tv Squawk Box CNBC May 2, 2022 6:00am-9:00am EDT
"squawk box" begins right now. good morning welcome back to "squawk box" i'm andrew ross sorkin along with joe kernen and rebecca quick is in omaha. it was nice to see you, becky. we will get to all of it in a minute there was so much action we want to check on the markets quickly. u.s. equity futures setting up nicely in the green. 145 points higher. nasdaq up 58 points. s&p up 17 points i want to show you the brutal month of april as we begin this month. dow falling nearly 5%.
s&p fell by 8.8% nasdaq was down by a whopping 13%. the dow is off 11% from the all-time high. s&p down 14% the nasdaq off 24% on i on this monday morning, treasury yields are sitting at 10 -- i wish 10-year note at 2.96% as we flirt with 3%. >> 2.924%. now we're going to send it to becky where all these issues were weighing on everybody >> the market activity, andrew, glad you made it back safely market activities leading to the tension as tens of thousands gathered eed in omaha to listeno
warren buffett and charlie munger speak before they took the stage, we learned about what the company is up to from berkshire hathaway's earnings report $106 billion in cash on hand at the end of the quarter that was down from $144 billion at the end of 2021 about $38 billion there. you know he was up to something. we learned he bought shares, more shares of exxon -- chevron, i should say adding to the stake at the end of the quarter took the berkshire hathaway holdings to $26 billion. that was up from 4.5 billion dollars at the end of the year incredible increase in shares of chevron. he slipped news in how berkshire hathaway increased stake of apple without giving detail. he mentioned it in passing that berkshire bought more apple over the quarter. i ran into buffett after the meeting yesterday. he said when apple shares fell for three days in a row early in the first quarter, he bought
$600 million of the stock. that will be revealed when berkshire hathaway makes the filing for the quarter public. he is also told me that the stock went back up so i stopped. otherwise, who knows how much i would have bought. now chevron joins the top four holdings it is rounded out by bank of america and american express all of this in his annual letter that there was little interesting to him in 2021 that changed >> we he spent $40 billion in a hurry in three weeks now we're back to somewhat in more lethargic mood. anything can change berkshire. the one thing that won't change going back to q2, is we will
always have a lot of cash on hand >> buffett revealed more about berkshire hathaway's activision stake. we will have more on that later in the hour. the other big story was berkshire hathaway shareholder and first time attendee bill murray he was here, too we got the first comments from him. >> okay. that's interesting she just froze. >> comments in a billittle bit >> page three of the new york post has rebecca quick i read about his comments over the weekend. we all experienced had this. what was funny and okay when you were a kid has changed he doesn't want to be the dog that can't learn new tricks. he hopes he can work with this
individual i don't think we have clarity on what happened. he said people say he pulls people's hair. remember pulling ponytails he put it in an ink well in my day, andrew. we never had ink wells we will see withhat he would li to do. it was interesting he wanted to clear the air on that situation that wasn't necessarily what you think about when heyou are goin out to the woodstock of capitalism and warren buffett to charlie munger to bill murray. >> he was out there in part. >> a shareholder. >> a video was made that ran at the beginning of the annual meeting. you couldn't see publicly where he did a groundhog day-ish
video. >> becks is back >> i'm back. i'm sorry. i can't hear it wasn't an ifb the whole live unit shutdown i heard what you were saying i heard what you were saying it was interesting he has been a long-time berkshire shareholder. i don't think anybody knows that he has been friends with warren buffett. he came out a couple of weeks ago before this happened he did a skit over something they have been talking about since last year's annual meeting. a funny skit based on "groundhog's day" and what happened over the last few years. in terms of buffett showing up the meeting here and showing up three years in a row and getting shut out that is why he was here. it was set up in advance of these things of the production shutdown obviously, so much about this
and he did he was sitting and listening to munger and buffett as they were taking questions and answers i don't know who saw the live stream that we were running with the question and answer period on cnbc.com. there was a lot of reflective comments from buffett and munger about how you improve as life goes on and try to be a better and better person. bill said he was thinking about that before he came out to talk with us over what happened he has been reflecting on this for the week and a half since it happened that he had been thinking about nothing else. i think it was an honest moment from him he did want to clear the air, as you mentioned, joe it was reflective. it got picked up in a lot of places he felt good about it. >> the gambling robinhood comments got a lot of play in the mainstream media >> the bitcoin comments.
>> i saw more bill murray. it's not what you think about from the berkshire hathaway annual meeting i don't think he really addressed it prior to that it was in this environment for the last three or four or five years. not only the me too movement, but cancel culture movement. what is an ppropriate you could pick a "seinfeld" episode and 80% of it we cannot talk on the show. >> he said things that were funny when i was a kid are not funny now. he doesn't want to be the puppy that doesn't learn new tricks. >> we talked about it. what we know about him, the person -- i don't know i don't know no one is accusing him of anything that is an egregious.
richard dryfeuss they got it right. i told you he is right about chevy chase. things happen. he is not a shrinking violet he will tell you what he thinks of you >> i will tell you the first time bill murray met my mom, we have known him for several years. the first time he met my mom we had been to pebble beach. she never met bill murray. i brought him back and it was late and 10:30 i said would you come in and say hi to my mom when he walked us back he said sure my mom was getting in bed in her pajamas. he's a funny guy he jumped into bed with her in
her pracajamapajamas she was laughing she was furious because she was about to put her c-pap mask on maybe not everybody would think that is funny. >> see him take a grandmother type into the bunker and pirouetting and waltz. he is a very physical comedian and funny. we'll get back to the devastation and carnage. the market turmoil >> 1,000 points will get your attention. >> maybe we're making the bottom right now. we can usually bottom this out. coming up, stock picking advice from elon musk. what he tweeted about the markets. it's fed week. it is fed every week and jobs week. we will get you ready for the
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at 2:30 a.m. buy stocks in several companies and make products and services you believe in only recsell if you think they e trending don't panic when the market does this will serve you well in the long term. he was offering medical advice as well. hard to know not bad advice as advice goes. stay the course if you like the product. if there is value -- >> hang on i still like netflix i don't know if i like it at $700 the product has trended worse. maybe that is when you give up on it. >> the problem is we are living in the story stock situation for the last year and a half to two years now. i don't know if you saw the other tweet.
maybe i should find it jeff bezos tweet that went out over the weekend also about the markets and venture capital. quoting one of the great venture capitalists in the country i thought we should get that thread and talk about that to talks about where we are and so many people are in the venture capital community have not lived through a downturn they don't know what the world looks like with higher interest rates. >> interesting take that buffett and munger nailed it the gambling aspects are not great. the journal left out an important part fear and greed will be human nature of what dictates what goes on in markets federal reserve added a wild card the past 10 or 15 years in terms of how free and easy money has been and how available it was. beck >> they did comment on that. they talked about the federal
reserve and admitted it added to it buffett defended jay powell and said he needed to flood the market when covid came out he acknowledged that played a role you could make the argument they needed to do it, but should have pulled back sooner. >> we had the anniversary of the reddit we talked about the reddit trade and nfts and acronyms. an a lot of that which was flowing. the first tweet went for a couple million >> now spacs >> all of those things that's what he was talking about. let's talk to veron. he is a technical guy. worse month for the nasdaq since
2008 according to the next guest, it is not over yet. here to break down the technical terms is chris varrone chris, is it about charts or sentiment in you haven't seen blood in the streets yet we are down quite a bit. you don't really read about it as much as we have before with the put call ratio bullish or bearish are all those things registering complacency for a decent bottom? >> joe, that is it the market is driven by sentiment right now. we are still in the process of ridding the market of all of the built up complacency that has been present the last 20 or so months we are in the confessional booth, but not done sharing all of our sins yet. this takes more time
more put call ratios they are rising, but not extreme. we still have yet to see vix above 40 you mentioned the aaia story i have a hard time believing that retail is as bearish as that survey suggests when we have not seen outflows there is a wide gap between records and actions. if we look to the sentiment with vix and put calls, i don't think they are as flush yet. >> what would have to happen what's the worst start to the year since 1939 and worst month since the finance at crisis? if that's not set being people's hair on fire, what will do it, chris? more violent selloff more points in a single session?
what do you think actually would do it? would get people's attention to make a decent buy? >> joe, think of it this way, a lot of high profile stocks turned back or close to back where they were before the big covid run. facebook is back amazon is back so is jpmorgan chase when you look at the high profile names giving everything back, i ask the question does the s&p have to give back the covid run? that gets you between 3,500 to 3,700 on the s&p i don't think you willultimately if you think about the sequence of the bear market, we described it in three terms. the first group to go. we called them the baby faang.
a ark stocks then almost faang. adobe. now amazon last week and facebook and netflix i wonder if microsoft and apple have to get hit before this deep corrective phase is over >> it's just odd, chris, the pandemic plays now giving back whatever you want to char characterize it. we had the future five years compressed in a year in terms of gains. when streaming was going well, a company that had streaming and a lot of other assets that were hurt during the pandemic, if the streaming did well, the stock went to new highs. people are back. they can go to movies and theaters and theme parks suddenly just because the small part that benefitted from the pandemic is no longer a story
and the stocks are be low they were before the pandemic st started. that doesn't make sense. there is too much money sloshing around looking for a place during the pandemic. >> joe, i would answer that as this environment of things are back to normal and back to pre-covid activity i find it interesting. that is not what you would expect in a very optimistic consumer environment the market is still trying to send a message there about the leadership from staples. at a minimum, we look at the high profile names where a lot of damage has been done. this will take time to repair. it is april or may if you look at midterm election years, you average a bottom in august or september. i don't think we're complete i want to see more fear. i want a deeper flush. that comes over the next number
of months. >> chris verrone. >> a deeper flush. >> wouldn't you vote for him for something? are you -- i don't know. you just look like -- have you thought about entering politics at some point, chris he's got the hair. han handsome just a thought i don't know what your politics are. i think the country could use you now more than ever, chris. thank you. verrone. >> thank you, joe. >> becky joe, thanks. when we come back, charlie munger blasting robinhood over the weekend. now the trading platform is k.riking bac we will show you the company's response next. >> announcer: this this cnbc program is sponsored by truist
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charlie munger had harsh words for robinhood at the berkshire hathaway meeting first up, here's what munger said >> look what happened to robinhood? from the peak to the trough. wasn't that pretty obvious that something like that would happen >> tell me again >> robinhood came out and went public and big gambling with shorts and big kickbacks it was disgusting.
>> yeah. and since last year they got mad and sold stock and they got the money. >> now it's unraveling god is getting just. >> a lot of the insiders got a lot of money from them they were big sellers as i remember >> may be. >> yeah. >> that's been some justice. >> well, i have to agree with that >> well, robinhood responding sending cnbc this is statement it is tiresome witnessing mr. munger mischaracterizing a platform he doesn't know about he does not allow day trading. he should say what he means. unless you look and think like him, you should not be an investor we are happy to share our educational tools. i'm not sure how wise it is for
robinhood to respond to this i guess they love it and they are scrappy and they want attention. this is something munger has been clear on for a long time. they talked about it is like a casino out there how people are willing to sell shares on an instant notice and not long-term investors. it has been a pendulum swing they fear it has been gone too far in one direction charlie doesn't like the video game-ization of the trade. he is not a big fan of stuff like that. >> hold on they say they don't have day trading going on on robinhood? what did i miss something did i miss a statement what happened here >> i don't know. we don't allow day trading or
short selling? >> short selling >> they tondon't technically al. if you go online and google how to short on robinhood, it is possible to do it. not in the traditional short selling way. having said that, the idea they don't allow day trading. >> they are day trading. >> i like watching those two guys the muppets. they remind me of the guys in the balcony. they don't care at all god bless them they are so with it. you know, late middle age at had this point -- >> these guys? >> yes >> this is middle. >> i feel i look and i feel good about myself i feel good about them i do feel relatively with you
around, mr. youthful >> i have to tell you. brains operating at the speed that make all of us -- i'll speak for myself make my brain seem slow. i know. >> mine, too >> i'm saying it is remarkable they are up there for 6 or 7 hours. anybody sitting in that audience was in awe of that beyond the comments. >> do they sleep, becky? what is the secret bacon? scotch >> i think they are fueled by peanut brittle and diet coke charlie munger ate an entire two pound box of peanut brittle. >> i went for two boxes, becky
>> yes i will tell you they were excited to be there. this is the first time in three years they were live it is invigorating with tens of thousands of shareholders listening home i think they had a good time more than five hours by the way, charlie held a dinner the night before. i heard from people he was up until 10:30 the night before holding court. they start early in the morning. buffett showed up hours before they went on meeting with people. for all of the ceos like jamie dimon and tim cook he has family coming from out of town they feed off the nenergy from that. >> maybe they are tired d now. coming up, we will talk
about omaha. we will talk about the gains and lots of people are trying to figure out what to do. did everyone sell already? we wdig into the market moves next. and germany signaling support for the eu ban on russian oil. helima croft will be here in a moment to breakdown the impact on the energy markets. you don't want to ssmi her comments "squawk box" back after this >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure ew wireless plan for my business, but all my employees need something different. 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.
we don't talk about it like that now. april was also the worst month for both the dow and s&p since march 2020 the dow falling 5% s&p 500 lost nearly 9% for more on what could be in store for the new month of may, let's bring in paul hickey good morning to both of you. paul, i'm going to start with you. i think there is a lot of folks beat up and beat up pretty bad do you go back in the water now or do you think the water will get colder in may? >> you know, it has been a really as you were saying in the intro with the weak performances in april and what made matters worse is there is no cushion one of the worst months in april in november. one of the worst stretches on
record this nowhere to hide environment for inn vvvestors makes things difficult. looking at this weekend. the short-term what will happen up or down sharply an hour from now? you look at the weekend and you saw during the weakest part of q1 when berkshire hathaway was buying 80% of the equity purchases were in the weakest two-week stretch for a long-term investor, you want to look for a company with solid earnings and prospects you want to focus on the value side and companies with attractive valuations. as long as the fed is here continuing to loom over the market, it will be hard for some of the higher valuation stocks to do well >> neil, what do you think >> it's definitely a brutal
couple of months for the equity and bond markets a confluence of risks come together to heighten to a level we have not seen in a while. >> what do you do? >> we are advising our clients to stay invested in the markets. it is hard to time these g gyrations. the longer you stay in the market, the probability of losing money is 6% versus only in the market for one year which is 26% stay diversified and invested. we think you should look under the hood off the index look at high quality and solid balance sheets and dividend yields and operating leverage and pricing power, et cetera we are advising clients to bring investments in the fold and assets you can get that diversificatio
and hedging. finally, i agree that looking at the come commodity side of things the energy sector is something we have looked at. had it year, a natural inflation hedge in the energy sector value, commodities and real assets and full diversification. >> is there a value given how much we have seen stuff sell off? there is a question of what was happening during the pandemic and this was one-off and alice in wonderland moment or true value within that and sure, it will pull forward, but is there value or can you look at what the prices used to be and say it is down off that
>> i mean i think you can look at and make comparisons to pre-covid levels and an these stocks have come in. the key is you don't necessarily have to say we have to get back to pre-covid levels for the stocks the earnings have grown. we have seen strong earnings growth in higher tech companies. we have the fed being very tight over the market here you have value trading cheaper than growth. growth trades at 24 times earnings value trades at 17 or 18 times earnings in that environment, you want to have the companies with the present earnings and cash flows rather than the companies with the future prospects you want to focus on the present rather than the future i think in that respect, until the fed shows signs they are getting ahead of the situation
which we're nowhere near with 25 basis points coming into now you will see the value trade continue to do better here if you look over the last six months, value has done really well relative to growth. energy done well relative to technology if you zoom out to say a 20-year chart, you can barely see the recent performance on on the chart. right now, they are making up for years of under performance there's plenty of room for more growth in the value trade so to pe speak. >> paul, thank you thank you, andrew. when we come back, we will take a closer look at what warren buffett is buying and what he revealed to shareholders over the weekend. and when we come back, we will have mohamed el-erian over
with microsoft was announced he said it is an arbitage trade. >> one of the things i bought, i bought for a different purpose by a different manager months earlier. he bought roughly 15 million shares of activision i knew about the company we see it in the monthly report. then on january, i don't know, 17th or 18th, something like that, microsoft announced they were going to buy activision for $95 a share. when they announced that, at that point, activision becomes a different kind of security we now own 9.5% -- something like 9.5% -- of activision
if we went over 10%, we would file a report. so the news people don't think anything there i can tell you as of yesterday, we own 9.5%. if we go past 10%, a form will be filed with the s.e.c. it is my purchase, not the manager, who bought it some months ago if the deal goes through, we make money if the deal doesn't go through, who knows what happens >> buffett adding he wanted to head off inaccurate stories by laying off the purchases you know there had been a report in the judiournal that berkshir hathaway was tipped off by the
sale although the journal corrected the story and walked it all back, the uncorrected version replicated across the internet it is out there. you can't shut off a wrong story if it has been out there for hours. lots of people looked at it and other organizations linked to it he was concerned about that. andrew and joe, you know all of the swirling around this this. not just with microsoft or berkshire implicated in saying it was because buffett knew gates. it was not his purchase. it was before the deal was announced and the purchase was made before the deal was considered if you look at the proxies out there. had this is not the only concern around activision. you know barry diller and others investigated there is a lot >> this is a totally different thing.
an arbitage play not trying to make a dist distinction. that was the whole other situation. he is arguing on the bet of the deal clearly he decided is not only is microsoft wanting to do the deal, which is true, but regulators will allow the deal to go forward. that was interesting there will be some people today who may try to make the same bet on the back of his bet >> what's the timeframe on the barry diller stuff a month ago we were talking about it they are looking at stuff? i guess they are trying to figure that one out. you have to come out and say yes or no. you have to vindicate. >> the s.e.c. doesn't have to saying anything. what's terrible about all those things as a journalist it is a funny thing to say what happens often times and i don't know the source of the original story yes, there are regulators and
prosecutors and others who believe they are investigating things when you investigate things, it is not like you put a press release saying you are investigating soogs. you don't have to say i'm not investigating that's how this game seems to be working. >> time will tell. coming up, news that let's moving the energy market an eu ban of russian oim you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire
closer to a ban on russian oil this morning europe's finance minister just saying an immediate russian oil embargo is possible. if you check out prices, let's take a look. you're going to see right now wti is down 2.75%, almost 3 bucks, 101.77 right now. joining us now, helima croft this is definitely ratcheting things up in this back-and-forth war about what's going to happen with russian oil, but maybe more importantly natural gas. they didn't say anything about a ban on natural gas, and that's what's the most important part, helima that's what germany is completely bound by. they can set up the rhetoric and maybe threat on the do this with the idea that that would hurt russia, how much they could take, but they're definitely running into a closer risk of what could happen with natural gas. >> absolutely they're leaving gas out. if you look at russia, they've
actually doubled their energy revenue since the start of the crisis there is a real urgency to try to close down some of the revenue russia is getting in, but one of the big questions we're looking at now is the 27-member block actually united on this. hungary was out this morning saying they would ban on any ban on russia imports. they're completely reliant on russia when would they actually phase in an import ban there's some discussion they would do it at the end of year germany said they might move it up, but there isn't a wlot of clarity right now on what this actual import ban would look like russia sends 2.2 billion barrels a day. we've seen india back up the truck with a $30 discount for russian euros.
ind india has surged their imports what would the ultimate effect be they're unclear what actual measures would look like. >> explain to me why crude oil is down on this news you would think if they're talking about a potential embargo on europe, that would mean fewer barrels on the market does that mean they don't believe in it at this point? >> there are other issues, the concern with china and lockdowns. they're looking to see what the actual clarity on the eu policy is going to be because again we have several members led by hungary out there saying they would oppose an eu ban what does it look like if you don't have full unity on the issue? do you have carve-outs what's the timing? there are some reports italy would like a price cap as opposed to a ban
russia saying to india, we'll give you a hair cut, but we're still going to take your oil that's the problem we simply don't know what the details of this ban would look like and the other wild card, though, is how would russia actually respond to this? last week we saw cut-offs to two countries for natural gas. would they potentially start weaponizing more energy supplies if you move forward with such a ban? >> helima, thanks. we'll see you later. >> thank you. okay we've got a lot more coming up on "squawk box." how will the fed respond to the market selloff in april? we're going to find out at this week's fomc meeting. steve liesman is going to join us with a preview next
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annual meeting, bringing it live to cnbc viewers live for the first time we're going to talk about that in a moment. nasdaq coming off of its worst month since 2008 this is about 2 1/2 hours before we're set to open, higher after a brutal week. nasdaq up by about 65 points s&p 500 up by about 16 points. let's show you treasury yields in just a moment the 10-year treasury note floating once again. 2.916% that's going to bring us a conversation about the fed, joe. >> the big market story this week will likely be the fed. central bank set to hold a two-day policy meeting with a decision and a jay powell news conference set for wednesday afternoon. steve liesman joins us with a look at whether stockmarket turmoil could curtail fed rate hikes.
we've asked that question a lot and a lot of people are saying, yeah, in hindsight, the market did this, what do you expect look at the interest rate environment we're in it all makes sense, steve, i guess. >> i think so, joe despite the sharp selloff, if you look at the market, they're reaching new hawkish levels suggesting the market selloff has not reached the point where it's thought to be exerting any fed power. the sharper outlook for the fed was priced in after new inflation numbers showed the cost of labor accelerating some viewers might have missed this data. the employment cost index on friday which powell said he's watching specifically hit a new 38-year high and the inflation figure continues to rise the selloff of stoxx was not accompanied by any fed yielding price, but rather a more aggressive outlook take a look. there's now a 100% probability
in these numbers of four 50-basis point increases, that is, through septembering, and a 46ch probability of a 75-basis point in june or juul. around 2% by august. ends at 2.8%, peaking at august 2023 right now at 3.3% this pricing shows little belief that we've reached some breaking point where the fed switched its concern from inflation to the economic fallout from the stocks as reported the fed put is not gone it's out of the market right now. in the face of higher inflation and litten sense it's peaking, the fed is likely to provide that brace for a 50-point basis hike and the balance sheet. >> if you're not an options trader, you may not understand what you're saying it's still there, the fed put,
but it's out of the money. i don't know is it "wall street journal" mainstream kind of. bond rate rise steepest since '09. yields have risen. yields have risen over the past month, quicker than they have in a long time. and, number two, consumers inflation fatigue growing as buying power ebbs, and it's starting to bite, and people are starting to say, no mas, i can' afford it. two of those things were coming, steve. >> i haven't seen the second part in the data yet we've been doing a report on the high-speed frequency data almost every week for some consumers it has. i mean in aggregate. there's definitely a limit you have inflation running faster than wage growth, so there has to be. what there is, joe s that big pot of savings that people amass during the pandemic.
it's obviously been winding down you saw last friday the savings rate tick down, so people are using savings. there is a point where this will happen for sure. but there could also be a point where innation ends up ebbing, and that's really the key when you ask whether or not are they going to do 75 i don't think they want to do 75 i think, you know, they've been reluctantly brought to the idea of doing 50-basis point rate hikes and powell will be happy to do that when they announce 50 on wednesday, but they need to see that inflation rate beginning to ease or come down from some respects, and if they don't, they'll probably ratchet up again >> hey, steve, you mentioned you haven't seen it in the aggregate, in the data yet we also talked about bank of america, which has one out of every two households we haven't seen it there's ther. they say consumers are still spending i will say you are hearing it
from some business leaders some businesses, consumer businesses are seeing a little bit of a pullback, a little bit of a slowdown from what they've seen i talked to the dairy queen ceo this weekend he talked about the last few months you've started to see it pull down a little bit same story with the seas candy ceo and berkshire automotive he talked about how he thinks they've hit a limit in terms of how much consumers are willing to pay for used cars and new cars too we've come so far. it's probably not in the aggregate data because you're seeing consumers willing to spend in other places that they haven't been spending before, but it's an interesting shift and you do have so many people watching to see when we've hit the limit in those areas too. >> let me make one anecdotal comment, becky when i pass by the sea's candy
place in the airport, i don't think there's any place that would keep me from buying a box of sea's candies i'm not personally at that place yet. i don't see it enough. that's the problem but in any event, you're probably right about this. we are watching the earnings statements and earnings calls and listening, and we're not seeing a whole bunch of ceos tell us we've reached that point. they keep using those funky euphemistic phrases like our price programs have been successful that is sort of code for we raised prices and people kept buying that has been the talk of late i'm ready to change that story as soon as there's some at least rehn rnably widespread evidence that we've seenused cars come off the boil that's been helpful. it's really interesting. we see these 5% mortgage rates, but we don't see much in the price of housing, so people are
still paying for homes this. process, becky, it seems to me may have further yet to play out before you get -- >> right. >> exactly but go ahead. >> no. just exactly to your point, that's the inventory we're talking about the supply chain issues, same with housing. there's not enough housing inventory. you have more consumers clamoring for less of a product. we know there's going to be an inflection point we just don't know when. that's what everybody ought to ask. >> it may happen episodically through different centers at a certain time you know, you have low income consumers and moderate consumers will be hit before higher income consumers will be hit. they'll be hit before the first ones that is part, by the way, of the inflation healing process, right, that you get to this point where they won't do it and they'll start to come off. that's, by the way, how inflation leads to recession,
right, because all of a sudden the places that were selling goods shut down or reduced their output, and that's when you have a decline in economic output. >> exactly really interesting conversation. in the meantime all that market volatility has investors on edge it was a big topic cough conversation at the ber shooic sure hathaway meeting this weekend. and while berkshire pay ace tension when considering stock purchases, he does pay attention to market conditions and lately they've swuj to an extreme he says he has rarely seen. >> in the last couple of years our market is probably -- it's always been a combination of the casino -- when i talk about that, ie'm talking about the whole market and trading, it set are, but the market has been extraordinary.
sometimes it's quite investment oriented, not what you've read in the books, what capital markets are supposed to do and you study it in school and all of that. at other times it's almost totally a casino it's gambling parlor and that exists to an extraordinary degree the money isn't turning over stocks >> he used the purchases that berkshire recently made in occidental shares as examples of this berkshire bought 14.6% stake in the last company he said it was hard to imagine he could buy that much so quickly especially when big institutions own about 25% of the float of occidental.
those are the long-term investors, and those are the ones who don't sell. he said the ones who weren't selling, he's letting it go on a day-by-day basis when the stocks fell in early march, buffet got really active. he increased his stake in chevron from $4.5 billion to $26 billion and there was news berkshire increased its stake in apple during the first quarter i ran into him after the first meeting. he told me when apple shares fell three days in a row in the first quarter, he bought about $3 million he said unfortunately the stock went back up, so i stopped otherwise, who knows how much we would have bought. he likes when they go down because he gets more at a better price.
activision blizzard, the buying slowed, but the market has been down the first month of the quarter, and we don't know what he's been up to since then all of this has been happening before we saw it in the month of april. andrew >> it was fascinated. when we come back, the finance crisis and 2020 pandemic lows and now multiple comparisons to make right now. many investors are experiencing these market ignitions for the first time our next guest, tech leader who's seen it all, steve case, is going to join us next first as we head to break, check out the worst, boeing lost 22%, disney almost 19%, sales force, 17%, jpmorgan, down 12%. stay tuned you're watching "squawk box" of
nasdaq, as you can see, up about 29 or so the s&p up 8.5 sth i this is after a pretty brutal friday, brutal week, brutal year other than that, everything is great. >> let's play comparison this morning. if you're feeling a little bit of a market deja vu, you're not alone. they have shades, some say, of the dot-com bubble the nasdaq lost more than 15%. our next guest knows something about this he is a tech sector veteran. i want to welcome in aol co-founder steve case. walk us through your thinking. you did it when you did that messenger back in the day, what was going on then, and to the extent you think it mirrors right now >> i think they're a little bit
different. when they went public, they went public in 1992, that's the first year they went public. our market value was $70 million. seven years later, it went up to $7 billion in the earlier part of the decade, nobody knew or cared about the internet toward the end of the decade, everybody wanted to know about it after it broke, not only did aol and time warner get hit, most of the internet stocks dropped by 90% or more and many went out of business i don't think that's the case now, but last year valuations got a little frothy. we pulled back on making new investments last year. we accelerated trying to monetize some of our market stakes we do believe entry valuations matter in venture capital, people talk about the power law. if you invest and a company ends up being super successful, it doesn't matter what the entry
valuation is that's true in most cases. in most cases the price you pay does matter. we're seeing more on the market than last fall. >> we had a steep increase in terms of prices especially on the nasdaq big tech was very successful there were expectations even higher i don't know how you think about is that some kind of alice in wonderland situation and if you look at what the stock prices used to be in terms of a relative basis, or do you have to look prepandemic to look at what fair value looks like then you had on top of that the whole spac phenomenon and that got companies to get public. that increased the price of a lot of private companies which still i would argue to you haven't been marked down fully, and how does that affect the overall marketplace? >> i think your testament is
generally fair valuations did get high. there are other factors as well. i think it has been somewhat reset. it's fair not every company has raised a new round therefore some of the current marks are probably based on older rounds that are probably still a little overvalued. we may see that sell out a little more. we're not public market investors. we're focused on the see stage, venture stage, growth stage. we have seen a little bit of a pullback, taking longer for rounds to get done companies have to be a little more thoughtful about the terms, not rush investors to make commitments. investors are being a little more cautious about the commitments they're making you're seeing a little bit slowing of the pacing and moderation of pacing, which is healthy. revolution growth pulled back. this year we're quite active we're seeing more opportunities because of the valuation reset
in the private markets. >> what do you make more broadly in terms of the private market in terms of capital? how much capital is availability and what are investors looking for? there used to be the sense that there was sort of an unlimited amount of capital out there chasing deals and companies that might not have plans to make plofts for quite some time and that was okay. now it seems to not be. >> there still a lot of capital out there. some investors that were quite tissue in the fall have pulled back somewhat and in some cases quite significantly because it was not as obvious the valuations they were investing in were appropriate for what the likely returns are it's a natural setting out of things they've been living through a number of cycles
last year things were maybe a little too bullish and frothy. public and private valuations were a little too high things have settled back now in terms of what investors are looking forring they're looking at not just a short-term impact, what might happen this quarter, but over the next decade some of the mega trends this whole unbundling of how you work, how you live is going to create a great opportunity 100 years ago the car really kick started the development of roads in suburbs and fast food restaurants and motels all came out of that technology a half century ago after world war ii, it led to malls and suburbs. we're seeing that as new collaborative technologies are invented to advance tech forces. hotels and companies were involved in exclusive resorts and allowed people to work while
traveling as opposed to thinking of travel as a vacation. 're seeing this ripple across the entire economy that's going to be not just thinking about a post pandemic new normal, but what is the new reset in terms of people's lives and what is the impact >> steve, weigh in on this there are some people who think it's the trend of the next decade and some who think it is -- well, maybe rat poison. that is a combination. where are you on crypto and this whole idea of web 3/metaverse, if we could put it all in one big bucket >> it's hard for me to say because i was web 0. we were there before the world wide web was even invented in 1985, we had only 3% online i worry a little bit on web 3
it's become this bucket of interesting things whether it be metaverse or crypto or nfts or what have you. there's not a clear definition of it. i'm excited what's happening in various sectors and technology it's something to watch. bundling all of these innovations into a bucket called web 3 i don't think is particularly helpful a number is bubbling that are interesting new technology that have the potential to be very transform it that's an exciting period. there is a period where people are a little bit confused. we saw that in the early days of the internet we're seeing it again now. sock technologies and companies emerge as the real leaders and that will happen over the coming years. exciting but still a little bit of a confused state of how people think about thinks like web 3. >> okay. steve case, always great to see you. next time maybe we'll do a whole
segment of you breging douc web 3 to see which parts have a future, which may not. nice to see you. thank you. >> thank you >> becky, back in omaha. >> andrew, thank you when we come back, we'll talk about the eu getting hit with an antitrust charge. check out the premarket s&p 500, winners and losers, activision blizzard leading the way. interesting because buffet revealing they bought 9.5% in it maybe more people are getting interested in this stay tuned, you're watching "squawk box" and this is cnbc.
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figures, li auto and nio says production was affected by the covid resurgence xpeng did see an increase in april deliveries still to come as we head toward the halfway point of the show, the fed's policy meeting kicks off tomorrow former fed chair roger ferguson joins us to talk about whether recent market turmoil could force jay powell's hand one way or the other and the nasdaq falling 13% in april as tech stocks continue to take a beating. later we're going to talk to former aol cfo for his take on volatility and where he sees growth stay tuned you're watching squu"squawk box cnbc what's going on? where's regina?
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we were up 150 points, now we're up 62. s&p up by 3, and, of course, this comes after that awful month of april for the equity markets and the coda on frirksd the dow down by almost 1,000 points on friday if you're looking at how the carnage is starting to add up. dow is now down 10% from its all-time high, the s&p is down 14% and the nasdaq down by almost 24% thecd here in omaha at the annual shareholders meeting warren buffett was asked about inflation and the previous comment about swindling investors. here's how he explained the damage that is done from rising prices >> of course, they do everything inflation i should say swipdles the bond investor, too, and it
swindles the person who keeps their cash under the mattress, swindles almost everybody. and the problem -- if you have a business that doesn't take any capital and let's just say the dollar depreciates 90%, so things cost ten times as much. if it doesn't take any capital, you can charge 10 times as much, and you've kept your relative position, but most businesses take some capital. >> the fed's policy-setting meeting kicks off tomorrow and markets are expecting, of course, a 50-point basis hike at the end of the meeting but it's weighing heavily on consumers' minds let's bring in roger ferguson. he's a distinguished fellow and former cfo of tiaa and former vice chairman of the federal reserve and a cnbc contributor too.
roger, the damage we've seen done to the equity market this week, does that set them up or are they concerned or are they more concerned about inflation and trying to stem that? >> becky, i think they're much more concerns about inflation and trying to stem that. that's their mandate as you point out, it's at a decades-high they're behind the curve and they need to move. secondly they're not surprised to see equities come off the boil after all, that happens when interest rates are about to rise so i think it's going to be steady as she goes for 50 basis points not just the upcoming meeting but probably a few more going forward. >> definitely coming off a boil, maybe no sur friez there we would expect markets to be down but the totals are starting to add up to some eye-popping figures when you've got the s&p down by 14% and the nasdaq down by almost 24%. i guess you could say this has been orderly and this is why the fed wouldn't be more concerned
is there something that would be more set up in the earthquake questionty markets >> we have to make assure consumers don't get squeezed. >> i think it's inflation at this point i heard warren buffett's comments about inflation swindling almost anybody that's job number one for the fed right now. now, to be fair your point is very important there does seem to be enough liquidity. i don't think it's going to change the game plan at this stage. >> that's an excellent point roger, we've talked about this before the big problem, though, is the fed has to get inflation under control, but it's got these really crude tools this is a -- this is a supply issue, and the fed doesn't have the tools to increase supply it only can tamp down demand maybe it's going to thankake tht
slow it down maybe it's going take the demand side to make a difference. >> i think you put your hand on dilemma. they don't control supply and we've seen how volatile supply can be with the shutdown in china. we also see uncertainty about oil prices up and down, et cetera so as i've said earlier, it's a witch's brew, and the probability of a recession is, i think, unfortunately very, very high because their tool is crude and all they can do is control aggregate demand some are going to be harmed earlier than others, but they have no choice they've got to retain credibility, which to date they've done reasonably well and they're going to be validating the market expectation several 50-basis point moves. it's very, very high because of the challenges of trying to get
this growing inflation under control and having so few tools to do it and so little ability to control the supply side of the economy. >> you just said at the beginning of your comments you think a recession is almost inevitable at this time. is that the first time you've said this, and what are you talking about when you say a recession. is this something like a couple of quarters of gdp declining or do you think this is going to be something that's steep and painful and something we remember for some time to come >> well, yes, this is the first time i've said it on your show many times i've said the risk of inflation is rising, the risk of inflation is rising. it's definitely over 50% one of the things that has gotten me to that place is the recognition that the rest of the world is also slowing pretty dramatically you know, we saw that here with the net export numbers being, you know, much weaker than had been expected.
so we have seen a global slowing here relatively rapidly just when central banks in a number of jurisdictions t u.s., the uk, are tightening, and so it is really a tricky global situation. the sort of 2% negative gdp, that, i think, would be a little bit of a win, frankly. it my be recalled a reverse soft landing, but time will tell because some of the dynamics are outside of the control of the federal reserve and are in the control of other central banks and other economies that have their own dynamics we see china slowing a little bit as well. so, you know, it's going to be a very, very tricky tight rope through 2023, and i do fear a recession, and i'm hoping it will be a mild one. >> wow okay so we'll mark it here.
you're concerned that a recession's inevitable at that point and the best we can hope for is a mild recession. roger, thank you for the dose of reality this morning we'll see you soon. >> thanks, becky. coming up, actor bill murray was in omaha for the berkshire meeting and spoke to becky for the first time on his new movie that was shut down based on the investigation of inappropriate behavior his comments after the break. first, though, let's check out some of this morning's biggest nasdaq winners and losers you see the list winners first. in the red now as yocau n see. stay tuned you're watching "squawk box" on cnbc
welcome back to "squawk box" on this monday morning the futures, well, they're turning around in saut so great ways we had some green on the screen. now red. dow up 33 points the nasdaq and s&p down a little bit more given where we were an hour ago, that's not the best of signs, especially given where we were last week. now making headlines, a
prominent chinese market analyst calling a market tumble could cause capital to flee. eunice yoon joins us with the full story on that eunice. >> reporter: thanks, andrew. well, he is with the bank of communications and often a frequent guest on cnbc and up until this weekend he had a following of 3 million on a popular wii chat account he's not known for being a radical voice at all or being overly critical of the chinese government he's known as a straight shooter when it comes to market analysis, and also to be quite fair and accurately predicted, the market collapsed in 2015 so it's -- today a lot of berkers were wonders what he did to run afoul of the chinese authorities.
he has, though, not been known to stick to chinese government talking points for example, he recently had predicted a shanghai market tumble below 3000, which proved correct. he warns of capital fleeing. and he plames chinese tech regulations, not the s.e.c.'s threat of delisting for the declines that we're seeing in chinese stocks in the united states now, he has also been quite critical of beijing's covid policy in fact, he recently tweeted shanghai, zero movement, zero g gdp, referencing the month-long lockdown, and the silence we're seeing is really the latest indication of the chinese government's increasing intolerance when it comes to public discussion and debate about the chinese economy. we've reached out to hong,
around thankfully he did respond, but he didn't have any comment on his current situation. guys >> i was going to say. he responded but didn't respond. isn't that because he's worried -- i mean it's one thing to silence him on social media. in if fact he's not responding means he's worried something worse could happen >> reporter: it's always a possibility here, especially with the overall environmental we're seeing when it comes to any discussion about the economy. influencers, for example, in recent months who have been shelling out stock tips have had their accounts disabled and some have been punished for what the government believes is bad-mouthing the financial markets. also there have been some private fund managers who are not known outside of china but have major followings.
one has 13 million, but he was actually posting about how he was scaling back his chinese -- the holdings of his chinese stocks with the point being he's holding 10% of his holdings in chinese stocks, but the government didn't necessarily like that, and his account was disabled. >> and in terms of disabling it, do they down rank stuff so people can't see certain things beyond taking people off the site entirely? this goes to the whole town sq square. >> reporter: it's both for example, his wabo account has completely disappeared, but his wechat account is still there. he's able to reach out, but when it comes to his actual analysis, it's not there anybody. >> before we go, charlie munger had interesting comments about china. he was asked about china over the weekend. sort of took two sides to it
at one point he praised the chinese in certain ways for some of the comments they made last week around some of the regulations around tech and the like but was also quite critical of china do those make the rounds out there or no? >> reporter: not necessarily from his comments, but the comments about from the chinese leadership definitely made the rounds last week they said they were going to be prioritizing economic growth, which includes supporting internet companies. it's not unusual for the authorities here to kind of make some announcements that they're going to say clamp down on internet companies or private enterprise but kind of scale it back a bit and tweak, but what's unclear is whether or not what we're seeing is like a wholesale change in attitude toward private companies or internet companies or if this is
president xi jinping looking forward to a political shuffle at the end of the year and wondering if it's a better authentic for him to be shoring up the economy ahead of that. >> thank you for that report we'll see you soon those were some of the comments that i think charlie munger, becky, was referencing in a relatively positive way over the weekend. >> yeah. he also said he liked that they cracked down on bitcoin. not a fan of that either and said we should have done that as well bill murray has been a longtime friend of "squawk box" and long time friend of berkshire hathaway this year he made the trip to omaha. we caught up with him. he made his first public comments since the film he was working on "being mortal" shg shut down two weeks ago because of what the studio said was inappropriate biv on the set he said he's been reflecting on
it. >> i have a difference of opinion with the woman i was working with i did something i thought was funny and it wasn't taken that way. the company, the movie studio wanted to do the right thing they wanted to check it out and investigate it, and so they stopped production but as of now we're talking and we're trying to make peace with each other i think that's where the real issue is between our peace we're both professionals, we like each other's work we like each other, i think, and if we can't really get along and trust each other, there's no point in going further working together or making a movie as well it's been quite an education for me i've been nothing -- not much else but theying about it for the last week or two, and i fell like if i don't -- if i don't see that -- you know t world's
different than it was when i was a little kid what i thought was funny as a little kid is not funny now. things change and the times change, so it's important for me to figure it out, and i think the most important thing is that it's best for the other person i thought about it if it's not best for the other person, it doesn't matter what happens for me and that's -- that gave me a great deal of comfort and relaxation because your brain doesn't operate well when you're in the unknown when you think, how can i miss perceive -- how can i be so inaccurate and so insensitive when you think you're being insensitive to insensibility that you've had for a long time. we're talking about it i think we're going to make peace with it. i think we're very on it is mystic about that. we have to be. i think it's a sad dog that can't learn anymore. i think that's a sad puppy if
you can't learn anymore. i don't want to be that sad dog and i have no intention of it. what would make me the happiest is put my boots on and for both of us to go back in to work and be able to trust each other and work at the work we both spent a lot of time developing the still of and hopefully do something that's good for more than just the two of us, but for a whole crew of people, movie makers and the movie studio as well >> you know, i think it was a pretty honest conversation with him, joe wetalked about it a little bit earlier. has been reflecting on this for weeks and he was listening to what murng ger and buffet was saying before he came out to talk to us on the set out in the convention center. just a lot of what they talked about is how you've to get better and better, live the
second half of your life better, live smatter every day those are things we talked a lot about in the past. it definitely hit him sitting in the auditorium listening to those things i thought it was a good corn very sags just in terms of the idea that norms are changing and people need to be aware of that and we all need to make sure you're making people around you feel comfortable and change with the times too. >> yep not knowing -- you know, you have to take him at his word i don't know if you off the record talked as well, beck. you haven't been back, so i haven't spoken to you about it. >> we talked, yeah. >> you know, i have trouble -- i've been a fan since the first years of "saturday night live," big fachblt when i was in grad school, i was in a lab at mit and i called up a boston radio station and did an imitation of
singing mcwing's happy birthday and i won a trip and met bill. so i've been a fan for a long time, so i really need to recuse myself i think he's a -- you know, he's a -- i said -- texted you. he's a cultural treasure and i don't know any more than what he just said, so we'll have to take it at face value what's that? '79? were you born in '79 >> no. i was born in '77. >> it was pretty good. i won and actually took a bus down to boston, that's how classy that radio station was. >> living large. >> living large. you know, we'll see what happens with this. it's a cultural conversation these been happening for several
years now. we'll see what comes next. it was thoughtful, reflective. >> that predated "caddyshack." i go back to what evolved into superstar status. >> you're old. >> yeah, right. >> anyway. >> so is he. >> when we come become, we'll talk crypto and the price action. jetblue submitting what it calls an enhanced superior proposal for spirit. spirit's board is reiterating support for that frontier deal we'll have much more on this when "squawk box" returns. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire
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so boost your bottom line by switching today. comcast business. powering possibilities.™ checking out the futures, the dow is now in tnegative territory. on friday the dow closed by 100 points now down another 80 points that was the big decliner too. mohamed el erian will give us his take on the markets and when weather he sees an end to the volatility any time soon stay tuned this is "squawk box.
good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in rainy times square some day spring will come. that's what tennessee garner said. >> it's may, may. >> it may be warm. some day we may get above 49 degrees. i'm joe kernen along with andrew ross sorkin. becky quick is reporting live from omaha, nebraska she spent three weeks out there.
more on the headlines from the berkshire hathaway meeting -- >> you mean three days. >> no. in omaha it's three weeks you can spend in one weekend is why said that. work with me i'll be here all month crude prices -- crude prices -- no omaha is great i'm kidding. might be a little quiet for someone used to manhattan, but, you know,that's salt of the eric out there in that flyover, what you would call a fwlieover >> i was there i landed. >> i know. the ten year, last we looked was 292. we've got a fed meeting this week there you can see 291.8 on the ten-year, beck. >> yeah. markets are moving things are responding. as you mentioned, warren buffett holding court in home omaha this
weekend. his first in-person annual meeting in three years he made headlines as he revealed that berkshire increased its stake in its holdings. first up, filed an increase. it took the energy giant to $26 billion in the first quarter, up from $4.5 billion at the end of the year last year during the q & a session, he mentioned he bought more apple in the first quarter he talked a little bit more. he bought about $600 million over the three days when apple shares wither falling during the first quarter. he added the stock went back up so i stopped buying. who knows how much he would have bought they're increase ig their steak in activision blizzard he said he got interested after the microsoft deal was announced and it was an arbitras play
when asked whether it was a good time to buy stocks, his answer was he never tries to time the market. >> we haven't the faintest idea what the stockmarket is going to do when it opens on monday we never have had. we have never made -- charlie and i, i don't think, in all the time we worked together -- and i'll tell you something later on about how learning takes place, but we have never -- i don't think we've ever made a decision where either one of us has either said or been thinking we should buy or sell base odden what the market's going to do. >> no. >> or for that matter on what the economy's going to do. we don't know.
>> he may not make bets based on the economic outlook he may not care what the market's going to do, but he does care about market conditions and he plowed tens of billions of dollars in markets over a matter rer of weeks when the stocks were down sharply cnbc's mike santoli was here he talks about how you can't time the markets but he's no stranger to market cycles and he likes when they're cheaping rather than when they're more expensive. >> oh, absolutely, becky as the market sells off, it becomes more of a buyer's market, if you're not trying to pick a low it's been very broad it's been the worst january to april performance in the s&p 500500 on record and actually the median stock and s&p is down they're such fasting for somebody who's going to be patient-sensitive. you see here opening -- just looking slightly lower, it's now
down 1.5% on all the bases they're now ted active for the trailing year. it doesn't necessarily trigger anything, but it's also a new low for this correction. a lot of folks focused on the 4100 area. that was sort of the intraday lows very nearby right now. we'll see sort of a noncommittal preopen action here which makes sense. what has held up on a relative basis is dividend plays. if you look at it, the dvy, it's next to the nasdaq 1 money has done quite well. what's in there, as you would expect, it's very overweighted in utilities it's almost an index and etf built to understand what's going on right now clearly it's been macro driven markets as well. take a look. it captures so much of what's going on in terms of fed
tightening really active to other fed banks. a likkely euro zone that's hurting in the end. as you see, this is a ten-year chart and we made these new highs. i don't have the line but it was 102. now, it's looking a little stretched. look at the last time we got very vertical on the index maybe we get a little bit of relief, but it's been tough to fight that overall trend. >> mike, we've been watching the futures this morning early in the morning in the wee hours, dow was up by 200 points. think by 150 points by fair value when we started the show now you can see down by 31 points nasdaq down by 68 at this point. this is a volatile market. what do you think when you see these things pulling back and forth and there's questions
about what you want to see after a steep decline on friday with the dow over a thousand points lower? >> it tells you for one thing, so much damage done to very big important stocks and people have very little conviction about the overall indexes because of that. you talk about the old textbook. very weak friday closes. you don't necessarily want to see a half-hearted rally that often gets chopped back as you test the conviction of dip buyers the market for as weak as it's been is not really flashing a lot of those super oversold conditions where people have really rushed out of there ite e been very mechanical on the downside a lot of the trend strategies have piled on. again, this is the very, very bottom end of the trading range. bounces can happen any time once the markets have been down in a straight line like this, but it's tough to really know how it goes bonds are not hurting as much. that's been a key element of this year. you're losing on the bonds as
stocks have gone down and that's kept people across the board very defensive, but yields have stalled out under 3% of a ten-year. >> thanks, mike. it's good to see you we'll talk with you later. let's bring in mohamed el erian. what do you think when you see these numbers? >> i think it's understandable, becky, that people are concerned because we have lost two of the three legs that have been supporting this market think of the market built on a stool. one leg was incredibly loose fed policy that's gone out the window even though fed conditions are loose. we've priced them in the interest fed is segment but not in the credit segment. the second thing that's also under prsh is economic fundamental and what that means for earnings you didn't mention the reason
why stocks came down is we've got really lousy data out of germany and china overnight. and then finally the things that are still pretty strong but there's investor conditioning. when you look at it, it doesn't surprise me there's concern out there. and i worry. i've shared this with you for many, many weeks i worry we're not through this correction if we get a big bounce, it's time to lighten up for those who are overexposed. >> mohammed, we spoke with roger ferguson and his many roles. he was also former chair of the federal reserve. we asked him how the fed's going to do be looking at market declines if you're an vester and the nasdaq is down, this does not feel orderly from the fed's perspective, this is still orderly these are not technical issues that are hammering things that might raise their concerns do you think there's any chance
that would slow the rate hikes or they would say, that's okay, this is expected, and inflation is euro bigger issue we have to tackle right now not a big selloff in the market? >> for the market, orderly means are my stocks going up for the fed, orderly meaning market functioning, and so far on the whole, market functioning has been okay. i say on the whole because those who look very closely as how the treasury market operates have noted outside moves on almost no moves, so there are pockets of liquidity stress as long as they remain small, the fed is not going to whoa about asset prices as much as they worry about controlling inflation. they need to regain credibility. that credibility is very low right now. >> how much of the moves that you're seeing that concern you in the treasury market could be just related to the idea that the fed has been the biggest buyer in the treasury market and
they're backing off because there's no more quantitative easing they're not going to be the big support in that market >> that's a really important point. i think the market has understood and priced in the rate hikes and they've gone too far. i don't think the fed will be able to hike rates as much as they've sustained. what the market hasn't quite realized is the qt element, the bans reduction, just to give you a sense of what's ahead of us. last year globally we expanded the balance sheets by over $2 trillion last year this year we might reduce them, i suspect, by about half a trillion that's 2.5 plus trillion turnaround that's really significant. keep an eye out on the q.t. element and that's where the fed could surprise us this week in terms of what it says about q.t. >> meaning that they're going to
say -- they've surprised us before and said they're going to start tightening more quickly than the market thought. you expect to hear more in that vein >> so they have to regain control of the narrative they've lost control of the narrative in a meaningful way. not just inflation narrative but the response narrative, and that's why the market has run away from them and every time they try to catch up from narth, the market has run further they've got to regain credi credibility. it involve stwos things like the one the ecb did last week. explain to us why you missed your inflation forecast so badly. and then the second thing is give us some guidance on the qt. how much per month starting when i suspect we'll start in june. i suspect they'll tell us maybe $50 billion, maybe up to $70 billion, but the market will want the pathway, and it's not clear to me the fed will supply that at this meeting. >> momohamed, thanks
we'll see you soon. >> thank you, becky. okay coming up, more billionaire market advice. we're going to show you what jeff bezos tweeted over the weekend. check out shares of apple this morning because the eu is accusing the company of violating antitrust laws by unfairly undercutting companies as payment services compete with apple pay. the commission arguing that apple restricts rivals access to its nfc chip technology. take a look at the stock right now. it's down a bit, but becky making some news with warren buffett over the weekend that he's doubled down and added to his stake. we're going to talk more about t.a tt that in just lile bi we're right back after this. >> announcer: this cnbc program is sponsored by bdo. people who no-no bdo
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has been some losses this is pretty interesting because jeff bezos tweeted over the weekend about the marketsful it was in response to these market thoughts from investors bill gurley who wrote the following. an entire generation built their entire perspectives on valuation during the second half of a 13-year amazing bull market run. the unlearning process could be surprising and unsettling to many i assert denial. bezos said he's one of the matterest people i know. most people dramatically underestimate the remarkableness of this bull run such things are unstoppable until they aren't. markets teach the lessons can be painful, and i think a lot of folks felt that in the last month or so if not longer. we'll see what happens to the rest of the month of may, becky, as we start it this way.
>> yeah. let's hope this is a different month than april but, yeah, anything goes anything can happen. when we come back, warren buffett and charlie mung gerwaying in on the cryptocurrency at the ber shierk hathaway meeting and whether bitcoin belongs in your portfolio. we'll hear what they have to say. bitcoin up by 38,000 581. for the most part yps crtoare higher this morning. we'll be right back.
warren buffett's skepticism offed by coin is well known. in the past he called it rate poison squared charlie mung ger likes it even less he called it venereal disease. they got another crack at it they were asked if their views had evolved. >> whether it goes up or down in the next year, five years, ten years, i dolkts know the one thing i'll pretty sure of, it doesn't multiple, it doesn't produce anything it's got a magic to it and people have attached magic to lots of thinks >> in my life i try to avoid things that are stupid and evil
and make me look bad in comparison with somebody else, and bitcoin does all three the first thing it's stupid because it's very likely to go to zero. it's evil, because it undermines the federal reserve system and the national currency system which we desperately need to maintain integrity and government control and so on and third it makes us look foolish compared to the communist leader in china. he was smart enough to ban bitcoin in china while all of our presumed of our nation, we're a lot dumber than the communists in china. >> on obviously these guys are not into bitcoin, they're not up to date. they don't like it and they have
been wrong for a while it has taken off their stories have been ratcheted up by fidelity who said they were going to aallow retires or investors to put a big part of their 401(k)s into bitcoin. you did hear from the government this week that the government was concerned by that, not real on board with that but, honestly, it's something that's red meat to wave it in front of these guys at this point. i asked the guys late in the session t afternoon session when i think some people may have been getting a little tired. at this point you know what they're going to say, and they didn't disappoint. >> i don't know if you saw this, there's the piece on b-1 wall street warms up got on the the point where everyone is at some point in the journey. if they're not actively invested, they're exploring it many are agnostic and the banks don't necessarily -- they haven't changed their opinion on it they just have so much interest on their clients they don't want
to miss out on the money my question would be do you know whether either warren or charlie has ever read anything i would think they would have read the bitcoin standard. i watched an eight-minute tape -- you watched the eight-minute tape where it's really a ledger, sort of a post on a ledger that actually keeps track of work you know to matter guys, it's -- even goals -- i don't think they've written anything on it >> he has never liked gold for whatever reason. >> it's not interest producing gold has been around for 4,000 years. >> gold resto's a store value
it's an asset if it's an asset at all that produces nothing that is true what he's saying that's 100% true if you buy an apartment, a farm, a company, if it's working, it should produce something >> no, no, no. the history of money and currency, it's never produced anything it's just a placeholder for something that is production tissue. >> that's his whole point. >> that's his whole point. >> andrew is right he doesn't like those types of investments. >> not everything is a commodity. therefore it's usable. gold is usable in jewelry. but that's not why it has value. it has it because it's immutable, a fixed amount, and it lasts. >> sure. but what warren said repeatedly as long as i can remember, he didn't like gold either. if you don't like regular gold, it's hard to like digital gold. >> he's wrong about gold. >> his point -- he used an
example, guys. >> i think -- he wrote 800 pagings on money bitcoin classifies as something that could very well be used -- >> could bitcoin be used tore for wait is for eternity sure it's only in the eye of the beholder that's all it is and that's what he's saying. >> i don't -- it's not a greater -- >> that's what gold is golder is a greater theory too. >> then all currency is. >> yes >> he's telling a group of people who are ostensibly investors there is two ways to do this. you can be in the greater full theory gain, which is one way to do it, or he can be in the value investing game, which is a different way to do it that's his way >> he used the example over the weekend saying -- he said if i
could buy all the crypto in the world for $25, i wouldn't do it because if i owned all the crypto, it's not worth anything to anybody else. just this idea if you own it all and you're not relying -- if you owe it, you're relying on others to pay for it. it's not a knock on crypto versus the dollar or other things it's a nonproducing asset. he's not a big fan of those things they've talked about this for a while. you're right that this is more and more embraced by wall street and the general public what is it, something like 77 million americans have some ownings of crypto at this point? i think those were the latest numbers they saw they knew this was going to irritate a lot of people >> they could be long gone and bitcoin could be 500,000 a coin and they're never going to realize how wrong they were.
>> that's possible. >> or it could go to zero. >> go to zero. >> or go with tulips -- >> tulips don't affirm anything either. >> it's not kurcurrency. >> you also are agreeing it's not a currency. >> i don't -- i don't -- i don't know if i -- >> gold can be a currency. >> i think gold can be a currency you don't want your etf at the border there's not cue grands but maple leafs. you should have gold and a gun, but that's going to happen for you, i know. >> i don't want to go there. >> no, i know. >> yeah. coming up, news out on the bidding war for spirit airlines. you've got to hear this. phil lebeau is going to arhe
jetblue sweetening its offer this morning phil lebeau is joining us this morning on the phone hey, phil. >> this is an interesting story. we talked about when this merger was first proposed by jetblue that ultimately would regulators approve a deal where jetblue and spirit are combined. and according to spirit, they do not believe that is going to be the case some of they rejected jetblue's initial offer saying, look, we don't think this holds mustard. jetblue came back with an enhanced offer saying, okay, we will divest some of our assets if there is a combination, specifically those related to the northeast alliance they would not abandon the northeast alliance, which they have between jetblue and american airlines, but they would essentially get rid of spirit's service to the northeast so that it would be just jetblue, and they were also saying, look, we will divest some of our gates down in fort
lauderdale if that's what needs to happen in oert to get regulatory approval and we'll add a reverse breakup fee. that is the enhanced offer if there jetblue, but this morning jetblue said, look, we do not think this will get regulatory approval we do not think it's a sue pea yore bid to the one from frontier so at this point, we'll see what spirit has to say about the enhanced offer from jetblue, but it's hard to see if this is going to get a whole lot of traction given the fact that their primary concern is that they do not believe the doj will approve a merger between jetblue and spirit even if the northeast alliance remains intact, which is what jetblue is calling for it would divest some of the assets there but they would not eliminate that agreement or alliance altogether if a deal was consummated. guysing back to you. >> all right, phil
much ado, much ado going on there. we know you'll follow it for us and see which way it goes. fewer flights and higher fares, i guess, which you love. meantime let's get back to this week's tech route i said this week last week. i want to bring in tim armstrong, ferrer chairman of aol and the founder of tech giant startup flow co- you see it on the screen all the time and elsewhere tim, we were talking to case earlier on the program trying to make the comparison or not on where you think we really are with the economy and specifically within the world of tech valuations. what are you seeing? >>specifically within the worldf tech valuations. what are you seeing? >> good to see you guys.
today's pain is tomorrow's gain. you have the tech stock bubble where valuations get too high, people are not focused on their core businesses. there's a employeeup, which we saw last week, but i would say we're probably at the start of the next generation of the internet around i think if you're an investor, you know, attention kmart shoppers there are some companies that are great. on the personal investment side, i'm investing this week because i see a lot of great companies undervalued. i think if you're a company, it's a great time to go back to making sure your core business is really solid and your investments and dollars are going where the future's going i remain incredibly bullish on tech overall. >> you think this is an opportunity.
you think things are on sale here you're not trying to catch a falling knife anymore at this po point. to the extent you're not, where do you plan on putting your money. >> i think there are two big trend lines, one the faang stocks they're doing so much revenue and good for them for doing that their future growth has got dom from new product development or eating their own customers, which they seem to be eating their own customers at this point. there's a lot of fear in narth about taking down the customer and using it competitively the second thesis is web 3 and the addition of a massive amount of data into the marketplace that can be owned on a direct to consumer basis will change the relationship between consumers and businessesful i'm betting on d direct to consumer kind of business we're doing it witat flowcode a with you guys at cnbc.
i think the faang companies -- doesn't look like it now but there are cracks in the wall it may take 10, 15 years to grow to this side, but i think we're at a great step. it's a buying opportunity for those of the new economy. >> into whalt? to the extent there are companies out there taking advantage? we were even debating what the future of webb 3 is or isn't over the next decade. >> yeah. i think there's companies like the crm game, for instance i don't have any stake in these companies other than some of them are personal. but we don't have any business relationships with them other than normal customer relations some are like a hub spot which i could consider to be a much better version of crm systems. i think that's one big area where we're owning customer first party data there are companies that are clear that are partners of ours.
i see what they're doing at airports and sports venues and things like that you see a set of companies enabling a much deeper level of crm and customer relation ships and webb 3 is about data and first party dataing and the businesses that help people build their first party direct to consumer relationships are going to be the big winner and the future of where web 3 is going to be going. >> where do you land part of it is around crypto. we've been debating all morning that issue given some of the comments we've heard from warren buffett and charlie munger over the weekend. they've been great critics of crypto where do you see that netting out? >> it's an interesting space you probably saw the imf release a couple of months ago that said between 12% and 15% of the economy is online and 88% is still offline. so i think when you think about
the current structure of financial instruments in the offline economy and you compare it to what ethereum, bitcoin, some of these other businesses are going to do be able to do. i hear whether it's an investment asset or not. i look at it differently it gives you the opportunity to attack a new level of data to the incentermentes where people are dating it's not just an incenterment for trading value. it brings an amazing amount of data we did a big drop and we partnered with a localized data company and dropping those nfts, allowing us to put tokens on all of those with gucci mane, the result is instead of having a merger for nfts, you're able to attach nfts chl i don't like at crypto a stored value arena or
whether or not it's an investable asset i look at crypto as if you had a dollar bill and you were able to attach data to it, that's the most part of crypto is the mix together so i heard the argument you guys were having. i read all the arguments in the industry i look at it almost completely differently, which it's about data as much as it is about the argument around what the value of it is. >> can we go full circle toll the value on faangs for a second the more i was thinking about it it sounds like you're anything tissue on the whole space. when you think about the next decade for a google, your former employer, for an amazon, for a meta, even for an apple. i don't know what you think of an apple at this point you think it's not going to be a promising situation or do you think there's more growth elsewhere? how do you --
>> i think it's -- smavgts as an investor, they're kind of turning into companies where i think there's growth at a reasonable price right now i'm saying -- what i see happening there is the customer bases there are not exactly happy all the time because they a feel like they're starting to encroach more and more if you spend money and give them data that gets spun into products that sets up a competitive situation. i don't think there's a lot of alternatives right now but the customer base t level of angst around it is creating opportunities. when you fast forward to some of the abilities of customers to go direct to consumer i think you have an open avenue because i think faang is going to have a tough time adjusting their business model as a consumer, ten years at google, i see a lot more ads per page, per video, per social, you know, happening, and there's --
you know, is that sustainable for a really long time going forward? i don't know but there seems to be a lot of innovation needed at farng i think they're still going to grow but when you look at something like -- i'll take netflix for an example. if you're netflix, maybe the biggest opportunity is to launch a new type of ad system on top of the platform that allows data sharing. i think they would mop up a lot of ad dollars very quickly based on what i hear from customers. >> real quick. when you look at valuations and use that as a proxy. should you look at val yuationss they were 50 weeks ago you look at apple, amazon, netflix, or do you look at what it was before the pandemic >> what i do personally, i go
back to 2017 and 2018 and i study what the companies and the trajectory they were on there. i wipe out the five- or ten-year pull forward and think where would these companies be now the price of earnings ratio is starting to get in line where i think they're more gar p-type investments. which is great i think faink will be a great area iny i think the place i see people have dumped value out of, there were a lot of companies highly developed in 2017, 2018, and they got a pandemic bump and they crashed all the way down. i think there's been an overcorrection i think as investors, you gould for gar p and faang but there's going to be a lot of kpaps once the smoke clears and the same with the dot-com bubble. the other thing is there's a lot of talk about the management
teams, not a lot of experience about people who have gone through tough environments. >> the point jeff bezos was raising over the weekend. >> i think that's true i also go back to the fact i think the strongest leaders are also going to get developed. if you take a company sfr 2018 that wu operating well with young leaders or founders and they're able to get through this pandemic about, that's one of the things i would be looking for. who are the next rising stars not in terms of the business models but the management teams. i'm bullish on that. i think faang 's going to have a lot of work to do. i think their products were ready for the next 12 or 24 months, so i think they're going to struggle. it's going to leave a lot of market opportunity for newer companies. we're bullish on flowcode. i sigh that as a big growth industry i would say now that people are really negative right now, you know, today's pain, tomorrow's
gain we're right in the middle of the pain i would think a year or two in the future where things are going to be. >> tim, always great to see you. fascinating to get your insider perspective on all of this and we're appreciative talk to you soon. when we're back, we're going to visit with our friend jim cramer and get his take on the trading week ahead that's next. a programming note, you don't want to miss "squawk box" tomorrow we have investment advice tomorrow billionaire paul tudor jones will speak with us at 8:00 a.m. eastern time you do not want to miss his words. back after this.
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welcome back to "squawk box," everybody. the futures this morning worth watching we had seen the dow fuehrers up by 200, drop down, and now they're in anything tissue territories. the nasdaq off by 56 of course, this comes after the awful friday trading session that was the coda to what was an awful month of april. let's get down to the new york stock exchange. i want to get to jim cramer. a lot of concerns out there. a lot of people want to know what you think they should be doing at this point. what's your answer >> i think you can put money to work here. this should be a clearing event for the fed. i think a lot of what happened on friday is a great calmness.
pe peggy from t"the wall street journal" talked about it it's a dreadful thing. i just feel like we're now in that world where people feel like putin is deranked, he's liable to do something, and they don't want to be in. i want to take the other side and say he won't do it, but i totally understand anybody who thinks a nuke is there, otherwise, he's going to lose. >> yeah. and, honestly, if that's the case, the market's probably the last thing i'm thinking about, if you think that's a reality because that doesn't matter. >> unfortunately, yeah i thought you did a great job this weekend you know, they're cooler heads, right? they've seen everything and they're still buying very good stocks they make a lot of sense in the face of what is a marketed fear. i do think it's odd that the
futures are down if you're listing them, but we've seen this before where people say, oh, look, we feel calm because of them and then it sells off. i always feel calm i always feel like they're a breath of fresh air. what can i say >> me too. it was interesting listening tor what can i say me too they did talk about a potential for nuclear attack at some point. it's not zero. it's not very high at all i think in their estimation, but probably higher than it was before we watched what putin was up to with some of these things. maybe to put that into context, there is this news out of germany today where they're saying you could see a european ban on russian oil very soon, and maybe that just ratchets up the tensions on what's circling around all of this, if he gets backed into a true corner, what his options would be, and we don't know if we're dealing with a rational person. >> yeah, we don't. we don't know what germany can
recommission we do know that it's not gas that's the issue, natural gas prices are insanely high over there. we've only sent about 1 to 2% of our nat gas to poland. our president has to say natural defense argument, all the liquefied natural gas must go to europe that hasn't happened yet there are still things that can happen. >> where do we sent most of our liquefy the natural gas? >> south korea, china. it's been really a lot to east asia they don't have any. so look out, could be big. >> yeah, not great solutions jim, i want to thank you just for talking about how all of this is a concern, it's what's out there, but also just pointing out that you think there's a buying opportunity here, maybe a little bit of calm people think through some of these things. >> have to >> we need to hear more about this if that's really out there, i
have to take the other side of the trade, i have to buy a little thank you. >> yeah, yeah, and by the way, we want to remind you about the new cnbc investing club. it's jim's club, and you can sign up to find out more at cnbc.com/join the club ic y couan point your phone at the code on the screen you can catch more with jim in just a few minutes "squawk box" will be right back. what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create
let's get a last check on the majorkets. downside risk, and to reweight a couple of sectors. joining us now savita subramanian at b of a securities a lot's changed since january 1st as you point out as some of the reasons. i wonder if this is the last trim that you'll be doing. you went from 4,600 on the s&p to 4,500 no one was expecting necessarily world war iii, covid resurgence, a more hawkish fed there's a lot of reasons how much confidence do you have in 4,500 for a year end target at this point? you must be -- you got one foot out of the door on that number, too? >> well, i would have to say that it depends, obviously on the outcome around geopolitics
i mean, we're assuming that we don't see this sort of full-fledged nuclear kind of engagement, and in that scenario, i think asset allocation would be the last thing on our minds but assuming that we get through this geopolitical scrimmage, our view is that at this point the probability of a recession that's priced into the market is about one out of three, and if that probability increases we would be likely to lower our target, but i think that regardless of, you know, recession likelihood or recession risk, it's time to get a little more defensive. we're seeing a lot of changes in terms of spending patterns, in terms of just sort of consumer sentiment. i think the one biggest change that we've seen is that spend on big ticket items has tapered off, and we've seen consumers uptick spending on services. so removing politics and recession risk from the scenario, if you just think
about the consumer, the consumer has actually meaningfully shifted which means you don't necessarily want to buy materials and consumer discretionary and goods purveyors. you really want to shift towards services you don't want to be long materials. you don't want to be long consumer discretionary, and you really want to be overweight some of the more service oriented beneficiaries like energy as we all move out of our homes, assuming that's a viable option this summer, that should continue to benefit oil. geopolitics is always a strong beneficiary for oil prices i think in the overall market that's the area where i have the lowest conviction. today represents an investment opportunity for the next several years at a sector level, but on the overall market, i think we're past the point of just simply buying the index and generating great gains i think we're in much more of a stock picker or sector picker's market, and total return is the name of the game from here that's why we would be focused
on sectors where we see a really strong likelihood of dividend growth, dividend yield it's been one of the best ways to invest this year, and we think that's going to be the case going forward >> is savita, it's been a long m since we've lived in a world where you can have that surprising -- somewhat surprising gdp print, the negative 1% plus and the recession risks as you say going to one in three now. and at the same time watch the fed get increasingly more hawkish. >> exactly. >> and to see the fed put as steve liesman has said, further out of the money so that means things are really -- things are really not going the way policymakers want them to go at this point. >> it's an interesting environment. i mean, i think the fed doesn't have a lot of latitude one thing that i think is potentially, you know, the positive that we need to sort of
go back to is that the fed and the government engage instead this major liquidity handout, where they basically passed over close to $20 trillion worth of cash to the consumer and to corporates, and that is a key positive because i think that unlike prior recessions we've had, corporates and consumers are actually better capitalized to weather a downturn than they have in 2008 or 2000 or, you know, prior major recessions i think that's a positive. to your point, i don't think the fed has a lot of wiggle room today. i mean, you know, again, i think the reason they're getting off of ground zero so quickly is to give themselves a little bit more latitude. i think it's heartening to see they're sticking to course, but you know, i think the other positive here is that some of the inflationary trends are starting to abate, so we're seeing some of the supply chain risks are starting to lleviate we're seeing labor
participation. we're seeing people come back to the work force, so these are all, you know, potential suppressants on inflation, but you know, to your point, it doesn't sound great. we've got a higher probability of a recession, we've got a fed in potential taper mode. this is not the setup where you want to be long equity. >> thanks, we're out of time thank you, savita. >> thank you so much we will see becky back in new york make sure you all join us tomorrow "squawk on the street" begins right now. good monday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber is in los angeles at the milken institute global conference. he'll have interviews. futures indicate little bounce from friday's brutal selloff ahead of a big week, with the fed's meeting and a jobs number and a third of s&p earnings. we are going to begin with that
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