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tv   Squawk Box  CNBC  May 23, 2022 6:00am-9:00am EDT

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andrew has a lineup in davos i see green. i don't see any snow i guess that makes sense not australia. starting with the bank of america ceo brian moynihan straight out of the box. "squawk box" starts right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq market site in times square. i'm rebecca quick with joe kernen andrew ross sorkin is reporting live from davos this morning we will get to him in a minute people have been concerned about the markets. this morning, there are green arrows dow futures indicated up 163
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points s&p futures up 23 nasdaq up 55 friday was a reckoning day markets moved back from steep losses during the course of the day. for the week, we are talking about major losses nasdaq down 3.8% dow and s&p down 3%. if you are looking at how far we have come, the year to date numbers at the screen, all-time highs. dow down 15% the nasdaq ended down the week by less than 30% down 29.96%. you are talking off the all-time highs. a lot of pressure. this morning, green arrows you will see yield for the ten-year yield at 2.82%. let's get right to andrew in davos. andrew, this is beautiful. this is like the hills are alive there. >> it is like "the sound of
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music. it is a balmy 67 degrees here. you wouldn't need all of our winter wear. i think everybody is struggling with what to wear. they brought all the wrong stuff. look around. you can hear the sound of music with the bells ringing as it is noon in davos, switzerland we have a huge line up fo folks making their way here. little different from the past we will get insight with the economy and the globe. concerns of inflation and ukraine and russia this news this morning that the president commented on with taiwan making its way around president zelenskyy kicked off the session this morning nonetheless, we have brian moynihan in a moment and others joining us brian is on the set with us as we speak let's get right to him and begin the conversation
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get the mood of what is happening here, brian. nice to see you. >> good to see you, andrew beautiful setting. you can hear the bells ringing. >> it is windy things may go down that is what we should worry about. i have been to one dinner. there is a lot of pessimism. inflation is not traensitory of the economy and this is going to be long. what are you seeing now? >> we are seeing the balances which continue to be stable and continue to grow year over year for the consumer the spending levels in may for the first few weeks are up 10% over last may. that is not as high as it would otherwise be last may, people paid taxes. it is a bigger base to grow. year to date up 17%. up 17% to consumers which continue to spend. in balances, it grew over in
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march and back to last year. the notion that people are spending the stimulus down is not happening yet. >> we hear anecdotal reports with high frequency folks who have tried to suggest the last two or three weeks that bank balances started to come down. is that not the case >> it will happen because people are paying taxes the reason california has a sur surplus, a lot of taxes and big receipts you will see from affluent customers. that happened in april balances go down a bit that is the normal pattern people will real that and not understand the quarter because april is where people sends money to the government. if you compare this april to last april, it is up 8%. this last may, up 8% >> the other data is mortgages what are you seeing there with
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the interest or pulling back >> mortgages have slowed down because of the refi drops away we put out a paper the other day and people have to realize mortgages and all of the fixed rate mortgages which are dominant, don't change rates what the impact is future mortgages. will people be able to buy a house? the reality is 200 basis point mortgage rise is $500 a month. it is the same amount of money what is different in this time with the rates rose with '17 and '18 framework, wages are rising three times from then. it is interesting. right now, they slowed down with the refi house purchases are still going through. >> what does this is a about the c conversation we are have now >> a lot of fear about the fed
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tightening and slowing down of the economy. that is what they will do. our economists predicted everything move. the fed will raise rates faster. our economist said friday there is a one-third risk chance of recession. if you asked in 2017, there is a 50% chance of recession. nobody had it on their mind. the reality is it moved up because the government has to slow down and take on inflation. inflation is transitory. it was not transitory last fall. now they have to move fast they moved 50 last meeting that is unprecedented. the question is can they slow it down without tipping it over if it tips over on one side of the bed and the other side it is fine we will grow this year and next year if you look at the blue chip economists, 1 in 40 has a
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negative number. nobody has one next year something is it. the fear is going up the reality is no one is saying there will be a recession in 2022 or 2023 >> what do you say >> with this spending and activity, the fed has a tough job and employment tightens. the fed has a tough job. it is a job they are getting at faster >> becky has a question in new york >> thanks, andrew. brian, i see you are raising your minimum wage to $22 from the $21 it had been people are having a tougher time keeping up with cost gasoline prices to food prices it is great to see that. it also comes into the whole wage inflation spiral that you see what is going on why do you feel the need to raise wages? what does it mean for the employee base and how does it
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fit in the broader picture >> becky, we had a pattern from '20 to '25 we moved it up from october to june we announced everybody making less than $100,000 in the company, we increased by 3%, 5%, 7% based on the years of service. we need the best team to serve clients and we need to make sure the teammates feel great about working at our company $22 wage $45,000 a year if you are an individual, you pay $100 for full medical care and $7 for match and reim reimbu reimbursement. these are all benefits because we want our team to focus on their career and staying with the company a long time. we raised them in response to
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pressures and we hired 7,000 people in the first quarter. we need to stabilize and have the best team. >> that is fantastic it means good things for the team i try to get to the broader issue of what it means and people real wages are dropping overall. the inflation pressure from cpi is eating away at wage gains that people have gotten on average. what do you think about this does it concern you to watch that >> that's the question the labor market is tight. you are hearing stories about moving up to where it was in '19 and higher still well within it was in '17. i talk to ceos around the country. and the labor market is tight. two job openings for every job going to the real-time data. we have seen less job postings
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which mean the market is easing. until the labor market is easing, wage growth is strong. the question is can they slow prices and wage growth that is the way it is with the market down and it helped the 401(k)s. this is the impact of the people's view. the reality is they are not changing behavior as of last week in other words, travel in may is up 40% over last year. restaurants are up are they spending less flat they are spending money on experiences and doing things that is the conundrum. a lot of them have the stimulus from before. the pressure point is as we move to the fall, unless you see some ease in the price depression and stabil stabilization. then people will get concerned right now, it is competitive.
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>> you say there is still stimulus >> for our account holders, in april, if they had between $1,000 and $2,000 before the pandemic, they had an average of $4,000 in april. if they had an average of $2,000 to $5,000 pre-pan democrat exh pandemic, they are carrying $13 $13,000. >> that is remarkable. >> we have 35 million checking accounts i'm give you a sample of households in america. they are primary accounts. you can see in becky's point our customers getting their wages grown 8% year over year. you know, when you look at that, that stimulus still sits it has been growing every month since july will they spend it down? probably, but not right now. >> another davos question.
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a big p conversation esg. lots of questions over the years here the question is whether or not that is a -- that was something that happened during a boom time what happens in a challenged economy? all of these companies said this, this, this over the next five years do you think that changes? do you think i can't do that or activists are calling up and say you cut this out >> we believe it is profits and purpose. not or the key to that is we have to produce earnings in the first quarter. we think of the environmental commitment we made the first commitment in 2004 we went through interesting times between 2004 and today all financing our clients transitions. what i think, andrew, people
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will ebb and flow on this and the pace of things the fear of energy drives activity the reality is if people have done it right and the world economic forum are here and the business council which i chair has the metrics we put out 140 companies have signed on all of those laid out if you are not making progress so people can see it whether it is women on boards or diversity overall or progress on environmental commitments. i think people will stick to them they align capitalism. these goals would not be achieved without the private sector the government doesn't have the money. >> you were ambitious around climate and fossil fuel. which companies you finance. in this environment now where gas costs as much as it does and there is a question. was this the right call? >> we finance oil and gas
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companies and we finance green companies. sometimes it is the same company. that is the interesting thing. oil companies have made commitments to change. is it the right call in a spot base, we wish we had oil and you see the production coming up. that will happen that demand will be there and price will be there. this is a transition we have to have energy for everybody. we have to have all kinds of energy we have to build it. we did $250 billion of financing last year. during the pandemic, it kept growing. i work with the meeting in london a couple of weeks ago with 100 ceos in the room. it is part of how they are driving the business it is not charity. what people have done is turned the switch from charity to lining business.
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when they make a purchase commitment for sustainable aviation and clean energy or our commitment over multiple years to drive down energy and power to build the power plant all of these are commitments that are gone. they are going on. it is not like you reverse them. they are already working >> becks >> brian, quickly, let's go back to the job market. you mentioned the situation where you think the job market could be easing a little bit not as tight as it has been with job postings it has been an employee's market for so long. a take this job and shove it market do you think that will switch soon how do you read that what other things are the watching to see on that front? >> it is not going to switch soon if you look at the economists, they sktill have the unemploymet rate at 4% or 3.5% next year it will be a very tight labor market frankly, in the u.s., because we
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don't have -- we aren't getting more people. most of the work force are all back at work except young people the optimisms is we can pull more people in and participation can go up. you are seeing some signs of that with older people who are retired and coming in. they are back at the same levels as before older workers. there is optimism there. that is the challenge the fed has. the unemployment rate is projected by everybody to be tight. that may make their job tougher with the wage inflation is harder to obtain goods inflation is coming down faster, but wage inflation is a tough nut. >> brian, back to the esg issue. in light of what we are seeing with the push back against larry fink and the other money managers voting shares for their
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own preferences and causes i don't know if it it is that much different for a ceo that might steer the company -- your company for example -- in a distribu direction that he has a person opinion on do you ever worry about that you are talking about a transition to clean energy which may or may not have hindered financing for fossil fuel industry in the united states. now that's coming home to roost, obviously. where do you draw the line do you cut off gun makers? do you get involved with voting rights issues? these are your own opinions as ceo, but it is not much different from larry fink which is receiving a lot of push back. should a ceo steer his company in manner that follows politics? >> i don't follow my politics. most of you wouldn't know what they were and the company
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wouldn't know it we have 200,000 people, joe, they represent every interest. we take action on what it means for our teammates. i get a letter saying we are financing fossil fuels and the letter the next day saying you are cutting them off i went out with senator cramer in north dakota. that state is declared net zero. they are building the carbon capture storage facilities we are driving that back on shale. there is loa lot of competing ideas. we drive purpose and profits, joe. if we did things that are good for the customers, that's fine if you did things good for the shareholders, you would say that is fine. if you did things that is good for the communities, you would say that's fine. that's what we do. that is not an unusual idea.
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it is an idea that has been around for a long time i did the first strategic plan in 1993 or 1994. these are not new ideas. politics are different from actually driving the company for what society does and needs and capitalism can drive for the right things which are economic based and team based and customer based that is what it is profits and purpose. not or you can read my shareholder letter i lay it out our shareholders are backing it. >> brian, before we let you go, i have to ask. everybody is talking about elon musk you are backing the margin loan to allow him to buy twitter or not. >> you keep asking people that and they say the same thing. not our deal you have to talk to the principles. >> you think it will happen? >> you have to principles >> one other question.
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margin loans there's a big question of billionaires or anybody of great w wealth that should use a loan that is not taxed and create that value you saw trevor noah create the video which goes to the wealth tax and money we say is not really being used in any real way because it is not available because it becomes available at this issue. >> one, that is the way the rules are. we could have a margin loan and borrow up to 50 cents on the dollar in for a penny or a pound. anybody can do it. that money is used to generate taxes. we pay taxes on the interest we get on the loans it is a more complex question than someone would understand. i can borrow money than not pay taxes. taxes are paid by other participants with the assets
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which has taxes. dividends have taxes on a flow basis. it is more complex than the average person thinks. >> thank you, counselor. brian moynihan i appreciate it. we have more on ""squawk box here from davos. we haveintel ceo and then scot minerd you don't want to miss it. next, live reaction from beijing after president biden's comments overnight we are reptiivorng le from davos here on cnbc ♪ >> announcer: this cnbc program is sponsored by truist wealth. where meaningful relationships matter most. e.
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breaking overnight president biden said the u.s. would get involved militarily to defend taiwan if china tries to take it by force >> are you willing to get involved militarily to defend taiwan if it comes to that >> yes >> you are >> that's a commitment we made that's the commitment we made. we are not -- look, here is the situation with we agree with the one china policy we signed on to it all of the agreements made from there.
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the idea that it can be taken by force -- just taken by force is just not appropriate it will dislocate the entire region and another action similar to what happened in ukraine. >> eunice yoon is joining us now with reaction in beijing just tell us what is the reaction, eunice >> reporter: i'll tell you the reaction of beijing, but a big reaction, i think, worldwide and foreign policy folks because the problem that people had was when president biden used the word commitment he said that the u.s. has a commitment to defend taiwan in such an event. this is a deviation from standard american policy which is based on the concept of strategic ambiguity. the idea is the u.s. keeps it fuzzy purposely as to what it
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would do you can see the reaction from the white house. signals it where they walked back quickly by reill terating position to uphold the one china policy and support taiwan defending itself now as you can imagine the chinese slammed those remarks. very upset said that biden should not under estimate the resolve of china to defend its sovereignty and territory integrity. this headline seems to have overshadowed or stolen the limelight away from the bigger story out of tokyo that is extra president biden had unveiled the indo-pacific economic framework which in involves every single economy out here except for china. i think what is interesting
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about it is right out of the gate, president biden made it clear this is not about trade and not about tariffs. maybe learning lessons from the trans pacific partnership. another big pact that the u.s. had marketed out here long ago instead, saying this is about rules setting. i think you can see a long list of rules it would set labor and environment and tax and investment they want to change the attitude toward supply chains there is an interesting inclusion of countries on the list you have pretty much all of the production competitors to china on this list india, indonesia, philippines had this is significant. you have the other side of the coin with supply chains. south korea is on this list. not with tpp
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japan and the united states. all of these places which are on the high end with all of the companies that are making all these high-tech gadgets. obviously, this looks like a way for the u.s. to pressure companies to diversify away from china. you can see me wearing my mask and companies looking to rethink the investment in the country. >> a lot of trouble spots around the world. thank you, eunice. i'm not sure it is a fine line to me. we were talking off camera you say one thing on ukraine you see what happens with ukraine. if there is a slightest weakness shown. you try to be more strident and
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warning trichina. i don't know if anyone believes militarily is that what he meant? >> if you go back to the agreement originally struck decades ago. the united states said we would support them if they were to do it it has been a question if it is our military or help them by providing weapons or other things that you have seen with the situation in ukraine >> this is above our pay grade for trying to figure it out. that certainly raises eyebrows around the world and raises eyebrows everywhere. >> more than eyebrows in china >> right >> to hear these things going through. knowing that this is the most important relationship in the world right now with the united states and china and struggles that have been here. watching that play out in the business world where ceos have to start thinking can i continue to operate in both countries? can i operate?
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eunice said companies will watch this closely from apple and if they look for other ways to get the supply line and this is also an impact for tesla. >> or even thinking seriously whether to defend the new em abo embassy in kyiv. do we send special operation forces there if that ramps up for putin if there are troops on the ground the slightest increase you worry about. >> everything is a provocation >> i don't know what defending taiwan militarily actually means. i hope the president thought it through. it sounds like it is being walked back. time for executive edge. gas prices rising. aaa national average now at
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$4 $4.59a gallon. now in california, it is above $6 a gallon. bring money if you have a suburban. >> brian said with the ford f-150, it will cost you $140 to fill up. well above five or six. when we come back, mohamed el-erian will be with us and talk about the markets andstabi. and we are celebrating asian american pacific islander heritage month here is dan suzuki. >> my advice is don't be afraid to stick out prove to people you are unique and more than your racial identity don't forget it is a two-way street as you want to feel included in
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all society's circles, make sure you are doing your part to include others into your circles. how can you expect them to see the beauty of your culture and your individual personality unssoule y allow them to get close enough to see it for themselves >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure so we' y busine our best deals on every iphone - including the iphone 13 pro with 5g. that's the one with the amazing camera? yep! every business deserves it... like one's that re-opened! hi, we have an appointment. and every new business that just opened! like aromatherapy rugs! i'll take one in blue please! it's not complicated. at&t is giving new and existing business customers our best deals on every iphone. ♪ ♪
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join stand up to cancer, count me in, and patients already participating at good morning it's me. welcome back to ""squawk box. we're live from the nasdaq market site in times square. the market is higher 233 points in the dow. the nasdaq up solidly. up 80 points we didn't close with in bear market territory in the dow or s&p. >> by a breath down 30%. we were down 29.96% for the nasdaq not down 30% yet >> no.
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fingers crossed. they are writing the articles now. a long way to go they may be right. i like this. investors struggle to identify the market bottom as stocks fall it is tough to identify the market bottom if you haven't reached it, right? what does that mean? >> trying to say this means the bottom no, this means the bottom. >> we have not bottomed. that's it. maybe we did maybe we did on friday tough to identify. >> we won't know for a while >> tough to identify the bottom until you hit a bottom >> in hindsight. >> right as we know, don't pick a bottom. gross. shares of vmware surging broa broadcom is in talks to buy it it was spun off from dell technology last year michael dell has a 40% stake
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it has a market value of $40 billion. our next guest says the market selloff to be entering a new phase. for more on that, let's bring in muhamed el-erian when you say a new phase, is this the good new phase or bad new phase? >> the worst new phase becky, the question is why haven't we had more of a bounce in what has been a relentless period of seven to eight weeks of declines? the answer is because we continued to get bad news. think of friday ten days ago we had a wonderful bounce. then the new week. then comes walmart then target. suddenly we have legitimate concerns of growth and earnings. we need to get the worries out of the way before we can get established a good bottom and get sustainable bounce
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>> looking at stats and the numbers, the dow did something last week that it hasn't done in almost100 years. 99 years since the dow ended down for eight weeks in a row. maybe that goes to your point. this is a slow and painful process. steady people say that doesn't concern the fed. this is still orderly. it is steep and painful and it is consistent. >> it is even if it were to concern the fed and it doesn't concern the fed because market functioning has been fine and that is the silver lining. if it were to concern the fed, the fed is highly constrained. the inflation isn't going to go away any time soon the fed just can't go back to the old habit of being there and having a fed put of injecting liquidity. what we see now is the fed is
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constraint the fed must keep an eye on the fact that the 60/40 portfolios have done really badly that is because of the safe haven of government bonds. distorted buy fed intervention i don't think the fed steps in any time soon. >> muhamed, i was at dinner las night with two ceos. one thought it was an 18-month scenario at worst. another had a few this would be a three-to-four year, if not more prolonged situation then the equity market would not flush out until 2024 based on the fact that he believed earnings were going to continue to decline because we have not seen that in a truly meaningful way which side of that debate would you take in davos?
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>> you are not just worried about inflation and profit margins and growth you are seeing an economy rewired by government and geopolitical issues and rewired by your desire to build. forget about the just in time. you have to have more resilience built in when you look at the outlook externally and internally, you will find people in the real economy are more negative than the financial sector that is what you are picking up at the dinner of 18 months or longer it is the structure of the global economy which is uncertain and certainly changing >> you are taking side of the longer >> yeah, i think we end at a period where multinationals will have to rethink about how they approach a global economy. this is no longer a world of ever deeper trade and financial integration. this is a world where you will
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get fragmentation because of the geopolitics and your decisions to increase resilience i see an uncertain period for ceos that operate globally not so nationally. that is much better than the rest of the world. >> muhamed, we had brian moynihan from bank of america. he was talking about how much money people have in their checking accounts. people have more money than they did a year ago they are still living off stimulus and getting more money in the paycheck. it is all coming in. he says it is a tight job market he doesn't anticipate that will change any time soon that is where you get the wage inflation that comes in. that is so hard to drive out that's a tricky thing for the fed to handle and to work out. how do you handicap all of this? what do you see playing out from the dynamics alone
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>> so, like you say, you have two dynamics one is keeping us out of recession. i continue to believe that the u.s. recession is a tailwind and not a baseline the baseline is stagflation. the tailwind is the labor market is strong and second, like brian said, consumers still have a lot of balances. on average, there are very m vulnerable segments. bank however, the other side of that, which is the deflation is we should expect wages to continue going up and try to catch up with inflation and as inflation starts coming down, we will have a tipping over effect. that is the different dynamic on the inflation side it goes back to what you said earlier, becky, the fed is constraint of what it can cdo
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>> thank you for being with us this morning we appreciate your time. not what we wanted to hear this morning about how there could be an even more worrisome turn in recal all this we appreciate it >> thank you andrew >> okay. coming up, we have more on today's market gains after declines of 3% for the major averages last week later, we will talk to intel ceo pat gelsinger. "squawk box" returns right after this
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breaking news from pfizer. meg tirrell has that news and more hey, meg >> pfizer is saying the vaccine for kids under 5 met the goals for the clinical trial they plan to file the three-dose vaccine with the fda this week they had preliminary efficacy data 80% protection was provided by three doses against symptomatic covid in the period when omicron was the circulating variant. the profile was similar to the placebo. the 80% number is based on ten
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cases in the trial they need 21to call it final that could be updated. based on this, bringing to the fda. pfizer was filing with two doses in february. they decided it wasn't strong enough in the age of oimmicron d added the third dose you see the comparison with pfizer and moderna moderna under review with the ds this will go to the fda and head to the committee meetings in june a lot of parents waiting a long time still no vaccine for kids under 5. joe. >> meg, can i ask a question there has been so many twists with this. the reason this is not approved yet is not because of safety, but because of efficacy. the testing was while omicron was out and it made it different
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from the earlier testing for earlier kids that had gone forward? am i getting it right on that? >> reporter: absolutely. the last vaccine cleared for kids 5 to 11 that was cleared in october before omicron came along. then started to get results coming in for the kids even younger. they found that two doses did not meet the immune response that was in december omicron was starting to take off. then as we got to february, the fda was interesting proceeding with the two pfizer doses of the vaccine. the he efficacy was not strong enough going forward the third does has the efficacy higher and they are bringing this forward never was safety a consideration. it always looked good. all right. thank you, meg get working on the monkeypox
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we'll have scott on. round two. "sq "squawk box" will be right back. what the world needs now... is people. people who see flight a little bit differently. so it takes less fuel to bring people together... ...and make faraway places feel a little closer... ...with engines that power planes more efficiently. because seeing a better-connected world isn't far in the future. we're building it... now. ge. building a world that works.
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welcome back to "squawk box," we're live at the world economic forum in davos, joining us right now is carmen dasivios, the ceo and global chairman of ey, in 150 countries, which means that you have your finger on the pulse, we hope, of all sorts of economies around the world. it's nice to see you >> glaet to see you. >> help us understand this we're obviously seeing the markets and inflation and the like, but when you look around, you think to yourself what >> well, look, we are getting prepared and our clients are getting prepared for a downturn in the economy, no doubt about it now, what are we seeing so far we are seeing some deal volumes slow up. but companies are still looking at doing deals there's a lot of analysis going on i mean, they just can't push the
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button on an ipo there is a lot of analysis there's still a lot of spinouts going on and so forth. that we are seeing a slowdown in the volume of deals. we certainly saw that in april that's the first indicator but digital transformation, technology, investment technology, that still continues across the board companies understand they have to do that changes in their supply chain, andrew, they understand. they have to de-risk their supply chain, they have to digitize their supply chain, an interesting concept in supply chains now is where do you put your supply chain. i know it's a longer term issue. there's a concept known as friend shoering you want your supply chain in friends that are friends to your home country. >> do you believe that it's inflationary for a long time we were talking about if there's a recession as a function of all the different cross currents, is this an 18-month situation or this is a multiyear scenario >> yeah, so i dobelieve that
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it's inflationary because it's just going to be more coastly fr the world for people to move their supply chains and so forth. i don't believe this is a five, ten-year type thing. as i've said to you before and at dinner last night, everything we think is five years now is two years. everything we think is two years is six months. the market's anticipating things much faster. that's because everyone's so connected from atechnology standpoint, knowledge data flows across much faster than it ever did. things that used to take longer just are shorter. >> you've got a big business in china. what are you seeing right now? obviously a lot of folks lockdown, but what do you see more broadly in the economy. how do you think it's going to change over the next 12 months so the lockdown in mainland china is hurt. it's hurt our business a bit we still operate very well, you know, using virtual and using teams, we use microsoft teams or
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zoom, and we operate like that in china as well so we're like -- our business continues. our business continues doing well we're growing in china the lockdowns have certainly hurt they hurt our culture, just like they hurt our kculture everywhee else in the world. now shanghai seems to be getting out of it. there's more of a lockdown in beijing. >> is it getting harder and harder to do business in china we were talking about president biden's comments about taiwan and what that's going to mean between the overall relationship between u.s. companies that are multinational in china. >> it is definitely getting harder to do business in china, even some of the things you see you don't see what's happening -- >> would you pull out? >> no, no. we would not pull out at all we have a big business in china. you know, china's a global marketplace, so we would never pull out burk, but it is gettin harder all the regulators want everything to be isolated.
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they're very fearful about moving data outside of china they want everything isolated. that's more costly to whatever companies. >> and you've moved out of russia now >> we've moved out of russia. >> is that a permanent situation? mcdonald's has said it's permanent. >> it's permanent for us too we're tactically going to be out july 7th in total because as i've said before, andrew, for us, we have a complicated structure, so it's taking time to get out we've committed to be out. >> it's great to see you thank you so, so much. >> enjoy us the next couple of days we've got a lot more coming up from davos we've got a big lineup ahead david rubenstein from carlisle, a rare interview with alphabet's ceo, and then we have intel's ceo pat gelsinger. we'll talk about those comments about taiwan from the president as well given the impact on the chip business and scott minerd from guggenheim with provocativ
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salute to veterans memorial day terry bradshaw: hi, i'm terry bradshaw rocky bleier: and i'm rocky bleier. col. greg gadson: and i'm col. greg gadson. terry bradshaw: on this memorial day, our heartfelt thanks, to all of our military veterans for their service. col. greg gadson: we honor our veterans, and those who no longer are with us. rocky bleier: to all of our military serving around the world, thank you for defending the many freedoms we enjoy. terry bradshaw: tune in to salute to veterans for discussions about the issues our military veterans face daily. salute to veterans presented by sap, navy federal credit union, verizon, visit us online at the world economic forum
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from davos, switzerland, is back world leaders and top business executives gathering to discuss theissues affecting the global economy from ukraine to esg. in this hour we're going to hear from carlyle group cofounder and co-chairman david rubenstein, plus, a rare interview with alphabet's ceo ruth porat, here to talk big tech and so much more to try to understand the economy around the world, and the global health organization working closely with countries to better understand the cause of the outbreak of monkey pox. dr. scott gottlieb is here to discuss how it may be spreading as the second hour of "squawk box" begins right now. >> good morning, welcome back to "squawk box" here on cnbc. i'm becky quick along with joe
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kernen and andrew ross sorkin in davos today covering the world economic forum for us. we're going to hear from andrew in just a couple of minutes. in the meantime, we want to check the futures this morning on this monday morning you are seeing the futures at the high of the session we were in the green before, the dow futures now up by 327 points s&p futures up by about 45, and the nasdaq up by 120 of course this comes after another rough week aflast week, the dow now down eight weeks in a row. that's the longest losing streak in almost 100 years, all the way back to 1923 this morning things off to a good start in our headlines this morning, gasoline prices are rising the aaa national average is now at $4.59 a gallon, and now in california, it's above $6 a gallon if you want to check on oil prices at this hour, at least right now you're talking about oil prices a little higher once again.
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wti at 111 rbob gasoline up slightly, but natural gas down about 1.5%. high higher gasoline prices because of issues with refinery. this is happening as we get into the summer season as more people are driving. the first shipment of baby formula arrived at an air force base in indiana yesterday. a military aircraft from germany delivered 132 pallets of nestle health science formula that formula will be taken to a nestle distribution center and sent to hospitals, pharmacies, and doctors offices. another shipment is due to arrive on wednesday. and shares of vm ware are surging this morning reports say the chip maker broadcom is in talks to buy the cloud service provider they were spun off from dell technologies last year michael dell is its biggest investor with a 40% stake. those reports say that negotiations are ongoing, a deal is not imminent, but that isn't slowing things down with the market vm ware shares up by about 21%
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this morning with broadcom down by about 4.6%. >> let's get to steve liesman who is looking at slower growth perhaps but no recession at least for now. hey, steve >> yeah, joe, this is a confusing one. the new forecast shows economists marking down their forecast for this year and next for gdp, upping their inflation outlooks but offering some contradictions about whether the 53 forecasters in the survey are predicting a recession or whether they're not. let's go through it. the may survey from the national association for business economy shows the median forecast for 2022 going down from 1.9% from 2.8% that's a sharp decline then it goes to 2.1 to 2.3 for 2 2023 that's less growth but not too shabby you look at the quarterly growth rates, it shows a decent rebound from the surprise first quarter contraction, and then a gradual
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shift. the median for each quarter remains positive there's no consensus call in the number for an economic contraction. okay, when asked when the next recession will begin, though, 52% say it's going to happen sometime in the next two years, about half of those see it happening in the second half of 2023 our other parts of the survey relatively benign. inflation does average 7% this year that's up are from five and change in the prior forecast it falls sharply to the 3% next year unemployment rate interestingly barely changes stays at 3.6%, a level that would suggest no recession, and the median forecaster sees the fed funds rate, that's 3% next year more or less in line with where the market is already priced for the moment, all you can say is we see that recession by 2023 are unwilling to pencil in negative numbers could reflect the uncertainty over whether the economy will contract or when it's going to happen. >> oh, boy
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steve, let's say we get what is a pretty weak quarterbac back to back with the negative quarter we've already seen when do we say it's close enough to call a recession? when would they modify the definition of whether we're in a recession or not it seems like it's pretty ash tear arbitrary. >> i need to correct you a little bit you got the wrong four letter abbreviation, the nber, the national business -- >> i know, but when would -- >> bureau of economic research >> what would nabe do it >> i don't know, joe, you would think that they would eventually at some point start to put a finer pencil on their forecast for next year or this year and start saying, you know what? here's where we see that economic contraction it's unclear, i'd have to go back it's a good question, and see when and if their forecast ever
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did predict those quarterly contractions that you would normally associate with a recession. >> okay. i don't know what -- andrew, did you want to talk to steve? oh, okay all right. good all right, steve, very good. >> never mind, he doesn't want to talk to you >> i don't know. nothing personal. >> i don't want to talk to him either. >> you don't, okay all right. >> bye, steve. >> i'm very happy to talk to steve. >> sound of music was austria. >> looks like it >> it looks a lot like -- ♪ the hills are alive ♪ >> we may have to take the cameras out and just sort of like run through the daisies i mean -- >> is it drizzling >> it's unbelievable. >> is it drizzling guys? it's not drizzling yet. it's about 70 degrees if you can believe it it's going to be raining supposedly later this week for now we're doing okay. >> it's beautiful. >> guys, next time, come on, it's -- and by the way, you ceda
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v -- see davos in a completely different way. i know you're going back with the snow when you see it without the snow, you can see what it looks like. >> we could be there in six months. >> we probably will. >> you could be. >> yeah. >> depends on -- >> that's some good miles, andrew, twice in six months. that's going to get you your frequent flyer status. >> frequent flyer miles, yes >> we've got a lot more coming up here from davos carlyle group cofounder and chairman david rubenstein is going to be with us to talk inflation, the fed's game plan and so much more and alphabet ceo ruth porat on the company's cloud business, the return to office, and tech stocks coming under pressure what it all means before we head to a break take a look at futures right now, dow up about 325 points nasdaq up about 115 points higher and the s&p 500 looking to open about 45 points higher squawk returning from davos in just a moment.
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welcome back to "squawk box"
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live here in davos, switzerland. businesses and consumers getting squeezed by surging inflation not seen in decades as fed chair jay powell widely expected to raise rates again at next month's federal open markets committee meeting. for a look at what's ahead, want to bring in billionaire investor and philanthropist david rube rubenstein, carlyle group's cofounder and chairman >> it's nice to be here. >> what do you expect jay powell to do? he sort of has telegraphed what he's going to do do you think it's good he's telegraphed what he's going to do it seems to be a lot of doom and gloom here. >> in the old days the fed chairs didn't say what they were going to do before they did it, and they didn't say what they did after they did it. those were the old days. maybe it was better, maybe it was worse. beginning with ben bernanke, and janet yellen and jay powell. the fed chairs are saying here's what we're going to do, here's what we've done, i think there's some advantage to it right now he's locked into a
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position if he doesn't do 50 basis points people will say what's wrong if events change he's got a harder time correcting what he wanted to do than if he hadn't said it in advance i think in hindsight i think it was the right thing to do. i think the market was nervous he wasn't taking inflation serious enough. >> the prevailing view is he has to act faster. do you think he can go to 75 >> the prevailing view in davos may not be as you said before, the conventional wisdom is usually wrong. >> the davos consensus is usually the contra indicator of what's happening >> he would not be listening to davos as much as his economists, and i think the economists are probably telling him if you do 50 basis points the next two fomc meetings that's probably enough for right now i think having said he wasn't going to do 75 basis points or wasn't on the table, i think if he does it, i think he's going to concern people more that inflation's a bigger problem than it already is. >> you know president biden very, very well. i think you consider him a friend what do you make of his comments
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today about taiwan and the fact that he effectively said that there would be military support. the white house seemed to try to roll that back this has now happened twice. is this a bidenism or is this a change in policy >> i don't think it's a change in policy. our policy since the agreement with the taiwan, you know, 40 some years ago is that we have conspicuous ambiguity. we don't say exactly what we're going to do to defend taiwan i think the white house said today that policy hasn't changed. so i think the white house wouldn't have said that if they had made a conscious decision to change the policy, and i don't think he made a conscious decision to change the policy. i don't think the nfc has decided to change the policy. >> when he says these things, what are we supposed to think? >> sometimes people say things they get carried away with, and i think he means well. i don't want to contradict the united states, but i think the
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policy hasn't changed. the white house wouldn't have walked that back if we had made a change in our policy. >> when you think about our economy and the davos consensus seems to be recession, at least 18 months, maybe longer. in your world, in the carlyle world when you think about is this the time to harvest, meaning sell, is this the time to buy, do our companies have enough cash right now? how do you see this all playing out in terms of the private equity venture university you've lived in. >> obviously valuations have come way down. there's an opportunity to buy things at a discount i think people in our business are going to look at things at a discount you're never going to know what the bottom of the market is. i think things are down, a lot more affordable price than we saw before i think it's a pretty good time to buy we've been buying thing, and a lot of private equity firms are as well. it's not a bad time to sell some things that are way above what you paid but may not be as much as they were before, but they're way above where you bought it. >> you spend a lot of time traveling around the world to
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raise money. is it harder to raise money right now? are people saying, david, you know what i love you i can't write you the check, or are they saying, actually, this is going to be like the next great vintage of private equity deals because, you know, the world's going to fall off of its axis. >> there aren't that many people that say they love me. i do think it's harder to raise money now. people are feeling that there is a recession coming people are saying that, whether it's true or not, that's the way they feel, and as a result they feel less wealthy than before. they're not getting back as much money as they thought, and i also think that the valuation, the denominator factor is they have less money because the overall corpus of what they have is going down in value i think they're going to give money out to people who have proven for them before they could make money for them. newer funds are going to have a harder time raising money. it's very difficult to raise a new fund if you're going to do it over zoom you've got to show up in person to do it. >> in terms of these marks and market-to-market what's happening, obviously the stock
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market's marking itself, you know, every second is there going to be a moment, do you believe that private companies have been properly marked by you and your peers at the moment >> well, private marks, i think, have been fairly accurate based on the last couple of years or, so they haven't been wrong now all of a sudden the market's gone down. i suspect you'll see marks coming down. the marks will not probably be as robust as they've been the last couple of months. i don't think that will happen >> right >> nobody knows for certain. >> the reason i ask is there's a view that maybe that the marks haven't come down. when those marks do come down that there's going to be even more companies or funds, especially in the hedge fund space that may have to either liquidate or do other things to actually pay for -- >> hedge funds come and go more frequently than private equity firms. hedge funds are much more volatility and venture capital funds have had great runups i expect they'll have big declines as well the private equity firms are
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probably not as volatile as the venture funds or hedge funds >> what about the big funds, blackrock, not blackstone, but blackrock and the like who have gotten into private investments over the last several years, as things come down, do you think that that dynamic changes? >> well, they are not doing deals directly they're basically investing other people's deals, and i think they'll probably do that that's a small sliver of what they do. for t roe price, their business is a completely different business it >> finally, you lived through the '70s you were carter guy so you know this do you think this is the 1970s do you think this is 2001? what is this to you having been around the block a couple of times? >> this is not the 1970s the u.s. economy was much more insular there. the labor force was much more different. 25% of the work force was unionized. that's not the case now. i don't think it's the 1970s it's not something that's just
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transitory as we once thought it was. so i think it's not as serious the 70s in terms of high inflation and high interest rates, but it's something we have to take into account and make sure we are dealing with it i want to congratulatie you. normally when i'm on your show, you're rolling your sleeves up that's in a studio here we're outside and you're in a coat and tie, so i'm very impressed. >> i got in a coat and tie for you. >> i always have -- this is what i sleep in. >> david rubenstein, thank you. >> my pleasure, thanks for having me. appreciate it. >> becky, back to you, maybe i'll roll up my sleeves. it's so warm out, i could. >> it looks good you got to go with the look for this it does work with the backdrop behind you, with the guests you've got there, andrew, keep it up. when we come back, president biden said the u.s. would get involved militarily to defend taiwan we will go to beijing for reaction to those comments next. and a programming note for you, tonight at 6:00 p.m. eastern time, i'll be hosting a
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cnbc special on flinflation and your stocks. special guests include the ceos of papa johns and an angi. that's tonight at 6:00 don't miss it, we'll be right back
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breaking overnight, president biden saying the u.s. would get involved militarily to defend taiwan if china tries to take it by force >> are you willing to get involved militarily to defend taiwan if it comes to that yes. >> you are >> that's the commitment we made that's the commitment made we are not -- look, here's the situation. we agree with a one china policy we signed onto it, and all the attendant agreements made from there, but the idea that it could be taken by force, just taken by force is just not -- is just not -- it will dislocate the entire region and be another action similar to what happened in ukraine >> eunice yoon joins us right now with the reaction in beijing. eunice, this is something that
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an american president hasn't articulated in recent decades, and it's something that's maybe even more striking because he said it while in the asian region what is the reaction from beijing this morning >> reporter: exactly well, from beijing not surprisingly, the chinese government slammed president biden's remarks saying that he shouldn't underestimate the resolve bof beijing, and they would defend its sovereignty and territorial integrity. beijing believes taiwan is part of china and is hypersensitive about the issues, so where president biden got himself into trouble is when he made it sound as though the u.s. is firmly committed to defending taiwan if china were to attack so as, becky, you had mentioned for the past 40 years, the u.s. has been trying to tiptoe around
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exactly what the relationship is with taiwan. it's a policy that's been described as strategic amb ambiguity, and the white house ended up trying to walk back president biden's comments a bit by reiterating the long-held position of the u.s. that it upholds the one china policy and supports taiwan if taiwan defends itself >> the white house walking this back this morning basically saying what he meant was that they would supply arms and other things if the situation came to fore does that tamp down any of the concern coming from china? >> no, i don't think it necessarily would, and there's been a lot of concern about comments like president biden's because increasingly out of security folks who observed
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taiwan and people who are here quite nationalistic on, you know, about the taiwanese issue, there's a concern that these types of comments just really empower or encourage the what would maybe even be described as paranoia by beijing. even if the u.s. formally doesn't change its policy that there might be an informal belief in the white house or in the u.s. government that taiwan is becoming increasingly a core strategic asset or interest of the united states, and so because of that, these kind of comments could foment, you know, that level of concern by beijing, make them more sensitive and then potentially lead to some level of escalation. >> of course on a business network we have to wonder what this means for american companies operating in china, what they do from here there's been some talk about
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what apple may be looking to do just because of the zero covid policy before any of this, and it does make you wonder what else american companies are thinking when they sea e this increased tension. >> yeah, i think there's this increased tension, and that's, i think, the other big development that came out of tomekyo was tht president biden had made this announcement that he was going to set up this framework, an economic framework with 13 member countries and so this -- what was interesting about it is that it looks as though it's aimed at trying to reorient supply chains and try to encourage companies that are here in china to move out of the country just because if you look at who the members are, they are largely the production bases that are competitive to china, such as india, indonesia, the philippines, and also those countries that make all of the
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high end goods such as the united states, south korea, and japan, and so what's also interesting -- and you mentioned taiwan -- is that there is some talk that taiwan could also be eventually included in this framework. and so you could see how all of this is adding into the calculus of a lot of companies out here who are trying to weigh the pressures of costs and geopolitical issues in their decisions for investments in china. >> eunice, thank you eunice yoon. still to come, dr. scott gottlieb joinstous t-- joins us to talk monkey pox and whether we should be concerned don't miss our interview with alphabet ceo ruth porat live from davos coming up stay tuned, you're watching "squawk box," and this is cnbc
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i just don't think it rises to the level of the kind of concern that existed with covid-19 or -- and the smallpox vaccine works for it, so -- but i think people should be careful. >> do you think that the u.s. has enough smallpox vaccine
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stockpiled >> i think we do have enough to deal with the likelihood of the problem. >> president biden weighing in on monkey pox and the risk it poses to the country joinings now, dr. scott gottlieb, former fda commissioner and a cnbc contributor. he also serves on the boards of pfizer and ellume na there's some pluses, some minuses, i hate to look at it that way, doctor you really need close contact. there's already a vaccine. what are the concerning aspects to it? those are two things that maybe make it less concerning. >> well, the president's comments just there in that clip were interesting because he said they think they have enough vaccine to deal with the likelihood of the problem. there was at one time supposed to be enough smallpox vaccine to cover every single vaccine it sounds like it's enough to do ring vaccination i don't think we're going to mass vaccinate the population. one of the questions is how much
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vaccine is in the stockpile. there were supposed to be 2 million doses of an antiviral drug effective against small box and is authorized in europe for use against monkey pox it's a question about how much of that is in the stockpile right now. fda just last week authorized that drug for intravenous youth. i think we should find out what's in the u.s. stockpile the concern among scientists is why is this spreading? why is this suddenly emerging? is it just founders effect did it get into communities where it started to spread more efficiently and that's sort of the scope of the outbreak, or is this just the tip of the iceberg and this has been spreading in the community more widely and we just identified it in certain community where is it presented. and is this more contagious than previous strains of monkey pox the sequencing data so far suggests this is the same strain that had been previously found in west africa, but there is a possibility that we for many
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years have just been misjudging how contagious smallpox is, much like we did with ebola until it emerged in west africa. >> so how do you see this -- are we going to be talking about this in three months, scott, in your view? >> yeah, i think the the risk right now is that this becomes a persistent risk, that we can't fully snuff this out and cases continue to emerge i don't think this is going to be uncontrolled spread in the same way we tolerated the covid-19 epidemic, but there is a possibility that now that this has gotten into the community, if, in fact, it's more pervasive than what we're measuring, it becomes hard to snuff out. a lot of these cases are mildly symptomatic. patients might not present they're going to get misdiagnosed if it is persistent, that can still cause a lot of disruption. it can cause a lot of disease and some people are going to have bad outcomes. if it caused a lot of disruptions, this is a virus that is a super stable outside
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the human host, so it could live on objects like blankets and things like that you could see situations where people become reluctant to try on clothing. do things like that where it could be disruptive in areas where this is spreading like new york city, if we do have large outbreaks. we need to get a handle on this. we need to identify these cases. it's very amenable to public health work, contact tracing now that doctors are going to be on the lookout for it, if public health authorities are aggressive, they can get control of this. i suspect there's more cases that are going to emerge in the coming weeks as people start to present and as we go back and find out a lot of people were mis misdiagnosed. >> let me back that up when we hear close contact, you know, i've been assuming that you really had to be very close contact with somebody. i hadn't thought about it living on objects and items for a while after that, and something you just said, we'd be concerned about trying on clothes. i mean, when you consider that for things like online shopping, 15% of that stuff gets returned, and then sent back out to
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somebody else, i mean, that changes my perspective on some of these issues, if you've got that, if you've got towels you know, as you get into the summer you start thinking about some of those things that i had not considered before. >> these are the realities if you start to have pervasive spread of this of how it could affect psychology. it's likely to be low level spread i don't think we're going to have a raging epidemic of this virus. it seems to be spreading widely in europe, and it's confounding a lot of the experts and surprising people who have looked at this for ia very long time they suspect that, you know, there are some different dynamics either this has never gotten into a densely populated western city before so we've never had to see how it would spread or maybe we misjudged monkey pox. i think that's probably the most likely scenario. this might be slightly more contagious than what we thought
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historically because we've never seen it spread in densely populated areas before like london that was the same case with' ebola. we thought it was very hard to transmit until we had a massive epidemic in africa and we changed our judgment about that virus. it could be long enough that -- it could be wide enough that that starts to disrupt things. >> i don't understand the transmission mechanism i've seen it referred to almost as an std. is that because sex brings you in close proximity with someone that has it or is there something about sex that involves the transmission? >> certainly close contact and broken skin facilitating the transfer of the virus. i think that there is a perception that this might have spread through sexual transmission in these clusters because of circumstances around the spread that it happened at certain parties where they knew activities were going on but i think that we need to be
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careful about drawing that conclusion it may be the case that it was discovered in those communities just because that's where people were presenting. people were actually presenting to std clinics with pox and getting diagnosed with this, but there could be other spread in the community going on that wasn't getting detected. if you have 10 or 15 vest kls you might not present. you might think it's a rash. there's probably a lot of people like that or people who got diagnosed with hsv or chi chickenpox, got wrongly diagnosed. that's how some of these cases have been discovered retros retrospectively, doctors recognizing that maybe hay saw a case or two of this. it spreads typically through very close contact. >> it seems like identifying the cases and then isolation would work pretty well given you could isolate it because you have to have such close contact. that's a positive, but what's the incubation period and that might be a negative, right >> yeah, well, you're not
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typically contagious during the incubation period. the incubation period could be up to 21 days. a fever and lymph nodes is one to three days. you're only contagious after the pox start to become self-evident they start as flat lesions if you have flat lesions, you might think it's an ordinary rash it's not until the telltale vesicles start to form that it starts to look like something that's distinguishable you are contagious once you develop that rash. some people might be slightly contagious when they have the fever. since this doesn't spread through asymptomatic transmission like covid, it's very amenable to public health measures and interventions to try to control this. >> that's good the mortality rate in the most vulnerable people, immune compromised people once again, what about ly people, would you expect a high
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mortality rate and what's the basal mortality rate, what is it 1% or something? and then for elderly, is it much worse or immune compromised? >> there's not good data on breakdowns, it is going to be young people and immune compromised and elderly. the case race in west africa was 1 to 3.6%. presumably, you know, if this is -- if patients are well cared for, you can get that case fatality rate down substantially. hopefully our experience isn't going to be the same i don't think that we will have large outbreaks. i think we are at a very uncertain point right now with this where if we don't start to get control of this, you could have continuous low level spread, and i think that even in and of itself could be very impactful from a public health standpoint and certainly disruptive. >> how would we deal with it
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therapeutically, and would it be a pcr test you'd look for antibodies? how would you test for it, and are they available now and what type of therapeutic? >> the testing has to be sent off to a laboratory, so it's not very efficient in terms of the therapeutics, presumably the therapeutics that work against smallpox would work against this poxvirus. it's in the national stockpile, two effective antivirals that should work well against this virus. >> dr. gottlieb, thanks. appreciate it. >> thanks a lot. >> hopefully we won't be talking about this with you for the next two years or twice a week for the next two years. >> hopefully we won't. thanks >> okay, thanks. up next on "squawk box," alphabet's cfo ruth porat will join us live from davos. right now, though, as we head to a break, bank of america's brian moynihan joining us in the last
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hour from the world economic forum. here's what he had to say about the labor market and the economy. "squawk box" will be right back. >> it's still going to be a very tight labor market, frankly because in the u.s. -- because d'tweon have, you know, we aren't getting more people esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim. the investment management business of prudential.
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welcome back to "squawk box. we are live from the world economic forum in davos, switzerland, this morning, we'll show you you the futures right now. nasdaq up about 93 points. the s&p 500 looking to open about 38 points higher when we return, a rare interview with alphabet ceo ruth po porat. she is right here live in the alps with us, and check out what's coming up next in the hour, we've got intel's ceo pat gelsinger, he's going to be joining us live. we'll talk about chips, maybe even talk about some of those comments that president biden made about what's happening in taiwan, and then later scott minerd of guggenheim, he's got a rk iheedinflioew on where the maets ad, atn and stocks, "squawk box" coming right back from davos, switzerland in just a moment
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welcome back to "squawk box. we are live in davos, switzerland, talking about the economy across the world and especially in the wrorld of technology technology stocks have been challenged, and google's stock down more than 20% this year along with so many others. we want to talk about what's going on in silicon valley and what this tech giant is doing to navigate the challenge we're all seeing, recession fears, global uncertainty and more with us a rare interview,
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alphabet's cfo, ruth porat i think this may be your first time on "squawk box." >> it is it's great to be here with you. >> you've been at google for a very long time now, you also were at morgan stanley you've seen the economy and improve been around the block quite some time. help us understand what you think is happening right now i think everybody here is trying to make sense of where we are. is this 2001 is this the 1970s? what do you think is happening >> well, i think having been around the block actually helps because the global macro environment is clearly complicated. it keeps shifting. you're talking about it every day, and at google we're clearly not immune it it i've made this point on our earnings call as well. the most important metric to look at when you're thinking about our ads business is gdp growth we know we can't control the macro environment. what we can control is our ability to deliver on all the exciting opportunities ahead of us and what's made google extraordinary for all these years is its deep roots in
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computer science and we think there continue to be extraordinary opportunities to deliver for consumers around the globe, for our partners, for governments, and so we're continuing to invest and invest quite aggressively for long-term value creation. >> by i ut i assume you must sit around maybe virtually now and say, okay, we think the next 18 month s is going to be more challenged more challenged may be good for a company with a great balance sheet like yours there might be lots of opportunities. do you say to yourself here's this moment, maybe we start to buy other things there's other things happening here >> i think when you look through it, it does come back to the point that cycles come and go, whatever they may be, and when you look at the set of opportunities, we're continuing to invest. so core to your question, we always try and look at portfolio optim optimization, and make sure that we're making the right choices and we're continuing to do that. but i think at the highest level, one of the important elements is regardless of markets, make sure you're focused on long-term growth.
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those who don't actually miss that and try and catch up later. >> do you think this is going to be a moment for acquisitions, and can you make acquisitions in terms of the political climate >> it's certainly an interesting time when you see what's going on in the market we are proud we are making an acquisition of mand yan, adding to what we're doing in cybersecurity. you particularly see it now. we have continued to add we're continuing to look at opportunities, and we'll see >> we talked it to a lot of venture capitalists here, there are a lot of companies that may run out of cash. >> right. >> and that's why i'm wondering whether you look at this moment, and there's sort of a real disconnect between those companies, which are starting to either lay people off or hold the line on hiring, and you guys are sort of doing the opposite >> it goes back to this core question i feel like i'm being very repetitive, but when you're starting with deep computer science and the set of opportunities, look at cloud. >> right >> we believe we are very much
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still in early innings we believe it's an extraordinary opportunity, our ability to add value to enterprise customers and governments means we should be leaning in and investing aggressively, and that's what we're doing, and to your question, making strategic investments, making acquisitions, and so we're continuing to build out the suite of what we're doing so we can deliver for our partners. >> in the moment -- and i don't know if you get weekly reports, daily reports, how it works in terms of advertising, what are you seeing, even the last couple of weeks is there any difference between what you saw two months ago, a month ago in the last week or two? >> well, the key trends in advertising, i think, one of the interesting elements that we are focused on is how are people reengaging with the world, and one example is what's going on with retail and commerce, and wait we're looking at it is the world has shifted to this omni channel where you're living in the physical world and living in the virtual world. probably one of the most interesting stats in my view is this whole thing about queries around searches near me, running
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shoes near me, best breakfast spot near me that's up 100% merchants and consumers are saying i want to be able to transact they're looking, maybe starting their search online. maybe starting it in a store but ending it in the other place so trying to make sure for all of us that we're straddling this online world and physical world is a key part of the -- >> there are a lot of companies that actually were built or grew up during the pandemic, oddly enough in the last two years maybe even with stimulus money and other money that came in are you concerned about that money falling out, meaning other companies having to pull back? >> i think it's reasonable to assume right to your first question about obviously we're part of a broader ecosystem, and so we need to be mindful of how this evolves, and so we're watching it like everybody else. >> let me ask you a free speech question or a content moderation question that everybody's trying to grapple with this issue, and one of the most interesting
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things that's happening right now is we had this tragic shooting in buffalo, but there have been tragic shootings all over, this is interest insofar as it went up on twitch, it was taken down other people tried to put it on other sites, folks likes you and others tried to take them down we now have a law in texas that would have force add company like yours to keep that up in a state like texas how do you grapple with these new laws and what do you think -- how do you think this all resolves itself if it does at all >> well, attacking disinformation or in that -- anything that incites violence, we've got a tremendous investment, people to walk it, take it down the whole point is how do you elevate authoritative information? how do you reward authoritative information, and you need to put structure and governance around it i think it's absolutely critical that you have the ability to move with speed when you see something, if you haven't
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already been able to block it to pull it down, and that is one of the critical elements. you saw that in russia as, you know, that's another important area where we had the ability to bring down disinformation and actually keep up elements that were key and invaluable, and so that ability to move and the investment behind it we think is a core part of delivering on what is it that people expect of us. >> what do you make of this moment we're in where you have states like texas -- and by the way, i don't know what elon musk would actually say about this, but he wants to turn twitter into a completely uncensored environment, at least a relatively uncensored environment, that's what he says but in a state like texas, taking things down would be illegal. >> so i think that one of the critical elements in everything we do on regulation is you need to constructively engage with regulators it's really key to go through what are the unintended consequences you and i have talked about that in the context of financial services it's very clear. if you can be specific and explicit work with regulators, i
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think they too want to land things in the best interest of safety, security, that's what we're looking into doing on both sides of the atlantic. >> ruth porat, thank you for being with us. >> there's warm weather, usually i see you in parkas. >> it's great to be with you. >> coming up, our interview with intel's ceo pat gelsinger live from davos to talk the global chip shortage, supply chain, and much more. as we head to break, here's a quick check on the markets 300 points of upward momentum on the dow in the premarket today "squawk" will be right back. >> announcer: davos 2022 is sponsored by netjets, the worldwide leader in private aviation
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good morning, welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm becky quick along with joe kernen, and andrew ross sorkin andrew is reporting live from
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the world economic forum in davos switzerland. we'll get to him in just a moment take quick a quick look at u.s. equity futures dow futures indicated up by over 300 points the s&p 500 futures up by about 37 the nasdaq indicated up by about 80 points. of course this comes after eight weeks of declines for the dow. first time that's happened in 99 years. if you check out what's been happening in the treasury market, you will see the ten-year is yielding below 3%. andrew, in davos, no snow on the ground this time around. andrew, what's the mood there in davos? >> the mood, i got to tell you guys, and it's sort of sad, it's depressing is what it is the davos consensus, and we've talked about whether the davos consensus is right or whether it's a contrarian indicator. we got here late yesterday, went to dinner immediately and almost to a man or a woman around the table, there was a view that we
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are headed for something worse than at least what the markets are reflecting right now and so there's, i would just say, a lot of concern. having said that, this is a place where there's always been a lot of hand wringing people talk about what worries and concerns them the most perhaps that's what's reflected in terms of those conversations. we've also been here all together when people have been remarkably positive. i remember when we were here, frankly, just before the pandemic began, and i think there was some positivity from some. >> just before. >> remember the year before that -- >> days before, i don't know when we had the first case in washington ask paul tutor jones. >> washington state. >> paul tutor jones said coronavirus, and then -- that was -- and we've been in it ever since. throw in a war and another potential war. and a monkey pox, hopefully,
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which is not going to be -- >> i arewill tell you the monkey pox issue is something people are talking about here, covid as well as you might imagine. there is a testing regime that they've set up we will see how successful that testing regime turns out to be but that does seem to be the mood here. you're missed. both of you are missed i will tell you wherever i go, i get to say hello to becky and joe. where are they >> we'll be back soon enough we're waiting for the snow. >> six months and it's like a blink and it will be here. when is 2023 edition is january. >> yeah. maybe seven months >> coming soon >> you might just stay you might as well just hang out. >> i know you'd like that. i know you'd like that >> no, no, no. >> just stay right here. >> go around europe? >> with this weather, i actually would. >> i would love to cedasee davon
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the spring >> with julie andrews. >> watching everything in bloom. that's kind of gorgeous. you couldn't ask for a nicer background. >> that was austria, but the von traps are around probably. >> and you can really -- by the way, there are snow caps you can't see at this point, it's a fairly remarkable thing we've got a big final hour ahead to tell you about, a couple of big guests on set. we're going to be talking chips, and we're going to talk supply chain. we'll also talk about those comments from the president, president biden, about taiwan this morning with intel's ceo pat gelsinger, ask then later in the hour, markets and investing with guggenheim's scott minerd he's got pretty provocative views about where this stock market is headed, joe. looking forward to that. speaking of markets, let's get over to mike santoli futures are trading in the green, and that is not something we've seen or at least when we have seen it, it doesn't mean anything about the end of the session, mike. we'll see. >> yeah, exactly, joe. i mean, and sometimes people say
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i'm not sure we want to see a green open it looks like the triumph of hope over experience, right? there are some decent reasons, i think, if you look at the chart of the s&p 500 index fund for some short-term relief, at least, and you see last week you could squint and tell that maybe some of the selling pressure peaked, you know you kind of had a finish off the loads, 3,900 level on the s&p 500 seemed to provide a little bit of balance getting through an expiration week, that was friday with options expiration sometimes you get some relief going into month end all those things together, you're still back at, you know, january 2021 levels right here just around that, just above that minus 20% level a lot of valuation work has been done, but the question is is it enough take a look at stocks versus bonds, talking about month end, whether you might see just a mechanical rebalancing here's what's gone on the last few weeks. you see right here at the beginning of the month, we were basically -- bonds and stocks price wise were tracking one
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another. you had equal losses on both sides of the portfolio pretty much, and now you've actually seen a big come into the bond market yields have eased back a little bit. that's enabled them to have a little bit of help diversifying. you've got this performance gap right here, to the extent there's any kind of monthly rotation among asset classes, you might see a little bit of migration back toward equities take a look at kind of leading and lagging groups, energy against semiconductors semiconductors, you know, you really have to look closely. they've stopped under performing the market, at least in the last couple of weeks. that's one thing people are taking hard. biotech, same situations some of the stuff that let us down energy still looks like a strong trend. the question is does this kind of, you know, curl over and maybe join with other signs that we've perhaps seen the peak inflation fear if not outright, you know, peak inflation numbers, joe >> all right, mike, it's a
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monday, and we've got another -- we've got a few hours that we have to make a decision on whether to buy or sell things here you see all the articles now, much further to go does that mean anything, mike? >> you know, i think for one thing, people -- there's been a complete mood shift, and yes, i do think people are much more focused on downside risk than the potential for reward, although it does feel like another one of those moments coming into the week where bulls and bears alike say, well, it makes sense if we do get a bounce right here. i think we were there last week, too. i think we've reoriented psychology the question is have people moved their portfolios enough on the retail side back toward cash and things like that that's the open question >> president biden angering china with some comments on taiwan overnight here's the president at a press conference with the japanese prime minister in tokyo. >> are you willing to get involved militarily to defend taiwan if it comes to that >> yes
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>> you are >> that's the commitment we made that's the commitment we made. we are not -- look, here's the situation. we agree with a one china policy we signed onto t, and all the attendant agreements made from there, but the idea that it could be taken by force, just taken by force is just not -- is just not appropriate it will dislocate the entire region and be another action similar to what happened in ukraine. >> a white house official saying the president's comments did not represent a change from america's policy of strategic ambiguity toward taiwan. taiwan's foreign ministry thanked biden. china, though, said that the u.s. should not defend the island's independence. joining us to talk moreabout this is gene spurling, a senior adviser to president biden he served as national economic director under presidents clinton and obama, and gene, let
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me just ask how we should interpret this was this a deliberate move to kind of distinguish and say that we would make sure we took steps because we don't like what we've seen happen in ukraine from russia, or was this kind of accidentally stepping into a situation that made the taiwanese very, very happy and angered beijing? >> look, i'm going to let the president's words speak for himself. he spoke clearly there was also a clear statement from his foreign policy team that this did not reflect a change in policy i'll let, again, his national security policy team as well as himself speak more about it as the day goes on. >> let's talk about the economy in the united states right now this is such a eunique point and probably an inflection point you have an incredibly strong economy, consumers have more in their bank accounts. but you also have this idea where costs are going up
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exorbitantly when you put the wage gains we've seen to inflation, real wages are dropping how do you interpret all of this what comes next? >> you said inflection point you know, we've been saying this is an economic transition moment, and you're right that, you know, we start with the fact that we, the united states, did come back faster from this -- the depths of the pandemic due to our vaccination policy, our economic policy. we got back to our gdp level, our pre-pandemic gdp level six months before other countries. we had the highest job growth ever we had record gdp. you saw ui claims fall -- excuse me unemployment insurance claims fall by 95 p%. listen, as you said, that does not mean we escaped the global inflation and higher prices that have come from an unprecedented shutting down and starting up of the economy, the degree omicron
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and delta delayed the supply correction or obviously the $1.25 pump, you know, spike to gas prices that have come from putin's war with aggression. but i do think -- and this is a point we want to make, and i think it's important for people to think about -- which is that the strength of that recovery also positions us better than any other country in this period of economic transition it positions us to be able to withstand some of the tough measures that obviously the federal reserve will have to take to tame inflation without giving back the -- excuse me, without giving back historic gains we've made on jobs and a strong labor market. so i think -- and i think what brian moynihan said today, you can expand on. if you look at the american household, if you look at household balance sheets, it's not even just a single statistic, jpmorgan finds weekly
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checking accounts are higher across the income spectrum than they were in 2019. household debt service as a percentage of income is the lowest we've seen in 30 years, consumer bankruptcies are down across the board, so are credit card delinquencies these are signs of resilience, and this is perhaps why we were not derailed by delta or omicron. i think people should understand this does put the united states in a stronger position than any of the other major nations around the world to make this transition to a more balanced, stable growth that we still feel will lead to a better economy for working families >> i know you see how most americans feel about the economy. pretty big disconnect from what you were describing. and not just political opponents say that maybe we added too much fuel to the fire i mean, the american rescue plan
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came on top of what was already a lot of stimulus, and then if it wasn't for joe manchin, we would have piled on another couple of trillion dollars at the same time, so to just attribute it to global inflation and putin's gas price hike, that just doesn't ring true with the american public. i know you're here to tell a message and to defend the administration, and we get that, but do you really believe everything you're saying as you're saying it, or are you more or less, you know, just sort of that's -- that's the administration's sort of -- what they're putting out there to the public we well. >> yes, i believe -- >> well, the public doesn't believe it. >> first of all, one thing i do want to make very clear is the fact that these are global phenomenons, global price hikes does not make it any better for an american family coming into
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the gas pump, so yes, these are global phenomenons, but yes, it's of little comfort to an american family. president biden understands that he's talked about the fact that he grew up in a family where, you know, a spike in gas prices really hurt, and we understand that but let's look, there are 38 countries in the oecd. the inflation rate is 8.8%, and the core inflation rate is 6.2%. you just saw the uk go to 9% inflation rate and 6.2% core, and actually, if you look annualized over the last six months, the inflation rate in the uk is about 10%. so the idea that this is not a global phenomenon, i think just simply does not hold up. i think when you look at the -- i think when you look at the american rescue plan, what i'm trying to say is not only did it lead to us coming back stronger
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to having one of the strongest labor markets and bringing 4 million more americans back in the work force, but it's also offered a degree of resilience that i think is somewhat underappreciated and again, when you look at the strength of household balance sheets, you look at the fact that city and state budgets are still investing instead of contracting, you look at the fact that business investment was up 9.2% in the first quarter, these are also signs of resilience i'm not going to make predictions. you have many other people that can do that, but what i am going to say is i think the united states is because of these economic measures that we've taken in a better position to make it through transition to stable and balanced growth, and hopefully a new normal that -- where the economy is working better for working families and not just the most well off who,
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you know, we see in davos and other places >> hey, gene, just in the years that you've been doing this, the decades you've been doing this, we haven't seen inflation like this americans are going to be paying -- already are paying higher prices at the pump and at the food checkout lines, and that just is expected to get worse before it gets better. what do you do how do you handle that how do you help out or not because if you spend more to try and ease the pain, it seems like you only exacerbate the problem because this is a supply versus demand picture we can't do anything immediately about supply even though we're going to try and work on issues that will help over the long-term. the only way to kind of fix the equation is the blunt instrument that the fed has, which is to break demand by slowing the economy down it's a conundrum >> well, listen, i mean, obviously there have been some tough breaks in what we hope would have been the correction there's no doubt that delta
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slowed a bit of that supply correction, particularly related to semiconductors. there's no doubt that gas prices were $3.31 on january 17th that's the date putin moved forces to the border of belarus and ukraine. now they're over 1.20, $0.25 higher in terms of what does one do, first, yes, you have to recognize and we do that the federal reserve and monetary policy, you know, are going to be the major player in bringing inflation down and one thing you've seen with this parkinresident is a real rt for the independence of the fed. you know, five presidents since 1960 have used moments like this to berate or bully or try to pressure the fed when they sought to raise interest rates to dampen down inflation you're not seeing that from this president. you're seeing respect and support for their independence
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and the tough steps that they're going to take. secondly, you know, the success of the american rescue plan in terms of getting from 2 million to 200 million people vaccinated, in terms of bringing back workers to the work force does put us in a stronger position, as i've said, but we also have seen that the surge in revenues, the ability to roll off many of the emergency programs has brought down the deficit significantly, so we're 1.5 trillion we have a 1.5 trillion lower deficit in just the first seven months we know basic economics, when you stimulate the economy with higher deficits, when you want to jump start and you bring it down when you want to dampen inflation. and third, you really do see this administration doing every single thing we can to reflect the president's priority of bringing down inflation from the
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historic releases, the strategic petroleum reserve to efforts on housing supply, to supporting lower prescription drugs, a $35 cap on insulin these are the types of measures we can do to try to aid -- be the wind at the back of the federal reserve to help lower praises for families and yes, we wish we had more support or any support from those across the aisle to help get that done. >> gene, thank you, gene sperling is a senior adviser to president biden. we've got a lot more coming up right here on squaw"squawk ." we are in davos switzerland, a cant miss conversation with intel's ceo pat gelsinger live on set right here in davos. and then we are going to talk futures, they are up. but the s&p knocking on the door of a bear market we've got lots of questions for guggenheim's scott minerd a little bit later don't go anywhere, "squawk box" returns from the alps in just a ment nnecting with customers, fast.
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switzerland. joining us to talk about the global computer chip shortage, manufacturing expansion plans, and ideas on how to help balance supply chains, pat gelsinger is here he's the ceo of intel. it's great to see you. we're thrilled to have you here without the snow, we're saying just how nice it is to be here with this weather. >> this is great we're being blown around, but not being snowed in. this is good >> here's where we want to start. there was just this news this morning, president biden making some comments that got a lot of attention around taiwan. the reason why we're all so focused on taiwan in terms of the business impact is on the world of chips and chip making so curious what your thought is on a morning like this and these comments that he's making? >> well, you know, first, i think it's great that biden's in asia, and to me the rebuilding of our partnerships in europe, why we're here in davos and world economic forum but also in asia, i think are super important. i'm very happy to see the administration really leaning into those partnerships and clearly post-ukraine they're more important than ever
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so very happy to go see that obviously asia's super important for chips. so it's very important in that sense. hey, independent of where they are, we want good partnerships and good focus there it also just reinforces why we are so adamant we need geographically balanced resilient supply chains. if we get those in place, everybody can be calmer about the overall structure. >> the speed of which you think that's actually realistic, meaning if you press go, which you are trying to press go, how quickly do you think we can get to a place where we are independent of the need for chip manufacturing in taiwan? >> oh, never right. >> never >> it is always that we have geographical relationships what we're saying is we need more balanced geographic supply chains the moon shot that we've suggested, and you know, was agreed upon by secretary raimondo in the u.s. and ursala vand der layen in europe, skand
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compared to 80/20, 80% in asia and 20% in u.s. and europe, by the end of the decade if we got to 50/50 that's a great outcome for the world. it's not that we're independent of taiwan or other parts of asia, but we're balanced and we meet our local supply, we reinforce local economies, we meet national security requirements, and then everybody can be calm because it's like, oh, the most important things, oh, i can manufacture locally even as i'm working through the supply chain imbalances. >> i want to talk about intel's business and what you're seeing in the economy there's another headline which you know a lot about, vm ware, broadcom, as a former vm ware man yourself, what do you think of this deal >> first, it's a rumor i'm happily reading the newspapers like you on that. for us, i'm excited about vm ware being an innovative partner for the future and any potential transaction for them, i would want to make sure that innovation is alive and well hybrid cloud, we do a lot with
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them in the low levels of our hardware stack, meaning their software stack that would be my priority. going to enable that future innovation. >> is it or not? >> i'm not sure. that's the lens that i would be looking at if it's an economic deal throughout the dollars and cents, no at good answer it has to be around the innovation potential for the company, for its customers, for its employees. you know, these are extraordinary software engineers and many of them i worked with for eight years. my soul was in this company for eight years. >> do you want to see this happen or not? >> i don't know yet. we're anxious to see it, if it doesn't reinforce innovation, i'd say no if it does enable a vibrant cycle of innovation, maybe. >> one of the questions we're asking is what we're seeing in the economy, and not just what we've seen in the past quarters, but even what you're seeing in the last couple of weeks literally the conversations you're having here in terms of sales and what's not -- are you feeling any kind of slowdown i mean, meaningful
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>> definitely. we commented on our last earnings call around consumers slowing a bit, and some of the areas being impacted because of supply chains being challenged, particularly from the shanghai shutdowns, and that has just sort of created, you know, this backing up of everything, and now everybody's looking, saying am i going to be able to ship my inventory. maybe i should adjust my inventory levels as well given i'm not sure where my supply chains are going to be we've definitely seen a bit of softening in certain areas because of that. we have been so far behind for so long, maybe a little bit of reprieve allows us to bring a bit more supply demand balance as well. >> when you talk to your people about what the next call it 18, 24 months is going to look like, what do you tell them? >> well, you know, we are on a ten-year journey, and as i say, we're making these long-term investments for capacity the semiconductor industry, about 600 billion, about 1.1 trillion by the end of the decade that's the payoff that we're on. don't be too disturbed bimonthly
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or quarterly cycles because we have a ten-year plan that we're building out but hey, you know, inflation's rising monetary policy is tightening. you know, we're probably in for economically a little bit more challenging period in the near-term, but we're not going to be distracted we're out to build a great company for this decade. >> one of the things you're confronting as are a lot of companies, wages and also unions what do you think is going on there? >> i think everybody post-covid, you know, lots of what happens, i could work from anywhere, so maybe i want to work other places, you know, and we've clearly seen different aspects and what are your post-covid policies with regard to work force. you know, and how will that look going forward? there clearly is a lot of what is the future of work looking like for us, you know, i mean, a lot of our people are in factories in and the lab, a lot of them we've said work from anywhere. as long as you show up for the
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necessary meetings, i don't care if you're closer to your mother or parents and tget to have a better quality of life, i'm excited about that, but show up and get the job done the war for talent is persisting in the technology industry, so i have to make sure i have the best and we're getting lots of people wanting to come back to the company because of the exciting future we're laying out. >> on the topic of wages, we've got to talk about your own wages. i'm curious what it feels like personally the shareholders are not happy with your wages. what do you think of that? >> well, you know, as i think about it, as the board gave the package for me to come over, a large portion of it was just the equivalent of what i had at vmware essentially everything else is at risk. if i don't produce for the shareholders, i get nothing, i don't know, at that level. third would be, you know, my base level salary is at the 50 percentile with other ceos, so i'm sort of in the middling there. everything else is at risk, which is perfectly aligned with
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shareholder interests. and fundamentally, i'm going to give most of it away anyway. my wife and are very charitable and we're very happy to say if i get more we're going to give it to charities to improve the quality of life more. >> do you think this change the dynamics in how pay is set at places like intel in the future? do you see this like a trend we saw this with jamie dimon as well >> i do think this whole idea of say unpay and how is that managed gets a lot of scrutiny i'm not bothered by that i think there is a certain level of accountability in that respect. i think it's a fair process, and you know, boards and ceos do need to be sensitive to that and thoughtful about how they manage it, and in my case, i'm perfectly comfortable that if i do a great job the shareholders are going to be extraordinarily rewarded in the process. >> we hope that's the case pat, thank you, great to see you this morning >> thank you. >> becky, back to you. >> thank you very much when we come back, critical market insight from guggenheim
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partner scott my minored and why it might be harder for y weo curb inflation this time around robert frank has that story. "squawk box" will be right back. >> announcer: davos 2022 is sponsored by morgan stanley. to support that village. ♪ ♪ i am peter akwaboah, chief operating officer for technology, operations and firm resilience. when you think about diversity, the employee network group is fundamental to any organization to provide a community and a belonging environment for the employees. they provide an avenue to support employees and ultimately it leads to retention of the best and brightest. the employee network represents the community at large, and it provides a good feedback loop to senior management to make the appropriate decisions,
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welcome back to "squawk box" this morning, we are live from the world economic forum here in davos, switzerland, and joining us right now in the alps to help talk markets and what it looks like surging inflation, scott minerd is here the global chief investment officer at guggenheim, and he has been warning of, quote, a summer of pain ahead for stocks. scott, thanks for putting us in a good mood this morning >> well, you know, i'm always an optimist, andrew >> so you think it's the summer. is it just the summer, or is it longer than the summer because the amount of pain that some of the folks around here are talking about could be talking about next summer too. >> look, it's going to be interesting because i think, you know, going into the summer the seasonals get weak we'll see a lot of downward pressure going into the fourth quarter, and then the big question is what does the fed do, right? the fed has basically told us they're on auto pilot until they think they've crushed inflation.
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they don't care about the markets, so if we suddenly find that the fed decides it's time to pivot once we have some sort of panic, then, you know, we could find ourselves back in 1998 and going into another bubble >> but you say some sort of panic. what are you talking about >> well, look, if stocks continue to fall and we were to get a precipitous decline, let's say that the s&p were suddenly down 40% -- >> but is that what you're projecting >> i think that's quite likely i'm not sure it will happen quickly or if it will happen orderly. that's the only question i've gotten. >> it seems like the fed is suggesting they'll keep going as long as it's orderly. >> as long as it's orderly, that's right but if we were to suddenly see, you know, the seasonal pressures in september and october, which are always horrible, if we were to suddenly see the stock market fall 20% in the course of a week or two, then i think the fed would pivot. otherwise i think they're going to keep going. >> you have been relatively pessimistic. is there anything in your analysis where you say, if i'm wrong about this or i'm wrong
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about this, actually, maybe it could break another way? >> well, look, if i'm wrong about how aggressive the fed is, which i don't think i am or -- >> and are you, by the way in the 50 basis point camp? >> for sure. no, no, i think they're going to stak stick with 50 basis points for at least the next two meetings we're going to be at a 1.75% by july, and our work shows that by the time the fed gets to 2.25, we're moving into restrictive territory. now, the fed doesn't think so, but, you know, given the fact that, you know, inflation's decelerating, you know, employment is sort of -- or unemployment's stabilizing, you know, this is like the old word problem in elementary school if train a is going 60 miles an hour going one way and train b is heading 30 miles an hour the other way, when are they going to collide so you know, monetary policy is getting extremely aggressive at a very fast pace, and we're starting to see, you know,
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inflationary pressures slow down we're starting to see employment -- unemployment stabilize, so i think they're going to just overdo it? >> so the wind's already come out of the sails of the tech world, and more broadly, i mean, you could call it the broad indexes. when you look specifically at this point, where do you see more pain and to the extent that there's upside from here, some stocks or some industries are what >> well, look, if you look at tech, i think tech is pretty fairly valued. but i see a lot more pain because markets -- >> fairly valued but you see more pain? >> right because markets don't typically bottom when they're fairly valued markets tend to over shoot, and when you have a day like we had on friday with the heavy selloff, which was a key reversal, which would tell us that near-term we're going to see a rally, but rallying off of a vix that's at 30, i mean, historically we need to be north of 40, closer to 50 to get a real bottom, and so you know, i
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think that until we see some real panic, we're not going to have a real bottom and, you know, like i say, bear markets don't end at fair value. they tend to over shoot. >> how do you think about the world of crypto? i don't think if we can get -- the camera's not going to see it the blockchain house is here, every crypto person is in town here in davos, and we've watched it, obviously, tank. it's not clearly a hedge on inflation, at least thus far do you see that as the tail? do you see that as the dog what's going on there? >> i think it's more of a symptom. it's telling you -- it's like the canary in the coal mine. we're seeing crypto collapse i think it's got more downside. >> how much more >> well, you know, when i look at bitcoin, which the technicals have been better than anything else, when we break, you know, below 30,000 consistently, 8,000 is the ultimate bottom, so i think we've got a lot more room to the downside under especially
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with the fed being restrictive, and let's face it, most of these currencies are -- they're not currencies, right? they're junk, right? the majority of crypto is garbage. so they're going to be survivors, but -- and crypto is the future. >> there's hundreds of cryptocurrency. >> 19,000. >> do you think that bitcoin is junk do you think -- how do you -- >> i think ethereum, i think bitcoin will be survivors. >> and survivors at one day at 100,000, 200,000, 500,000 in the sort of cathie wood world or something else >> it could be i don't think we've seen the dominant player in crypto yet. this is like the internet bubble, right? if we were sitting here in the internet bubble, we would be talking about how yahoo and america online were the great wi winners and everything else -- we couldn't tell you if amazon or was going to be the winner, right? but of course yahoo, google, we didn't have goggle yet
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america online, the dial up service died we don't know -- i don't think we have had the right prototype yet for crypto, and let me tell you what that's based on, right? the definition of currency is that it's a store of value, it's a medium of exchange, and it's a unit of account. none of these things pass. they don't even pass on one basis. >> if they don't pass now, why would they pass later? >> technology will come along, and there will be a point if you can create an ecosystem, then where we can actually use these things for transactional purposes and people feel comfortable, they hold their value. >> right >> you know, stablecoins an interesting attempt, but that, candidly if we're going to exchange the exchange rate like a currency board like the hong kong monetary authority, right, then it's going to get regulated like currency. >> given how pessimistic you are, if you had $10,000 in cash
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today, what would you do with your $10,000 in cash handing it to you, you can do whatever you like. >> i wait for the check to clear. that'd be the first thing. >> my money's good, my money's good here. i look at things that, on this question are you a trader, or are you an investor. >> i'm giving you $10,000. >> what's my horizon for me >> you're going to come back hear and sit here in five years. >> i would probably invest in art or real estate. >> you would not invest in the stock market >> not today, no. >> if i made it ten years? >> well, you know, look, i think when you look at things that have truly performed over long periods of time, art is one of the best things out there. but you know, would i buy stocks you know, i'd like to see stocks lower, so would i spend the money today. would i put it and say, hey, you can't buy art, scot.
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would i put it in a money market account and wait for a buying opportunity? i'd do that. >> is this the 1970s to you? is that what you're suggesting >> by 1980 you hadn't made a thing. >> you'd lost money. >> you'd lost money. >> so what are you saying? >> this looks more like to me like the 1940s. >> which stocks did well at the end of the second war, going into the 50s, stocks did really well, but you know, other things did better, i mean, so that's why i think real assets -- >> and you think real estate will hold up >> i think so. again, real estate's all about location where are you going to go. >> scott minerd, thanks for coming to our location in the alps i hope to see you next year. in five years we'll cut the tape and we'll see what happens. >> i would love that i'll wait for the check, i'll give you my wiring instructions. >> thank you appreciate it. >> becky, back to you. >> andrew, thank you.
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when we come back, we're going to get you up to speed on this morning's vaccine news regarding children and as we head to a break, a programming note for you, tonight at 6:00 p.m. eastern time, i'll be hosting a cnbc special on inflation and your stocks the guests include the ceos of papa johns and afgi, ngi. davos 2022 is sponsored by netjets, the worldwide leader in private aviation ♪ ♪ wow, we're crunching tons of polygons here!
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covid vaccine is according to preliminary data pfizer and its partner biontech, says three doses of their vaccine offer strong protection for children under 5. the exact number was 80% effectiveness during the omicron wave biontech's ceo says the company's plan to complete their fda authorization this week. for the first time in a long time, the fed is in full on inflation fighting mode, but this time around there are factors working against the central bank robert frank joins us right now with more. robert, good morning good morning, becky. americans have lost over $5 trillion in the stock market wealth so far this year. the vet hoping those losses will cause consumers to spend less which will rusin flags it's a theory called the negative wealth effect when your 401(k) or house falls
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in value, you're less likely to spend on that big vacation studies show for every dollar of lost wealth, consumers spend about $0.05 less this time around, it may take a lot more wealth destruction to actually impact spending and inflation. that's because americans added $40 trillion to their wealth during the pandemic, even with this year's losses they still have an extra $35 trillion to fuel that spending minneapolis fed president neel kashkari saying last week, quote, are these stronger balance sheets leading people to spend more or be more confident, in which case the fed has to be even more aggressive consumer spending is more sensitive to home prices than stocks, but as we know, home prices are still rising, at least in many markets. it will take a market decline of more than 20% that lasts the rest of this year to have a meaningful impact on inflation becky. yeah, i think the big issue is, you know, that wealth effect works if you're trying to bring down market prices and make
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people feel less wealthy from the -- you know, the fake money, the monopoly money they've built up over time a lot tougher to do when that money is already at your bank account. we talked to brian moynihan. he said americans have more cash this april than they did last april, this may than they did last may, and not by a small amount,amount. that was just from the stimulus that was poured into the american people's pockets. >> yeah. he said it was up 8% that's the challenge it was great news for the economy that those bank balances are strzonger but bad for the fe as they look at the monopoly money they have to incinerate before you get to a point that consumers are so hurt and under pressure this time around the negative wealth effect is going to be weaker, take declines in the market and the housing sector before it starts to impact inflation. >> robert, thank you we'll talk to you soon
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when we come back, what to watch ahead of the opening bell on wall street, futures up about 300 points and later this morning, don't o ne a big interview with citi ceja fraser live from davos. "squawk on the street" we are coming right back. you're a one-man stitchwork master. but your staffing plan needs to go up a size. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit
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facebook's products harm children, fostoke division andmoves weaken our democracy. teens blame instagram for increases in the rate of anxiety and depression. it's not great when your customers are voting with their feet and deciding to kind of walk away. facebook's parent company meta dropping more than 26% last week... that is more than $230 billion in market share value. when will there be accountability? how many more people need to be harmed before mark zuckerberg listens?
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a little more than half an hour before the opening bell on wall street with futures in the green but the dow on the longest weekly losing streak in 99 years but who's counting joining us is kerry firestone, do you get the feeling that we're in the process of stabilizing or making some kind of a bottom or do you think we've got another significant amount of down side, 10, 20% more to come >> well, of course, that's the question, and we don't like to predict markets. i would leave that to scott minerd, who did an advance grade school with trains colliding questions when he was that young. we would say at 3900, there would be down side a lot of people said 3400 nancy
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pelosi wa lot of people said 3400 when you look at where we were in march 2020, an abyss of closing the world and the end of society and whatever could possibly happen that was march 24th of 2020 are we at that level of fear and possible dislocation i don't think so and if we trade down another 5% we'll be at 15.5 times next year's earnings. even if you lower the estimated earnings it's hard to say what the bottom is but we can find places of stability when we think about companies whose earnings are stainable and we think they're trading at a market multiple that's interesting when we consider interest rates -- not high historically but higher interest rates and seeing inflation come down, seeing some effect in the housing market, mortgage rates are high. amazon cutting workers
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walmart. when you start to have these actions. and target seeing less consumption. that means the fed is doing its job and inflation may be starting to come down sooner than expected. >> you've done some look backs at historical precedence for similar periods and done the what percentages worked out, what percentages continued lower and it seems like risk/reward based on s&p lows and some other metrics that you're finding more of a chance of this being maybe a positive time to put a toe in the water than a negative time can you go over that >> sure. exactly. well, i took some data from william o'neill, they're technicians if you look at the last couple of months, the change between the high and the low of the day is about 2% on ave average every day the last two months
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if you look at over 20 years of data, what happens in the subsequent six months, two thirds of the time the market is higher, one third of the time i it's lower it's higher by a significant amount that doesn't mean it's going to be higher for sure but the odds are in favor of a rally because of what happens happened in the extreme amount of movement we've seen every day. you don't have to watch your screen until the last ten minutes because that's where you find out what the market is doing, you watch all day and that amount of extreme dislocation and trading around the open is unusual. >> but two-thirds and a third, obviously 33 -- one out of three chances for much lower is still -- you know, that -- maybe the odds are in your favor at this point >> well, i think the odds are in your favor but if we think about where the market could stop, and i think that's an important thing.
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we're down 19% hit 20% the other day on the s&p. are we going to trade at multiples 13 times, 12 times where we have in the past, of course, but the level of inflation was so much higher it's hard to imagine that we would overshoot to that degree and if we look at the number of stocks that have traded down, 50% to 80% over the last five, six months really since the nasdaq peaked in november of last year, you know, there is a lot of damage and, of course, it takes a while to get through resistance, no one is going to say it will happen quickly or we can stabilize and heal quickly but we're talking about a bottom i think the bottom should be closer than the top by quite a degree, considering where we've come >> we have to leave it there, kari, appreciate it. >> thank you. >> good to see you taking
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scott's advice, getting into some art we've mentioned your art before. i don't know if it means you don't like stocks but you invested in art. >> like both. >> you like both thank you. andrew is my train going 50 miles an hour and yours 30 or mine 30 and yours 50 >> you never got on the train. the train is in south america now. now you're glad you're not on, am i right >> we'll see >> take a plane down we'll get to continue this discussion tomorrow because we have another big show from davos. a ceo raextravaganza we have a special chat with bridgewater founder ray dalio. more from davos, switzerland
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it may rain though, tomorrow >> will you tape some of those law & order reruns in german for me so when i get there, maybe in january, i can watch them. >> everybody thinks this is so ritzy here i'm in the worst hotel room you've seen. my bed is for babies i'm in a baby bed. i'm in a hostile here. there's no tv. there's no tv. >> pizza three times a day swiss pizza. >> make sure you join us tomorrow. >> coffee though >> yes "squawk on the street" begins right now good monday morning welcome to "squawk on the street." i'm carl quintanilla got a bounce in store coming off seven weekly declines for the s&p. more discussion about repositioning in the end big week with macro with fed


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