years. i don't know, this number today could be closer to 80, could be closer to 90 or 100, but it seemed a bit like yesterday braynard kind of slapped the market and said wake up, we're going to be reducing the balance sheet. >> and the rapid kind of wake up call that came with deutsche bank saying they expect a recession now, think stocks will be down by 20% the next year, and the commentary that the fed's tools are not the right ones to fix the problem and it was the supply chain, too. they have zero power to fix the supply chain >> i think it's a combination of things i think the supply chain is a piece of it, but there was
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definitely a lot of fiscal stimulus out there definitely a lot of federal reserve or monetary stimulus out there. there is no doubt that the federal reserve should be withdrawing stimulus and should have done so quite a while it's kind i don't know what to say ridiculous, but last month they were still buying bonds and it has to talk about an aggressive wind down that's a very short policy reversal. >> and barry just pointed out you've got more infrastructure spending coming to the tune of $1.2 trillion so the fiscal spending is not going away when we come back senator roy blunt will join us to talk about the latest out of washington plus jet blue making an offer to merge with spirit airlines which could upset the prior merger plans between spirit and frontier airlines none of the stocks reacting that well to this today we'll have the latest on the
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welcome back to "squawk box" this morning the futures are in the red this morning. nasdaq opened down about 234
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points right now dow off about 242 points and the s&p 500 off about 43 points. in the meantime the u.s. is set to announce new sanctions in russia today in coordination with the group of seven advanced economy swz the european union the white house says russian banks and new investments in the country will be targeted and also as russia war in ukraine reaches six weeks the head of the eu executives said today the bloc will probably target imports of russian oil all of this comes as evidence has emerged of killings of torture outside in a town capital of kyiv. joining us now to talk about further sanctions on vladimir putin's economy is senator roy blunt of missouri. senator blunt, thank you for being here today let's start with this just the atrocities we are seeing uncovered here will these sanctions continue to ratchet up pressure? will they do anything? >> well, i hope they do.
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i do think the one thing that won't do anything, frankly, is this idea putin is going to be shamed into changing his policies by a u.n. investigation. clearly the world court of public opinion is beginning to understand just how putin has acted, the wealth he's taken away from the russian people and now what he's doing in ukraine did the same thing in syria, did the same thing in chechnya the brutal, aggressive focusing on innocent civilians, hospitals, schools, buildings they know children are in. it's unbelievable. but what you see in these -- ukrainians recapture territory is mass graves, meme with their hands tied behind their back, shot in the head that are civilians of all ages, all -- all walks of life. it's just unreasonable, and i think we're going to see the
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rest of the world respond. europe apparently now prepared to move forward with more oil sanctions, more coal sanctions, trying to deal with the difficult issue that germany, frankly, got themselves into being so dependent on russian natural gas. but russia has branded itself for who it is under putin, and they're not going to be able to run away from that, becky, i don't think. >> i don't think so either these sanctions are having an impact at least on the russian people we've been hearing about how inflation in russia is up 15% in very short order since the war has begun. these additional sanctions will eat in but does it impact putin he's shown a high tolerance for pain on his people in the past >> he certainly has a high tolerance for pain on the russian people what the russian people have had stolen from them by putin and the oligarchs, the inability to
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have that last ability the history of russia to have the personal freedom they'd like to have and the personal freedom the ukrainians are fighting to be sure they can hold onto they have been subjugated by russia before. they don't want that to happen again. i think the surprises of the incredible ukrainian resistance, the poor performance of the russian military and nato coming back really to be prepared to serve its own purposes and now looking at a neighboring country and doing what they can to help that neighboring country defend itself pretty incredible, unanticipated. i think it's going to have a long-term economic consequences, big lung-term military consequences as to how we look at military assets and as well as be a part of the energy
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conversation >> a story we have not discussed this morning that came out from reuters could be key and one of the most helpful i've seen today, six people told reuters some of the chinese state refiners that they are shying awayfrom new contracts for russian oil, honoring of contracts that go through may but not buying beyond that because they are concerned because beijing has warned that these sanctions could have an impact and you don't want to be tainted with that and even though they're being offered low prices for oil, maybe this is a turning point and china stands up and says no, and if putin loses xi as a partner maybe that makes a difference >> it'll be interesting to see how that long-term irrevokable relationship or whatever they announced to you they've never had a good term long relationship china certainly will drive a
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hard bargain when it comes to buying energy and other things from russia, and they should be concerned about being tainted by what's happening in ukraine. again, the world is looking at this and understanding what they'll see, and they'll understand who the partners are, and they'll understand and those sanctions will get tougher congress needs to come up and the big hang up on that appears to be what kind of waiver authority the white house is going to continue to insist on i think russia is going to pay the price here for a long time and china shouldn't want to pay that price along with their new closely monitored ally of russia it was a big mistake for china to make that commitment without knowing what putin was going to do and an even bigger mistake if
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they did know what putin was going to do. >> today there's a hearing taking place in congress where they're going to be calling the heads of the major oil companies up to find out why they're price gouging at the pump, what happened there i mean is this price gouging to see prices increase like this, or is this a result of what's happened on the oil markets, what we've seen with higher prices across the board as the economy reopens after covid and the ukrainian war? >> well, i think it's clearly -- you know, the basis for it is clearly the biden energy policies the policies he announced during the campaign, energy prices began to go up not the day after the inauguration they went up the day after the election as people anticipated what would happen if biden's energy policies became the energy policies of our government i think by christmas -- i think christmas day gasoline at the pump was the highest it had ever been and it had gone up $1.15 a gallon on average before anything happened in ukraine
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these energy policies produced exactly what they would want to produce. in fact, democrats say we want to drive people away from using fossil fuels and then governor newsom in california i think this week said we're thinking about giving subsidies, checks to help people who have cars it's their own policies would produce the result they would say they would want them to produce to drive people away from using our traditional energy resources, and then they come up with goofy things like reducing the strategic oil reserve or giving people subsidies to try to offset the inflation, a lot of which is driven by rising energy prices and the rest of course driven by demand a lot of that in that $1.9 trillion package that democrats and only democrats voted for in march to send money directly to people, people wind up when they get money wind up
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spending money and if you put that much more money in the economy that's also going to drive inflation clearly the number one economic and political issue in the country today and still will be by this time in november >> senator, want to ask you about a different issue that relates to the supply chain which is labor and covid politico describes you as the gop's top senate health care appropriator and you have advocated effectively against spending more money -- the original package that the biden administration had put forth and recently said you think the biden administration is going to have to come back in 60, 90 days to get even more money why not come up with a package today that makes sense if this conversation is going to have to happen all over again in three months >> wale, you'd have to ask the bide administration that we might need 90 billion, and then they actually publicly
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suggested they were about to ask for 30, and then they asked for 22 and then 15, and now down to 10 that we'll probably have to go back and look at this again i never understood why this request came the way it did or ratcheted down constantly, clearly the -- i think the accounts they use interest therapeutics, for vaccines, for testing, for research have been spent down i'm trying to do what we can to restore those accounts, but you certainly can't restore them more than the administration is asking for and this idea we're going to repeal title 42 which is the covid restriction at the border, but we still need billions more covid dollars here, really significantly complicated getting this done and probably prevents it from getting done this week. >> so what do you think the fair number is that's going to be
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needed -- if we had this conversation at christmastime 2022 >> i think it's not fair to know what happened in covid, but i think $10 billion is the minimal number to see how far that gets us that's what the administration is asking for domestically i'd like to do it. i think we were really close to being able to get that done and then cdc announced the change in their view of impacting on covid. and that's frankly what our members need to decide we're not going to deal with the covid issue on spending unless we have a chance to talk about the covid issue at the border. if anybody ever wondered if cdc was politically motivated, this would suggest they're politically tone-deaf with that statement out at the same time we're trying to increase by several billion dollars the covid spending numbers, and they haven't spent the money. they've spent it in the
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categories another part of that problem is there's a lot of money in the so-called covid recovery bill that hasn't been spent and only about 6% of that $1.9 trillion had anything to do with actual covid treatment. the rest of it was to drive an economic recovery in an economy that was already obviously well on the way to recovery >> senator blunt, i want to thank you for your time today. >> hey, great to be with both of you. good to see you. >> i'm here, too missouri >> good to be with you, too, joe. >> good to be with you, senator. hope to see you again. coming up what the ceo of the nation's largest public pension fund is watching in the markets. marcie frost will join us for an exclusive interview. plus america's top oil executives face a key house committee today with gas prices still near record highs. we'll tell you what you need to
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coming up, jet blue throwing a big wrench into a big airline. we're going to ask a top analyst which is better for investors. jet blue with spirit airlines or spirit airlines with -- speaking of jet blue don't miss a first on cnbc interview with the company ceo. that's 10:00 a.m. eastern time with our good friends on squawk on the street. stay tuned we'll come right back.
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welcome back to squawk members of the house and energy commerce committee getting a chance today to grill oil company executives about high gas prices what kind of high drama are you expecting? >> there's 19 members of the subcommittee you've got 11 democrats, 8 republicans. to give you a preview. i know you guys did an interview earlier in the hour. i think the title of the hearing should be a pretty good indication how it's going to go. you've got the ceos of those
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companies as well execs from bp and shell. what they're going to want to know is why the price of gasoline so why, why is the price up this is an interesting chart in the past year the price of crude oil up 73% now oil has come down the last couple of days when it does that's not how gas stations work. here's what both sides are going to say and we can chitchat congress is going to say this. the six companies at the hearing made $76 billion in profit last year true oil companies are paying more in buy backs and dividends. also true. according to a survey 55% of companies are not planning to raise production more than 5%. oil production is on the rise maybe not as fast they would like, but they're struggling with stuff, labor and supplies covid and lockdowns crushed the
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industry a lot of companies bankrupt. they're going to say, yeah, we have leases but there's permitting problems, et cetera and the drilling time has gone from six weeks to six months due to lack of steel, lack of water, lack of truck drivers, et cetera so i expect there'll be a grilling gasoline prices more than anything else, andrew, is something american consumers see and feel weekly if not daily depending on their commute, and it's a political hot button heading into november 8th. >> that was the question i was going to ask you which is even if you think this is just drama and a bit of a sort of theatrical situation it often does change the political conversation, the national conversation it puts targets on certain peoples backs. how do you -- how do you assess that and what may happen after
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this >> you ever watch "game of thrones" arb andrew? >> i have. >> you remember that scene they're watching through the stage, shame, shame. i think this is going to be largely designed to put faces to the names. i guarantee you there's going to be mentions of the pay packages. these kind of numbers are going to come up profits are well up from las year we know that but i will say this from 2008 to 2012 oil companies made more money than at any time in history and will probably never make that much more money again. in fact, 2008 gross profits for exxon, shev rop and everyone else and we've kind of been here before driving demand is high nobody's taking mass transit at least they're starting to but weren't. so you've got vehicle miles in many areas not just here but in places like india soaring.
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the price of the entire supply chain is up. so from taking oil out of the ground to putting it in your pump, there's a lot of people each taking their cut. there probably is at the local gas station. the refiners, the pure play refinery companies because of what's called a crack spread and everything like this may be making more money. some of the oil companies on this panel don't actually produce or sell gasoline so they might just deflect and say we just take oil out of the ground and sell to someone else. >> fascinating we will watch the drama unfold today. appreciate the preview, thanks when we come back why does jet blue think teaming up with spirit airlines makes 3.fbillion worth of sense we're going to get into the latest potential airline deal
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and the snafu it's creating with another deal all when "squawk box" comes right back
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shares of spirit airlines are lower this morning, but they
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had surged 22% yesterday on news that jet blue made a $3.6 billion all cash offer for the discount carrier that could upset merger plans between spirit and frontier. joining us for more annalist and what many said the same thing and that is that jet blue and its prey have a lot of overlap down south in florida. the total overlap across the entire country, then it would be that jet blue actually has less overlap than frontier. how do you view it >> i think if you look at where frontier and spirit would operate together versus spirit and jet blue, there's probably a lot more risk of -- of taking competition out of market on the
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east coast if you let jet blue and spirit tie up. i think it's a matter of overlap that kind of brings the anti-trust lawsuit risk into this but it's a also matter of just where these airlines compete on pricing. i think the spirit and frontier tie up would remain an ultralow cost carrier, but jet blue's average tickets are about 40% higher than spirit so if you get a jet blue as the sort of surviving management strategy and acquiring spirit, i think, you know, the ftc based on what we've seen out of them the last year or two under the new administration, they're probably going to assume that spirit's prices on a track towards jet blue, so higher prices risk to consumers so a lot more risk to this deal through the lawsuit. >> so does that take away the premium that shareholders are being offered to accept the jet
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blue deal? if you're a shareholder would you say i'd rather go with a sure thing than go with frontier >> i mean if i'm a shareholder and i see you've got two things here, the jet blue offer is 27% higher than frontier's offer, but also all cash. there's no what ifs or does this work out down the road you're getting your cash now so i think i take that risk and i say, you know, give me 27% more money, and, you know, it's not an iou, it's cash on the table. >> with the regulatory risk, too, because you could be -- you may be waiting around a year and you don't get it >> and potentially you'd have to fall back to the frontier deal if it's still there. but i think i would take that risk >> that's the part i don't understand you're going to take the risk of what would be a year plus long fight to get the deal done, and
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if i could tell you today the deal would not get done, how about that actually, why don't we start there. let's say the year doesn't get done a year from now you still take that? >> no, i would not but i think there's an interesting component here >> go ahead. >> this probably has a lot more anti-trust risk is you could go in from seven natural allies down to six if jet blue gets spirit if fron tour gets spirit you stay at seven and actually have a viable -- >> what's the start i'm misunderstanding or not appreciating about your argument you're effectively saying it's a much harder anti-trust argument to overcome on one side, but still trying to take the risk. i'm still trying to understand that dynamic what percentage would you put on this high risk deal, actually
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you're calling it a higher risk deal being approved? what's the chance that happens to you by the way, i would put it at 10% it would get done in a way -- unless you're going to break up the company or get rid of lots of routes, and that would be my number what would be your number? >> i would put it more at 50-50. >> 50-50, okay >> because you'd have to consider, andrew, these airlines right now are not profitable at all. and a lot of them can make the argument where oil prices are now and likely to stay there, they might not be profitable and even in 2023 they're saying you don't want us to consolidate, but if you don't let us do this we might disappear over the next year or two anyway >> you think that's going to persuade lena khan >> i think that's a pretty good viable argument. look, how can you say we're too profitable and going to be
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anti-competitive when we can't even make money in the current environment? >> i think that's a viable argument and i would put the odds much higher than 10% of getting that deal through. >> all right, collin, thank you. you're an airline analyst. is it route or route because it's route 66, isn't it? and then if you route someone in a game, you beat them badly. so route should be saved for that do you do either do you have a preference >> let's just call it an avenue. >> i'm going with route, route 66 >> just avoid the confusion all together and call it a victory and then we'll avoid the confusion all together >> that's why you analysts, big bucks. thank you. appreciate your time
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you see what jet blue said we're always thinking about things >> by the way, after every taxpayer in america has basically -- >> what happened first it was we can't survive without your money now we can't survive unless we consolidate. >> consolidation has been going on for a while the other guys start looking around the room saying i've got to -- >> i understand why they want to do it. there's a global pandemic 1 in a 1-year event >> coming up jim cramer's take and get his views on this airline merger and more. plus the exclusive interview coming up with marcie frost, ceo of the nation's biggest public pension fund in e thnation you don't want to miss what she's got to say "squawk box" coming right back
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let's get down to the new york stock exchange. jim cramer joins us right now. we've been having his conversation all morning what happens with frontier, spirit, jet blue you put all this conversation together how do you weigh the deals >> i said in my club note this morning if you go back to what happened between 2010 and 2020, there are a lot of people from the democratic party who wish a lot of these deals had never
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occurred and felt that what they did was create a lot of anti-competitive mergers i know it was just a great moment where alaska did virgin, american u.s. air, front tear midwest, and i remember at the time talking to a lot of democrats in the party who said i wish we had stopped, so now we have the people in the agencies going to stop them i believe these guys, one of the reasons why these stocks are down is the recognition. they're going to make a lot of money and also make fools of themselves, but they'll make money before they make fools of themselves it's very ill-advised on the part of every single one of these companies. completely amid a terrible read of the ftc and the anti-trust department of justice, which is really anti- these mergers >> could the spirit deal have slipped through without the
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extra scrutiny the jet blue bid is going to put on this? >> we've got this guy in the anti-trust department. he's a rigorous fellow we have a person in the ftc who a lot of people feel is just a fire brand but the person in the anti-trust department is a great lawyer for paul wise and he'll never stand for this stuff i think the guys are wasting their time and money, and they've got very bad legal advice all of these mergers are ill-advised. >> is this a chill for every potential merger >> absolutely. they've got to make a statement, and the statement is, okay, listen, we've screwed up we let all these airline mergers go to the democrats and we're not going to make that mistake again. so what we have to do is shoot down everyone of these i think the recognition that justice and ftc are going to act together to slam the heck out of
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these. so, look, i want to speak to the lawyers who said these deals are fine because they remind me very much the lawyers that checked off on at&t, sprint. really unbelievable what's going to people want to buy these are playing with fire. >> that's an excellent description of the stock reaction today you think of bidding wars starting off here. >> no. >> i mean, go back to what happened and to what the democrats thought about what they did wrong in the previous administration one of the things that most regret is they created a lot of anti-competitive mergers this was the area i felt they screwed up the worst. >> jim, thanks. >> absolutely. we want to remind you about the cnbc investing club. find out more at c
8:51 am t point yourphone at the code onhe screen, it'll take you directly there "squawkbox" will be right back f. bill, mary? hey... it's our former broker carl. carl, say hi to nina, our schwab financial consultant. hm... i know how difficult these calls can be. not with schwab. nina made it easier to set up our financial plan. we can check in on it anytime. it changes when our goals change. planning can't be that easy. actually, it can be, carl. look forward to planning with schwab. schwab! ♪♪ esg is responsible investing. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim. the investment management business of prudential.
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welcome back to "squawk box. our next guest leads the nation's largest pension fund in
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the country. here to talk aboutfinding returns in the current market as rates rise and what seems like a comeback joining us now is marcy frost. ceo of calpers we're trying to make sense of the market we'll hear from the fed at 2:00 p.m. today i know a lot of folks are focussed on that what are you focussed on >> well, we certainly focussed on the long-term as a pension plan but, you know, the structure within the markets we did last november change the asset allocation per the $500 billion portfolio that puts in a little more inflation protection we have some downside risk protection on the factory-weighted equities, which is about half the portfolio.
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but, you know, we're long-term investors. we're going to pay attention to the short run. we're much more concerned if inflation were to stay at the risk we know the feds are working diligently to try to control inflation and, again, long-term investors stay focussed. >> in terms of thinking about allocation broadly speaking. in the context of a lot of folks thinking about tech and how you think of private equity venture. is this changed as you start to look at the next several years and think, i imagine we'll be seeing meaningful inflation across the board infrastructure, as well as private equity and moving it up front 8% of the portfolio to 13% of the portfolio obviously we'll have a bit of time to implement that strategy through our pacing model on the real asset side, increasing that to double digits
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as a way of having some inflation protection in the portfolio itself. >> is there any thesis about an impending recession? duetch bank out with note saying they're expecting a recession. stocks down as much as 20 percent. goldman sachs has been talking about the possibility of a recession. some are moving money to a private equity because they think there will be an opportunity on the other side. >> we stay committed to our long-term strategy and the asset allocation on the private equity side we've had a pretty significant target to private assets, including a new allocation to private debt and, you know, again, it's about diversifying the portfolio to witt stand the various market conditions that we find ourselves in over
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decades. we think the position of the portfolio today is postured in a way that can witt stand, you know, some volatility over the next, you know, four years. >> within that sort of private equity pocket, where does venture capital stand? where does real estate stand >> we started to find deals in venture. we have a new chief investment officer who started with us on march 28th she's really looking at additional venture our private equity team found some deals it tends to be small for the scale of calipers. we started to invest there real estate is in a real assets portfolio. we look at it as a core portfolio as both a bit of an inflation protection but also an income source for the benefits stream we have to pay to our 2 million members. >> you've been a quite public
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advocate around the idea of esg. some made the argument is an issue people think about, you know, in a sort of bubble economy or when things are high. it becomes harder to focus or prioritize some of those issues when things become more stressed do you agree with that >> i agree with it to some degree you know, the short term, you know, if you've got energy security issues, you have food security issues with this, you know, that russia waged on ukraine. food security is becoming more of a problem, as well. but, you know, esg, whether we call it an environmental social and governance is about long-term sustainable investing. we remain committed to it, whether it's climate risk reporting. the fcc released proposed regulations on transparency on climate risk at least on the scope. they put some safe harbor in on
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scope three. but we are in full support of more transparency for us to manage the climate risk. >> given that, the reason i ask i wonder if you say energy over the next couple of years might be a good investment and might get some returns is that you say i want to do or maybe don't want to do because i have this esg piece of my thesis >> we remain in. you know, our philosophy is we hold companies for the long-term. we're going to be with them whether there's a short term energy crisis or energy spike or whether, you know, the pricing of oil comes down or the pricing of oil increases but we're with these companies for the long-term. we want to understand their transition plans it's a financial risk issue. >> okay. great to see you we appreciate your perspective on what is going on in the
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markets. thank you. >> thank you we haven't mentioned the bank of america credit card data numbers. spending came in for march numbers. up 11% year over year. card spending for household up 6.7% airline up 91% restaurant spending up 17% the lower households are feeling pressure points. there's a split mr -- there make sure you join us tomorrow now time for "squawk on the street." good wednesday morning, everybody. welcome to "squawk on the street." i'm david faber along with jim cramer carl is on assignment this morning. a quick look at futures as we get ready to start trading a half hour from now what jim and i like to call the old hump day it starts with treasury secretary yellen's warning or being ready to tell congress of


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