Transcripts For CNBC Squawk 20240704

The s p hitting another record high yesterday. The 16th of this year. The s p futures indicated up 12. Dow futures indicated up 27. Nasdaq futures are indicated up, too. This comes after gains for the s p and nasdaq of more than 1 . Pushing both indexes to record highs. Dow closing higher. It was up 130 points yesterday. A lot of this came after what we heard from jay powell. He was speaking again before congress and yesterday he said this is key. Yardeni pointed this out. Powell said we are waiting to become more confident that inflation is moving sustainably at 2 . It will be appropriate to dial back the level of restrictions. That is what the market heard. Not far from it. As a result, you saw treasury yields pull back. The tenyear yield at 4. 07 . The twoyear yield at 4. 49 . It is interesting because it is all based on inflation. We havent even any definitive proof that the economy is going to fall off a cliff. Maybe we can get that today. Maybe he knows something. When he said were getting closer and closer, i thought that was really interesting. I dont know how easy it will be for the last bit of inflation. The last mile of inflation. I thought he was more dovish than i thought. I was surprised, too. What we have been talking about is could there be a possibility of rate hikes. Or non. The indication was sticky and does it pick up. I think it is possible there arent any. You know, it could change quickly based on the jobs market. The key point is were at an inflection point. That means every data point matters. Today is jobs friday. The forecasters expect an increase of 198,000 nonfarm jobs. That would be down from the red hot gain of 353,000 in january that shocked everybody. The Unemployment Rate is expected to hold steady at 3. 7 . Every one of the numbers matters, particularly jobs numbers. Lelts get to the state of the union and wall street. Wall street did not build america. They are not bad guys. The middle class built it. Im not anticorporation. I grew up in a home where trickle down economics did not put much on my dads kitchen table. Thats why i determined to turn things around for the middle class. When they do well, the poor are pulled up and the wealthy still do well. Joining us is Alex Thompson from axios. Alex, good to see you. All of this comes after the series of bizarre polls. I dont know if they are bizarre, but we had people saying that the public needs to be reminded of the donald trump they knew a couple of years ago. They seem to have forgotten. There is nostalgia settling in which allows donald trump to be up 4 or 5 from cbs or new york times. It is a bizarre twoweek period in terms of polls. Do you think biden turned that around last night . I cant really point to state of the Union Address that completely turned around any one poll. The democrats word was relief from last night. It didnt matter what joe biden said last night if you are a democrat. It is how he said it. Every single poll americans dont agree on much, but 70 agree on the polls say they doubt biden is capable of serving another five years. Last nights speech was well into the evening and he was angry and feisty. He stayed late taking more selfies with lawmakers. You saw democrats embrace and rally around him chanting four more years on the house floor. It was notable to me that the president hit a bad high mark last night in terms of the unfavorable numbers which are the highest ever in his presidency. He did a ton of favors for himself last night. If there is to be a biden comeback on the polls which donald trump is leading in almost every poll, then the biden comeback started last night. Just looking at some of the analysis and what people are saying. There have been certain people in his party who said talking about what youve done with the economy up to this point and hammering that home again and again isnt working. It would be pebetter to Start Talking about what you are going to do and contrast that to donald trump. Some of the numbers dont just favor the five points, but the other ones, alex, were 40 of people say they have not been helped by the Biden Economic policies. Only 18 feel they have been helped. Were still dealing with where prices are and thats the problem. They may be going up 3 down from 7 or 81 . We have the cumulative over the years. When you go to the Grocery Store and you are buying eggs, they are up 22 . You combine that with the border and you go to any drug store, you have to ask for a key to buy anything at any drug store now. Thats what people notice, i think, which is a difficult problem. Absolutely. You saw biden try to split the difference here. To your point, he still was trying to take credit for this economic. Something the democrats have been frustrated about. To your point, a lot of voters dont give biden credit for inflation coming down to 3 . They blame joe biden for inflation becoming so high in the first place. Just because the rate of inflation is down, doesnt mean prices are lower. To your point, the price of milk and eggs is an important political metric. What you saw is joe biden still try to take credit for his economic record, but you did see him try to turn up a little bit of looking forward. You saw him talk about raising taxes and talking about wall street and talking about basically saying he would let the trump tax cuts expire at the end of next year for everyone making over 400,000 a year plus corporations. He was trying to get in the middle. I think your point is well taken. Voters are not giving him credit for inflation being at 3 . They are blaming him for grocery prices being 25 higher. I think that whoever wrote that speech, zients, or who helped put all that together, was trying to rally democrats. If you are a republican, there was nothing that he was saying about the policies i guess thats why we have two parties. Everything that is there. Antibusiness, ridiculous shrinkflation. It was all populous. From the clip we played, he heard the criticism. I bet he ad libbed those pieces. Trumps a populous, too. He doesnt want to cut spending. We want to blowout the deficit in different ways. One with tax cuts. Neither one wants to touch entitlements. Both have a record of spending. Populism on both sides. No republican would have watched that last night and said im voting for biden. If you are worried about the national debt, then neither of the candidates are for you. Joe biden said he wont tax anyone making over 400,000 a year. Thats a huge tax base. That could go to cutting the national deficit. He has pledged to do more spending. Donald trump, to your point, pledged not to touch entitlements and pledged to further the cuts. We are in the middle of the election season and we are right in the midst of both sides p pledges populous policies. To him advocating in the speech. Go to the prepared remarks over what he said, there are a number of differences. Notably when he predicted that there will be a soft landing. That was not in the prepared remarks. He ad libbed that. If there is economic turbulence in the next sixtoeight months, that would be the most notable line in the speech. If he predicts a soft landing and there is a disruption. Mission accomplished statement. The other thing, alex, i dont like ageism. Nobody does. Maybe he allayed fears. Five years is a long time. Kamala harris is still a heartbeat away from the presidency. Probably no more than one stumble or gaffe away from back to being where we were. Five years is a long time. Age does have a way everybody is different, obviously. I have seen 70yearolds that should not be anywhere near that desk. I think to your point, this did not solve the age issue for joe biden. You will not see suddenly 20 or 30 of people with concerns of joe bidens age watched that one speech and say im good now. What it did is it will clamp down the chatter that has been nonstop the last three months with the democrats in the beltway is talking about how they need to replace biden and they need to have him go to the convention and withwithdraw. You will see the Biden Campaign reprieve from the news cycles for a few weeks if not longer. All it takes is one gaffe or one time with him looking lost after a speech or stumbling over his words or a really bad fall. That will reignite the issue. You know, five years is a long time, but eight months of the Campaign Season is a long time. All right. Reading the journal today. Really . Two candidates. Either one would lose to anybody else. Its bizarre. Both candidates. They need each other. Sy symbiotic relationship. It is one or the other. It really is. Oh, my gosh. Some people say it is very clear to them it is joe biden. Other people are very clear it has to be donald trump. That is why its 50 50. Absolutely. It is inn conceivable to the other side. Both sides. A big chunk in the middle who dont look at either of them. When it comes down to people in that booth and what they do, it is evenly split right now. Both sides are horrified with the idea of the other. They dont understand each other. They dont accept that the other people deserve to be heard or be respected at all. Thats a bad place to be right now. Alex, i dont know how we solve it. We need Arthur Brooks or albert brooks. The good place to be is a reporter. I guess so. There are fatigue from these two guys. Thanks, alex. Its you. Former Congress Member George Santos made a surprise appearance last night. Theres the rhinestone collar. I thought it was a Glen Campbell thing. He announced he is planning a primary challenge to the new york republican Congress Member nick lalotta. He was spotted wearing a rh rhinestone collar and silver shoes. Mine are all worn out. He still retains floor privileges because he has not been convicted of a crime. Can you go for life . I guess. You would think it would be a way more crowded chamber if thats the case. They leave for a reason. If i had a ticket, im not sure you would have seen me. When we come back, a house panel looking to force tiktok to split bytedance here in the United States. It comes as users are Flooding Congress with phone calls. By the way, it came at the prompts of tiktok. Call your Congress Member and tell them you want to keep us. We have details on this coming up next. Later, eli lilly releasing an ad ahead of the oscars urging people not to use the popular weight loss drugs for vanity reasons. We have more on that story later isouth hr. Announcer this cnbc program is sponsored by baird. 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Why cant they use my backyard with empower, we get all of our financial questions answered. So we dont have to worry. Empower. Whats next. 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 a Bipartisan Panel of lawmakers unanimously approved a bill that could lead to tiktok banned in the United States. If the bill becomes law, bytedance would have less than six months to diffivest the soc media company. House members on the Committee Said the intent was to prevent a Chinese Company having unfettered access to data. Not to get rid of tiktok. Tiktok sent users a push notification urging them to Call Congress and tell them to stop the shutdown of the service. It provided a function to allow people to search for their representatives phone number by inputting the zip code. That led users to panicked calls. Some offices getting 20 calls a minute prompted by the users. We will cautalk to representati Cathy Mcmorris. We talked about it. They are advertising a lot. Tiktok. I have seen the nun. Tiktok is so nice. Shes a nice nun. Very nice. Doing very nice things. She could not do these nice things with the people a congregation if you are a nun . Without tiktok, she could not do all of the works. The neuro surgeon. Loss of their son. This is how they are getting their campaign out. I resent the heartstrings. Who is behind it . Ccp . Really . Theyre behind tugging at my heartstrings . If you break it down, you dont have to were not going to shutdown tiktok, but you cannot have the information going back to bytedance which there are some Chinese Government controls over there. Who are the kids crying if you take tiktok away . Did you see that . I dont know. I dont have tiktok. You dont know. No. If you take this away oh, someone threatening to kill themselves if you take tiktok away. Some girl. That really gives me concern. Unbelievable. Business groups sued the Consumer Financial proptection bureau over the rule that caps credit card fees. They voted to limit fees to 8 which is less than the average of 32. The Consumer Bankers Association and american Bankers Association are opposing. They sued to block the rule. They argued it exceeds the authority and it will result in more late payments and higher debt and lower Credit Scores and reduced access to credit. Thats the rub. Reduced access to credit. They will say that every time. There are questions about if that matters. Yeah. If it is going to be unprofitable. It is true. They will pass it on to customers somehow. One way or the other. Coming up, its been a year already since the collapse of Silicon Valley bank. We will talk about the fallout on wall street and for regulators next. Later, pollster frank luntz will join us with reaction. He always has a focus group. We have reaction to the state of the union from a group, as i said, was happening last night. Squawk box will be right back. Everywhere are asking buss 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. vo explore the world the viking way from the quiet comfort of elegant small ships with no children and no casinos. We actually have reinvented ocean voyages, designing allinclusive experiences for the thinking person. Viking voted worlds best by both travel leisure and conde nast traveler. Learn more at viking. Com. Its been a year since the collapse of Silicon Valley bank that sent shockwaves through the sector. Leslie picker is joining us with more. Do we have enough time now to say it was Silicon Valleys problem . It was more of a oneoff, leslie . Reporter it is remarkable, joe. We could probably say that, of course, we are seeing cracks a year later. It was remarkable. A year ago tomorrow is when we saw the 42 billion in deposit disappear from svb in a day. The Historic Bank run led to the Second Largest Bank failure in history. On the anniversary of svbs demise, we look at what has happened since then. This left a lasting mark with the kre, a regional etf under performing the kbe by nearly 14 percentage p pooints in the las year. They were able to get deposits. The deposits overall grew in the Fourth Quarter for the first time in seven quarters and lower rates toward the end of the year helped pare back losses in under water securities in the Balance Sheets. That figure stood at 274 billion, down 100 billion from peak paper losses in the quarter of 2022. The two issues that plagued last years failures, Interest Rate risk amid deposit flight doesnt seem to be as much of a problem, however, quality appears to be worsening. The amount banks are setting aside have been picking up steam amounting to double the average between the financial crisis and the pandemic. 25 billion. That is a key reason why net income declined across the system last year and it has also been a concern within the books of new York Community bancorp. I dont know if the story is over yet, but the history certain isnt rhyming. It may be rhyming a little bit, joe. S just it cannot be similar t svb. It is too small at this point. It is not systemic. The ripple effects would be fairly small. What are we down to now with market cap . It barely registers, leslie . Reporter i believe it is 2. 5 billion after yesterday. They still have 117 billion in assets making them a top 20 bank in the country. With deposits and everything else. We can certainly handle that if we had to, i would think. Through peers or the industry or government. Not that we want to get involved with that. I never understood it. It never seemed it could turn into an svb which did not turn into much either. Reporter yeah. I think one of the key factors here is the economy has held up really well. You have, you know, aspects related to the historic rise in Interest Rates that obviously have some banks offsides. If the economy stays on the current path and talking to bank executives, they say most banks should hold up fine. Where you run into trouble is if we have high Interest Rates and a really significant recession. Thats when you could see more uss tem systemic issues in the system. Thanks, leslie. When we come back, we will talk about eli lillys new ad campaign ahead of the oscars urging people not to use popular weight loss drugs for vanity. We have that next. As we head to break, look at yesterdays s p 500 winners and losers. Announcer executive edge is sponsored by at t business. Next level moments need the next level network. Ds 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. theyre waiting for you. Hey, do you have a second . Theyre all expecting more. More efficiency. More benefits. More growth. When you realize you can give your people everything, and more. Thank you very much. [applause] ask, now what . Heres what. You go with prudential to protect, empower and grow. With everything you need to deliver, you guessed it. More. One more thing. Whos your rock . Learn more at prudential. Com good morning. Welcome back to squawk box live from the Nasdaq Market site in times square. The futures have turned positive at this point. You can see there where nothing that jay powell said would i think what is the word im looking for . It will not knock us off the rails with the recent rallies. I feel better about the prospects for rate cuts than before. Im surprised he said they dont think it is far off with the rate cuts. Thats the clearest hes been to this point. If they can get to 2 and he doesnt think that is far off, then the rate cuts follow. I would say derail. Im 15 years younger. Its going to happen to anyone. Speak long enough on tv. Bigly. Right . Eli lilly has released two ads for the weight loss drug, both highlight obesity as a medical condition. One points to vanity use in hollywood ahead of the oscars this weekend and knocks that practice. Joining us with more on the weight loss landscape is dr. Angela fitch. Medical officer and president of the obesity medical association. Dr. Fitch, this is a really interesting ad because the knock on some of the drugs is they will be too widely prescprescri. This ad takes target at that which is interesting coming from one of the companies that makes some of the drugs. Yes, becky. Thank you for having me. It is a very important topic. Obesity is a chronic disease. It has not gotten the attention it deserves. It is our biggest epidemic in the country and world, actually, right now. It is nice to see the Public Service announcement to recognize the criticality of treating obesity as a chronic disease. The idea in the public that there is abuse of the drugs, but the way, it is not just an idea. There have been reports and we have done them here at cnbc and other locations, too, that really point out how you can call up a doctor melissa lee did a documentary on this. You can call up a doctor and for nine minutes, you dont fit chr charact characteristics and you can be prescribed these drugs. What happens to the Drug Companies if there is abuse . Are they going after this with the blowback or side effects . I think they are worried about the fact that there has been a shortage of the medication as well. We know that there are over 100 Million People in the United States that qualify for treatment of the disease of obesity. We want to get it in the hands of the right people at the right time with the right wraparound Care Services to provide the best longterm outcome. Again, this is an issue in our country. Obesity treatment is not a standard benefit on the insurance plans. We have a treatment where 60 of the time, this can help people with obesity to put the disease in remission, but we are not able to get it in their hands for various reasons. It is highlighting the fact this is something we need to Pay Attention to in the United States and more action taken. What about the cost of the drugs . We had a guest earlier this week and a former member of the Biden Administration who suggested the government should be allowed to negotiate drug prices for this class of drugs immediately because they are so expensive and there is such an urgent need. I wholeheartedly agree. Monday was world obesity day. Thank you for having me on to highlight that. This really is something we have to take an urgent approach to much like with the covid pandemic where we were able to make things happen techn technologically. We need to come together, payers and employers and government and pharmaceutical makers to figure out this critical issue we have before us. The innovation that brought the drugs could be crimped d drastically if the solution is you have to give us these drugs and give them to a price we are willing to pay. Take it or leave it. This is like other countries which negotiate their price. We have a good medicaid pricing that happens in our country. We have over 15 states now in the United States that offer these treatments to patients on medicaid. There are ways of working it, for sure. We have treatments that are at lower costs as well. It is important to include the whole spectrum. Those people who dont have as much weight to lose may not need this powerful of a medication. Doctor, why is there any reason not to use price controls on pharmaceuticals . Instead of hiding what you are actually going to do, go ahead and say it costs 3 to make that pill, well let you charge 3. 50 for it. Why not do it that way . You dont think that will hurt innovation and the innovation in the rest of the world with price con controls, do you think that is comparable to the innovation in the United States where we dont have price controls . I do think we have to take innovation into account for sure. As a chemical engineer, im passionate about innovation, especially in this space. I do think we have to balance that. We have to balance that with other areas of our United States healthcare that are also in the middle taking out a lot of our costs at the middle layer. There are a number of things that come together to attack this issue that were talking about right now. Dr. Fitch, thank you for joining us today. Coming up, two Retail Stocks moving in opposite directions this morning. We will dig through earnings from gap and costco after the break. Reminder, get the best of s squawk box with squawk pod. Well be right back. Power e trades easytouse tools, like dynamic charting and riskreward analysis, help make trading feel effortless. And its customizable scans with social sentiment help you find and unlock opportunities in the market. E trade from Morgan Stanley. Hey you, with the small business. Whoa. Youve got all kinds of bright ideas, that your customers need to know about. Constant contact makes it easy. With everything from managing your social posts, and events, to email and sms marketing. Constant contact delivers all the tools you need to help your business grow. Get started today at constantcontact. Com constant contact. Helping the small stand tall. 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 welcome back. Shares of retailer gap are higher. Earnings of 49 cents a share beat. The Old Navy Brand returned to groet growth for the first time in a year during the holiday period. Comp sale were flat for the quarter, but beat the forecast of 1. 1 decline. You can see the stock is up 7 . You have costco shares falling short of the expectations. Ecommerce shares grew 18 compared to the prior year. The membership signups rose as it cracked down on membership sharing. Not by a meaningful amount over the member base. The stock pulled back after the 52week high during yesterdays session. 57 gains for the year. When we return, taking on billionaires. Taxing corporations and taking on the economy. How is america reacting this morning . We have political strategist frank luntz with us to break it all down. Squawk box will be right back. . 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No billionaire should pay a lower federal tax rate than p ta teacher or nurse. I propose minimum tax for billionaires at 25 . Just 25 . You know what that would raise . That would raise 500 billion over the next ten years. Lets bring in pollster and political strategist frank luntz. Frank, it was no surprise to hear this. It had barometrieen messaged th would touch on these issues. What did you think of the response . I had a different reaction from my focus group. I thought he showed passion. I was surprised he was as loud as he was. Clearly, he had been rehearsing the speech again and again. He did have several trip ups, but that said, there will be 1 or 2 of democrats who will return to him because he shows he is in command and he wants this job. Thats the point. My focus group said this sounded too much like a reelection speech and not enough of a state of the union speech. In particular, he focused too much on the past and blaming people for things that happened and not enough on the future and exactly what he would do. Okay. I can understand because this kind of was his response. Former President Trump spoke on tuesday night after super tuesday. President biden did not. A lot of people said this was his official kickoff the campaign essentially. Well, you can see it. You can see it in the way that he framed the issues that it sounded like a comparison. You can vote for the old guy, and this is what youre going to get or vote for him. But thats different and problem with that is we continue to politicize things that should be outside partisan politics. And you heard the shouting yesterday, you had a couple hecklers. It tells us that not only are we in the socalled silly season, but that people are going to take a different approach to politics, it is going to be a really tough, nothing is off limits in campaign 2024. Frank, on this show, are we allowed to go back to the old style . You chastised us so many times, you said grow how should we be above all that or can we get in the muck with everybody else . Do i have your permission to get in the muck or do you still want me to to be, i dont know there is no avoiding it, frank. There is no avoiding it. I wont do it. My mission is not to analyze 2024 and encourage it. But, joe, you give me special dispensation to occasionally fight fire with fire . Yes, because i love your show. I appreciate the show, just lets, please, get to the focus group because i want you to see what americans say about very quickly, frank, before we do, lets play one more sound bite from the president. These were his comments on wall street and that matters for this audience. Wall street didnt build america. Theyre not bad guys. They didnt build it though. The middle class built the country and unions built the middle class im not anticorporation. But i grew up in a home where trickle down economics didnt put much on my dads kitchen table. Thats why im determined to turn things around so middle class does well, when they do well, the poor and the wealthy still do very well, we all do well. Frank, my guess on hearing that is that he adlibbed a little bit to try to soften up the speech, probably the way it was written. Because i think this is a president who is trying to figure out how far he needs to run to the left and how far he needs to come back to the center to try and have a chance in this election. I think youre right. Taking those shots, but saying im not anticorporate america, i dont think wall street is bad guys, but well, thats exactly what barack obama used to do. He would say the point of view that was hostile, to what he actually thought, do it for a sense or two, but then that word but. And i want every viewer to Pay Attention to every political speech from now on, because if you hear the word but, it means what came before it is not what they really believe, it is what theyre about to say. Okay. Thats fair. Lets talk about this group, focus group you spoke to yesterday. This was a group of undecided voters. And what did they think after hearing everything that we just ran . First, they thought that joe biden was passionate, but they reminded him of the grandfather at the dining room table. I have to admit, i started to laugh. I usually dont laugh at the focus groups. When the people said reminds me of my grandfather, that he just says stuff and were all looking at him in absolute shock. Second, is that they do believe there needs to be a change in washington. But it is not raising taxes, its cutting spending. Lets play a sound bite from that focus group. This is what they said after hearing President Biden go after wall street, millionaires and billionaires, and they were asked if they could relate to that. Im an economistso i think i approach this at a slightly different angle than a lot of people. And i do think that wealth and income inequality is the Biggest Issue of our time. I mean, my parents lived in hong kong and i was that was the primary reason for the protest that happened in 2019. I do appreciate more efforts made by any candidate to shrink income wealth and inequality in this country. I think thats a unifying theme. The problem it doesnt get done is there is no compromise up there. The republicans have a way of fixing the tax code, hes got this way of fixing the tax code, and nobodys compromising. So it doesnt get done for 20 years. Lets amplify on that point. Hes talking about taxing the rich to spend more money and at no point during the speech did he say we have out of control spending in washington, d. C. And here are steps we can take to pull the budget down and not have to raise anyones taxes. And he just bragged about creating a whole new agency. Frank, that sounds like a fairly informed group of undecided voters. How did they break . They broke onethird toward donald trump, onethird toward joe biden, and onethird absolutely no movement at all. And thats why i think that youll see some democrats returning to biden, some of these undecideds, and it is such a small percentage of the population, only 5 , and some of them are just going to be impossible to get and the warning to wall street is that this is clearly going to be part of the Biden Campaign, because he too is a populist. And this stuff plays well. Tax the millionaires, tax the billionaires, but the undecided absolutely is more in favor of cutting wasteful washington spending than they are in increasing taxes on anybody. And the undecided voters may be a small portion, small population, 5 , but theyre going to be the ones that decide this election. Exactly. And im waiting for the candidate, because donald trump doesnt have a good record on this either. Whichever candidate makes end ing wasteful washington spending, whichever candidate does that is going to capture the lions share because the undecideds dont like either candidate, either party, and rejected the way washington works and attacking this debt and waste, theyre waiting for someone to stand up and say, enough. Have to hold your breath on that one. Frank luntz, thank you very much. Coming up, countdown to the jobs report. Economists expecting a cooldown from januarys red hot number. Thats next. A house panel looking to force tiktok to split from Chinas Bytedance or face a nationwide ban. The chair of that panel, Cathy Mcmorris rodgers, is going to join us. We said were going to talk to a chair. Remember, Clint Eastwood tedri that. Didnt work. 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Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. The countdown is on. Investors getting set for the final jobs report before the feds next policy decision. We have got a preview of what to expect. Shares of mongo db plunging after the guidance for the Current Quarter and fiscal year came in below what the street was expecting. Well hear from the companys ceo first on cnbc. And President Biden vowing to raise taxes on the wealthy and corporations in the state of the union. Well talk about the priorities as the second hour of squawk box begins right now. Good morning and welcome back to squawk box here on cnbc. Live from the Nasdaq Market site in times square, im joe kernen along with becky quick. Not only is it friday, but liesman is on set. I mean good day. You know what i mean . Something, can somebody send me a taco or something, it would be heaven. Here are the with bacon. Or one of those doughnuts with bacon. A taco doughnut with bacon. Okay, homer. Back to the futures. Mm, purple. We digress. Now the dow is down. The dow was up two seconds ago. Not big moves. Nasdaq off just a little bit now. That was up too. And the s p up 500, up marginally. Lets look at treasuries, because thats really what were going to be paying attention to. Down to 4. 06 . Didnt you think powell was more dovish. Absolutely. I think on wednesday, nobody else did, he repeated it on thursday, and he went like this instead of like that. Remember that Old Commercial and nobody picked up on it. On wednesday he said the same thing and then nobody really glommed on to it. I was shocked when he said were much closer to cutting than he said on wednesday, we need a bit more evidence and we dont need better numbers, we need the same numbers and then he said were not far did he do that on wednesday or was that yesterday . Which one . The line he said not far. When we do get the confidence and were not far from it. That was yesterday. That was yesterday. It makes me think waller is right, it is not about whether the economy slows, it is about whether inflation comes down. Thats whats in my report. Ive written this brilliant thing and i looked into it. No, i didnt. I didnt. Good writers borrow, great writers steal. Exactly. Heres whats going on. Economists are looking for a slowdown in february from the strong january payroll number but to a number that remains robust. 198 down from the expected 353. That 198 is still double the growth of the working age population. We need to find some workers here. Average hourly wages expected to come down from again the unexpected strength of january, 0. 2 versus 0. 6. It should bring down the year over year wage growth to 4. 4 to 4. 5, still on the hot side. Focus on the Participation Rate now topped the prepandemic era among the prime working group but low below it for all ages. There is our chart below it for the orange line is the prime working age group. It is a bit above it for that group. But the blue line, the blue axis on the left side, remains below it for the overall working age population. Got it. Yeah, for the overall population. Question for the fed is whether the pool of workers exists to fill the demand for jobs. And also what price you need to pay for employees to fill those job openings with an eye toward whether the hot job market is inflationary enough. No longer should be expecting or counting on a much Slower Economy or job market. Rather his focus is squarely on just the Inflation Numbers themselves, suggesting testimony yesterday that rate cuts might not be far off. When we do get that confidence and were not far from it, it will be appropriate to begin to dial back the level of restriction so that we dont, you know, drive the economy into recession rather than normalizing policy as the economy gets back to normal. So some questions about todays report was the january strength on overstatement, it is going to be revised away somewhat or is there payback with lower numbers in the february report . Also the question of these large scale announced layoffs, a lot of them in tech and finance that havent shown up in the data yet. Joe, ive got what thanks, dom. No, thats in the teleprompter. Youre not dom, are you . What happens if it is a way hotter number than expected . I think were back in the putting off wait a minute. Thats what i was going to say. Not a hotter number, but i dont care about the jobs. All i care about is wages. I care about the wage numbers. Couldnt we have a big jobs number but if wages are under control, if we believe we dont need a slowdown, all he cares about is the trouble is were still trying to find that equilibrium level to get the workforce would they like a slowing job market . Yes, they would. I wish that but did you hear what you said . What . Yes. Nobody wants a slowing job market. Slower. Or slower. Slow and steady. Should always be more. Always be more unless it is higher wages that go along with that and that means i want to throw out this a. I. Thing which is bugging me, okay. For productivity . 33 33 of all layoffs have been in tech, okay. According to challenger. Since when . Year to date. Okay. So, this is a big test of the a. I. Issue. Lets assume that some of those jobs have been lost, maybe perhaps to a. I. , okay. These workers are usually highly educated workers. In general, highly educated workers have lower Unemployment Rates than less educated workers. Sure. So what im interested to see over time here is do these more educated workers, are they folded quickly back into the workforce or are we into the a. I. Apocalyptic scenario where it is these workers who dont find jobs. Yesterday we had many ceos from the business roundtable, greg hayes from rtx had a different take than most ceos and that is inflation is still a problem, the fed should keep rates higher, and his reasoning for that is because hes having a really hard time finding qualified workers who are, again, skilled, educated workers and it gets to your question of skilled workers. Can you pay them more money and get them to come back or do they just not exist . What im interested in is when they get laid off, do they show up on the unemployment rolls, in jobless claims . It is something we have to watch over time. It may be early days for a. I. Job losses. One thing we know is andy mcafee last week, he talked about one of the great things about a. I. Is how it writes code. What happens to your code writers . You always want see, im back to you always want rates lower to stimulate more economic growth. That would be a thing you would want. I dont see any reason for the fed to move at this point. They should be a little restrictive because there is no guarantee things are going to get down to where they want. Ed no b not bad to be a little restrictive right now. On what becky said, more a. I. Investment, more capital demand should be the higher cost of capital. Thats another thing that would drive it is just one of the things to factor into the pot when we figure out the right rating. Eli lilly is an 800 stock, it is down shares are moving. The fda delayed its decision, down less than a percent, on whether to approve eli lillys experimental drug for alzheimers. New date has not been set. This has been the greatest drug stock to own, and it is now 741 billion. No one is close. Pfizers like this because of covid. They got nothing. You know. And then they got the weight loss thing and it is just it is unbelievable. This guy comes on all the time. Hes a young guy, cant believe what he has in there five years. Eli lilly going back to sydney terrell and everybody else. John mower, senior Portfolio Manager at nfj investment group. Had every dime of his clients money in eli lilly for the last five years. It is unbelievable, john. Unbelievable that dont you think diversification would have been a good no. Do you have any eli lilly, john . We do not. But i will say that concentration is definitely been the way to be the last several years in the market, which is actually interesting pivot to what i think is where the value is. How have you been managing you mean you had the magnificent seven, that hasnt been a bad trade either until recently. Well, going back to october of 22, we got very bullish on equities and we got overweight cyclicals, overweight semis, overweight foam builders. We thought the defensive areas were too expensive. You had guests on that were predicting a recession last year. What we did predict was that the valuations were too discounted in cyclicals, so we got very overweight, so we had many semis, including nvidia that have performed very well. Today, joe, we see a very different landscape evolving and one of the areas i would like to advocate for are small caps because if you look at the dispersion between the valuation of small caps today, you got one of the biggest opportunities i think going back to the 1990s and one stat ill share is that if you go back to the october lows of just last year, small caps are 25 . But the s p is up 22 . So the Small Cap Index is actually beating the s p 500 off the october lows. And ill share one more stat real quickly on why we think small caps are interesting, the magnificent seven have a total market capitalization of 13 trillion, okay. The entire small cap universe is 3 trillion. So if you have just a 10 correction in those big stocks, thats half of the entire market cap of the russell 2000, so, a small spoonful out of the ocean can be a big way for small caps. People have liked them so long that they probably dont like them anymore and now probably is a time. I dont know anybody you should have been calling our producers in october of 22, because people that like the market in october of 22 are far and few between. Everybody on the street was predicting a return to the october lows, all through 2023 until the end of the year and it just d the market left everyoe in the dust. It is true. I think the big reason for that, joe, that everyone got overly focused on the narrative, throwing out the fact that valuations were steeply discounted. Particularly on price to book, which is what you should be looking at when you have an earnings recession and stocks which is what we got a year and a half ago. So is there any way this year is going to be comparable to last year in you like small caps, but so it will be a different type of advance, maybe a broader advance, but will it be a solid year overall for the averages, do you think, john . I would be very surprised if we do not have an up market this year. Typically following a big down market like we had in 2022, you should expect positive returns out of equities. But, again, i do think it will be a little bit different and i think that you have the sneak preview, joe, was in october of last year, because if you look at what performed well, it was the yield sensitive areas, banks, it was rates, it was some of the value stocks, and those are prime to benefit when rates come down. And the twoyear bond yield has been screaming at the fed to lower rates. The twoyear bond yield sits 100 basis points below the fed funds rate. If you look at what happened in japan and the uk, both those economies are now looking to recession with inflation rates higher. So i think powell is aware of the risk of keeping rates too high. I think investors should be thinking about, hey what is going to be benefiting when rates come down, and it is the areas that got hurt the most, which is the most in debted areas and the financials, which obviously had a liability crisis on the asset crisis back in march of last year. That was not like the gfc, a bunch of bad loans. That was clearly around the treasuries they hold on their Balance Sheets. That will reverse. You can see a significant uplift in valuations and a move higher in the banks. And ill just share this as well, joe, banks are up 38 since october of last year. Theyre beating the s p 500 by 1300 basis points. I dont hear a lot of guests coming on and saying banks are beating the s p by 1300 basis points since october, almost six months. All right, john. Appreciate you. John mower, nfj investment group. Who are you owned by . Vertis investment partners. We were part of alliance, and now part of vertis. I just want to warn you, john, i dont know if you saw the speech last night, but talk to your accountant because theyre coming for you. I heard the tax rates may be going up. Joe, you might be in that category too. Im not sure. I might. I might be. Billionaire category . Not quite. Bitcoin. I know youre a bitcoin guy. No. Maybe in zimbabwe dollars im a trillionaire. Thank you. When we come back, energy and Commerce Committee chair Cathy Mcmorris rogers will join us to talk about her bill moving through the house to prevent ads by foreign adversaries from targeting americans. We can call this the tiktok block. Later, the ceo of mondo db will join us. That stock tumbling after the Database Company gave investors a disappointing ouootlk. Squawk box will be right back. 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Lets dig into this a little bit, because there have been so many states and National Representatives who have talked about the possibility of banning tiktok, this came a lot closer than people may have anticipated. This was a unanimous vote, 500, in your committee, to push this out and there is a vote coming to the full congress. What do you anticipate the vote on the full floor will be . Well, i think that the vote in committee, the unanimous 500 vote in committee underscores the concerns, the National Security concerns related to apps that are controlled by foreign adversaries. And that includes tiktok. But it is foreign adversaries using apps to collect, to manipulate, to surveil on americans through the data that they are collecting. And it was we had a classified hearing yesterday. The members responded to that. And were moving quickly on the floor because this because of the National Security threat this posed by these apps. This is not a ban, this would be a choice for tiktok, whether or not it remains controlled by the ccp through bytedance or if it decides to divest and to continue to be operational in the United States of america. But it is their choice. Bytedance, the Chinese Company that controls tiktok has said it is not sharing any information with its users with the Chinese Communist party. But it also says that the Chinese Communist party might not let them divest tiktok. What is your response . Do you know differently . Well, the tiktok has repeatedly been caught in this lie that it is not controlled by the Chinese Communist party through bytedance. We know from internal reportings that from employees that are saying everything is seen by china. This is a way that china operates, this is the way they treat their own citizens. They surveil, they on their own citizens and they cannot be trusted to safeguard american data or to protect our American Values like freedom. Congresswoman, it is hard to decide what to do. Everybody wants to allow corporations, even if theyre not u. S. , you know, we dont want to, like, ban corporations. We dont want to ban free speech and tiktok, very effectively has reached me with their ads now. They have got, like, this cute little nun doing a bunch of good works, she needs tiktok to do that. Have you seen that . There is another one, were talking about a neurosurgeon who lost his son in a drunk driving accident, and hes been able to reach people so that trying to make it theyre very smooth and sort of i dont know if it is conniving but is this the ccp tugging on my heart strings to allow tiktok to remain so that we dont do anything about it . Well, just because they say it, doesnt make it true. Theyre collecting massive amounts of data, 177 million users on tiktok. This is how china operates. This is how the ccp operates. And they are using this to surveil, to target, and manipulate data. We saw a real time example yesterday, when we were in the middle of this hearing and markup, where users on tiktok were blocked from being able to get on to the app until they called their representative and told them to not support this legislation. That is just that was one real time example of how they can manipulate americans for their own purposes. And, by the way, that was a pretty effective campaign. The Washington Post is reporting that some offices, some congressional offices were getting as many as 20 calls per minute from tiktok users saying dont take my tiktok away. Do you think that that sort of pressure is going to change the vote on the full floor . Well, it was clear that they were able to weaponize their tool to motivate a lot of people to call. Many offices were saying that it was more calls than they had ever received. But it just underscores how this can be used for their own purposes, and i would just this is not about targeting tiktok, this is about a National Security threat, tiktok is a tool of the Chinese Communist party, the legislation is about banning applications that are controlled by foreign adversaries like china that pose a National Security threat to the United States of america. But tiktok has a choice to make here. They can divest. They can divest from bytedance, and continue to operate in the United States of america, or they can remain under the control of bytedance and ultimately the Chinese Communist party. Chair, lets just talk about this. It is not enough to get it past the house. Impressive vote in committee, 500. But you need not only the house to vote on this next week, but then the senate to come up a similar law, similar bill and send the whole thing to the presidency. What are the odds that this is passed into law in the next three or four months . Well, our goal is to get this to get this legislation on to the president s desk. There has been many bills introduced in the house and the senate related to the concern about foreign adversaries that are collecting massive amounts of data, 170 million users, for example, through tiktok. And how they are using that data against americans. Even last night i was having conversations with senators on the house floor in while we were watching the state of the union, related to how they also want to engage on this legislation because of the serious concern, the National Security threat that poses when foreign adversaries are able to collect this kind of data. Im very hopeful that we are going to get a bill on the president s desk ultimately. We also have been working with the white house, the white house has given a lot of Technical Assistance because this is a targeted, specific approach because of constitutional concerns. We want to make sure that we are focused on the National Security threat that an application poses when it is collecting this data, on americans, but is ultimately controlled by a foreign adversaries. Which is why nobody really wants to call it the tiktok ruling because that is a little too narrow, has to be broader than that. Chair mcmorris rodgers, thank you for joining us. This is the only issue that has complete bipartisan support in washington these days. Good to be with you. I dont think were ready to take a shot. We have a focus group here that is involved. Who has tiktok . You have tiktok . The studio audience. And we said, where is the the Cross Section of the country, where you have the salt of the earth people, the most quality people, cincinnati, is that what we decided on . Just a random these are some of my relatives. What do you think about this idea . Would it hurt your business . [ inaudible ] we need to give you a microphone. Effective tool. We have our own Frank Luntz Focus Group from the best city, from the queen city, right . The reds looking okay . Is that is that tall short stop going to be good again or hes so cool. I love him. I have high hopes for him. We got to go. Coming up, this mornings premarket movers, check out the futures ahead of the jobs report. Wait, take another shot. There is the light. We got the light on. We couldnt get a get ready for the pictures. There we go. Were coming right back. Announcer time now for todays aflac trivia question. What actor was nominated for best actor and best supporting actor for the same role in the same year . The answer when squawk box returns. Thats like the gap in my Health Insurance. Gap in your Health Insurance . Yeah, it didnt cover everything when i got hurt. Good thing i had aflac. Hmmm the cash i got from aflac helped pay for medical expenses, groceries, rent. It really helped close that gap. Go, go, go yay go aflac go duck get help with expenses Health Insurance doesnt cover at aflac. Com wish we had aflac on our team. You can want more from your vitamins . Get more with natures bounty. From the first ever triple action sleep supplement, to daily digestive support, to more Wellness Solutions every day. Get more with natures bounty. Announcer now the answer to todays aflac trivia question. What actor was nominated for best actor and best supporting actor for the same role in the same year . The answer, Barry Fitzgerald in 1944 for going my way. Voting rules were changed shortly after this occurrence to prevent further dual nominations for the same role. All right, welcome back to squawk box. Im dominic chu with our friday morning movers. We got a couple of interesting analyst calls to start off with. Well start with ge, which is up fractionally on just around 10,000 shares of volume. The newly reorganized industrial conglomerate is getting upgraded to overweight from neutral by jpmorgan. The price target up to 180 bucks. There was a 30 runup already in 2024. Theyre calling ge the premiere name in commercial aerospace with regard to things like macro tailwinds for the business and better Balance Sheet dynamics. Ge up three quarters of a percent. Another call gaining attention is carvana, up higher by about 5. 5 at this point. Over 50,000 shares of volume. This is the ecommerce platform for buying and selling used cars. It is getting up to sector perform or neutral from underperform rating at rbc capital markets. The target price up to 90 bucks, it was 45, a catchup call here after carvana shares gained 50 so far this year to date. They think a lot of the negative thesis on the stock played out in the latter half of last year. And that the bear case is more in the rear view mirror now, better cash generation trends and better liquidity and thats Capital Trends as well. Carvana, up 6 . Well end with a quick check on what is happening with two of the most talked about names in the market lately, thats danish drug giant novo nordisk, and electric vehicle giant tesla. Novo given all the optimism around its diabetes and weight loss drugs like wegovy and ozempic, tesla because of it is tesla, now obesity drugs propelled novo to be worth more in market value than tesla with it standing in the global ev market. Novo trading with just around a 607 billion valuation. Take a look at tesla, and thats roughly around 569 billion, just some context around market values, weight loss versus evs, something to watch. Coming up on the show, the ceo of mongodb joins the squawk box crew. That stock dropping sharply in the premarket after providing investors with softer than expected guidance. That big interviewomg cinup. 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It is a friday, and we were feeling pretty optimistic, the futures were, when we came in this morning. You have seen some weakness that creeped in with the dow futures now indicated off triple digits, decline of 95 points. S p 500 futures down fractionally. The nasdaq indicated off by 16 points. We got a jobs report coming up in less than an hours time. Market will be writing off that and we had gains across the board yesterday with two of the major averages hitting a new high. Mongodbs shares are falling after the companys guidance for the quarter and the fiscal year came in below analyst estimates. The forecast overshadowing a good report, earnings and ref knew t revenue that beat expectations. Joining us is mongodb ceo, lots of im stalling to make sure i nail your name, dev ittycheria. You got it, joe. Thanks for having me. Youre welcome. Thank you for joining us. Wow, 30 billion, basically 30 billion market cap company. First of all, for viewers that dont know exactly how you make all that money, what do you do . So, essentially there is two ways we make money. One is we offer a Cloud Service where people can essentially provision, manage and run their databases in the cloud, managed by us. And people typically choose us to build applications that essentially run their business, whether it is working with customers, working in the backhand, dealing with suppliers, and also just driving Revenue Growth. The second way is that people deploy us typically on prem, using Traditional Software mechanism where they buy an enterprise advanced software, and that typically is for customers who want to run workloads on premise. The advantage with mongodb is you can run us anywhere, on cloud, in the premise or on edge. Would you say investors should have looked at the forecast and been disappointed . Or in your view, youre just conservative whenever you dont know exactly how the future is going to play out . Yeah, so, essentially what we called out on the call yesterday, joe, was that we had a couple onetime things. We had about 5 headwind on growth, due to two items. One, unused commitments. We used our salesforce to move away from customer commitments so we align our values to what customers wanted to use. That creates a headwind in terms of growth this year and we had some higher than expected multiyear deals on our on prem business and because of the accounting rules, you recognize more revenue up front using ase 606, so that creates a headwind. We dont expect the size of those multiyear deals to happen again this year. Besides that, our consumption business is quite stable. Our nonatlas business is slightly down and thats where the guidance came from. Casts a bit of a pall on other cloudrelated stocks, which makes me think it is not just mongodb. What is the overall macro environment look like to you right now, dev . We feel like were going after big market. We have grown very quickly. Ten years ago we were 30 million business, now approaching a 2 billion revenue business. And it is a very big market. The big interest level is around a. I. And when does a. I. Show up in these in our numbers. And what i also explained yesterday was that, you know, whenever there is a new trend, typically it is the bottom layer where you see the Real Investments happen and see that in stocks like nvidia, see that with the consumption of Technology Like openai and some of the open source loms, but all this investments, customers need to see returns on investments and that will show up in the applications and building, whether to drive more efficiencies in their business, whether it is to offer better experiences to their customers, or finding new revenue new streams of growth, so, we think thats going to come. It is early days. I coined it, were the dialup era of a. I. A lot of the technologies are still quite immature, the costs are still higher than customers would like to pay, and the performance and latency for some of the technology also is not great. As the costs come down and the performance increases, youre going to see customers embrace and deploy a. I. Applications of that scale. Is that the short way of saying it is just not worth it yet for most customers . No, i wouldnt say that. There is a lot of experimentation and prototyping going on. Almost every company has to have some sort of a. I. Strategy, whether it is to just drive more efficiency of the business but it is expensive and may not result in huge efficiencies just yet. Yeah. I think because the tech stack is early, it takes time for people to figure out how to drive down some outliers are being very aggressive in terms of driving more efficiency in customer support, but it will take time for customers to figure out the best way to deploy a. I. And where the biggest impact of the business could be. Just like the name, david. It sounds like the guy in the frat that takes a beer can and mongo and smashes it into his forehead, right . Can you hire people, dev, right now . Who would you hire . What should i come out what should i come out of grad school with to get hired by mongo . Yeah, we like people who bring a lot of skills, whether it is on Computer Science and strong technical skills. Problem solving skills. You know, work hard, so were hiring this year. Were investing in our business, we expect our head count growth to be in the mid to high teens. We also, you know, so we see a big opportunity in front of us. We also obviously want people who are coachable, people who, you know, who want to learn and grow with us, and so we tell people to join mongodb not for a job, but to build a career. People start with us as individual contributors now and now theyre Vice President s running big parts of our business. Quite excited about that, about the opportunity in front of us. You got stock too probably. So theyre happy. Yes. And rich. Dev, thank you. Good to have you on this morning. Appreciate it. Thank you, joe. Youre welcome. Take care. When we come back, we have reaction to last nights state of the Union Address. And later, how chinese ev makers are targeting the european and american markets. Mark fields will join us to talk about it. Plus, wells fargo banking analyst mike mayo talks financials and what hesees ahead for the banks. Squawk box will be right back. At pgim, finding opportunity in fixed income today, helps secure tomorrow. Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. 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. Coming up, breakdown of last nights state of the Union Address and the president s promise to raise taxes on the wealthy. And then the countdown is on to the february jobs report. Well tell you what investors can expect, likely to expect. Squawk box will be rightac bk. [sfx wind, rain and rolling thunder] [music up and under] crowd get in [crowd cheers] american announcer justin rose has done it. British announcer hes a 17 year old phenom. Nobodys born with grit. British announcer this is hard to watch. Its something you build over time. American announcer thats 21 missed cuts in a row. 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Existing customers can get a free line of our most popular unlimited plan for a year not only will you save hundreds but youll also be joining millions who have connected to americas most reliable 5g network. Sure is a lot safer than becoming a stuntman for money. Get a free line of unlimited intro for a year when you buy one unlimited line. Visit xfinitymobile. Com today to learn more. In last nights state of the union, the president pledged to raise taxes on the wealthy americans and large companies. Cnbcs robert frank joins us now with more. Hey, robert. Good morning, joe. He used your favorite phrase, fair. Hes so fair. The top 1 paid 46 of federal income taxes in 2021. President biden saying they should pay more of their fair share. His proposals for raising taxes on the wealthy included a billionaire minimum tax. A tax of 25 on all income on unrealized gains over 100 million. He would eliminate corporate deductions for any employee making more than a Million Dollars a year. Private jets would get taxed, with changes in the depreciation schedule, and higher tax on jet fuel and a higher medicare tax rate for those making more than 400,000 a year. Biden saying the 2017 tax cuts were a handout to the wealthy, and he said republicans plan to extend those individual provisions and would add 3 trillion to the deficit. In fact, taxpayers in every bracket are now paying lower tax rates than they were in 2017. Thats according to the tax foundation. The top rate for the top 1 was 26 in the latest year, compared to 7 for middle income taxpayers. The other thing that we should fact check from last night, he repeated this claim that the billionaires pay a tax rate of 8 . But hes including unrealized gains in their income, which we all know the irs does not recognize unrealized gains as income. Same thing with the 25 hes talking about. Right. But it is not correct to say 8 . It is over 20 . It is somewhere between we dont know billionaires per se, but we know the latest read on the top 400 taxpayers, hundreds of millions in income mostly billionaires pay 23 . Somewhere in the 20s. The idea of doing it unrealized we do property tax and things like that but not the same. Not the same for businesses, Small Businesses and taxes much bigger. Know what . Well need all of those 8,000 new irs agents. Ever try to do unrealized the next pay it on one year, down the next near, you dont have it anymore. Already paid taxes on it. I asked, would you be able to actually implement a wealth tax . And he wouldnt directly answer the question but said wed like to include whatever they pass, but thats going to be tough. Yeah. Tricky. Robert, stick around. Going to take a closer look at bidens economic priorities mentioned in last nights state of the union. We bring in heidi heitkamp, director of the university of chicagos institute of politics and a cnbc contributor. Also marc short is a Trump White House veteran also now a cnbc contributor. Thank you both for being here. Start with you, marc. You said President Biden may have had a low bar to jump over but actually hit it . I think he did have a low bar but i think we have to remember he was elected to the senate 52 years ago. So that chamber is a comfortable environment for him and theres been a lot of focus, was it too angry, too fiery, was it too partisan . I think there should be a lot more focus on the substance, because i think that the proposals he lays out would be crushing to the middle class of america. Whether or not its significant tax increases or corporate america, whether or not its the Regulatory Burden he proposes. I think theres challenges when he proposes lets have a price control on all pharmaceuticals. Same time saying i want to defeat cancer. Well, the pharmaceutical companies, ingenuity it needs there, what youre going to do, limit competition and reduce eng ne i inuity. Not willing to build a wall to secure the border. I wish more focus on the policy in the speech as opposed to style of the speech last night. Grill down on that. Youre a moderate democrat. What do you think about the policy proposals laid out . One thing you know about the state of the union, becky, is that every poll tested focus grouped tested, the foundation and skeleton of what were going to see as we add meat to it during this campaign. So these ideas are popular kind of at a top line. When you drill down, implementing a wealth tax, number one, in the Supreme Court right now being litigated. I think you all know, because i have been on your show talking how difficult to implement unrealized or tax unrealized capital gains. These are not ideas that he thinks are going to pass. These are ideas that you campaign on to draw contrast. You know, i think marcs right. There wasnt a lot of attention to the substance. Were going to see what happens in the next ensuing days, but i can tell you, hes got a lot of data that tells him what he said last night is extraordinarily popular. You just dont fit in anymore. Come out of the closet, would you please . Youve got no reason to keep saying just come well leave the lights on. Marc, can we leave the lights on for her, if she wants to come home . I tried so many times. Winning her over on the tax relief proposal. Come on home the waters fine, heidi joe, i am totally comfortable where i am. I smiled through that entire speech. I had to go do it hit on nbc so i had to leave in the middle that was you have to give it, marcs right. Created a low expectation we dont want you. If you still smiled through that speech you are not welcome. There you go. Im okay with that. Marc, let me ask you. You think that this speech, i mean, heidis breakly said the same thing. A lot of these are things youre campaigning on you dont think will actually happen. You think he intentionally pushed left to solidify the left side of his base rather than run moderate and maybe look for some of those nikki haley vote jers why do you think that is . I think he did that, becky, because i think hes anticipating this could be a multiple candidate raise and needs to solidify his base mid40s we had win. African american community, hispanic and younger voters. Those communities. Are they offering a protest and come home to joe biden or actually attempting to switch over and vote for trump . Hes also concerned to say, what happens if those people go to rfk jr. . If they go to jill stein . He cant afford those battleground states to lose any of those votes. I think he was looking to try to consolidate his base last night. His speech not focused on, despite him saying im scranton joe biden. Appealing far more to the left of the party and trying to rally the base back to him. Yeah. Marc, going back to taxes. The republicans do want to pass many of the individual provisions, extend those provisions in the 2017 tax cuts and they are very popular with voters. Despite what biden said last night. As we just showed you through the statistics. Voters at every income bracket got a tax cut, but how would you pay for those extensions . And wouldnt they add to the deficit . Well, i think as you know, as well as i do, we pass the tax relief in 2017, federal revenue a little over 3 trillion and today its 4 trillionplus. Reality, our revenues continued to grow because the economy grew. The problem has been spending side. We went from about 4 trillion in spending at that time to now 6. 5 trillion spending each and every ye growing by 58 , 60 in a that time period. Not keeping up with our spending. We dont have a revenue problem. We have a spending problem, and no solution last night whatsoever. Even the mention to curtail spending. We now spend over 75 of our annual budget and interest in debt and no conversation what well do to protect those programs and cut last quick word to heidi. Almost out of time. I want to say about joe bidens solidifying his base and the nikki haley voters. He hit the abortion issue hard and believes thats where nikki haley voters will come back and vote those swing voters vote democratic, and wait to see what happens. There is not any budget expert in america who thinks you can solve this budget problem by cutting spending entirely without looking at revenue. So marc knows that, and i realize that weve got a deadline coming up. Wait and see to see how congress handled the expiration of some of these tax provisions. And frank pointed out, either candidate isnt rushing to cut spending. Thank you both for being here and robert franch, thk, thank y coming up, Market Reaction and banking analyst mike mayo. Quk xilbeig bk. Sawbo wl rhtac at pgim, finding opportunity in fixed income today, helps secure tomorrow. Our timetested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. Pgim investments. Shaping tomorrow today. Yep. Jobs friday. 30 minutes and counting to the big number. Stock futures lower. Dows on pace for a second consecutive weekly loss. Something that hasnt happened since october. Bring you all the data and Market Reaction, plus talk with former fed vice chair Roger Ferguson about what the Labor Department report could mean for the u. S. Central banks Interest Rate. Have him after we get all the data. Final hour of squawk box begins. A funny picture of jay powell. Hes like, what . Final hour of squawk box begins right now. Good morning, everybody. Welcome to squawk box right here on cnbc were live from the Nasdaq Market site in times square. Im becky quick along with joe kernen. Andrew is off today. Big friday. Jobs friday coming up in less than half an hour. Ahead of that futures mixed. S p flat. Futures across the board up earlier. Now the dow indicated off by 53. Nasdaq indicated down by 13. Treasury yields a big picture. Weakness there. Yesterdays session in particular. This morning ten year is below 4. 1 at 4. 06. Two year sitting just below 4. 5 . We want to start the hour by getting right over to our senior markets commentator mike santoli. Mike what are you watching ahead of the jobs number on the heels of everything that powell said in the last couple of days . You mentioned, becky, the move down in treasury yields. Seems to be part of the buffer helping stocks. Maybe pause in the index. If we get a pause or pullback, well deserved. A tight persistent trend all year. Look how the hugged that upper sort of line of this trend, and didnt have any liquidity. A lot of this is, of course, things like nvidia. The engine of piling on market cap almost without any daytoday news. Bias to the upside but not just the handful of stocks working. Take a look at the midcap 400. This obviously right below the s p 500 in terms of size of company on a fiveyear chart. Hasnt been doing much for a while and a lot of people complaining that the market has been insufficiently broad. Thats sort of haltingly starting to change. A nice rally from october, but hard to watch. We broke to a new high, though, right around that level from a couple years ago. Late 2021. A little bit of confirmation theres more demand outside of mega cap. Going on a while. A couple undisputed leadership areas ive been struck by for months going in sync. Home builders and semiconductors. Continuing here. Something unifies them its scarcity, obviously. Not enough supply of homes or gpus the type nvidia is supplying and therefore Pricing Power also longterm trends demographics of course, a. I. Investment that seems to be animating. A market led by these areas is generally healthy, but also at risk of getting overheated in the short term base and the angle of the scent here. Add one word. Home builders, semiconductors, so rate sensitive. Entirely reliant what happens with the fed. Big runup seen as the markets anticipating rate cuts, something happens that that goes away. I guess this is why we look closely at numbers like todays jobs report and the Hourly Earnings within it. I agree. I dispute semis at this point are particularly rain sensitive because the absolute low meant um of the a. I. Story is overwhelming everyone. Okay. Yeah. Mike, thank you. See you a little later. Citigroup ceo james fraser saying the banks First Quarter results probably better than expected. Speaking at a conference. Also saying citis reorganization will be complete by end of this month, and citigroup is our next guests Number One Bank pick. Been a while since that, i would think. Maybe based on this. Joining us, mike mayo. Mayo Wells Fargo Securities of u. S. Large cap bank research. Officer and gentleman. Took me a minute. A minute. Why do people not understand what im saying . Because youre referencing 40yearold only 40 years ago. Richard gere. Mayo mayo this is a big deal for you and you think its restructuring and latest note, this is, made you bullish Honesty Group . You compare to other restructuring. P g, Consumer Products company . But i thought you said citis over 12 with previous restructuring . I have one word to sum up my view. You brought a sign. Yeah. Oh, good. Okay. Thumbs up to citigroup. Citi is on a detour from 25 years of horrific performance to improve performant. 012 when it comes to restructuring. We think for citi number 13 there lucky number, we think. Whats happening here is in some ways subtle but extremely powerful. They are going from this Matrix Management structure all of these countries and functions, to five lines of business. Very simple. Services, banking, markets, consumer and wealth. The five heads of those businesses, you know, they are schmear, andrew, try to get them right. We have andy sieg head of wealth and a couple Merrill Lynch guy. Exactly. Five heads of these businesses and report to frazier. Thats it. Cascading effects down to the bottom of the firm. Delayering management layers. 13. Who has 13 management lay jers joe, how many are between you and the ceo of cnbc . Zero. Youre the ceo . No. For me to talk to him . Yeah, not very many. We have a good were different. Not really in the line of command. Not a right. No, but my boss, zero. Really. Thats in my mind. Ill get a call from j. C. Block him. But the first of all, they brought out dirt you lawn dray saying 13 management layers, crazy. Down to 8. And people say, well, this going to take a long time to work out. How longs the detour . Guess what . The answer to that [ showing a detour sign ] by the end, citi will have made all the major decisions about where people stand within the firm. Three weeks from today 21 days. People say, oh, look at it in two, three years. No. You dont have that long. Okay . Three weeks from today theyll have delayered from 13 down to 8. Five lines of business. Accountability, transparency, First Time Ever these five lines of business have profit and loss statements. They have returns. They have capital. Could be held accountable and we can follow them from the outside. All dead weight . Trying to figure out if this is when elon took ober twitter and laid off half the people immediately. Do you see a difference on the other side . A problem is it cut too much or is this the right amount . They said eliminate 20,000 people. Its painful, but got me fired a few times, you know. A very difficult situation, but i think they get over the hump soon. So people say, well, citis never done this before. Im Walking Around the Wells Fargo Equity Research floor and we have dozens and dozenss analysts and then i find the Consumer Staples analyst, chris carrie. Sounds like procter gamble. Several years ago had functions went to six lines of business. Citis going to five lines of business. Sold off businesses equal to 10 to 15 revenue. Citis selling off revenues equal to that. Procter gamble according to our expert at wells fargo a challenged company. Citis a very challenged company. It worked in spades according to analysts for procter gamble. So worked for them, it can work for citigroup. I like, your viewers, anyone who deals with me, or you, if you own procter gamble, give citigroup a look because theres a lot of parallels here. A whole new report that talks about those parallels. You say, oh, citis never done it before. Never gone to five lines of businesses, sold 10 15, 15 revenue before. And never gains at the top. Nowhere to hide. You know what . Three years from now by 2026, she says she is highly with high conviction, she expects citi to have 11 to 12 return. By the way, my estimate is only 10 and i expect the stock to double. Get to a 10 return, trade a tangible book value we have at 111 in 2026. No heroic assumptions here. And consensus is only 9 . But guess what . If she doesnt get a 10 return, doubledigit return in three years from now could be out of a job. But if she gets returns should be banker of the year. In this International Womens day, the only woman who heads a major u. S. Bank, jane frazier, has a chance, could fail like the other 12 restructurings or wind up being banker of the year. Im leaning towards banker of the year. Not riskfree, a great plan but still have to execute. These are all, just in my mind, its moving between 4. 50 and 6. I cant shake the one for 10 after the financial crisis. Jamie dimon went through the same crisis. Chuck prince went through it as well. His bank ask orth half a trillion . This is worth 100 billion. Its never been able to get out of its own way and still a 5 stock. I was on your show back then. Put the sell rating on 480 in 2007. Then the stock almost failed the next year and a half. So youre right. Why theyre 012. Why the stock inexpensive. Tangible book value on think Balance Sheet 164 billion. Market valley 110 billion. Where are the holes . Where the ceo. Janes been there a while. Its finally happen. How many years . Three years. Finally. Still 5 58, whatever. People dont understand what im saying. This is equivalent to, like 5. 580 after the one for 10. I go to annual meeting, eah, shireholders remember that and angry. I hope, i would think 0. 10 of what their stock was worth at one point. A lot of pressure on jane to deliver. The detour dont get mad. If i could buy it i would buy it but i cant. Detour is really this. Thats the detour. Oh, my god going to cut your you dont have a tie to cut off. Stocks going higher, joe. Okay. I believe you. P g, who was the ceokceo orchestrated that . That was six years ago. John or roland . Came back. John there the whole time working with. I think john probably three, four years. Management before. He was. Cfo. Yeah. Definitely. They had the guy before that brought him back. Gone. Yeah. Mcdonald . Oh. Thank you very much. Now he has a phone. No. Eeieeio. When we come back, a february jobs report. Counting down to that. Just 17 minutes away. Up next, though, ev anxiety. Whats behind new concerns in this sector . Speaking with the former ford ceo mark fields. Squawk box will be right back. 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 well, if tesla is the poster child for evs in america the industry is seeing warning signs. Shares of elon musks company lost more than a quarter of their value this year. Just this week down more than 10 . Joining us right now to talk about tesla and what it seem, what seems to be flagging interest overall in Pure Electric vehicles is mark fields. Former president and ceo of ford. Also a cnbc contributor. And mark, what is happening . I mean, theres still a lot of ev cars that are selling, but theres a lot of supply to meet that demand at the same time. Maybe the market kind of rethinking the supply demand picture . Yeah. I mean, i would characterize this, this is a market thats going from optimistic to realistic, and youre seeing kind of waning demand. Listen, growth is still there. Right . We know that you know, ev sales here in the u. S. Past over a million last year. Up almost, slightly less than 50 . Its growing, becky, but not growing at the rate of which everybody was expecting. So thats why youre seeing all the whats the National Sales . Is it, i dont know, 12, 13 million of automobiles . Yeah. National sales last year was a little overovers 15 million vehicles. 1. 1 million i think. A little over 7 share. It was up from the prior year, which was about 5. 5 share. So its growing, but the bottom line is its not accelerating the pace. All of the automakers expected. Why you see now all automakers making changes delaying programs, shifting out the construction of plants. Things of that nature, because end of the day the consumer has the issues around the cost. They have issues arranged the charging anxiety. Insurance and a big issue for consumers, nobody really talks about, is with the reduction in prices youve seen here in the u. S. And around the world, lets take here in the u. S. , you know, a model y is about 20 less. Costs, price this year than last year. That has huge impacts on residual values. If youre a consumer that owns an ev right now your vehicle is probably worth a lot less. That weighs on consumers as they think about evs going forward. What about competition coming from places like china . Phil lebeau doing an excellent job reporting on what this means for other countries around the world. Whats it going to mean for producers here in the United States . Well, china is a real threat. I mean, lets face it. The Chinese Government about 10, 12 years ago said, listen, we missed out on dominating internal combustion engines and were going to dominate on electrification. Gave a lot of incentives, government grants, incentives and spent a lot of money putting capacity in place and building evs, but come up quickly in quality of those evs. Started out as strategic decision by the Chinese Government to dominate now turned, becky into one thats tactical, because they have so much over capacity right now in china. They sold a little over, about 7 million evs in china last year, and they have capacity for almost 20 million. Now exporting. For the u. S. , theres high tariffs right now. But if they decide to put plants in mexico, potentially they can use nafta to bring those vehicles in, you know, tarifffree, and thats why i believe the u. S. Government is going to do something, not for permanent, but some period of time to give the western, or domestic area time to catch up, because of the unlevel playing field. If they dont want does it mean for the big three automakers . A lot of pain and hurt ahead. Listen, end of the day its not only the labor thats much less for these chinese auto companies. You know, a lot of the elements for the batteries are made locally. So its lower price for them. And so its going to be a really hard time. If you think its hard now its going to get harder. Tesla is probably the best positioned of the western automakers, because they are the most vertically integrated. Look at newcomers rivian yesterday announced a new product. Look at some of the players there. They need scale to survive, and i think that will put them at the most risk, if the chinese products come through. Mark, quickly. New administration. If trump actually wins the white house, would probably roll back some of the requirements that are pushing automakers to make so many of these evs. A big difference for the big three, both on profitability and what their future plans are . A big deal, yes, becky. Right now even the Biden Administration according to rumors is looking at relaxing the epa guidelines because, listen, by their look at california, for example. California and 14 states that follow them basically said, listen, by 2026, you have to have 35 of your vehicles pure evs to sell in the state. If not, every one you get as 20,000 fine. That is aofis completely unrealistic at this point. Lay on that and lack of charging infrastructure, i think youre going to see either the Biden Administration relax those or trump gets elected, i think youll absolutely see those rolled back. Mark, thank you. Mark fields. Thanks, becky. Coming up, the february employment report economists expecting, write this down, if you want to, addition of 1 198,000. In january. Remember what it was . 350,000. 353. Could be revisions, Hourly Earnings. All kinds of in ani in a nush m inner here. Squawk box will be right back. Encore energy, americas clean energy company, now in production in south texas. Energizing america with reliable and affordable uranium for Nuclear Energy fuel from our environmentally friendly extraction process. Encore energy. 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. Dad, dont forget about my new cleats. Sweetie, i cant make it to dicks this week. Have you heard of dicks. Com . Have i heard of dicks. Com . Girl lets go lets go have i heard of dicks. Com . screaming whoa. Dont overthink it. Lets go shopping. Anyone impressed with how fast that was . up next, the number of the morning. The fed jobs report. Steve and joe just talking about it. Joe biden will be right back. e 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. As an independent financial advisor, my promise to you is simple. As a fiduciary, i promise to put your interests first, always. I promise that our relationship will go well beyond just investment decisions. Its the intersection of your money and your life where we can make the biggest difference. [announcer] Charles Schwab is proud to support the independent Financial Advisors who are passionately dedicated to helping people achieve their financial goals. Visit findyourindependentadvisor. Com theyre waiting for you. Hey, do you have a second . Theyre all expecting more. More efficiency. More benefits. More growth. When you realize you can give your people everything, and more. Thank you very much. [applause] ask, now what . Heres what. You go with prudential to protect, empower and grow. With everything you need to deliver, you guessed it. More. One more thing. Whos your rock . Learn more at prudential. Com welcome back to qb squawk box on cnbc. A few minutes away from the governments february employment report. Ahead of the number bring in our jobs panel sarah malic, chief Investment Officer and lavigne janes fuhrman former chairman of White House Council economic advisers currently a professor at Harvards Kennedy school of government and joel griffith, Heritage Foundation Research Fellow in economics and our own Steve Liesman and our own Rick Santelli. Steve, when i thats the number. I point out not had a down side surprise in a very long time. So just reverse it to the mean. Regression to the mean. Rick, probably tired. Up watching the state hate of the sorry. State of the Union Address last night, rick . Oh, yeah. Barely stay awake during the address much less got more rest than you think. All right. So, anything listen, real quick. Go ahead. Have to watch average workweek. Okay . The hours. Last week we had a big drop at 34. 1. All watched productivity output per hour. An important metric to see. A lot of things skewed isnt january youll see. See if they reverse. All right. Rick, keep talking, because youre going to have the numbers, just can lead right into those, those numbers. We had a hot wage component of adp. Will that happen again . Yeah. No. I think thats really important, because if you consider the Unemployment Rate, how low it is, and you look at average Hourly Earnings, that 3. 4 to find a or 3. 1. Find a lower one going back a number of years. Back to march of 2020. All right. Hear the music. Here are the numbers for the february jobs, jobs, jobbing reports. Revisions lost nearly 170,000. Nonfarm payrolls a stronger and that expected 275,000. 275,000. Well, compared to last month bet of the year back to jan of 2023. Comp, 483,000. Look at the Unemployment Rate, it took a jump. To 3. 9. 3. 9 last time we had an Unemployment Rate anywhere near there youd have to go to 4 in january of 22. Lets call it a little over two years. That is significant. Now, if you look at average Hourly Earnings, a big deal last month. We saw a 0. 6 jump. Best in two years. Modified to only up 0. 5 caompig well back into history. Finally, revision. The new number . The new number is much more in line. Only up 0. 10. A strange effects we saw in january. 1 comps too. Last time we were there equals february of 22. February of 22 to find a lower number, youd have to go back to march of 21, joe. When it was zero. Unchanged ap year over year perspective on earnings last look also juice at 4. 5 . Best sinceall 23. Similar to month over month, gets downgraded, but a bigger number. Downgraded 0. 1 to 4. 4. New number is 4. 3. Make as bit more sense. We had several 4. 3s end of last year. Find a lower one . Back to june. June of 21, find a 3. 9. Finally, here we go. Average weekly hours last week at 34. 1. That was lowest level since march of 2020. Jumps back up to 34. 3. 34. 3 we finished last year to find a higher one go to november at 34. 4. Participation rate . Also a january, maybe a bit of anomaly. It popped last week in the wrong direction. Up to 6. 5. Excuse me. It went down to 62. 5. Pretty good. That would, youd have to go back a year to find a lower one. What is it now . Well, its 62. 5. Remained there. Good news. The last number here is u6. I like this one. Un under employment rate. Highest since december 21. Higher to 7. 3. Dec 21, original comp. Back to november of 21 at 7. 7. Interest rates shot up. Then shot right back down. So basically if you look at a ten year, ten year was 405 before the numbers. Shot up all the way, high 412. Back to 405. Two year yield at 4945. 447 for the number. The pop is the strength in jobs. Some of the other numbers coming back in line as we have discussed. Really pushed yields back down. This is the third, the fourth consecutive session trading below the previous sessions lows. That was a big spike. We want to see how friday culminating a very big week from dropping yields over a month low yield closed yesterday in tens in nearly a month in twos. Well, thats it, folks. Joe, back to you. Yeah. Thats all . Thanks, rick. All you got. Lets get right to our jobs panel. First, instant reaction. Bear with me. I want to let steve just try to tell me verall, i think we need to split things now. Used to say a hot or cold report . And with what our discussions have been lately, steve, we need to know, is it a hot or cold flor report in terms of economic or inflation . Not always the same. Two great questions. First thing i want to say tells you how subject to revision this data is. That ridiculously hot january number is now, still pretty good. Right . 229 off the 335. Still a big number. Take, given, trend to downwards revisions. The case for a while. I dont know where the bias comes from in the blf reports. Take it with a grain of salt. Somewhere 150, 200,000 range. Not crazy to think. Participation remains okay. I would say, longterm unemployment, no spike. 1. 2. Those working parttime for economic reasons. I wrote down construction, manufacturing down 4,000. Service sector up 200,000. Retail doing well. Up almost 19,000 with 17,000 general merchandise. Transportation and warehousing an area i thought might lose workers because thought they may be over hiring. Still up 20,000. The big numbers. Education and health care, 85. Leisure and hospitality up 58. Thats where it is. I think the fed will say, wait a second. These numbers are very volatile. I wouldnt be surprised to see the workweek going up a good thing as well as i think year over year wage numbers came down to 4. 3 . Not a lot of inflationary impulse there. I said in last hour i think they would like to see job number moderate. And sarah, did you see anything that would change your outlook or what were the most important salient features of this . I think a win for the bulls and those who believe in a soft landing narrative. Showing the labor market is slowly coming back into balance. You saw it with revisions, january obviously was an anomaly, a Wage Inflation starting to moderate and labors for participation is good news. Keeping people in the workforce. The question, what does the market go from here after a rouge run seen since halloween . Need two things for the market to broaden out. One, tenyear yields to moderate. Thats good news. Earnings growth. Four quarter earnings coming to a tail end really led by technology with 15 Revenue Growth by mega cap seven, 60 Earnings Growth. The rest of the s p has not been strong. 3 Revenue Growth, minus 2 Earnings Growth. Wep need earnings to grow beyond the magnificent seven. Upside from here. Challenging for tech to keep carrying this market higher from these levels. Jason . What struck you initially . I think this is very much a soft landing report. Everything that we were worried about last month got revised in a little bit of a better direction. That hours decline smaller than we thought. Wage increase smaller than we thought and moderated further this month as hours went up, wage growth slowed. At this point im not looking at the jobs number anymore. I have no idea what steady job growth is in this economy. In part because i dont know how many immigrants are coming into this economy. Unemployment rate is a much better thing to look at. Its a ratio. You dont need to worry what the population size is and the fact that went up means we should be raising our inflation, our recession fears just a little tick. We should be lowering our labor market tightness fears a tick. And most importantly here over the last three months wage growth is at a 4 annual rate. Last month looking at the last three moss, a 5 annual rate. Thats a big difference, i think, shows everything coming into place for inflation coming into a stable, low way and the fed has to worry about that increase in unemployment. The possibility for recession and the fact its tools are lagged. They should probably start cutting soon. May or june. Wow. He doesnt know these numbers, but almost seems, powell almost seems wondering why so dovish. Joel does think explain things a little bit . No. Im actually concerned about a number of items in this jobs report. Really a continuation of what weve seen. Look back over the past year since last month, the official number says weve created around 2. 5 million jobs. Look at the number of fulltime jobs, weve actually lost close to a million fulltime jobs. Ask yourselves, how is it were seeing jobs growth overseeing diminishment in fulltime jobs . Because the past threeyears or so weve seen percentage of people working a full time job plus a parttime job skyrocket by more than 30 . That really does tell us something. It says that people that are employed are trying towork harder just to make ends meet. To make a quick point on the labor force Participation Rate i remain concerned aboutthat. Its still flat lined. There are close to 2 out of 5 people working age not working. That percentage of the population, were actually below where we were prior to the pandemic. Represents upwards of 600,000 people just disappeared from the labor force. Rick santelli, we had Rick Santelli, data provider. What does Rick Santelli the man have to say . Well, if you go back to april of last year we had a 3. 4 Unemployment Rate. To find a lower one, had plenty of 3. 4s. Consider that that data series goes back to 1948, joe. But to find a lower one you will to go to 1953. Okay . So weve gone from a comp of 1953 in april of last year to 3. 9, half a percent higher which is now a 2 year high. Not saying its messing up the soft landing but something to Pay Attention. Chairman going both sides of the aisle of the house side and the senate side over the last several days, one of the key issues, of course, do you have to crash and burn the economy . Do you have to see the Unemployment Rate move up . Do you have to see some pain out there to know that youre getting the job done . Well, i dont think he quite saw it that way but the markets and some of these data points could potentially see it that way. Especially if we start to see moves of a couple tenths of a percent every couple of months. Thats a big jump and something to Pay Attention to, and even if the Labor Force Participation at 62. 5 looks a little better than it has, it has been as joes pointed out significantly lower and i think we get used to these metrics and parttime versus fulltime probably goes a long way to explain some of those january anomalies. I want to steve, i want to ask you a question and rick can weigh in, too. Gold jumped 25 on this. So to me it looks like, looks to me like this increases, i mean, golds going to jump when the fed starts opening this again. Bitcoin jumps when you think theyre start printing more money, because theyre worried about a weakness in the economy. Is that what were seeing . Right. Also perhaps diversification away from the dollar. 25 pretty good at a high. For gold. Address the parttime issue. First of all, it is possible, and in some cases likely, people are taking parttime jobs because knneed extra money. Also possible more parttime jobs out there because employers cant find workers they need and offering a series of jobs at a parttime way. Gentlemen and ladies when i look at percentage of total jobs that are part time in the economy ive seen a bounceback. A lot of jobs part time, bu still on a percentage basis either equal to, just a little below, looking before the pandemic. Jobs lost in the first, were parttime jobs and now theyve been coming back. I just wouldnt make it a huge economic issue out of this parttime employment. Right. The other thing is, parttime jobs go up when the economys strong. Parttime jobs are a sign of economic parttime jobs because people want to and need to work parttime, part of it and work employers trying to fill the jobs. Not a cyclical one. All of these levels i said before. You want to look at Employment Level over the last year. You need to know whats happened to the population. Over the last year. Census, dls dont know the answer or how much employment has grown. Look at the Payroll Survey and more importantly assess how hot the economy is look at wages and that, you know, is higher than its consistent with stable inflation, but with this months report edging a little closer. Rick, just one more question. We needed a report on cnbc. Out at a a a pub in new jersey. Talking abouts 15 minimum wage we now have, and i guess in parts of new jersey. The guy said, i dont hire fulltime anymore. I cant afford it. You just read my mind yes. You read my mind. One of the issues with parttime. Jason is right. Historically. But, see, we tear up the historic playbooks postcovid. Everything is a little odd. In the dada, Twilight Zone with regard to employment. Truth to that look at burger joints in my neighborhood that have closed. Saw a surge in business. Still couldnt wale really get d you go there, theyre gone. Bigger ones have more fire power when it comes to hiring. All right. We got to go did you get to the bottom of it . Screaming in the its so much nuance whenever we seems like the nuance is increasing every jobs report that we do. Got to think about more things. Right . Gives me a headache. Its not as quick. Just want to get rid of us and go back jason, i miss you. Ferguson is coming. Thats you why. Jason, i like when asking you questionss. As a professor, you get a huge head, bossing all of these kinds around all the time. And i get to laugh at nigh jokes and i cant get to you do. Thanks to the panel. Thank rick and steve i dont have to, but thanks anyway. When we come back, much more on the jobs rors and how it could play into the feds upc upcoming interest race decision. For that former vice fed chairman Roger Ferguson. Joining us right after this. Stay tedun. Youre watching squawk box, and this is cnbc. 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. vo what does it mean to be rich . Get iphone 15 pro on us. Maybe rich is less about reaching a magic number. 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. Welcome back, everybody. February jobs coming in hotter than expected but januarys big number was revised down. Joining us now to talk how Federal Reserve members are likely to seal this latest data is former fed vice charmin Roger Ferguson. Former president and ceo of tiaa and vice chairman of the Business Council and a cnbc contributor. Roger, look at this. 275,000. Street expecting 198,000 in terms of jobs. Unemployment rate, though, jumped to 3. 9 from 3. 7 . Big revisions down 171,000 ily in a huge number seen in january jobs. Participation rate unchanged 62. 5 . Average hours for the workweek, 34. 3 from 34. 1. Take all of those numbers, moosh them up, feed them into the fed machine. Whats the analysis that you spit out . Look, i think end of the day the fed analysis is so far so good. And still sort of no rush to cut. What does that mean . So far so good. Things have not fallen out of bed. Yes, the Unemployment Rate ticked up a bit. Have your antenna up a little about recessionary risk. Always important. On the other hand revision suggests outlying number in january was a misstatement. This ends up with basically where they were before. Which is, there is room to cut at some point this year. Inflationyear. Inflation pressures do seem to be continuing to go down and so i think they look at this and go, pretty good report, keeps us on the path that jay powell laid out. I would agree with all of that except one phrase that jay powell used yesterday in his testimony. He was asked a question, and he basically said, theyre looking waiting to getting more confident. When we do get that confidence and were not far from it, itll be appropriate to begin to dial back the level of restriction. I mean, were not far from it. What does that mean to you . What that means to me is likely not a move in may but probably a move in june. You know, i think theyre going to want to get one more meeting to make sure they get that degree of confidence and june has been when theyre likely to move and thats what i heard when chair powell talked about getting confidence not far from it, et cetera, seems like it gives them room to move midyear which was the most likely outcome even though the market took some time to get there. Jason was making comments and suggested that the higher tick in the Unemployment Rate, 3. 9 now versus 3. 7 , is an indication the economy is weakening and pointed out not only is the data outdated but the feds tools take a little while to work. He worried that if the fed doesnt cut rates by may or june then you are risking getting into a recession. Look, first, you know, sometime ago, i indicated i was worried about a recession risk. You heard chair powell i think yesterday say that, in fact, if they delay too long there is an increased risk of recession. None should be news to anyone. I think were still talking about risk to recession, but more likely outcome is soft landing. So, a tick up in the Unemployment Rate to 3. 9 is still well below what one might think of as recessionary levels. Its still a sign of a Strong Economy coming back into balance so i think one can have it both ways and chair powell said it clearly yesterday, lets think about a risk of recession, avoid that, we dont think we want to crush the economy and may or june and june is more likely. We had an interesting guest earlier that said if the fed does cut rates as the market expects, i mean, he pointed to the new highs the stock market averages keep setting. He pointed to speculative things like cryptocurrencies and gold prices taking off as all signs that theres still a lot of liquidity out here and if the fed actually cuts rates into this liquidity, that its going to be game on and the markets will be off to the races. Does the fed worry at all about that . I think the fed is certainly interested in what they think of as sort of financial conditions, which is all the stuff that leads to, you know, forward momentum, you know, absolutely. I think on the other hand its a little hard to know exactly whats driving the market, because the markets are forward looking and expectation of a fed cut, so one might argue that if the fed cuts its just simply validating what the market already expects and not, you know, a sign it should be off to the races. Rather, its, oh, yes, it should be you could say thats a sign of feeding the addiction, though. You could say its a number of different things, no doubt about it that the market is highly sensitive now to Interest Ratesfor sure, slightly different than it has been in the past but on the other hand the fed has one job to do, now its a dual mandate. Inflation and unemployment and theyre working hard to thread that needle towards that soft landing, and if the market then sort of takes off, they may have to adjust a little bit but it shouldnt be the thing that drives their thinking. Roger, thanks a lot. Always appreciate getting your thoughts. Thank you. Coming up well talk markets and get you ready for the final rcongeeday of the wk. Wee mi right back. For 44 years. When i have customers come in and ask for something for memory, i recommend prevagen. Number one, because its effective. Does not require a prescription. And ive been taking it quite a while myself and i know it works. And i love it when the customers come back in and tell me, david, that really works so good for me. Makes my day. Prevagen. At stores everywhere without a prescription. Trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. Get an expanding library filled with new online videos, webcasts, articles, courses, and more all crafted just for traders. And with guided learning paths stacked with content curated to fit your unique goals, you can spend less time searching and more time learning. Trade brilliantly with schwab. Po, you need to bring peace to the valley. [ choking ] the chameleon is nothing like anyone youve ever faced. She is capable of mimicking any shape. Awesome. I mean its disturbing, but its awesome. Futures higher now following this hours jobs report. Joining us on the marketmichael landsburg at landsburg private wealth management. Were still stuck with this, what you make of the report. I thought the report was pretty decent. I mean, obviously the first time we see a report it will be revised downwards, 12 months in a row but the economy is strong laborwise and yet unemployment ticked up a bit but still concerned. The rest of inflation to me whether its food and energy seemed to be going up. Theres a little disconnect there. Overall a pretty good report. Why did gold go up . Why bitcoin is up. This looks like theyre closer to cutting after this report. And i dont really understand that. I look at the Earnings Growth year over year s p was up 8 . Nasdaq up 33 , earnings, stocks at alltime highs, doesnt seem like a great time for me to see a cut, especially when the rest of the world seems to be picking up. I think youll add to speculative fervor and kind of the opposite of what was intended. Do you think that its going to be tough to get to the inflation target . Thats what is sounds like youre saying. I kind of liken it to that last mile of the delivery. Easy to get everything across the country. 9 to 3 was reasonable. They may round up to 2. 9 but to get to 2 will be a while. We dont have c pvenlt i going below 3 for the whole year, and the last month or so weve seen everything pretty much tick higher in the food complex, energy and metals as well, copper. You only like a fab four out of the seven and would you rather do the fab four out of the seven or rather broaden out to the russell . We do like the fab four versus the seven just for Different Reasons but i think theres broadening out and we like the russell 2000 on the growth side and it will be the spot you want to be and find areas that havent grown a lot. I think you can look outside the country. Fans of india, china seems to be coming online now so i think theres opportunities outside as well. Fab four, we cant use fab four. You possibly cant. Paul is always the cute one, wasnt he . Do you remember . Thats what they always said. My mom liked george. George was very talented. Miss him. Way too young. Friday, tgif. Well see you monday. Make sure you join us. Squawk on the street is next. Good friday morning. Welcome to squawk on the street. Im Carl Quintanilla with jim cramer. The jobs number for february while a beat at 2. 75, tenyear drops to 4. 04 and june cut is fully priced in. Road map begins with getting the fe feds tension. What it means for the fate of rate cuts