Transcripts For CNBC Squawk 20240704

Decliner with points and percentages this morning. Those futures are off 117 points. Take a look at treasury yields. They were higher yesterday, but you are seeing a pullback this morning. The tenyear yield below 4. 18 . The twoyear yield at 4. 58. Joe mentioned that bitcoin continues to climb. It is down by 1 . 6 6 6 66,834. We are watching the price of gold futures. Gold hitting the record high close yesterday. That april contract jumped at 2,131. Despite the high, it is still below the inflation adjusted high of 3,200 which hit back in 1980. Alltime high. For gold. Yeah. You know, with inflation slowing, but money printing, less likely with no cuts maybe coming this year. Potentially. Or three later in the year. Yeah. Looming behind all that and were adding 1 trillion to our debt every 100 days. I read that the other day. Thats still climbing. Theres no relief in sight for that. Bitcoin as you keep talking about the halving in the next two months. I was reading something yesterday that suggested if you look at the increases at the halving which happens every four years, there is still a lot of room to run. Crazy. We will have someone on later. I want to know the possible lows. When it goes down, it can go way down. It was 17. It was 66 and back down to 17. A developing story on tesla. The gigafactory near berlin was evacuated over a fire at the pylon near the site. The fire knocked out electric as i in the area. The fire has not spread to the tesla plant itself. Police are investigating arson as the cause of the fire in the area which has been a focus of environmental protests against the tesla plants planned expansion. Making green eco friendly evs, but they are mad they are expanding the planet. Think that through. They dont think a lot of things through. They were writing another masterpiece. Heroes. They dont want oil. They rode in cars to go there. No oil. Ever. Or a bigger electric ev factory. Right. They want it. In the meantime, the google cofounder making a rare appearance over the weekend at the agi house in hillsboro, california where they were testing the google gemini model. It started generating historically inaccurate images and including a female pope and racially diverse nazi soldier. Here are comments released overnight by agi house. We definitely messed up on the image generation. I think it was mostly not thorough testing and for good reasons it upset a lot of people. Brin said it was not sure why gemini responses left a tilt. It wasnt the intention. The company made improvements by 80 of international tests. Brin stepped down in 2019. He remains on the board, but recently returned to work at the company. It is all around the a. I. Move that alphabet has been making. Brin told those gathered that he came out of retirement because the extrajectory of a. I. Is so exciting. When the story first hit, we probably need a female pope. That did not bother me. Get with the program here. A lot of changes in 2000 years. We had joanne lipman. Women are smarter and work harder and totally better people than men, as i found out yesterday. And . Tan is and it is possible fo woman to be pope. Thank you. The priests and epis episcopalians. I think the Catholic Church and this pope joe. Yeah. I like the last one. My favorite is jpii. I dont know about this guy. Thats heresay. You were raised catholic. We had latin mass. The guy facing the other way every morning in first and second grade. Every day. Post vatican ii. They changed that. It was english after that. Today is like i said, its tuesday. I like less than mondays. I always like tuesday more than monday. More than monday . Yeah. Less than thursday. More than monday. All right. Its supposedly super somewhere. Republicans in 15 states are voting for the preferred president ial candidate. Former President Trump is expected to deliver a strong blow to nikki haleys campaign hopes. That will just make her more defiant. She has no events scheduled for today or beyond. That may be it. Reportedly has no tv or radio ads booked. The twisting herself into a pretzel to try and stay in the Republican Party after this. She has 30 of the vote, but she doesnt have the delegates. She be able to get back in. I did hear speculation this morning that if she were to endorse trump, that he might actually want that because it would help with suburban voters. 30 of the vote. You just need a big never mind. Both of them. Trump or her. I see how these things play out. Shouldnt we roll our eyes and feel like we were used . Welcome to politics. Democrats are holding primary and caucuses in 15 states. Plus american samoa. The first polls close at 7 00 p. M. Eastern. I dpeguess if you create a commission, it means its really happening. Nursews alert out of washington. Biden administration creating a strike force to root out price gouging. There is price gouging, megan . We would not have a strike force if there wasnt. What are the details . Reporter thats what the white house says. This is one of several actions from the council. The strike force led by the Justice Department and ftc. It will be a government effort to boost collaboration and shares data and resources and rooting out illegal attempts to keep prices high in areas like food and prescription drugs and transportation. If this sounds familiar, it may be because it is not unlike the executive order on competition that biden signed in 2021. This is a whole government approach. There are a couple of highlights. The cfpb finalizing rule to reduce credit card late fees. It will bring the average fee down from 32 to 8. The fcc is going to be taking steps to reduce internet costs for People Living in apartment buildings. The Agriculture Department is cracking down on meat and poultry processors to help farmers. They say they estimate the agenda is saving americans 20 billion a year. Joe. It is. Competition is good. They are right about that. Megan, thank you. See you later. In the meantime, sesame street jumping in on the inflation. Cookie monster says me hate sh shrinkflation. And Sherrod Brown says me, too, cookie monster. Big corporations shrink the size to help their executive bonuses. Im from ohio. This is going to be hard between now and november. To walk the line t. I. It is really hard because were in a position to be objective. Like the rest of our colleagues in cable news on both sides. No one. Everybody is in on the joke, are they not . How will you do it . Are we going to be okay . We will see what happens. Trump versus biden. I cant believe were doing this again. Now. It wasnt good enough the last time around. We didnt have enough fun. It wasnt as chaotic and nasty and divisive. We have to do it again. Here we go. When we come back, heres how we will do it. We talk to barry knapp about the jobs report and what it could mean for the fed. That is coming up next. You see the futures down by 40. Later this morning, target is set to report and the Ceo Brian Cornell will speak to wall street. He will speak to us first at 7 00 a. M. Eastern time. Squawk box will be right back. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. Nobodys born with grit. British announcer rose is really struggling. Its something you build over time. American announcer thats 21 missed cuts in a row. [car trunk slammed shut] for 88 years, Morgan Stanley has offered clients determination and forward thinking to create the future. Crowd stop it . Only you can see. American announcer rose, back in the winners circle. [crowd cheers] [music out] fresh, warm hot dogs when im not selling hot dogs, i invest in a fund that advances innovations like robotics. Fresh, warm hot dogs, straight out of my torso one for you, one for you. Oh, youre a messy one. Cool, right . So cool. Anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. Hot dogs fresh, warm hot dogs before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. Whoa, how did you defeat them . Fund investment objectives, with a little kung fu strength and by connecting my devices to the most powerful force of all. Skadoosh. Hah, huh . Cool right . Amazing. Harness the power of xfinity internet and stay connected to the things you love. Ah, theyll be like this for hours. Hello dad, hello dad, hello da. Uhoh. Good bunnies. Ahh now to the markets. Joining us now on set is barry knapp. He is a manager partner at macro economics. Barry, markets are down, but barely, yesterday. It seems the move and momentum is certainly up to the right. What do you feel about things . How do you think . Are earnings enough to justify the places were going . They are for about half the market. The tech sector is 30 of the s p and Consumer Discretionary which is tech as well is another 10 . Communications services is 10 . If you look at s p earnings this quarter, they are on track to get to 10 this year. It is exclusively driven by those three sectors. It makes sense if you think about the dynamic. Last year, it was described as an unstable eekquequilibrium. Household sector wasnt at risk or sensitive to the rate hikes. The same was true with the corporate sector. You have the whole other dynamic which is the Banking System struggling with the deepest yield curve inversion since 1980. The Banking System is the conduit to provide credit to Small Businesses and real estate sector and the federal government. In that environment, being long tech works well. This is a Strong Capital spending cycle the. You probably have above trend productivity growth in the cycle. You have the sector struggling mightily with what i have been describing as nothing like 2008 because that is the lens everyone looks at with micb has trouble and everyone says is this systemic or are there credit problems . The problem is 1980 when volcker created the deep inversion of the yield curve that started the chain of events that wiped out the savings and loans. They were 80 of the mortgage create that time. That was an existential threat. They were hit by money market funds at the time. They could not raise their money and earn their way out of the losses they had on assets they purchased. It is similar to the Regional Bank situation now. You think the Regional Banks are in trouble and this will mean the end, essentially, of Regional Banking . For large parts of the market, they need to consolidate or find another way to operate unless we get an aggressive fed rate cut cycle. The usuaissue is the friday employment report. It looked like the demand for labor was weakening last year and supply improved a lot in the first half of last year. Participation rates were up. They found an extra 1 million workers, mostly male immigrants, no surprise. This year, it fell by 625,000 workers. If the supply of labor has dried up with demand coming down, that is why we are stuck at 3. 7 Unemployment Rate. The idea that for the fed to cut to 4 , the level that would disinvert the yield curve and take all of the pressure off the banks and allow them to open the credit channel and lend will take an Unemployment Rate above 4 and wage growth below 4 . The tenyear note yield can stay around 4 and not cause further damage. You are stuck and im saying im long tech. Consumer discretionary and consumer and industrials with anything remote sensitive and the back end of the treasury market i want nothing to do with. Do you think the fed thinks the Banking System is in as much trouble as you do . I dont, but i would note we had the Kansas City Fed president give his first speech as president of the Kansas City Fed after six months last week. Guide post for a new central banker. One of the guide posts was shrinking the feds footprint in the markets and trying to shorten the duration of the bond portfolio to try to allow unintended consequences of this which is the inversion of the yield curve which hurts the Banking System and move on government spending. Waller said something similar to the situation last friday. He said let longterm treasuries tail off and replace with bills. That was the policy from 2008. You may not recall this, but i do when the process started. I was adamant that they should be more aggressive selling off longerterm securities and hike rates more slowly so they dont cause the curve inversion. I think they are looking at this from the 2008 lens and looking as i heard mary daly talk about it. She said were looking for Office Real Estate problems. Thats not the issue. The issue is you own assets that may perform. The issue is the lenders. New York Community bank has rent controlled apartments. That may have been great with zero Interest Rates. Now your rents will never keep up and the asset value will go down. You can pretend the assets are fine, but the mortgages at 3. 25 are trading80 cents on the dollar. That creates a big issue on the balance sheet. Lending to the federal government as well because the Banking System is crucial for all the treasuries with two years and seven years. That problem needs to work its way out. Barry, i really appreciate your deep thoughts and walking through it. Thats from saturday night live. Deep thoughts with barry knapp. Can the market go up with apple stalls or goes down . It seems to me that story around productivity and a. I. Is deeper than apple. We need a new mindset of what is exciting in the stockmarket. The baton is passed on from nvidia or microsoft. Im not surprised after the dynamite earnings season that you have a pause. Its a demise of apple which has been exaggerated. I wont go so quick. I was thinking about that the other day. How would you get out of the ecosystem . I dont want out. I dont want out. Theyll probably figure it out. Hes pretty good whaat what he does. So are you, barry. Thank you. Drop the k dude. I should add it in germany sdpgermany. Add it. The e on the end of your name is superfolous. Coming up, another rating downgrade for new York Community bank. They could pay more to retain deposits. Hue will be on. Hue son. That story is next. You know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart why choose a sleep number smart bed . Can it keep me warm when im cold . For a changing world. Wait. No im always hot. Sleep number does that. Now, save up to 1,000 on select sleep number smart beds. Plus, special financing. Shop now at sleepnumber. Com now to todays executive edge and ongoing Regional Bank worries. Deposits at new York Community bancorp may be at risk with the shares plunging 20 yesterday. Not a lot of 20 left. I guess there is, hue son. If you keep going down 20 , you never get to zero. It is weird the way that works. Reporter yeah, joe. This is an under appreciated impact of those moodys and fitch rating downgrades that happened friday. One thing that flew under the radar is moodys cut the longterm Credit Rating on the deposits to three levels below investment grade. We found institutional clients who care about the rating. Some with the Mortgage Service and the Banking Service with cr crypto. One is known as circle where they serve as the back office to some of the deposits. When you are suddenly below investment grade, what does that do . Talking to industry sources, they say it could trigger requirements for more collateral or trigger a requirement for them to move deposits to another bank. Certainly when you think of the cost of money these days, any offering would cost them more money to hold on to their deposits. From what we can find, there are roughly 15 billion of deposits which could be at a flight risk. That is 25 of the deposit base adding pressure to nycb. We only say those four letters, hugh. There has been zero contagion from this. Not to minimize it. New York Community bank. Would you leave much money . Why would you leave it there when there so many banks around . They need to pay more. Reporter there are concerns about that. To be clear, the last update that nycb gave was february 15th before the series of moodys downgrades. At the time, 72 of the deposits were insured or collateralized. Most of the dehe poposits were flight risk because they were uninsured. If you look at nycb nobody else has the concentration that barry was talking about with the regulated new york city businesses which are all of a sudden worth less after the 2019 law changes the economics on the businesses. Nobody else grew as much as nycb. They added signature last year in the banking crisis. They added flagstar and doubled in size. They brought a lot of scrutiny they were not ready for, joe. Janet yellen said everything is insured. Hugh son, thank you. Target just reporting earnings for the quarter. It came in at 2. 98a share. That is much better than the street had expected at 2. 42. Revenue also beat expectations at 31. 9 billion over the 31. 8 billion the street had been looking for. Store sales down 4. 4 . The exestimate was down 4. 5 . The Fourth Quarter Gross Margins were strong. 25. 6 . The company is giving guidance for the full year coming on this and says for the full year, they are looking for Comp Store Sales to be flat to be up 2 . That is in line for what the street was expecting. They are looking for 8. 60 to 9. 10. The street is at 9. 15. It will take a difficult Current Quarter to get them to that point. They are looking for First Quarter earnings per share of 1. 70 to 2. 10. The street was at the high end of that at 2. 09. Comps down 3 to 5 . That is in line with the expectations of 3. 6 . You see the stock is up sharply at 5. 8 . Probably because of the Current Quarter is better than expected, but also because the Profit Margins have gotten better. For 2023, that is the highlight they point out with operating Income Margin of 5. 3 . Two Percentage Points higher than the year before. Operating income dollars up 2 billion compared with that. That stock is up 5. 8 . The Ceo Brian Cornell will be speaking to the street today and laying out what they expect to see which is happening at 9 00 a. M. Before that, brian will join us on set coming up in a half hour time at 7 00 a. M. Huge rally. The chart doesnt look different than home depot or lowes or a lot of retailers. This stock, i dont know if we will see it. You can a little bit. That in october or november is 102. 102. I can tell you it is up 50 or more in that time period. Right. Some people thought target had inventory issues or woke issues. It moves like all the others. They all move in sync. Chances of the recession are diminishing for the retailers and suddenly a bid for all of them. The last time we heard from brian cornell, he talked about it in november where he was talking how the consumer was looking for value. We will hear from him over what is happening in the stores and what the consumer is looking for here and how they improved their margins. I think that is an important part of the story over the last several months. The other important part, we dont need to bring this up, but the high while walmart traded in the alltime highs in recent weeks. Were still talking 260. Were at 160. Its come back a lot, but its not ins recent years. The inventory issues and problems they ran into. The dotcom stuff in canada. A lot of things that target had. The big issue has been what happened during the pandemic with the surge in sales. How do you make the sales profitable . We will hear from the ceo in a half hours time. When we come back, we will talk crypto with Bitcoin Trading near a record high. Right now it is trading at66,628. Well have more on that story right after this. Announcer executive edge is sponsored by at t business. Next level moments need the next level network. Sounds incredible. Lets check it out. Says here it gets plenty of light. And this must be the ocean view . Of aruba . Huh. This listing is misleading. Well, when at t says we give businesses get our best deal, on the iphone 15 pro made with titanium. We mean it. Amazing. All my agents want it. Says here. inviting pool. Come on over too inviting. Only at t gives businesses our best deals on any iphone. Get iphone 15 pro on us. the future is not just going to happen. You have to make it. And if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. The all new godaddy airo. Put your Business Online in minutes with the power of ai. Only at vanguard, youre more than just an investor, youre an owner. Put your Business Online in minutes our Financial Planning tools and advice can help you prepare for todays longer retirement. Hi mom. Thats the value of ownership. Good morning. Welcome back to squawk box. Were live from the Nasdaq Market site in times square. This morning, the futures are in the red again. The dow futures down close 50 points below fair value. S p down 14. S that nasdaq down 106. Bitcoin is basically back to those record highs from a couple of years ago. Joining us now is anthony pampliano. Founder of pamp investments. It is difficult to see where bitcoin is headed. In terms of things that are on the horizon with the halving coming up and the etf that was recently approved. It is now becoming more mainstream. Has it been two months . It started slow, but then it has been a rocket ship. If you look at the last 60 days and the next 60 days, the etf approvals were a huge deal. Blackrock with 11 billion in the etf. They have added 1 billion in the last day. These are massive inflows for one fund. There are 11 of them. Massive money coming in. 12 times more demand. Also, as we near the record high, if we go back and look at past record high breaks or eclipse the old alltime high, bitcoin doubled in 18 days or less. Once you breakthrough the alltime high, what is this worth . The world is figuring out that. In 18 days or less, it doubled in price. You add in the halving and we go from 900 per day to 450, then it is hard to make an argument that it is moving faster than we expected. We need to say past results are not indicative of the future. You sound so it sounds that for anyone at home if they are totally new at this game, they may mortgage their house and put it all on bitcoin. There is still risk. I dont think they should do that. If you go and ask most people in the bitcoin world, they will say higher percentages than you expect in terms of what they put in. 1 to 5 for a traditional portfolio makes sense. You made a case for going from 70 to 140 in 18 days. That sounds like things you hear on tv where you want to stay away. Bitcoin is up 20 in the last week. Up 60 in the last month. Up 200 in the last year. Im not saying it is going to 140,000, but it doubled in 18 days and there is a halving upon us. It is hard to not say this is likely to go much higher. What i think we Pay Attention to here is there are three main buyers in the market. The first is the Pension Funds. We had a fund in fairfax county. The cios there are up 12x on the exposure to bitcoin in that fund. There are four funds last year in all of state public Pension Funds fully funded. If they all put 1 in bitcoin, there is a strong possibility a number of the funds would get back to fully funded status in the next 15 to 20 years. You have sovereign wealth funds which have been quiet. There is etf opportunities. They dont have to buy bitcoin and take the risk. They can get the exposure without holding bitcoin. If a Sovereign Fund says we bought bitcoin, there will be a global race with countries. Do you think gold support with sympathy with bitcoin . Inflation is coming down. Is it the amount of debt and how quickly it is growing that has bitcoin and gold strong in recent months . If you go and look, one of the critiques was a zero Interest Rate phenomenphenomeno. Rates are up. Bitcoin is back to the alltime high and stocks as well. Bitcoin is an index for global liquidity. The fed and ecb and japan are contracting, but china is giving the middle finger to the global economy. They are saying we are going to ease here and put liquidity in the market. Bitcoin is a big, big winner. If you believe the dollar is debased, bitcoin is a winner. Whats gold market cap . 10 trillion. 10 trillion. Some people are looking for bitcoin to be 10 or 50 of the market cap. You think it could be a multiple of the market cap of gold . Today, bitcoin at 1. 35 trillion is higher than the bond market. Half of gold . Now it is 10 . It will go past gold eventually. Bitcoin is a 10x improvement on gold. If you are a 10x improvement, to be ten times the market cap makes sense. You are bullish . Very bullish. Im gathering that. No matter you know my feeling on this and i have not been quiet. Im still going to get grief for questioning you at all from the whole base. That is the other thing. No one is selling. We could be wrong. If the network is not producing it, where do they get the bitcoin . We could be wrong. Anthony, thank you. When we come back, elon musk losing the title of the worlds richest person at least for now. We have the details right after this. Announcer this cnbc program is sponsored by baird. Visit bairddifference. Com. Wall street forecasts over 100 billion in sales for antiobesity drugs known as glp 1. But these treatments are largely administrated through cumbersome injections. Enter Lexaria Bioscience with their patented oral delivery technology. Early studies were glp1 suggest reduced side effects and better blood sugar control with reduced spikes. Lexaria bioscience. Transforming the future of glp1 drug delivery. Wealthchanging question are you keeping as much of your investment gains as possible . High taxes can erode returns quickly, so you need a taxoptimized portfolio. At creative planning, our Money Managers and specialists Work Together to make sure your portfolio and wealth are managed in a taxefficient manner. Its what you keep that really matters. Why not give your wealth a second look . Book your free meeting today at creativeplanning. Com. Creative planning a richer way to wealth. Jeff bezos has takenover elon musk as the worlds richest person according to the bloomberg business. It estimates the fnet worth as amazon shares risen. Lvmh ceo was not far behind. Again, that has been amazons fortunes rising with testslas fortunes come back down. You get the island and the jet and you are just like the rest of us. Are they really different . A little different. They have good cooks. How come all the best chefs are men . Thats not true. Coming up, apples market dominance. We dont want to get into this. Julia child. You have one. Shes dead. Aching a m ber. And more about discovering magic. Rich is being able to keep your loved ones close. And also send them away. Rich is living life your way. And having someone who can help you get there. The key to being rich is knowing what counts. Oh, its cold outside. Time to protect your vehicle from winters wrath. Of course, the hot sun can be tough on vehicles too. You need weathertech. Laser measured floorliners and cargo liner will shield the carpeting from sand and snow. For your interior, theres seat protector and sunshade. Plus, mud flaps and bumpstep for the exterior. While the new impactliner, with shock absorbing rings, safeguards your truck bed from costly damage. Order American Made products at wt. Com surfs up you know doug, ever since switching to workday youve been a real rock star. Rock star . What do you know about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole olf cart . Welcome back to squawk box, everybody. Apple news, sales of its iphone in khachina falling 24 , and amw increased competition from domestic rivals like huawei, and its sales jumped 64 during that time. Apple shares down by 2 , and as you can see, it has come down handily over the last six weeks or so. Joining us, barton, we were talking about apple handing off the baton to everything related ai. How big of a setback is this for apple . Apple is at a crossroads right now. They need to come up with a really kind of interesting Ai Innovation at their worldwide developer conferencein june. This is a stock where its legacy is built on Disruptive Innovation and its really at a lull in that right now. The apple car shuttered after ten years, and vision pro, an uncomfortable device to wear. You own apple because you want to own the next leg of disruption, and the leaders, microsoft, open ai, they have more resource, and it will be a challenge to see if they can step up and do something that moves the needle here. What would it take . Do you think thats likely to happen as an announcement this year . Look, i think that they will clearly be talking about ai probably at the june developers conference. I think that the easiest thing for apple to do is talk about the Processing Power in their devices, the mac book air, and they are promoting that as the worlds best laptop for consumer ai. Apple silicon, they are in processing. They can promote the capabilities there. What they might want to also do is come up with subscription services. The bar is going to be set by the leaders already. Microsoft with their copilot, and google with their comparable addones. We moved to neutral apple in august, and any other stocks in the magnificent 7 are doing better, and they need to shape up and ai is the best hope and there are clouds around that at this point. You have a buy rating on apple and amazon and meta, and your price targets are higher than where the stock is today. What moves it to that point . Well, certainly the stock has pulled back. The 189 price target is still consistent with our hold rating. Ai is what they need. If that moves the needle and stimulates more business, more demand for iphones and macs is where i think the real benefit could come. That could be a different story. Thats contingent on them coming up with Something Interesting and needle moving in a sector where they are behind and other players are bigger. It will be a challenge. The eu find that just came out, is that anything that concerns you or is that the same with the eu beating up all of the big stocks in the u. S. . Well, meta has been beaten up by eu and others. What it speaks to, though, more generally is in regulators globally take a page from what the eu has done, and try and move apple more substantially from some of the choices they made to give them such a dominant position and such an economic benefit from the app store. At this point we dont expect a meaningful change versus what we have seen today. Thats clearly a risk. China, which you just highlighted, theres risks that you need to overcome, and thats the challenge for the stock right now. Thank you for joining us today. Thank you. When we come back, target just releasing Quarterly Results and guidance. The stock is moving higher. Well take a look at that in just a moment. We have an exclusive interview with the ceo, brian cornell. Thats next. Squawk box will be right back. The future is not just going to happen. You have to make it. And if you want a successful business, all it takes is an idea, and now becomes the future. A future where you grew a dream into a reality. Its waiting for you. Mere minutes away. The future is nothing but power and its all yours. The all new godaddy airo. Get your Business Online in minutes with the power of ai. Rylee from rylees realty hi this listing sounds incredible. Lets check it out. Says here it gets plenty of light. And this must be the ocean view . Of aruba . Huh. This listing is misleading. Well, when at t says we give businesses get our best deal, on the iphone 15 pro made with titanium. We mean it. Amazing. All my agents want it. Says here. inviting pool. Come on over too inviting. Only at t gives businesses our best deals on any iphone. Get iphone 15 pro on us. target reporting just a short time ago. The ceo, brian cornell, joins us live to talk about the quarter, the guidance for the year and the state of the consumer. Fed jay powell will give a message to congress tomorrow. Weight loss drugs can shed pounds but draining tax dollars. A guest will join us to explain. The second hour of squawk box starts right now. Good morning and welcome back to squawk box here on cnbc live from the Nasdaq Market in times square. Here with becky quick, i am joe kernen. Andrew is off. Tax dollars . Yeah, and we will get that story. I still dont like needles in my lips, forehead or stomach. It will take time and convincing. We will be with you in a second, brian. Do you have an opinion . Take your time, joe. You dont look like you need any of those well, you will see as time passes. You can see we are in the red. I still think apple, maybe somebody else can pick up the slack, but as long as apple is feeling the blues, im not sure we go much higher, but we will see. Crypto was not listening to that. Down over a percent today. I think i saw 68. 6 at one point. I saw 67. 99 something. Target is out with better than expected Fourth Quarter results. It was much better than the 242 the street was expecting. Also beating expectations. Joining us is brian cornell, targets chairman and ceo. That stock, by the way, up by 7. 6 so far this morning. Thank you for joining us. Good to be here. A lot of things to move through, on the quarter and year we just ended before we get to your guidance the next year. The thing that jumped out the most was the margins. I think it was a solid year. To see our profit grow by almost 2 billion, and really solid progress from a management standpoint. We are talking about efficiency work within the organization, and half half a billion came from operational efficiencies that we are continuing to focus in on. Like what . Inventory management played a big part, upstream in supply chain, instores, and the teams really focused on managing costs. We did see sequential improvement from the Second Quarter to the Third Quarter to the Fourth Quarter and a big improvement in traffic. If you decide to join us later today, and we are down the street having our annual investor conference, you will hear me talk about we are not satisfied with where we are and the theme is a roadmap for growth, growing the top line and growing traffic and making sure that we make target a Growth Company again. How do you do that for a year . We are looking for the full year, comps to be flat, which is what the street was expecting. The street was around the midpoint, and for the First Quarter you are looking for earnings per share to be below what the street was expecting. What is happening in the Current Quarter . How do you expect to change that through the rest of the year . Becky, we have been working across the organization on great plans to stimulate traffic, and drive comp across the business. We expect to see improvement in the Overall Company performance. We are putting a lot of time into ensuring we have the right balance of newness and thats whether you are stopping in the stores or online. We know consumers are shopping at the intersection between newness and value. The consumer is still looking at value propositions and you are looking at a consumer a little pinches come again . I think we have heard you talk about it for years now, and we have seen a very resilient consumer, despite inflationary headwinds, and the uncertainty over the market overall, and the consumer continues to shop. We generated 107 billion in sales on a yearly basis, and its a consumer on a budget and are shopping carefully, and still looking for newness and value and celebrating seasons, so we expect that to continue in 2024. The inventory issues were a couple years ago, and you have been dealing with them now for a couple years, but the stock bottom in october and november, like, 102. I am wondering what the last move from o150 to that was macro recession worries. A lot of your peers, the stock charts that doesnt show it. They have like a oneyear start. Was that what it was, we were all waiting last year for a recession . Well, certainly, joe, there has been concerns about Discretionary Spending like apparel, in home and in toys. We have seen that over 2023. We expect improvement as we go into 2024, and a big part of that is the work we will do, with our great partnerships and own brands to make sure we have the right balance of newness and value. When you talk about the inventory management, does that mean viewer skews, too, and does that translate into items not in stock or not . Actually, one of the great outcomes, becky, we have more instock more often. We focus on retail fundamentals that that when you and joe come in, the product you are looking for is on the shelf at an added value and whether you are in a store or using our driveup lane, and we are putting it in your trunk and bringing you now your favorite starbucks coffee. Reliability is important. When we have the inventory right, the entire system runs better. Meaning what, though, merchandising means you picked the right stuff or cut back on the number of things you are putting out there . Thats a tricky thing to do is the merchandise. Yeah, it varies by category. We are looking at the number of items, and what is the blend of National Brands versus local brands and how do we bring the newness in. When i think about newness and insta in inspiration, it has been beauty. We will take those lessons and bring it to the other assortment. You have been there for ten years . I have been there for ten years now, joe. Do you think you do things differently . Are you better now . Are there things you have learned what you have learned over the ten years maybe you would have done differently in the past . I think our entire team has learned how important is it to listen to the consumer, and i use that term, listening to our guests and we value the relationship we have with the guests that love shopping at target. We have to listen to the consumer and be on trend and understand how things are changing, and being in the Retail Business today, social is a big role on what people buy. If becky is wearing a white puffer at davos, and she tweets that, and the next day people will be in looking for that. We need to follow what is new and exciting and for us thats foundational. Should you be a great Corporate Citizen or walk a middle line and try to keep your head down and do what you do . You know what i mean . Every ceo has to think about that now. There has been a little bit of a sea change in the last year or so where i read even for the super bowl, the ads this year, we want to make sure that we sell our product but dont want to make anybody mad here or make anybody mad here and we dont want to get into any of these things that some ceos were embracing a couple years ago. Joe, we talk about target being a happy place and bringing joy to those that shop us every week. No drama, just be happy. Great product, great newness, a great value, and great Guest Experience in store or online, and when we do that well, we get rewarded. You cant make everybody happy all the time. We serve all of america. We have a stat we will talk about today, and i will try not steal the thunder from our conference, and we appeal to everybody, and we need to make sure we are the happy place in new york, los angeles, minneapolis, and we want to make sure the brand is for all americans. What are your goals for the year . Becky, we will go beyond one year and talk about the next ten years, and the investments were making in our stores, the number of new stores we are going to open up, and the number of stores we will remodel. The investment going to make the supply chain technology. I will tease this a little bit. We are talking about enhancements we are making to our loyal target program, and we see enhancements to that program. A reuters story think you are going to refer to project trident. Is that what you are talking about . I am. One of the things i will tell you is, we will put a big emphasis on target delivering the same day to your home, to make sure its food and beverage, america knows i already pay a membership fee for that, and is this going to be something that includes that or beyond that . You will have to wait, but its something beyond that. Its going to be something that drives growth for us go into next year and we are excited about talking about it later today. You have seen mazcys and wht has happened. I sure have. Do we not need macys in america . We have to say, all right you look at that as an opportunity . Absolutely. Almost 2,000 Stores Across the country. When we see that happen, we have to say how do we lean in and introduce the target brand and the apparel offering to those consumers. One of the things i am excited about is the work our apparel team has done. If you are walking in the stores right now and walk into a target store, what you see from our spring Apparel Collection is something you and your daughters would enjoy. We have done great work there. On trend, great color and great value. Thats what is going to get us back on track with growth next year. Reminds me of the opportunity when toys r us closed down, you stepped into toys in a bigger way. One out of every four toys is sold at target. When we see changes like that, joe, we have to lean in. We are going to get back on offense is going to be our message today. Jp penny, macys for every crisis that can be an opportunity for target. We have opened up 200 new Stores Across the country and remodeled over 1,200 stores. We are putting capital to work. That drives more traffic. It makes our brand more prominent. We will continue to invest in new stores for the next decade and thats going to be part of the longterm growth. You are talking about investments over the next ten years that costs money, is that going to defer from any of the things your shareholders might be looking for, and i did realize you didnt buyback any shares in the Fourth Quarter. Will you pick that back up . Our improvement on the cash be position, we improved our cash from 4 billion to 8 billion. Our pry orr tease have not changed. We will invest in our business first, and we have a long history of paying a dividend, and the dividend over the last ten years has doubled. Potentially later this year we will start to buy back shares. But thats the order . Yes, thats the order and it has not changed. And the Biden Administration will look into price gouging from beef to housing and all kinds of things, transportation, that they are looking at. Where do you see the inflation battle right now . Where are prices and what are you able to deliver to consumers . I think inflation has been the stickiest with food and beverage. If i go back to pricing prepandemic, for many food and beverage items, the center of store grocery items, they are up 20 to 30 . For your costs . For our cost and the consumer. When i think about the challenge the American Family is facing right now, yes, Interest Rates are up, and gas prices have been volatile, but if you are feeding your family, and those prices were core food staples are up, thats putting pressure on your wallet. Thank you for coming in, and in less than two hours you will be speaking to the street right here. What time is that . 9 00 a. M. I have to juggle a few things. Front row. I will have a seat for you. Refreshments . I will make sure there are drinks and snacks. The stock right now looks like its up by 7. 3 based on the earnings from today and the guidance they have given for the full year. Coming up, we will look at other premarket movers. And also, Thomas Hoenig on the fed. Squawk box will be right back. This thing, its making me get an ice bath again. What do you mean . These straps are mindblowing they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. And you are . Im an investor. In invesco qqq, a fund that gives me access to. Nasdaq 100 innovations like. Wearable training optimization tech. Uh, how long are you. Im done. Im okay. Is it possible to count on my internet like my Customers Count on me . It is with comcast business. Keeping you up and running with our 99. 9 network reliability. And security that helps outsmart threats to your data. Moaire dida twoo . Your data, too. Theres even roundtheclock customer support. So you can be there for your customers. With comcast business, reliability isnt just possible. Its happening. Get started for 49 a month. Plus, ask how to get up to a 800 prepaid card with a qualifying internet package. Dont wait, call and switch today look at this mornings premarket movers. What is your schedule . Where did i see you yesterday . I am trying to figure out my schedule today. What did you anchor yesterday . I anchored the exchange and power lunch i am going to write that down. So i will see you at 1 00 . You will see me today at 1 00, and then at 2 00 again as well. Me and courtney are doing it together. I am setting my whole planned schedule based on that. These days we have so many people moving in and out of the office, on assignment and vacation, its patchwork everywhere, so dont set your eternal clock by me whatsoever. Our managing editor would say to check the planner. What is it called . Its called the planner. Let me look at that. Joe, lets take our tech theme this morning with morning movers. We will start with tesla down roughly 2 this morning, and half a million premarket trading volume. Its related to chinese sales data for tesla that reverb rated across most of the ev stocks and global market. The german facility halted operations due to a power outage, and tesla did confirm the halt in production as well as an evacuation of the site. Local authorities are looking into if it was a possible arson attack, but tesla down 2 . Apple, down around 2 as well. It is following a 2. 5 drop yesterday. Part of the news is because of the news in the european union. This morning analysis Counter Point research estimate apples iphone sales in china fell 24 last year. We will end with a check on another tech stock and china story as well, and thats advanced micro, and its down half a million shares of volumes. Amd did not get permission from u. S. Regulators to sell an artificial intelligencerelated chip made specifically for Chinese Markets because the chips were still too advanced, which means it will have to apply for the export license. Thats according to a report from bloomberg. The u. S. Commerce department and amd did not respond to the request for comments. Joe, i will try and remind you about setting the clocks i found something called the squawk planner whoa. All we need to do is help china with ai . I think thats where those rules are in place, so we can maintain the competitive advantage. They are never going to have fire a shot. The warfare will be over digital and computers anyway. Theres a different planner you are talking about . Yes. Why not roll it. Thanks, dom. Still to come, china setting a target of around 5 for gdp in 2024. We will get the work details from beijing. Thats next. The futures this morning still under a littlereur psse. Looks like do you futures are up by 65, and the nasdaq down by 92. Squawk box will be right back. Growth target of 5 for 2024. The announcement was part of the National Peoples Congress Annual meeting. I was fascinating by some of the Coverage Today of what is happening, but bring us uptodate with more from beijing. Reporter joe, the targets are largely unchanged from last year. But because they are coming off of a higher base, they are seen as quite ambitious, especially without stimulus. To support growth, china said it was going to set a fiscal deficit at 3 of gdp, and also fishing longterm bonds and other special bonds to try and help with the growth. It said that the money would be spent on what they described as Major National strategies and strengthening security in key areas. Now the premier, who announced those targets admitted it would be difficult for china to reach the goals. At the same time he said that the country was going to stick with its policy approach of proactive and prudent, so not really signaling any change. However, there was a hint of potential changes in the government work report for the First Time Since 2019. The report dropped the reference that president xi jinping has had, house something for living in and not speculation, and that is raising hopes that the curb on real estate is going to be lifted further. There was a lot of discussion on tech self reliance, and the importance of promoting made in china brands overseas. Interesting, joe, you would probably take special interest in this, they dropped the reference to peaceful unification with taiwan, just saying reunification, in their terms. Also, what was interesting is there was a call for a reform of Global Governance system and opposing what they described as bullying acts and hegemonic bullying accounts without mentioning the United States, and thats interesting, and dropped from last year any reference to upholding the international order, and thats suggesting we could see a more assertive china on the world stage. Just reading that, and covering the wall street journal today, too, and some of the conclusions that the piece draws about kind of almost a shift in priorities away from the amazing growth that we have always seen in china to something called quality highquality development, which emphasizes National Security, political stability and social equality. That is truly a shift from what we think of in terms of the envy of the world. It sort of is embracing the hybrid capitalism, communism, and if the rest of the world tries to bully china to open up the human rights and trying to give them the freedom much of the rest of the world enjoys, thats us bullying them, thats not the ccp bullying thats rich. You dont have to respond to that. I am way over here. I am way over here. But thats rich to me. But thats scary about taiwan, too. That seems pointed that they left that out. Reporter yeah, i think that what we are seeing is perhaps a move towards a codification of National Security being more important than the economy. Throughout the period and especially the run up to the National Peoples congress, there has been a projection of confidence in the economy, and a lot of discussion about how Economic Issues will be on the agenda. What we have seen is what you described, a shift. The economy in the past, we always thought china would be more pragmatic and prioritize the economy and its shifted towards a National Security. Seems like a Strong Economy solves all ills, but it does not solve it does cause people to have hopes and dreams and everything else, so maybe it makes sense for that system. Thank you, as always. Appreciate it. When we come back, will fed chair jay powell double down on the no rush to cut message when he testifies in front of congress thiwes ek. Congress thiwes ek. We will speak to and 3 vitamins. Next. The all new godaddy airo helps you get your Business Online in minutes with the power of ai. With a perfect name, a great logo, and a beautiful website. Just start with a domain, a few clicks, and youre in business. Make now the future at godaddy. Com airo im jack black. Get tickets right now for kung fu panda. You dont have time andfor a drum solo. Ess. Get tickets [ screaming ] get tickets skadoosh. Get tickets before i started playing basketball, i was kind of quiet. I wasnt really that confident or outgoing. But now, with basketball, i feel like a leader. Yo, cayden sport for good means to me that ill be able to give back to my family and my community. Goals can be accomplished, dreams can be accomplished, but dreams are just dreams if you dont go out and try to achieve them. Learn more about sport for good at laureususa. Com. His semiannual tomorrow. Thomas hoenig, so much has happened in terms of our perception of the economy, rate cuts, recessions, everything else. What do you think is at this point in time where are we and has your view changed at all about what we need to do if you were on the fed . Well, things have certainly changed, and mostly by surprisingly good outcomes. I think thats very positive. I think the fed realized and most people do, that the economy is stronger than they thought it would be, certainly stronger than i thought it would be and going into this year it remains that way. We do have inflation above the 2 target, and they will focus on that, i suspect. I think powell in his testimony will be careful to say were very pleased with the economy Going Forward but we have not gotten to the 2 target yet, and as long as the economy remains reasonably strong we will continue to shoot for the 2 target, and he will say indirectly if not directly dont expect rate cuts in the immediate future. Not in the first half of the year. Your money is still on from rate cuts in the second half of the year . Well, i think i think thats reasonable, whether its three cuts, i dont know, because the economy is really strong. The other part of it, i think, people maybe need to take a look at is when you think about the economy right now and the amount of debt and the strength of the economy, there are a lot of economists talking about the eq equilibrium rate, and you have a 2 inflation target, your longer run fed goal, they may take more time if the numbers stay in the 3 range, as they have been for over half a year at the cpi level. I am not convinced they will cut rates in june, but they may. There will be enormous amount of pressure, no question about that, and we will see how they handle that. You have been able to figure out why the economy has confounded so many people on being stronger, and is it leftover pandemic stimulus or leftover fiscal stimulus from the first few years of the Biden Administration . I think so yes. I did not realize how much liquidity and fiscal stimulus was being brought in. When you think about it, not just the pandemic issues but the c. H. I. P. S act, and it has all added to the economy and boosted it, and the public and subsidies and so forth were stimulating the economy, and thats why the economy has remained as strong as it has. Plus, the consumers have a lot of excess savings they have been bringing down, but because the economy has been stronger, real wages have out spent inflation for a while, and the spending abilities are quite strong even now, recognizing in january we saw slowdown in the consumers, but i think the duration of their ability to spend is in play and that will affect the economy Going Forward . Thats a dangerous lesson if people take it as a new economic model where theres no, you know, day of reckoning, and its basically free lunch, because why didnt we spend twice as much and we would have 6 gdp, thomas . In the back of our minds, we know theres 34 trillion out there that will require debt service. When does that happen . I think thats a real legitimate concern. I saw an article yesterday being written by an economists, money is free. Lets do that. It worked so well. And many are saying 3 inflation is just fine, lets settle for that. You do have that coming forward. The enormous amount of debt that is coming at us and the interest on that debt will eventually, i think, cause us to become a less settles economy as we go forward, because we are sa siphoning more and more off in the private sector, we have to, either through inflation Going Forward, and the outcome of that is lower productivity rather than higher productivity that we are enjoying now and hope to enjoy in the future, and we may be accepting that more in the future as we spend more in the long run. I think thats unwise. Maybe ai will help us, thomas. The panacea. I dont know when it comes home to roost, but you have to worry about that, it seems, although we have been worried about it as long as i have been doing this, and it still hasnt come. I will tell you something, though, we do see it, we have had a major crisis in the 80s, and we just dodged one a year ago, and they are out there and something could, i think, will break the dam and then we will have real problems. I think it behooves the fed to say enough, we are going to focus on stable prices and also we are going to focus on maintaining a policy that repays that over a long period of time, and not dropping Interest Rates back to 2 anytime soon. Former kc fed, Thomas Hoenig. Thank you. Bye. Coming up, how the weight loss drug craze could hit americans in their pockets. Former director of the council is here to explain. Shares of target right now, that company reporting earlier in the program, reported numbers better thanexpected and gave guidance in line with what the street was expecting for the full year earnings. That stock is up 8 , a big part of it is the margins that ov greatly. We will have much more on the numbers and the consumer coming up in the next hour. Squawk box will be right back. This is real time insights. I am here with john hallmark, legislative leader. The executive order on ai deals with safety and innovation, but what do Business Leaders need to focus on . Most importantly that it applies to them and they should Pay Attention to it. This is like the dodd frank bill for ai. Disclosures and mandates, regulations. Talk to me about how companies will be impacted . Companies will be impacted in a number of ways. The financial services, health care, food systems and supply chains, incredibly broad. These companies will have to deepen their understanding of ai and how they are employing ai in their firms. What actions should executives take right now . Executives should be adapting and engaging. We are engaged with clients right now to develop Risk Management governance structures and working in washington, engaging with policymakers, and we are developing standards around the executive order. We will help equipped companies for the road ahead. Important insights. John, thank you very much. Thank you. Welcome back to squawk box, everybody. A couple of corporate headlines, a group of banks including Morgan Stanley in talks with elon musk about refinancing what was used to purchase x. And then peltz calling for an overhaul of disney, and this comes as he prepares to faceoff in a Shareholder Meeting next month. Its super tuesday, super taco. They know i am the ultimate fan boy this being taco bell . This is from taco bell. It says love taco bell. Its not from anybody specifically, and they say, joe, last year taco bell freed the taco tuesday trademark to give everybody the chance to celebrate tacos. People are dissatisfied with the candidates, and i have talked about possibly getting my platform was just one thing and that was to make taco tuesday a national holiday. Thats the only thing i am running on, and they mention that here so they were watching, and they dropped off about eight of these boxes boxes of tacos. I had to take a moment. I did. Because i was i dont know if i was touched or happy, and what do you think . I think it was a little bit both, right . I was touched and happy. I still am. Lets go to break. These are good. I am the beneficiary. Okay, coming up, we will talk about fat people and ozempic as i am eating a taco. The latest oped and the te costs. And eric cantor will be back to talk about the white house and what it could mean for your money. We will be right back. I got the cabin for three days. Its gonna be sweet what . Im 12 hours short. Have a fun weekend. Unnecessary action hero unnecessary. Was that necessary . No. Neither is a blown weekend. With paycom, employees do their own payroll so you can fix problems before they become problems. Hmm get paycom and make the unnecessary, unnecessary. See you down the line. This is our future, ma. Godaddy airo. Creates a logo, website, even social posts. In minutes how . A. I. impressed ay i like it who wants to come see the future . get your Business Online in minutes with godaddy airo rylee from rylees realty hi this listing sounds incredible. Lets check it out. Says here it gets plenty of light. And this must be the ocean view . Of aruba . Huh. This listing is misleading. Well, when at t says we give businesses get our best deal, on the iphone 15 pro made with titanium. We mean it. Amazing. All my agents want it. Says here. inviting pool. Come on over too inviting. Only at t gives businesses our best deals on any iphone. Get iphone 15 pro on us. welcome back, everybody. The weight loss drug craze could hit american taxpayers pockets, thats according to former Economic Council member, brian deese. He warns that making these drugs available to all Obese Americans could cost taxpayers more than 1 trillion a year. Brian deese joins us right now. Hes got more on all of this. He is now an innovation fellow at m. I. T. And brian, the numbers here are pretty staggering. Why dont you walk through the math that you got to this 1 trillion. How does it add up . They are. Its good to be here, and im really glad we can do this on taco tuesday with all those tacos laid out around the place. Look, when i started looking into this, i, too, was really blown away by the numbers. We have a massive obesity crisis in the United States. And the scope and the scale is so large, that these drugs could touch tens of millions of americans. Thats the good news. They have the potential to reduce obesity, address diabetes, and reduce the Health Care Costs associated with that. The problem is that the scale and the cost of these drugs is so large, that it could add enormously to the federal budget. So on the numbers, if you look in our median case, youre talking about 44 Million People getting these drugs. At current prices, 15,000 a piece. Thats more than 1 trillion gross of cost to the federal government balance sheet. Now, there is a savings, because we are reducing Health Care Costs, as well, but unfortunately, those savings only amount to about 200 billion a year. So youre left with about an 800 billion a year bill. And just to put that in context, thats about as much as we spend on the entire Medicare Program today. So if we dont do anything, and the status quo is what it is, and we do allow this drug to be available to americans, we could be building in a cost to the federal budget, spending on the order of another medicare assisted with our budget. We cant afford that as a nation, but i dont think we can afford not to have these drugs widely available, either. Were going to need to do Something Different here. And it would be better for policy makers to address this now, rather than to let those costs explode and try to catch up on the back end. Hey, brian. I appreciate the math, and understand the problem this poses, but your prescription is one that is basically youre saying, we should basically just take and cut the prices that we will pay for this, take it over, let medicare and medicaid say that theyre going to negotiate with this brandnew drug class, which is a step further than even the ten drugs that are now being allowed to be negotiated for, drugs that have been on the market for a long time with a big base. I have a hard time understanding how thats not just basically ip theft, taking things over, and how it doesnt kill innovation for anybody whos trying to come out with some of these drugs that could be really miraclelike drugs. Look, we want to find a balance between encouraging innovation and also not exploding the deficit. And as public payers, if youre going to be paying that much, you do have leverage and you should be able to use that leverage in the marketplace. Its not good public policy, but its not good for the private sector, either. Because we will quickly run into a situation where the magnitude of the profits involved here, basically represent a direct transfer from u. S. Taxpayers to shareholders of these companies. You know, the Innovation Point i take seriously, but also, lets be specific about that. The hurdle rate for drugs today 19 private drugs today is about 8 to 9 . 8 of capitol, 9 of revenue. Last year, novo nordisk, for example, saw net Profit Margins in the 35 to 40 . So 4 to 5 the hurdle rate for investing in these drugs. So there is, there is an opportunity here to come to a more reasonable price for the u. S. Taxpayer, without discouraging innovation, and frankly, by using some of those proceeds to invest in public innovation, as well. So theres a balance to be struck here, but we also have to realize, the status quo. You guys were just talking about the deficit and the national debt. Status quo here is we are moving towards place where were going to blow a giant hole in the budget. Better to act now, and to act prudently. Yes, but this is an unprecedented situation. Given so much credit or your its a big leap to think that the government can be effective in walking a fine line of what youre trying to do, brian. And my example would be, lets say alzheimers, we know what it costs, how much it costs longterm for families and everyone else. If i were a drug company and i knew that you were going to seize my drug because i was earning what you believe is greater than my profit margin should be, i wouldnt develop that alzheimers drug. And you say 8 or 9 . You know why novo nordisk is getting 35 . Because Companies Like pfizer screwed up and didnt get into this business. So their stock is down 50 . So an innovative drug company that makes all the right choices for its shareholders, which risks their money to try to make yes, to try to make an outsized profit, suddenly, youre looking at that profit saying, oh, no, no, no, thats for the public good. We as the government are going to decide how much we can let you have, so that we dont blow out the deficit. Thats not the way, you know, free markets work. Thats the way Central Planning works, brian. No, look, lets i appreciate the overthetop rhetoric, but lets be clear about how Health Systems work across the world. Federal governments across the world are payers in these systems. Today, the cost of this drug in france is 1,500, in denmark, its 3500. In the United States, its 15,000. Were not talking about anybody seizing ip they dont develop any drugs anymore over there, because theyve overdone it. And were and were not talking about seizing ip. Were talking about seizing ip or anything like that. Were talking about negotiating a fair price. Theres that fair word. And if we dont, fiscal consequences are even worse. All right. I guess weve got to go. Brian, thanks for laying this all out. Its a question im sure well be circling around andwe appreciate you coming on today. Enjoy the tacos. Thank you. Now im not going to eat them, because im not going to get any ozempic. They took my ozempic. Coming up, team getting squeezed by antithe trust regulators as they try hold off competition in the phone space and build out its ai program. A closer look at what investors should do with the shares right now. And later, transportation secretary pete buttieg igis going to join us. Squawk box will be right back. What is cirkul . Cirkul is the fuel you need to take flight. Cirkul is the energy that gets you to the next level. Cirkul is what you hope for when life tosses lemons your way. Cirkul, available at walmart and drinkcirkul. Com. Trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the awardwinning trading platforms. Bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. Tailor the platforms to your unique needs with nearly endless customization. And track Market Trends with uptotheminute news and insights. Trade brilliantly with schwab. Wall street forecasts over 100 billion in sales for antiobesity drugs known as glp 1. But these treatments are largely administrated through cumbersome injections. Enter Lexaria Bioscience with their patented oral delivery technology. Early studies were glp1 suggest reduced side effects and better blood sugar control with reduced spikes. Lexaria bioscience. Transforming the future of glp1 drug delivery. Good morning, the futures are down, but target up, up sharply. Shares of the retailer surging on strong results. And a super important super tuesday. Voters heading to the primary polls in more than a dozen states, with former President Donald Trump looking to add to his lead over nikki haley. Were going to talk top issues for investors. And ahead of the president s state of the union speech this week, his administration is trying to highlight what it sees as its biggest accomplishments. Transportation secretary Pete Buttigieg will join us on where the money is flowing from, from bidens flowing to from bidens infrastructure law. Final hour of squawk box begins right now. Good morning, everybody. And welcome back to squawk box right here on cnbc. Were live from the Nasdaq Market site in times square. Im becky quick along with joe kernan. Andrew is off today. And on this Tuesday Morning, a little rainy here in ngew york. You can see a little bit of rain falling on the equities futures, too. Dow futures down by triple digits. A decline of 105 points below fair value. Nasdaq futures also down by about 100 points below fair value. The s p futures down by 17. This comes after a rare down day for all three of the major averages yesterday. Lets take a look at whats been happening in the treasury market. Yesterday, we saw higher yields. Today, a little bit of giveback. The tenyear yielding 4. 18 , just below 4. 2, and the twoyear at 4. 58. Bitcoin prices, by the way, were giving a little bit earlier this morning, but youre still talking about bitcoin above 67,000. 67,453 right now. And target shares jumping on betterthanexpected Fourth Quarter results. The company beat profit and revenue expectations for the current for the last quarter, for the Fourth Quarter. Samestore sales were down by 4. 4 in the quarter, but that was a little better than had been expected. And targets operating Income Margin rate improved to 5. 8 . That was up from just 3. 7 a year ago. Speaking with us in the last hour, the Ceo Brian Cornell weighed in on the state of spending. The consumer continues to shop. You know, on a fullyear basis, we generated 107 billion in sales. And a big part of that came from discretionary categories. So, its a consumer whos on a budget, theyre shopping carefully, theyre still looking for newness, theyre still looking for value, theyre celebrating seasons. So we expect that to continue in 2024. In terms of guidance, target says that it is looking for fullyear samestore sales to come in flat to up 2 . Thats roughly in line with street expectations. And the midpoint of its fullyear adjusted Profit Guidance is just a few cents below what the street had been expecting. I think 9. 10 was the midpoint of its guidance. 9. 15 a share is where the street is. Shares of apples iphone in china plunged 24 in the first six weeks of the year, according to a report from counterpoint research. Apples facing stiff competition over there in the market, from firms like huawei, oppo, and vivo. And the news comes one day after apple was hit with a nearly 2 billion fine from european regulators over music streaming. Joining us now is toni sacconaghi, bernstein Senior Research analyst. A lot is swirling around, toni, and i cant rank which concerns have hit the stock or i sort of hit the road, which weve seen really for decades, almost. But im worried that there was a bit of a sea change. Is there . Or once again, demise is being greatly exaggerated. Good morning, joe, there are a lot of factors swirling around apple today, but i think the core of the business. This is a company that has about 1. 2 billion unique users, and they have a capability to develop flnew products that Consumers Want to go and try. The vision pro is expensive, and its not going to be a mass Market Product for several years, but apple has the brand and cache that consumers will embrace new products and equally important embrace new services and that platform isnt going anywhere. And apple has the opportunity to leverage that Going Forward and so i think if i had to dimension the next five years, the last ten years, theyve grown about 6 . The next year will be more muted. Thats still pretty good, particularly for a Company Apple applessized. In the past, legacy have started to miss out and the worry is that could happen with a ai. It seems like it could be in a more advantageous position than some of the other companies we think about in the past. So, joe, you raise a great point. If you look at the leaders in Technology Every 20, 30 years, they change. And the risk of platform disruption is real. And i think thats why you see apple taking steps to try and be a leader in wearables with the watch and with the vision pro Going Forward. I think ai is certainly really important transition point in technology. I think it will be one of the most significant forces, both societal and technologically for the next 20 or 30 years, but i do agree with your assertion, that apple has this powerful install base, and the question is, can it use ai to add more value to that installed base . And i think it can. Were seeing ai phones launched in the marketplace. Google has some, samsung has some. We think that apple will have aieenabled capabilities in its next phone coming out in september. So i dont think this is and obviously, the iphone will allow access to chatgpt, copilot, other third party ai capabilities. So i dont, at this point, think that apple necessarily has to be, you know, the leader in generative ai. I thinkthal have a lot of ai on their device that will make the device easier to use, and there will be an access point to other generative ai applications. I think we i dont know what the market cap was in apple when we said, whats next . What about a car . Entertainment . All of those things. Somehow it has gone almost 3 trillion, not quite, but it was close, just on building out services in the ecosystem. And i guess theres no reason to think that cant continue if you do that effectively. I think what apple has shown with services is, so this is a business thats a little over 20 of revenues. Its been growing double digit, so services alone is adding almost three points of growth to apple every year. And its a function of a few things. Apple is introducing new Services Every year, whether theyre Media Services or financial services. Theyre deepening penetration. It feels like i need more storage for icloud, seemingly every few months. Theyre taking price on some of those services. And theyre deepening penetration. There are many parts of the world where people still dont have services. That trifecta of being able to Sell Services in new parts of the world, raise price skand introduce new services, likely means that business can grow double digits for several more years. All right. The demise greatly exaggerated, but you did sate, thats ratcheting down growth in revenue and earnings, i guess, toni, but thats still pretty good, nonetheless. And that would still compound on the stock price if the multiple stays the same and its not that expensive, either. Maybe it is too early to say until its over. Last point on evaluation, if we look up apples evaluation, obviously, its come in. The most important metric is what is apple trading at relative to the market. The fiveyear average is about 1. 3 times on a pricetoforward earnings basis. Six months ago, it was 1. 5 times. Now its 1. 3 times. Its at its average valuation in the last five years. Thanks, toni. Thanks, joe. When we come back, transportation secretary Pete Buttigieg will weigh in on jetblue and Spirit Airlines walking away from its merger deal. Next, its super tuesday. Well talk top issues for investors as more than a dozen states head to the polls. Stay tuned, youre watching squawk box andhiisnb ts cc. Its basically tennis for babies, but for adults. It should be called wiffle tennis. Pickle yeah, aw whoo these guys are intense. We got nothing to worry about. With e trade from Morgan Stanley, were ready for whatever gets served up. Dude, you gotta work on your trash talk. Id rather work on saving for retirement. Or college, since you like to get schooled. Thats a pretty good burn, right . Got him. Good game. Thanks for coming to our clinic, first ones free. You got this. Lets go. Gobble gobble. Ive seen bigger legs on a turkey rude. Who are you . Im an investor in a fund that helps advance innovative sports tech like this Smart Fitness mirror. Im also mr. Leg day. 1989 anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq100 innovations. I go through a lot of pants. Before investing carefully read and consider Fund Investment objectives, risks, charges, expenses and more in prospectus at invesco. Com. Its super tuesday, perhaps soon to be super taco tuesday. We dont know for sure, eric. The biggest primary day, though, on the president ial nominating calendar. 16 states in one territory have a caucus or a primary today. And former President Donald Trump looking to further cement his lead against former South Carolina governor, nikki haley. Joining us now on the most important issues for investors and voters at large, eric cantor, former congressman from virginia, who served as House Majority leader. Hes now vice chairman and managing director at molis and company. Have you got tips for becky, tips for becky and me to navigate the next how many months it is . How do you suggest we get through this, being on cable tv . 35 weeks. You know, its really like, today, you know, its almost like a nonstory, because you sort of know how its going to end today. Yeah, but when the battle really begins in earnest between these two candidates and their people on the respective sides, i dont know. Im going to need some type of medication, i think. No, but i think, you know, what the job of an incumbent because when youre incumbent like President Biden, you dont want this to be a rurm referren. It is about a contrast for him, versus the public like voting on whether they like this biden economy. And clearly, hes not done a great job. I just heard briandeese on the show, and you know, again, thats a perfect example of their economic agenda in the Biden Administration. Unfortunately, unfortunately, theyve littered it with acolytes of elizabeth warrens, and especially its blame business, business is making too much money, in fact, this week, they said, were talking about how corporates rip off the public. Blame business, tell business, imgoing to tell you how much you can make. And thats just not who we are in america. Thats not our the crux of the matter is, were going to have Pete Buttigieg on, and i know exactly what were going to hear from him. And i dont even know if im going to have the i may not be able to i might just let them go. At this point, i know what a lot of it is what do you think hes going to say. Dont believe your lying eyes, heres whats really happening. Borders secure. Theres no bigcity crime. No inflation. President biden is as sharp as hes ever been. And people are the economy is great and people just dont appreciate it, because the media is making it seem like its not great. But the polls have been absolutely horrific in the last week. Not from typical not from rightwing heritage or National Review or fox news. Its been from the New York Times and cbs, these polls. And youve seen em. Right. You can cut it with a knife, how unhappy people are with they want Donald Trumps policies. Where did that come from . How did that come from . And the reality is, is it is still a cost of living election. You know, you just had the ceo of target on earlier, brian cornell, who said that the actual cost of food and services is up 20 to 30 . Thats a lot for people. Youve been watching all morning. Yeah, i have. And thats a lot for people. And its reality. Its not just the polls. The polls are reflecting where voters are in earnest. Again, i just think that this is a real point in which biden is going to have to step up and either contrast himself with how much do you think, though, is a problem with the policies, a problem with how americans feel . How much do you think that this is a question on the age referendum . We have two very old candidates who are going to be running for this. And biden has not been out in front of the cameras very much. Warrens 95. Hes 93. I dont think 77 is old. And i dont think 81 is old. I think joe bidens old. People do age at different they do. He has declined, i think, pretty significantly over the last eight to ten years, for sure. And he does not present well, and this is the democrats problem. Eric, not the only New York Times i dont even know how you could get a poll like this. Only 18 of voters told the New York Times that bidens policies have benefited them personally. 40 said trumps had benefited them. So what happened its almost like a, like a nostalgia, rich lowry, the National Review, said that trump nostalgia is setting in. What, january 6th is settling in the Rearview Mirror . And what are they remembering . Wage gains or listen, if you remember, before covid, you know, we had the impact of the tax cuts, you know, that will be a discussion, if youre talking about the next 35 weeks, that will be a discussion that well have, because the tax cuts will expire, and theyll be up for renewal. Thats a 3. 2 trillion issue. Huge fiscal stress in the country given the interest costs to the debt. So it will be, you know, if youre thinking about how they deal with navigating, i think what business has done, is theyve been able to sort of block out a lot of the noise. And i think if you look to where things are heading, number one, the border crisis is dominant. Thats become the number one issue. Which is pretty extraordinary. Were sitting here in new york city, how far away are we from a border, but its now an issue here. I can tell you what im going to hear if i brought up the border. The president put together a bipartisan border plan, and the republicans voted it down, because donald trump told them to vote it down. But we know full well what happened three years ago. We know full well. And i think the people know full well. And theyre not buying it, but i guarantee were going to hear it in ten minutes. Theyre going to say, listen to me, do as i say, not as i do. Dont believe your lying eyes. Dont believe your lying eyes, i like that. But on the border, the real question is, border has not done. You know, title xlii went away because of covid. They couldnt go and put that back into place. But the bottom line, hes not done his job in leaning on mexico to try to make sure that number one, that they can secure their southern border, and number two, that, you know, that they can he got rid of remain in mexico, he has to talk to that government there the way that trump did. And people see through it, they know hes not leading. Thats the real thing, joe. And i know the hyperbole is just deafening sometimes, but well get through it. Weve got a great country. The deal market is slowly coming back. The Interest Rates, theres a little bit more clarity around that. People are feeling a little bit more comfortable with the economic environment. I still think that, when push comes to shove, though, in a general election, its going to be tough for trump, because i think abortion is still around, and everything and the polls can say one thing, but when its all said and done, in spite of everything, biden could still end up getting a second term. Get 35 weeks. And its close. And weve talked before. Theres a polarization thats set in this country, almost a parody. Its going to come down i think four to five states period, and probably given how parties perform, it will be in the big suburban counties, in those four, five states. And youre right, if youre thinking, who will decide who is that small portion, its suburban professionals and especially women. Abortion is an issue. The only thing is a border might across all demographics, people are more, somehow more comfortable with some of trumps policies. Across all demographics. In the New York Times poll, all demographics. Theyre double what support was three years ago, four years ago. And the border and what people see day in and day out, ive even said women quoted, im worried about abortion, but the border is actually thats whats right in front of them. And i think trumps been actually pretty good at how hes no navigated the question of, you know, abortion. And so, well see how that plays out, but i do think, gain, the contrast, if biden even gets there, and is not a referendum, its so easy for trump to sort of dominate in that discussion, because there is no contrast. Theres just a blame game on the democrats side. Listen, becky, youre right. Its going to be close. Abortion is a real question. Foreign entanglements. This is another thing you hear in the Business Community about sort of multinationals thinking about crossborder m a, and how do we deal with the trade issue . I mean, how do we deal with our position in the world. Trump is very, very opposed to where the Biden Administration is going on ukraine. Well see how this issue in the middle east plays out. Theres a lot that i think that were going to have a discussion, in where the country we keep pulling you back in to this other stuff. Like godfather iii. Im sorry. Weve got to go. Its 25 years of my life in that world, i get it. Which is better. Your new life. All right. When we come back, transportation secretary Pete Buttigieg will join us live as the Biden Administration preps for a critical sta oth iospeech. Qu squawk box will be right back. At Morgan Stanley, old school hard work meets bold new thinking. laughter at 88 years old, we still see the world with the wonder of new eyes, helping you discover untapped possibilities and relentlessly working with you to make them real. Old school grit. New world ideas. Morgan stanley. The future is not just going to happen. You have to make it. And if you want a successful business, all it takes is an idea, and now becomes the future where you grew a dream into a reality. The all new godaddy airo. Put your Business Online in minutes with the power of ai. Youll hear me talk about the fact that were not satisfied with where we are. And our theme today is all about a road map for growth, getting back to growing the top line, growing traffic, and making sure that we make target a Growth Company again. That was target ceo, brian cornell, who joined us in the last hour, talking about what he plans to tell shareholders at todays investor day, following this mornings Fourth Quarter profit and revenue beats. That stock this morning, up by 8. 3 , after those results, and Michael Lasser is ubs retail analyst. He joins us right now to talk a little bit more about it. The company pretty convincingly beat for the Fourth Quarter. Its guidance for the full year was about in line with what the streets expecting, but the guidance for the Current Quarter is below. Still, youre looking at that stock up more than 8 . Why is that . What did you see that you liked . I think there are three reasons why the stocks up. Number one, its getting its traffic back. It was only down 2 this quarter after being down midsingle digits for the last few quarters. Number two, the profitability of this business is returning back to where it was historically. And number three, i think the markets looking at the outlook, and saying, its set a conservative expectation that will afford them to have an upward earnings revision cycle that will continue to drive the stock. Why was the traffic down, do you think . I think the traffic was down for a couple of reasons. One, target overindexes to categories that wereunder pressure. Things like consumer electronics, which was about 10 of the sales in the Fourth Quarter. Toys were under pressure. A home, thats a third of the thats a third of the companys total sales in the First Quarter. Those three items. Those three items. So despite that, it still was only down 2 . Thats an encouraging sign. So if you weighted sales by category, all things considered, its doing not too bad. Brian talked a little bit here about what theyve been doing to try to raise their operating margins, raise their Profit Margins. And a lot of that has to do with cutting the number of skus, with making sure that they really have inventory under control and they say are putting the right things out there. Thats a tough game to continue to play. Yeah. You have faith that theyre on the right track with this . I do, i think they will be a little bit more aggressive in the categories where theres strength, areas like beauty, certain consumable items. They Just Launched a new more valueoriented line of food products. So i thinkthal make some very strategic bets on inventory, which is key. Because they need to be able to maintain a positive sales momentum, as well as improving margins from here. You got your buy rating at 174. That stock is up more than 12. So what do you do with your price target . Were constantly arriving our price target, but one way to think about it is that this print put target in position to resume a 6 operating margin. It guided 860 to 960 for this year. If it hits a 6 operating margin, its earnings will be close to 10. 50 close to 11. And if it trades at the same multiple, thats close to a 100 stock. So theres still catalyst on the horizon. Theyll be at the ubs consumer conference next week, where theyll be in front of investors to further reinforce this good story. Thanks for stopping by. Good to see you, becky. Thanks, joe. Coming up, Pete Buttigieg joins us live on jetblues failed merger with Spirit Airlines. Talk a little bit about boeing and the other spirit, Spirit Aerosystems. This weeks state of the union speech and much more. Squawk box will be right back. W about rock stars . Billy idol . I mean wheres the skintight leather . My shoes are leather. Wheres the unnecessary zippers . That thing billy, rock star is just how doug feels when he uses workday. Thanks, rory. Ill show you rock star be a finance and hr rock star. Workday. For a changing world. Billy idol just stole your golf cart everything i do thats for my health is an accomplishment. Concerns of getting screened faded away to my astonishment. My doc gave me a script i got it done without a delay. I screened with cologuard and did it my way. Cologuard is a oneofakind way to screen for colon cancer thats effective and noninvasive. Its for people 45 plus at average risk, not high risk. False positive and negative results may occur. Ask your provider for cologuard. I did it my way welcome back to squawk box right here on cnbc. The futures have been under pressure this morning. Right now, it looks like the dow futures are down by about 122 points. Thats about the weakest weve seen all morning. Nasdaq futures down by about 110. The s p down by close to 20. President biden set to deliver his state of the union speech on thursday evening, ahead of the event, his administration is highlighting what it sees as its biggest accomplishments. Some of those are projects funded by the infrastructure law from 2021. Joining us now to talk about that and some other key issues, transportation secretary, Pete Buttigieg. Its good to see you, mr. Secretary. Can we start with faatype stuff. Then well get to this politics stuff a little bit later. Tomorrows thursday is a big night, we understand that, and well get to that as quickly as possible. But number one, i guess, jetblue, you agree with that, that its good for consumers, that thats not going to happen with spirit . Yeah, we weighed in as a department to back up the department of justice, largely because of concerns about what has happened over the years in the airline industry. You know, back at the time of the deregulation, it was confidently predicted that there would be about 100 major competitive airlines in the United States, by the turn of the century. Obviously, things worked out differently. We have had fewer and fewer airlines, more and more concentration, more and more consolidation. And that has an affect on consumers. So just like across the administration, were taking a tougher line on antitrust, really concerned about whats happening to consumers in any sector, including travel and tourism. This is one where we had a lot of concerns, stood with doj, and i think right now, having more airlines rather than less airlines, more competition rather than less competition is good for passengers. The latest on that other issue we talked about, and its not Spirit Airlines, Spirit Aerosystems, so it gets a little bit confusing, but theres some talk maybe boeing just finally buys spirit back in. But at this point, the faa, i think, has been visiting both companies, and its going to continue onsite presence at both boeing and spirit. What needs to happen . Do they report back to you on what theyre finding . How do you fix quality issues that seem like they might be more than just a oneoff . There was an intense round of visits. We had faa boots on the ground a few days ago. The administrator met with the Senior Leadership of boeing, communicated some real concerns about what seems to be their inability to comply with the kind of Quality Control practices that faa expects of them. And gave them 90 days to present a comprehensive plan and show how theyre going to move forward to cure these issues. Look, this is something that is obviously of critical importance, and were going to come at all of this from the perspective of safety. It is no accident, no pun intended, its no accident that we have gone 15 years without a fatal crash of an airliner. Thats the result of an extremely rigorous standard, when it comes to not just the way these planes are designed, not just the way theyre flown, but also the way that theyre manufactured. Anytime somethings out of compliance, that puts that record at risk. We never take for granted that theres this incredible fact of flying through the air is actually the safest way to travel in the United States of america. Keeping it that way is going to require boeing to step up, and faa to keep boeing under a microscope, including this, you know, tough step that was unprecedented of limiting how many aircraft they can produce in a month, until they can demonstrate, that if they want to do a higher number, they can do it safely. Boeing got a big order yesterday, from american, and maybe they can get through all of this, but its been a tough couple of years. The stock is down about 50 or so. Its an important company, maybe one of our greatest Manufacturing Companies in this country, mr. Secretary. What do they need to do . Do you think that it makes sense if they were to buy Spirit Aerosystems back . Is that a better way to handle these issues . You know, i havent weighed in on their business structure. I think for them, thats a business decision. For us, any interest we have in that has to do with safety. Youre right, the economic importance of this company is enormous. Not long ago, i was in the pacific northwest. I was in vancouver, washington, meeting with High Schoolers who were in a tech program, toget them ready for the trades, and one of the students says we were asking them what they were up to. One of the students eyes lit up when he let us know that he was about to have his second round of competing for an internship to go work at boeing. We know how important that that is for the economy, but really, on our side of the house, and certainly faas side of the house, its 1 hu00 a conversat about safety. And doing the right thing on safety and having the right Safety Culture is one of the things thats going to be necessary for the longterm health of boeing as a business, too. Well switch gears now. On thursday, we will hear the state of the union from the president. And there have been some expectations built up, i think, among democrats and President Bidens supporters, that its an important state of the union. But were in very, obviously, divisive times, very strange times. If you look at the gdp, i know you could bring that up, how well weve seen growth hold up, when we thought a recession was coming. Weve seen unemployment well below historic levels, at historic lows. And frequently, its been pointed out the disconnect between how the economy is doing, new highs in the stock market, and the perception of the job President Biden has done on the economy. And i know you you had to have seen these polls this week. They were kind of staggering, kind of shocking from the likes of the New York Times or cbs or ipsos, in terms of not only not giving the president credit, but really, nasa. 18 say the president s policies have benefited them economically. Even among women, 20 more say trumps policies benefited them than bidens. What do you attribute that . And how do you fix that . Youre right. When you look at the numbers across our economy, alltime highs in the stock market, record job creation, unemployment that hasnt been this low for this long since before i was born, yousee so many good things happening that we want to tell the story for. And im one of those who definitely believes the president deserves more credit for those achievements. Part of how you do that is, youve got to go out there and take credit for those achievements. I think youll see the president in the state of the union talking about whats been achieved. Youll definitely see cabinet members like me continuing to go out across the country, pointing to the projects that are getting done, the bridge being redone in minnesota, wisconsin, is just one example, out of 40,000 that were highlighting right now. But look, people are also frustrated. And i get it. People are generally frustrated with the negativity they see, every time they see congress of washington. Thats why congress has an Approval Rating right now last time i checked in the 20s. We need to make sure that we highlight the things that are going right and continue to Pay Attention to the things that are going wrong. And lay out the plan and make clear whos trying to get progress. And whos trying to actually solve those problems versus just use them to score political points. I mean, it was especially disappointing to see what happened with the border. Youve got congressional gop, talking about the border, every chance they got. So you would think that they would be interested in addressing it. And yet when a bipartisan bill put together by one of the most conservative members of the senate and democrats working, negotiating, making tough, tough decisions that both of their respective bases were going to have trouble with came and hammered that out, it looked like there was going to be a chance to do something real, with real resources at the border. Only for donald trump, whos not even an elected official to come in and kill it with the chill that he put on congressional politics. So we can either solve problems or have them be political footballs. The whole move to try to come up with something, by the administration. And obviously, bipartisan that didnt come until it became clear that it was going to be a Major Campaign issue. And only then, did the Biden Administration get interested in it. And every time i hear well, hold on, lets be clear, here let me finish first. Every time we hear those talking points, that suddenly it was republicans who ruined the border, thats why people get so frustrated. We know what President Biden said about inviting people in. We know that he got rid of all the things that were keeping the border closed, that President Trump had put in. We know that he got rid of all of those. So when you say its not his fault thats not what thats literally not true. Thats literally not true, he got rid its true we got he got rid of family separation. Did you siee 7. 2 Million People come in during the trump administration. It was a trickle. He got rid of the policy to tear children out of the arms of their parents, thats true, but it is not true, some of the other things that have been suggested. This is part of the problem with why theres a disconnect in 2015, in 2006, literally, since the reagan administration, right, there have been bipartisan efforts to get something done here. But i really believe weve gotten to the point where many Congressional Republicans find it so useful as a cudgel, that they would rather keep the problem going for political uses than solve the problem and risk the chance that the president could share in the credit for that. In the same way that, you know, we see some of them, even though we had great bipartisan cooperation on the infrastructure bill that i work on, a lot of them who were against that, only to turn around and try to get credit for it when we actually have a Ribbon Cutting or groun groundbreaking. I just the reason that some of these numbers stay where they are is because it just seems like instead to have actually owning some of the issues that we have, instead of acknowledging that the president maybe has lost a step, the administration keeps saying, dont believe your lying eyes. But respectfully, joe thats why youre at 18 no, respectfully, i think Congressional Republicans are saying, dont believe your lying eyes, which is why theyre polling at about 15 . Congress is never right now, we have congress is never we have economic numbers is it my lying eyes that under joe biden we have had the most job creation in American History . Is it my lying eyes telling us that unemployment and inflation are both below 4 and have been that way for the longest time in who knows when . Is it reality or is it spin to point out the fact that manufacturing jobs are up under this president and were down under the last president. These are matters of simple fact. When we heard for three years that the borders closed and its secure we heard it and 7. 2 Million People have come in to where our big cities have no idea how to handle this. And you hear from the administration heres the thing, joe. This is really important. This is really important, okay . The common sense position, and the position that, by the way, a lot of moderates, democrats, and moderate republicans would always say, the kinds of things that you hear at the chamber of commerce in indiana, where i come from, is that there ought to be more Legal Immigration and less ilLegal Immigration. And yet when theres a chance to actually do that, thats not what happens. The last administration cut Legal Immigration. And meanwhile, our economy is pulling people, just as much as terrible conditions in latin america are pushing people. And when theres finally a bipartisan compromise that would help address at least some of those issues, Congressional Republicans couldnt get it done, because donald trump whos not even in elected office, killed it. That is a fact. That well see whether can this moves the needle. I just think, you know, the American Public just wants something that benefits them. They just dont want to hear so do we. What they see is happening. Mr. Secretary, we appreciate your time and will be watching on thursday night. Thank you. Thank you. When we come back, columbia universitys tim wu will join us tk toalkey antitrust issues. Squawk box will be right back. Is it possible . With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Welcome back to squawk box. Things have worsened a little bit. You can see the futures now are in the red, with tripledigit losses on both the dow and the nasdaq. And thats worse than earlier. The latest the news from the airline industry, jetblue and spirit walking away from their 3. 8 billion merger after federal antitrust concerns were raised. Our next guest is known as the architect of the Biden Administrations antitrust policies. Joining us right now is Columbia Law School professor, tim wu. He served as an adviser to President Biden on technology and competition policy, and his latest piece for the New York Times is titled, texas is right. The tech giants need to be regulated. Tim, thanks for coming in. Pleasure. This was a case that was argued before the Supreme Court last month. Its basically a texas law and a florida law that conservative politicians there put in place to say that the tech giants had to be careful with what they were doing. That they couldnt just edit anything, they couldnt just decide to not post anything they you are actually siding with the conservative politicians on this . Yes, i am. The texas law to be precise has no censorship of anyone based on view point. I sided with texas. I think the problem here is not that ive so much embraced the texas law and its goals, but i do think weve turned the First Amendment into too big a barrier to reasonable enforcement, reasonable regulation of the companies. What sort of reasonable regulation are you talking about . What do you think social Media Companies are doing that needs to be reigned in . Something more not discriminate against parties that are involved in there. I think they need room to do prooif sigh, need room to protect children. Part of this is my less about the texas law politically and censorship and more about the problem we have problems with children become profiled online and we need power to do something about it. You say if the Supreme Court strikes down the texas law in particular, which is a narrower scope of law, that basically these companies with do whatever they want, no one can stop them. I think were coming close to making the First Amendment into general purpose immunity. The reason is everything these companies do is moving and displaying information. One court ruled collecting information from children is a form of speech. If you say that, you cant do anything about some of the serious concerns that people have. So where do yu think the court may come down on this, just having watched you said four hours . Yeah, a fourhour argument. I think its closer than people think. The Tech Companies tried to get this something struck down very broadly. They may send it back. I think theyve heard enough that in particular the conservatives in this area, i think maybe its a very Narrow Holding or revamping. Lets talk more about antitrust issues. Jetblue and spirit ended their deal yesterday, agreed to walk away from that 3. 8 billion deal, but it was happening at the same time that weve seen concerns about other antitrust issues moving forward. Maybe albertsons is the biggest one to point to. Where do you think policy stands these days, and has it gotten too restrictive . If you ask anybody in the deal world, they will tell you they dont know theres any deal they can bring there are still against the regulatory scrutiny. I think the antitrust law is trying to set out new rules of the game. I think what the Justice Department and ftc are doing is the most obviously anticompetitive deals are not going to go through. There are deals 12i8still going through all the time. The ones where they combine obvious competitors with the excuse theyre trying to take on other companies is not going to go anywhere. The Airline Merger was a rig victory for doj. This was just a minor pairing versus the ones theyve allowed to go through in the past. Yeah. If you look at the albertsons deal, this is about Grocery Stores merging when they have giants like walmart, amazon, whole foods that are out there every day making life tougher for them. In some ways it feels like youre going after the little guys to not allow them to compete with the scale of the big guys that dont already exist. Were going after the big guys, too, i should point out. Or my former employer is going after the big guys. We passed on far too many mergers and let the industries consolidate. Look at one area where we dont need higher prices, its groceries and flights. That excuse worked ten years ago, but the results are in. Those Industries Just saw the prices go up and not much good happening for consumers. I think that excuse no longer works. In Certain Industries youll look at it and say theres nothing anyone can do to combine here, that we will think actually is helpful to compete against the bigger players . I wouldnt go that far. I would say the excuse of were going to give a pass to an anticompetitive merger because they say, oh, we have to compete with the other big guy, so thats the reason we need three Companies Instead of five sometimes that makes sense, especially when its the smallest two that are combining. It may make sense in theory. The results show once theyre three or four they tend to agree to cooperate on prices. Mobile is a great example. The airlines are another great example. We passed all these we allowed all these mergers to go through and the prices just went up. They didnt compete. Its more profitable to cooperate. Why wouldnt you cooperate . There are some questions being asked about what that means for Spirit Airlines, whether theyll be able to actually effectively complete at this point. What happens if some of these smaller players shut down because they cant compete . There is a Failing Company defense. Spirit just expanded their routes post this. They added two more routes. Theyre slightly profitable, not hugely profitable. I dont know. I think theyre always going about how well never survive, nothing with work. Tmobile said we cant survive. Now theyre the most successful company. Imthfentents are difre. T, ank you for coming in. Well check the markets and get you set for the trading day ahead. Stay tuned. Squawk box will be right back. Ontario has all the partners you need to make the electric vehicle of the future. With one of north americas largest i. T. Clusters. 65,000 stem graduates per year. And all the Critical Minerals to make electric vehicle batteries. Ontario. Your innovation partner. Nelson pelths published his plans for changes at disney as he prayers to face off against the company at its Shareholder Meeting next month. In the 133page paper thats titled restore the magic, pelths submitted demands for overhauling the board and businesses. This includes a Succession Plan for ceo bob iger, review of studio operations and Digital Strategy for espn. Tryon owns roughly 3. 5 billion in disney stocks is seeking to add peltz to the board. You see who came to igers defense . The disneys. Abigail disney. Shes been railing about his compensation and the board and how theyre all in his pocket. Something along the line of a wolf in sheeps clothing. Enemy of my enemy. If bob iger is not woke enough for abigail maybe shes finally on the right side for him. Final check on the markets. We are down and the market in the last week or so hasnt shown i think the same resilience weve seen since the beginning of the year. Well see if anything is up here we had a great 2023. Are rate cuts coming . That might be off the table at least for now. Weve seen bitcoin and gold go almost hyperbolic, although with gold, not quite the same thing. But it is a couple hundred dollars up to 2,136. Highest level ever. Highest level ever make sure you join us tomorrow. Squawk on the street right now. Good Tuesday Morning welcome to squawk on the street. Im Carl Quintanilla with jim cramer and david faber. Some worries in mega cap tech, whether thats amd, apple or tesla, well get to all of it. Roadmap begins with apple shares down again this time with report of an iphone sales slump in ch china. A different story for target. That stock is up sharply despi