2023. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's take a look at where u.s. equities stand at this hour. red arrows across the board. dow indicated off 70 points. s&p futures down 17. nasdaq off by 90 points. of course, that comes after the major indices slid yesterday. yesterday, the dow was down by 41 points. the s&p was down .50%. the nasdaq was off .80%.

the first trading day of december. friday was the first. second trading day of december. people asked if all of the dpans gains of november and now this is the hangover. let's look at treasury yields. the ten-year yield at 4.24%. low yields relative to recent months. t two-year below 4.62. gold prices are pulling back from the high of $2,100 on sunday night, but holding above $2,000. you have bitcoin which has been up extraordinarily as well. it is still above $41,605. new this morning, moody's cutting the china credit outlook from stable to negative and reaffirming the long a-1 rating

with the level of debt. moody's citing the reliance of fiscal stimulus and borrowing on the property crisis is the reason for the downgrade. this will send ripples around the world. it has an impact on the larger conversation of where you think china is in relation to taiwan. we talked to the president of taiwan about the prospect of the takeover. she felt given where they were economically, the challenges that china was facing, they were less likely to invade taiwan. we will see what happens. >> if you have economic woes, you try to point in a different direction. i heard both. >> there are two sides to that coin or sword or whatever phrase you want to use. two edges. yeah. "grand theft auto vi."

we are watching shares of take high two interactive stock fell 4% after hours. it planned to launch the trailer for the game last night, but released it early after it was leaked on x. the game debuted in 2013. that is the second best selling video game in history behind only "mine craft." this isn't due until 2025. this is vi. >> i was looking at the graphic. video graphics. it changed a lot in the ten years. much more realistic and looks like an actual movie versus the video game. >> i've never played it. are the protagonists stealing

the cars or catching the people stealing the cars? >> i never played it. >> anecdotes. >> terrible things you can do. again, i haven't seen it since the beginning when my cousins were playing. i was shocked of how you get your health line up and how you keep the money you made along the way. >> interesting. the people look real now. >> they do. that's different than what it was ten years ago. french a.i. startup mistral is raising $500,000 in funds for investors. that is ago to the bloomberg report which states the valuation is $2 billion. this is led by alan horowitz. he had worked on large language

models similar to a.i. and 50 companies are pushing the so-called open model of a.i. the alliance is including oracle and national science foundation. the group proposes the closed systems developed by openai and rivals. we will have more details in the next hour. andrew, elon musk telling you at deal book last week that he came up with openai. it is supposed to mean openai systems, not closed. >> that's what he is frustrated about. cbs planning to cvs is plang to shift away on the pricing models for drugs. the wall street journal says this move is phased in starting

in the first half of next year. so drugs may cost less and some may cost more. executives telling the journal that more drugs should show price decreases than increases. we will probably learn more about how the process will work after the ceo will speak to us at 1:30 p.m. today. reports this morning of johnson & johnson looking to settle 100 lawsuits to claim the talc-based baby powder caused cancer. we talked a lot about that case or cases with the bloomberg report announcing that the amount of the settlement is not released. >> i'm still trying to figure out how that works. the new method sounds reasonable.

>> it is because when insurance gets involved and who the insurance company is and the pharmacy managers do. >> middle man stuff. you heard what they will do. we will bsell on the floor what it actually costs us. that could be complex. this is really opaque. >> completely. this is the problem with medical costs in general. not just for medication, but if you get an x-ray. you don't find out the price until after the fact. >> is there a better business than billing medicare? i don't know how doctors can do things. some things are lucrative because it is covered by medicare. i don't know if anyone at medicare is minding the store. that is the argument.

you see the same. no accountability in trying to keep costs down. gop presidential primary debate this week. it is the small stage. i guess that is true with fewer candidates. you could have a bigger stage with fewer candidates. we mean the smallest number of people. >> gavin newsom? >> no. he is letting everyone go back on the streets. no longer picking up the -- ron desantis will be there. nikki haley will be there. vivek ramaswamy and chris christie will be there. it is hosted by a company called news nation. megyn kelly has a show on sirius

xm. >> you know news nation. >> all i know is cuomo. >> the great dan abrams. chris cuomo. you have seen this network. >> no, i haven't. mine is locked on cnbc. cnbc. i was going to say something else. i was going to say something else. i'm not going to. it's really not. no. not after the main guy left. former president trump is skipping the debate and appearing at a fox news town hall today and holding a private fund-raiser tomorrow. he'll be on with sean hannity. >> who is sean? >> doug burgum has suspended his campaign after failing to gain enough support to qualify for

the debate stage. some people actually liked him. he had good ideas. it just doesn't work in this day and age. >> good ideas? >> yeah. being reasonable. you know, someone has 60% of the votes. in the meantime, expelled congress member george santos now selling videos on the cameo web site. i do know what to make of it. recording personalized messages at $200 a piece. the pennsylvania senator john fetterman said he paid santos $400 where he offered advice. >> they should start a company together. >> fetterman has been calling for bob menendez to resign or be expelled.

>> the charges against menendez are more troubling. selling things to egypt. >> right. john fetterman said he is an egyptian senator. my son follows this closely. he loves fetterman now. scotty, he's a temperature. h democrat. how did i raise you? the pennsylvania governor. colorado. >> what fetterman said on this is something people should listen to. it is the gold bars they had were stolen. >> rich. cars. you know, i came from cuba so i had to hide the money. i don't think he did it. his parents? coming up -- at this point, he has done it so many times and beaten it so many times, he

doesn't think the people of new jersey will elect him. he is at 9% or something like that. coming up, stock picks coming up to close out the trading year and we will look at nice art from kari firestone. later, arthur brooks will join us on politics and happiness and more excrement has hit the world's fan since he was on. pp will see how he is staying hay. you are watching "squawk box" on cnbc.

time for the squawk picks. our next guest says the market continues to grind higher despite the non-believers. she likes a couple of names like nextera and american tower and adobe and american express and blackstone and paypal and united health. joining us with more is kari firestone at rss management. where's the art? >> right there. >> i see a little bit. normally it is right behind you. it is usually some post modern beauty. rss asset management and cnbc

contributor. i see he it. it looks like a landscape. >> it is cape cod. it is a painting of a place we love on cape cod. i didn't ride my bike in at 5:30 to be downtown. i'm still in brook line. >> wow. that's impressive. >> how do you want to do this today, kari? tops down or bottoms up? the individual names? why do you think the market will continue to grind higher? se seasonal factors? sc santa claus rally? a lot of tailwind. >> december is supposed to be a great month historically. it is up slightly. i would say it has never been as

great a month in recent years as we believe. you know november was so fantastic for the s&p up 11%. this is hard to believe we can represenlicate that. it is based on the fact if we are in a soft landing, which appears we are, earnings can go higher which is likely in 2024 as demand comes back and interest rates come down. we should find value in the market. we are looking for ideas that we believe have more potential. i didn't give you the big m megacaps with the rally. it is good to look for some new places. >> let's do that. do you have the list that you gave us? the first was nextera. >> that is a name that has had a tough time in the past few months. it is a well known utility.

it is a big sustainable energy decision. they funded and much came from borrowing assets from one part of the company to the other which was well known. with the spike of interest rates, funding costs were higher and the market doubted they would continue to do this. they have financing in place. we think the fears were overdone. the stock has started to come back. we think there is more to go. it's true that there are many sustainable energy projects that became too valuable by the marketplace and now they he are t too cheap. the next one is amt. american tower. they build towers around the world and own them and rent them to telephone companies and other cable and other providers.

because of interest rates and capital expense, the market became worried about the stock propducing the earnings with th interest rates escalating. now that is moderating or plateaued and will moderate, they think american tower is the name that is starting to have a decent rally. >> it is almost all the way back. >> it is not a long enough chart. >> both of those are at 3% yield. total return. keep going. >> i think adobe is the next on the list. i'm looking at the "as." adobe has add a strong run recently. look at the stock. it has come back a long way. it has further to go if you look at the knfive-year chart. it is a pandemic beneficiary. it came down because there

wasn't a lot of building. interest rates were impacting the world of construction and design. now they introduced a lot of artificial intelligence products that we think will make a big difference on graphic design and other types of design elements. building design that they are continuing to spread across all platforms. including what we do on our computers. we all use adobe. the economy starts to improve next year and that is good for adobe and the earnings will increase. the next one we have is american express. i wasn't going for "as" here. that is a low multiple. it got hit with concerns that we are not going to be traveling. that is not true. card holders have started to use the american express cards and platinum cards with the biggest

increase and they heare spendin money to travel. people on the other end of the spectrum, people retired are traveling more. it is a bank. it has a lot of cash on hand. interest rates have gone up. they don't have to keep going up. american express collects a his number. >> we can only do the "as." we have to have you back. that's what they're telling me. a lot of young people love the american express cards. >> they seem to be the most secure. >> they have to be paid every month. a lot of them don't actually get the bills that come every month. there are other people, sometimes, apparently, that get the bills for other people that have the american express. have you heard of that? >> joe, i heard of it. you know about that. >> do you know that phenomenon?

kari, thanks. you live in boston. do you take the ferry over to nantucket? >> i live in brook line. it is not nantucket. it is cape cod. i drive. i drive 24. >> cape cod. >> a place called scraggy neck. it was an island. that is the causeway. >> i once knew someone from nantucket. >> a man? >> you know lots of people on nantucket. >> i'll not go any further with that. i could after andrew's deal book conve conversation. thank you, kari. >> loving it. >> mcdonald's. at&t dropping nokia for ericsson. we will show you how much that contract is worth and it is a big one. programming note. don't miss "cities of success

ll"hvie. it premieres at 10:0 p.m. tomorrow night. >> announcer: squawk picks sponsored by wisdom tree. the modern alpha pioneer.

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welcome back to "squawk." at&t is dropping nokia for ericsson in a deal worth $14 billion. this is away from nokia in many markets. ericsson would fulfill with equipment made in the texas factory. you are seeing a lot of stocks moving on that news. nokia off 6%. ericsson up close 4%. the streaming media landscape with verizon announcing a bundle deal for netflix and max for $10 a month. that is a 40% discount. max has offered discounting prices before, but the first time netflix has offer ed a

discount in years. apple is looking into a bundle deal as you see how many services you sign up for and setting limits makes sense for them to bundle up. we are back to the cable set up. >> yes. >> unbundle. when when come back, we will talk about alaska air's deal to buy hawaiian air and the potential for regulatory coming up. and as we head to break, here is a look at the s&p 500 winners and losers. >> announcer: winners and losers is sponsored by state street global sadisors. the biggest ideas inspire new ones.

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good morning. welcome back to "squawk box." live from the nasdaq market site in times square. it's 6:30. checking the futures. it looks like yesterday morning, actually, at this time. all three indices were down.

when we did finally start trading at 9:30, it looked like it was going to get ugly for a while. the dow was down triple digits. down a couple hundred. it pared losses. it was down for the session. ing nothing too significant for the great november we had with the averages to yearly highs. we had this story yesterday. it was supposed to be 18. let's talk about the airline deal. hawaiian holdings nearly tripled while alaska air tumbled in the deal to buy the rival hawaiian air. joining us to discuss the regulatory push back or what the market will think is on the merger is peter machetti from the department of justice. straight up. handicap the deal of happening.

what are the chances? >> you know, i think the parties have a lot to work with here. this is not like other transactions that the justice department has challenged. you have two airlines that are both on the west coast. they do serve some of the same routes. for the large part, they actually serve different routes. the parties are saying they overlap on 3% of the transactions. that really gives the parties the opportunity to say this transaction is good for passengers because we're going to be a better competitor to the big four. we will have a better loyalty program and pass on the cost savings to passengers. on the other hand, certainly the parties are settling in for a long investigation. they are saying that it will be 12-to-18 months before they can close the transition. >> where do you land on the

consolidation of the airline business? tim wu wh, who has been on the program many times, had an op-ed in "the new york times" and made the argument for too much consolidation in the airline business. although prices on the inflation adjusted basis have remained the same ore have gone down. when yyou factor in what you ge and the size of the seats and the luggage have made it worse. do you agree or disagree? >> absolutely. a lot of concern in the airline industry. you have the big four. united, american, delta and southwest. there has been consolidation across the decades. you know, u.s. airways and american airlines was a big transaction. tim wu is influential in anti-trust circles.

you see the biden administration being aggressive in merger enforcement. right now, a trial is wrapping up in boston where the justice department is challenging jetblue proposed acquisition of spirit airlines. that's because there is a concern. what alaska and hawaiian are going to say is our transaction is not like those other transactions. you have to look at the specific facts and where we operate. that is certainly what the justice department will do along with the state attorney general. >> there is one element of so much consolidation that you need to allow more consolidation to happen to make it more competitive, if you will. then another view of you cannot let one more deal go through because you will make it worse. >> those are the issues. that is why anti-trust is complex. you have the pulling

considerations. on the one hand, with fewer airlines, that is less competition. one less platform out there for consumers to choose. on the other hand, there are synergies that come along with the transactions. merging parties say they expect to realize $235 million of efficiencies because of the transaction. that's the give and take that the reviewing agencies need to look at when they will determine overall whether this transaction will help or harm consumers. it will take a long time to do that. >> peter, last question as you have been talking to a lot of companies about the airline sp space. as companies are thinking about the deals in the election year which is coming, is there a wait-and-see attitude? is there a few ou view of get ie hopper and we will see what

happens in 2024? airlines are a popular approach. it may not matter who the president of the united states is then. >> i would say generally speaking we have seen more continuity in anti-trust enforcement across administrations rather than differences. certainly when you look at the amount of deals that have happened in the past decade or so, regardless of who the president is, there does seem to be a continuous flow of transactions. this current administration is aggressive on merger enforcement. having said that, many deals are going through. you are certainly seeing a number of companies looking to merge or acquire other companies. >> peter, we will leave the conversation there. i'm sure we will talk more about the deal and more with you. thank you. >> thank you. coming up, take-two. coming up, take-two interactive shares lower. the trailer for the "grand theft

auto" game leaked early. you can follow our squawk pod on your favorite podcast app. it doesn't excuse you from watching us live. you can listen anyt time. we're coming right back. in a crisis caused by a terrorist massacre. warning civilians to clear out, while hamas forces them back. allowing in food and water, which hamas steals.

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shares of take-two interactive are lower. it is after the trailer for the company's new gta was leaked early online. steve kovach joins us with more. i need remedial training. i need to know more about the franchise. >> that's what i'll tell you. >> are the thieves the prota protagonists? >> you play as a thief. you're a thief, killer and murderer. >> interesting. >> this thing is huge. the trailer last night for "grand theft auto" leaked early. it was leaked on x. it was supposed to come out today. it is the gta vi that launches

in 2025. the clips we have seen is how much money gta makes rock star games and parent company take-two interactive. shares down 6% this morning. little bit of selling on the news and not coming out until next yeear. gta vr racked up $1 billion of sales. it is still making moneyplayers. expectations are just as massive. even with little detail about what the game will be like beyond the footage that we saw last night. by the way, 57 million views on youtube so far. to put that in perspective, the beyonce trailer ahas 2.1 millio views. this is from the studio with a

near perfect track record. take-two has bullish guidance for 2025 for the game. expecting $8 billion of bookings and it expects momentum to last into the fiscal 2026. this indicates people are looking at the guidance and trying to figure out when it will launch. it looks like early 2025. the first quarter sdp. >> i look theike the look of th trailer. do you steal it? do you take it to the chop shop? >> it is an interesting commentary on modern america. the exaggerated version of florida and miami. >> that's cool. >> that's what it's like. >> boats involved? >> everything. >> one of the clubs. that's an airplane. >> yeah. it is not just about killing and shooting. a the really good story. it is almost like an epic story that goes on in the games. it is not just running around

and shooting people. they get a-list actors for these games. >> "fast and fur furious." i saw a guy with face tattoos. >> gators in the pool. this thing just prints money fortf for take-two. >> the graphics have gotten better. >> on the next generation of consoles. to put it in perspective, the game people are still playing, two generation of consoles. playstation 3. >> it looked like a video game. now it looks like you are playing in a movie. >> it acts like a movie. you get a story. >> a horrible story. >> it is breaking the law and shooting and all these things. if people really did think they would do all those things, this world would be -- wait a minute.

>> it's a fantasy. >> the world would be all screwed up if this was causing people to do things. >> i don't think it causes people to do things. >> we're doing so well, steve. >> not because of gta. >> the general decline of world society. >> now you sound like charlie munger. getting to the decline of civilization. >> there are some things happening in the universities that i have a problem with their. >> charlie said the same thing. >> it is technology and art. >> it looks cool. i want to go there. >> you want to go to vice city? >> yeah. from what i could see. i don't know if i would fit in. >> you need face or neck tattoos. >> i wear a high collar he have day. how do you know? >> your tie is really tight.

>> steve. steve, thank you. when we come back, we will talk about the just keep it return policy for goods that would cost more to return than they're worth. that's next. reminder, you can watch or listen to us any cesartime. just check out the cnbc app.

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shares of gitlab is higher. the software company earning 9 cents per share. revenue beat estimate. guidance coming in higher than . meantime, tesla warning customers could no longer get the tax credit for the model 3. the credit can shave $7500 off the car. the company says the full tax credit will be only available to deliveries made through december. the verge reporting part of the tax credit won't be available because tesla won't be required -- the question is do

they lower their prices and take a smaller margin? >> right. there's a new report out from return services firms, gotrg. there will be a return list or keep it policies whose products exceed the return cost. with more on the survey is the president and ceo of gotrg. this seems like it's too good to be true for the consumer. can you buy something, decide you don't want it, and you tell the company you want to send it back and they say, never mind, just keep it? >> very true. very true. good morning. >> why would retailers do that? >> retailers have a threshold for returns, and usually returns are costly and retailers don't want to lose money on the returns, and they allow customers to keep certain items.

there's a lot of criteria around that, and for the most part retailers allow customers to keep returns nonprofitable for them to take back, and typically items under $20 or so. for the most part, it's for trusted consumers that have a habit of returning only items they don't need and don't continuously return the items again and again. i am sure with amazon and walmart, those retailers have laxed their return policies, and take back -- allow customers to keep those returns on a regular basis, typically items $20 or less. >> i have been hearing those like amazon that relaxed the return policies, and they are saying now if it's not

profitable you can't return it unless you will pay for the returns yourself? >> there has been a real shift towards charging customers to return items using parcel mail, and retailers have been encouraging customers to take those items and return them in stores, and they are trying to incentivize returning items through the mail because that's expensive, and they want to encourage the customers to walk into a brick and mortar store so they can save on shipping and save the environment and what not. >> but the idea of keeping it if it's free, that doesn't apply to everybody and will not allow the general public to find out about because that's a huge loss for them if that starts happening. you are saying this is just a way of keeping your very best customers you know a lot about,

who order a lot and rarely send things back? >> companies like walmart increase the return policies during the holiday season, and they extend the returns for items through january, and that is to find the best customers and treat them as best as possible, and one of the items they could say is not worth it for us to return it, and by the time we recover it we are underwater, and you will have customers that are trusted that have a certain purchasing pattern and they are allowed to keep the items. of course they are not going to release the entire algorithm and how it works, and they are always finding that algorithm to make sure they are not being taken advantage of, and they are going to choose this for the

best customers, and you will not know until you go through the entire returns process, and in a lot of cases you will find out, oh, wow, i get to keep the item. the idea is to regift it or donate it or something along those lines. and for the items they want you to return them, they want you to go back to the store rather than shipping it back to avoid the shipping charges. >> the retailers' algorithm has gotten better, and they can figure out when to sell to who and when to take returns from who, and they will not be using these as lost leaders except on their best customers? >> yes, and it's based on the amount of money you spend with them, and if you are a great customer and you take advantage of it they will figure it out

quickly. >> and it's interesting their algorithms have gotten so much better. >> yeah, with the advancements in technology, it's a great way to incentivize a good customer to keep shopping with you and deter those that take advantage of the policies. >> thank you for your time today. >> thank you for the opportunity. coming up on the other side of this, we will talk consumer prices with the ceo of j.m. smucker. and then arthur brooks, talking happiness and all those good things, coming up after this. s e adjust the base, add more guitar, maybe some drums. -wow. so many choices. -yeah. like schwab. i can get full service wealth management, advice, invest on my own, and trade on thinkorswim. you know carl is the only front man you need. (phone rings) oh, i gotta take this, carl. it's schwab. schwab. (feedback rings)

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♪ ♪ good morning and welcome back to "squawk box" right here on cnbc. andrew ross sorkin along with becky quick and joe kernen. nasdaq is off about 95 points, and the s&p looking to open down about 20 points. the treasuries right now, looking at 10-year and the

2-year, at about 4.620. and wti crude, that's down marginally this morning. and crypto, the risk on, risk off, what the fed may or may not do, right here, becky. dom, what is on tap? >> we will start with a couple analyst calls getting attention. amazon shares down roughly a percent or so roughly 70 shares of trading volume, and that's despite the giant getting love from bernstein, and they cited a grounding out and more commitment to free cash flow and

maintaining what they call the best in class e-commerce business, and those amazon shares down despite the top pick call. and then ubs is around 17,000 shares of volume. not helping matters, analysts of b of a downgraded the stock to neutral, and they think the big benefits will take time to play out. moving a little more to the neutral call down at 2%. and then ending with the telecom movers, and at&t struck a deal with lm erickson. the five year agreement would move services to ericsson.

at&t right now just about flat on the session, but ericsson up about 2%, and nokia moving down after the second bit of news on this cycle. back over to you, becky. >> dom, thank you. >> sure. >> i can't talk to him? don, can i talk -- >> i guess not. >> that was the first primetime away game the bengals won since 1990. >> you have to like the way the quarterback is looking. >> he was good in college. he was really good last night. >> it took him a few years to reach this point in the nfl, and then took him a few games to get his footing underneath him. i would say if you have a quarterback, of course, i root for a team that had an underdog quarterback, and you have to come to grips with the idea that

this is a caretaker role, right, because burrow is coming back, and this is a year when you no backup quarterbacks mean a lot. what i am curious about, the next iteration, because josh dobbs, right, who is in minnesota right now, came out blazing when he got traded as a backup to fulfill the kurt cousins role, and there are all kinds of stuff happening with backups and it shows you how important that role is. >> it does. i have to drag it out of you when i finally do get to talk to you. it's so hard to get you started on -- to opine on this stuff. >> the reason why, and i will leave it here because i know the reason why, because sometimes they feel as though i may be, you know, i could save some of the time for you guys. >> you are spurring me on. i was actually up watching that

for different reasons, believe it or not, like crazy stuff going on in my house and i saw the end of it, and it was exciting. that's why you draft a guy like macpherson or whatever his name is. >> i am a niners fan, and they drafted moony, and i know how important that kicker stuff is. >> i will tell you this, and i said it earlier, moody's outlook on china, it reaffirmed its long-term rating on the level of debt, and china is increasing borrowing and deepening property crisis, and we will talk about that a lot in terms of china. we could see stocks snap appear

four-day win streak, and we had one of your technical guys on yesterday. horrible. 3500 was his prediction. you are not there, but you certainly think that we have gotten a lot of next year's returns already where the averages are right now, because it's not going to be great next year in terms of earnings and in terms of other things where we already had huge gains, so valuations are high? >> the theme for next year is tempering expectations in 2024. i think we have a benign outlook for the economy itself, but when you had a 20% rally this year and you have had elevated valuations and earning expectations for next year are in the double digits when we can probably achieve something half of that given what we heard in the third quarter from the ceos gloomy out llook, and that doest help revenues. if you put all that together, we

need to be less optimistic than many in the marketplace are right now about next year. in november, what we saw was a sentiment and it was driven by multiples. and i think people are getting a little exuberant about having relief from the fed, but we need to figure out what that means for next year. >> 2024 was supposed to be the year we returned to double digit growth. you are convinced these guys are not just being conservative? a lot of times they talk down expectations so they can beat expectations. you think we can now say with some probability that it's only single digit earnings returns next year? >> the big focus was margins and we saw a lot of margin stability. the pricing power has been exhausted, and luckily that comes at a time when we are

seeing decelerated wage growth and input costs, and when we pair this with some of the consumers, what happens on the revenue side. if we look at the gdp tracker from the fed, we are slowing to 1.2%. as the consumer becomes a bit more judicious, and when companies say maybe we could support the revenues, i am not sure double digit is realistic. >> there's no more double expansions, and so we can just purely use your earnings per share for what the stock market is likely to return, so you are talking about 5% for a stock market return? >> i think it's a reasonable outlook for next year, going back to the normal type of economy. in 2024 we see a 2% growth, zero

recessions, and 2% inflation and 4% unemployment. a benign outlook, but after a strong year -- >> why would anybody buy stocks rather than a two-year? you can get 5% -- close to it, so if can you get that risk free, and you can not guarantee the market will be down next year? >> no, i can't. if any year would be down 10%, and we had expectations across the board for negative returns, and we always under sell what could be the upside risk, and we want to hold on for that reason, and there's no reason not to have short duration fixed income because you are getting good income. we don't know what will happen next year. if we have more of a soft

landing, that would advocate for short duration fixed income, and we want to have some short duration, and that's what we were expecting at some point to see. not all in one month, but to see some pull back in yields. we have seen that now. there's a limited scope to come down from here, and so shorter fixed income is important. >> let's say you are in charge and you are a global market strategist, could you see telling people 20% stocks and 80% fixed income, would you do that? >> no, the opportunity cost of holding that much cash is extreme? >> not cash but fixed income. what would your equity allocation be for next year? >> i don't think we want to stray too far from the strategic

here. >> you just said 5% if you are lucky, and maybe down 10. why not get 5% in the two-year. >> well, i still think a 5% to 6% gain in the equity market is long-term what you would expect when you are setting up a portfolio, and we have gotten lulled into double digit returns, and that's unrealistic in the environment -- >> but it's possible? >> it's possible. i don't think we want to count on those types of returns. the upside risk is there and we still want to be invested in order to get some of the upside risks, and we need to have more expectations of what the equity market can do, and if we see yields come down more, we have to be a little concerned about banking on the income. that's what people have done in cash. >> can you buy some of the

stocks, and you don't have to accept 5% or 6% -- you can try and pick good stocks, and watch cnbc? >> if we think about the quality out there in the u.s. market, certainly there are many opportunities, and it will be a bottom-up analyses in where we are finding the opportunities, but don't count out the stock market next year, but don't expect a repeat of 2023. >> thank you. coming up, peanut butter and jelly time. are you a jif guy? >> choosey mother's choose jif. >> we will talk about food inflation and so much more with mark smucker. he's got the right last name. >> it's a coincidence. >> it's a coincidence. after briefl

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mark smucker joining us, j.m. smucker ceo. welcome. >> thank you for having me. >> we will talk about peanut butter and jelly, our favorite topic, but first you look at the earnings, and how do you think it's reflective of the market meaning the macro, and how dew point to operationally things you did in the last quarter differently? >> i think we have been on this journey for three years and the results of this quarter are really strong. it's a testament to the work we have done. we completely reshaped our portfolio and have gotten super focused. if you look at all of our categories, we saw both sales and profit growth as well as volume growth in most of them, which really reflects this -- the breath of our portfolio meeting the needs of consumers where they are, whether that's from a value perspective all the way up to premium offerings, and

whether that is milk bone dog biscuits and uncrustables which is a convenient snack. we have lot going for us and are proud of the results this quarter. >> do you think there's something not working as well as you want it to? >> part of the reason for our success, andrew, we have built very unique capabilities and have strengthened our marketing prowess, and have gotten execution of managing stocks, so we are showing up for the consumer where they need us to and providing the brands they are looking for. feeling like the cape abilitiese have are working. >> how does it relate to market share, meaning is there any part

that says we need to discount or we can't move higher because we want to capture more share? >> yeah, our shares are strong as well. 79% of our portfolio is growing or maintaining share. 87% from a volume perspective, we have been very prudent in terms of how we have managed price on the way up, and actually recently took a price decline on coffee, which is also helped to benefit our entire coffee portfolio. just making sure we are being fair with the consumer, and passing along what is justified and also backing off when we need to. >> you say you did back off. why? what was specific about the coffee space? did it get more competitive or did something happen or the cost of the commodity of the bean, the underlying product? >> it's the latter, the cost of the coffee, and the green coffee has come down a bit and it's still volatile, but our physical

cost came down and we passed that along to the consumers. >> when you think about other commodities right now to the input cost, how does it look? >> it's hard to protect into the future, and we are still in an inflationary environment, and we have not seen any significant increases in the last six months or so and we are generally holding steady and that's good for the consumer. >> wages, for factory workers and the like? >> wages have gone up, you know, across the board a little bit, so i think that's pretty typical. we obviously have to make sure that we are incentivizing our employees in the right way, and we are. >> final question. on the jif, do you like the smooth jif or do you like it chunky? >> low fat, chunky. >> i like them both, honestly. i actually prefer both.

who knows, i mean, we are considering adding jif to other products, and as you know, we just acquired the hostess business and we are proud of that acquisition. it's another way for us to meet consumers' needs in snacking. >> will you start to put peanut butter and jelly inside the twinkie? >> you never know. it remains to be seen. >> crustables, you already do that, right? >> i know joe likes the uncrustables. >> i know i said last question, but one more. how do you feel about ozempic and the drug loss drugs, and how do you feel that will affect our business? >> our focus is serving the consumer. hostess has, within the hostess

acquisition, we have a low-sugar offering, and there are tons of bite-sized versions and portion control. we will continue to listen to the consumer, what they want and through the innovation -- >> you have seen companies come out with a report that we think earnings are going to be down, and people are not going to be as hungry, and they will literally physically or -- i don't know if it's physical, but i think it's physical, but they will not want more food. have you sat around in the room and talked about the growth for certain food products? >> well, we will watch that very carefully. as i said, if we do our job and serve the consumer and innovate in the right way, we will continue to serve them and make

sure that we are providing the products they want. >> okay. >> it's offset by all the cannabis legalization -- i mean the hostess stuff, mark, i would think, right? you have pushing and pulling. you have the ozempic but -- you see what i am saying, andrew? >> if he does a twinkie with peanut butter and jelly, he's got me. i don't know if i get a commission for the idea. >> we will keep you in mind. >> great. >> i think it's -- >> peanut butter, jelly, peanut butter and jelly -- >> what is that from? >> they play it at the phillies games. it's -- you never have seen this? serious? somebody write in if you have seen this. i can't believe neither of you have seen it. i will play it for you after the break. >> ignorance. >> peanut butter and jelly and a

baseball bat. >> that's going on the year-end reel right there. >> what about reese's pieces. >> meta, ibm and others team up to form what they are calling the ai alliance. we have details after the break. and then we are watching shares of johnson & johnson. they are giving new guidance for 2024, and it calls for operational sales growth of 5% to 6%, and that's a little ahead of what the street was expecting, and if you do the path, it gets you a gain of 5%, and they are saying up 7.43% at the midpoint giving guidance of $10.70 a share.

that includes the transaction they just announced last week. the street's estimates are above the guidance range, and we will hear a lot more coming up from the ceo of johnson & johnson. he will join us in a few minutes, to talk about the long-term strategy, and he will speak with us on "squawk box" first. we will be right back. we always thought that whatever we did here would be an emblem of what small communities can achieve. trying to give a better life to people that don't have the means to do it. si mi papá estuviera vivo, sé que él tuviera orgulloso también de vivir de esta viviendo una vida como la que estamos viviendo ahora. es electricidad aquí es salud.

over open ai's leadership, a group of other ai companies are teaming up. julia is here and has more about it. >> it's called the open ai alliance, and there's about 50 companies and academic research organizations say they are teaming up and declaring their plan to make the artificial intelligence an open source. they will deploy benchmarks and tools and other resources to enable the responsible development of ai solutions, and they also talk about using ai to

address society-wide challenges such as climate change and education, and also to educate policymakers on regulation for ai. certainly part of the idea is to get ahead of potential regulation. they say it's to ensure the business of ai is not controlled by just a few large stakeholders that could control and license all of the powerful ai tools. open ai and microsoft are absent from this consortium, and it comes to the heels of the specu speculation. there's no direct business implication of the alliance. they already have taken an open source approach to their ai development. it's clear that they are trying to play a key role in the future of ai, and they want to bring these companies together and be leaders of this organization. >> sounds like they are

concerned that microsoft and open ai will have such a huge lead and nobody will catch up to them unless everybody puts their efforts together. >> it has been a year since the launch of chatgpt and ai, and we have to remember that generative ai is a new tool everybody has been playing around with recently, but it has been in the works. the question is are you going to be closed or open sourced and have inoperable tools. >> in terms of people coming and going, and a sense that some of the engineers are thinking about their future in different ways than they would have been two weeks ago? >> it's interesting, because we saw sales force make a big play for the engineers, and to a big extent, quite successfully. open ai started out as an

academic experiment, and we saw the departure of people like reed hoffman from the board, and now we are asking what does it mean to be an open ai company? they have to figure out what their new model is. maybe it will be like a traditional company with a strong alliance with microsoft, which invested billions in them. >> strange days. very quick changes on these things, and it all comes after sam altman's departure and return, and everybody is thinking about what it means for them. >> yeah, i flag that the regulation is top of mind, and regulation could come out of eu, and the reality is that these companies really want to play an active role in determining what

that regulation looks like. >> julia, thank you, and it's great to see you here. >> great to be here. programming note, by the way, you can join the cnbc work summit tomorrow. you can hear about the future of ai, and grammy winning duo, the chain smokers, and you can hear about the potential of ai helping artists and more. still to come, the ceo of johnson & johnson is joining us for an exclusive this morning, and you don't want to miss that. it's after the break. and then senator chris coons. "squawk box" returns after this.

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johnson & johnson is set to host its annual investor day today. the company is going to be laying out its long-term competitive growth plan to lead

the next wave of health care technology. joining us is johnson & johnson's chairman and ceo, joaquin duato. this is your first investor day since the spinoff of the consumer business, and the street is really looking to hear what you have to say about the future. >> thank you, becky, and you have for having us today. it's a great day for johnson & johnson. this is the beginning of a new era for us focused on medical technology and innovative medicines, and today we are going to give a line of sight to the pipeline and a glimpse into the future of medicine. take lung cancer, for example, at johnson & johnson we can diagnose lung cancer, and we can perform surgery with smart instruments, and you will see the johnson & johnson is the

only company that can navigate across the entire patient journey. we showcased our capabilities and how that will translate into 2024 guidance and a competitive top tier growth outlook for johnson & johnson. >> let's talk about some of the numbers you put out this morning, because that's one of the first thing the street digs into to. you are saying operational sales, you are expecting growth of 5% to 6%, and the street's estimate was closer to 3%. what do you see that they don't yet? >> well, we have a strong 2023 in which we raised guidance three times. when we think about 2024, we see continuation of the trends with vast competitive growth of 5% to 6%, and importantly this is the beginning of a cycle of growth, and growth that will be top tier

in the second half of the decade, and it's based on the strength of our portfolio. for example, today, we will talk about our medical technology business, and our medical technology business is growing about 7% in this year, year to date in 2023, and by 2027, one-fifth of our sales will be based in new products. and when it comes to the pharmaceutical business, today we will disclose that by 2030, we will have our portfolio and pipeline ten products that will have sales in excess of $5 billion, and we will introduce 20 different medicines by the end of the day. our growth and outlook is based on the strength of the capabilities and the strength and depth of our portfolio and pipeline that is making a big difference. >> i guess the reason you feel

the need to talk about the pipeline is because the street has had lessons. you have had the loss of stelara, and you want to show people there's a lot more there? >> we want to show people the strength of our capabilities. in medical technology, we are the only company that simultaneously is developing robotic systems in general surgery and orthopedics. in pharmaceuticals, we are the only company working in multiple modalities. we want to show that on the strength of our capabilities, how that will make a difference for patients and be an example of how we plan to shape the future of medicine through the new johnson & johnson based on innovative medicines and medical technology. >> there's a bloomberg report out this morning that says johnson & johnson is actively trying to settle about 100 law

suits that claim the baby powder caused cancer, and if confirmed that would allow the company to avoid dozens of jury trials scheduled for next year. is that true? >> our goal is to be able to put a final resolution to this issue. we want to be able to focus on what we know, which is bringing improvements in therapies and surgeries. i can assure you that 99.9% of the people the johnson & johnson is focused on that and our intention is to put a final resolution to the issue and keep doing what we know how to do well. >> sounds like you are trying to settle, because you would like to clear it up and get a resolution done? >> yeah, as i said, a final resolution and get back to focussing on what we do well, which is delivering medical technologies and innovative medicines. >> let's talk about some of the things you are doing with medical technology. we talk about artificial intelligence all the time.

you are somebody who is in the ceo position right now that has experience with some of that because you did serve as the interim chief operational officer for a couple years in 2018 and 2019. what are you using artificial intelligence for now and what can people look for? >> thank you. well, it's going to have a tremendous impact in health care. at johnson & johnson we have all the elements. we have the data sets, and the proper algorithms and we have the people, becky, we have thousands of people working in data science, and working in engineering and we feel very good about where we are positioning ourselves, for example, in medical technology, ai, and that will help surgeons identify structures while they are in the surgery and understanding how they can improve the procedure next time.

in our pharmaceutical medical business, we are already bringing to the clinic to models that are ai eligible, and we are moving science more in the decade than it has moved in the last 100 years. it's going to be a winning combination, and at johnson & johnson it's going to be a benefit. technology with a purpose and with the goal of improving human health. >> 2025 to 2030, growth 5 to 7%, and how are you able to see out that far? it seems like there's a lot of things that could really change that, including whether the u.s. government goes ahead and starts to negotiate on drug prices and things. how do you figure that out and take the drug negotiations into your considerations? >> yeah, we have good

visibility, becky, on the extent of our pipeline and the number of assets projected. as i said before, we plan to introduce 20 medicines and have 10 products that will have success at $5 billion at the end of the decade. we continue to have improved technologies and growth in the medical technology business. ai could affect the pharmaceutical innovation, but we feel that confident that we will be able to deliver that in our growth targets for the second half of the decade based on the strength of our pipeline and based on the strength of our medical technology business. >> if it goes through, you are saying if the inflation reduction act and the government negotiations do go through, it could impact the innovation for drugs because you woepn't be ab to spend as much -- >> down the road it will.

those factors are already embedded in our outlook, and down the road it will affect pharmaceutical innovation. the issue is johnson & johnson will always be on the side of trying to create an affordable product for all americans, and the inflation act focuses on prices, and the issue in the u.s. is about half of the list price of the medicines, and 50% of our case goes into the -- we need to lower the cost at the pharmacy counter. the focus, unfortunately, is more in the prices, and that's going to have an impact in the innovation. but, again, our outlook is positive and we are confident in delivering top tier 5 to 7%

growth based on the strength of our pipeline both in medical devices and medical technology. >> the intermediaries you are talking about, is the insurance companies and pharmaceutical managers? >> yes, those receiving the discounts and rebates, and how can we make sure it goes to reducing the out-of-pocket costs patients face at the pharmacy counter. >> thank you for joining us. we appreciate your time. we will watch to see what else you have to say on the street. >> thank you, becky. excited for today. thank you. coming up, author. >> a great guy. >> arthur brooks is joining us.

follow squad pod on your favorite podcast app and listen anytime. stay tuned. this is real time insights. i am here with the ey global finance leader. your latest cfo survey showed the biggest challenges cfos are facing. break that down for me. >> first, we have the short-term performance and long-term investment, and driving innovation, and how do you develop the skill sets and mind sets to meet the goals ahead.

the key question that they need to answer is how ambitious they want to be in capturing those opportunities and what are the risks of rmaintaining the statu quo. they are looking to manage costs, and the risk is they do that in areas that drive long-term value, and ai has a role to play there. >> how are you helping your clients navigate through this? >> we spend a lot of time with ceos clarifying the vision for their business or organization. they have a important role to play to deliver against long-term strategic priorities. >> thank you for sharing your insights.

welcome back to "squawk box." we have some red on the screen. 76 points off the nasdaq, and s&p off about 18 points. take a look at shares of take-two interactive. they are under pressure after the release of the trailer of the grand theft auto. they planned to unveil that trailer this morning but were forced to move it up after a low-quality version was leaked on x, formerly twitter. it debuted back in 2013, and it's one of the best-selling games in history. is the stock moving down because they are looking at the trailer and don't think it's as cool as it's supposed to be. what is the view? >> i don't know enough about the

previous games, but look at the run. it's up. >> maybe it's like an apple thing, buy the rumor and sell the news? i don't know. up next, arthur brooks. at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns... pgim. our investments shape tomorrow today. trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools,

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sending a warning to congress, how funding packages for ukraine, and we're talking about this and the legislative logjam on capitol hill, and just the overall environment we find ourselves in for a collect -- really a collective, like, psychoanalyst, analysis, with arthur brooks, professor i her us the of american enterprise institute, a harvard university professor and columnist for the atlantic. i don't think we've spoken to you since they -- the world changed on october 7th, to a great exstent, and we saw subsequent to that things i never thought i would see in my lifetime, arthur and then you can combine with that the political backdrop we have here, in a 2024 election that seems to put people in a bad mood when you think about maybe the two candidates.

but, the good news is, people -- i mean, life goes on. i see people spending money and looking forward to summer vacations next year and taking time off and i'm just wondering whether we say we're just in a sour, horrible, environment and then just move on or are we really affected by all -- i think we really are in a bad, bad way at this point. >> yeah, you know, happiness in the united states has been in decline since -- i mean, a very gradual decline for a couple of decades. by the way, it's great to see you. it makes me happy to see the three of you. this is my favorite show. thank you for having me today. >> good to see you, too. >> it's a gradual decline in happiness, but it's really been punctuated by three pretty terrible storms that have been a downdraft in american happiness. the first was 2008/2009, which really wasn't the financial crisis. it was the advent of the mass entrance into social media, where people started putting those apps on their phones,

which was really hard for young adults, created a lot of loneliness. the second was the culture of contempt in american politics, where hatred was being fomented by leaders who are dark triad personalities. and if you don't know what that is, these are leaders who exhibit narcissism, machiavellianism, and traits of s s and on the trail of that, people haven't come back in the same way. i would be a lot happier if i were in the studio with you right now, for example. but that's just one example. those are the three things that have really hurt us. >> i asked if you were into -- what was that? to make you really happy, i guess i was supposed to read this. your latest book is, "build the life you want," co-authored with oprah winfrey. i left that out. anyway, thanks for joining us. the -- he's not going, he's staying. >> i know. thanks for joining us now.

i didn't read that at the beginning. >> no, no, i'm delighted. it's great. it's great to see all of you. it's funny, because what we find that so many americans, you know, in this terrible political tumult that we have, you added to that the fact that people became very isolated during the coronavirus epidemic, and work has changed permanently. is people aren't coming back. they're kind of stewing in their juices. and when you actually see, you can look neurochemically at what's happened to people. it's actually lowered their ability to have communion with other people. so they spend more time in highly polarizing context, watching, you know, social media or cable news programs in the evening, that are very, very politically, very, you know, a lot of anger and a lot of contempt that people are getting. and people are substituting their citizenship in their communities for, you know, watching political news shows, as a result of that. and that's really lowered our happiness a lot. and we're being manipulated by leaders that have these dark

triad personality characteristics. >> that was pretty fun, when you described that personality. and i mean, i can't just say there's only one. but i did describe one fairly accurately. but maybe his opponent, too. i don't think it's a whole lot different in terms of the narcissism and it's sort of just a different brand. >> oh, yeah. but arthur, did you -- you -- studying all of this, you still weren't a little bit shocked with the reaction to october 7th, that we're seeing on our college campuses and probably something going on right now, somewhere. >> it was shocking. yeah. it was shocking, joe. >> but the overt -- the overt anti-s anti-semitism. really, i never thought i would hear any of those terms again in my life. >> yeah, but you know, the thing -- what really shocks me is that i'm not shocked anymore. you know, the truth is, in our current environment of activism,

we're being -- all of this stuff is being fomented by people that are basically trying to script young people into a culture war. and that's what manipulative leaders really do. and most activism tends to be highly manipulative, and it's just another symptom of the things we're talking about here. >> some of them are professional protesters, some of the ones that are mixed in with the other. that's all they want to do with their life is protest. >> yeah, you have to understand that activism has only one goal, which is more. you know, whichever happens to be more of it. and universities are really supposed to be centered on inquiry, not on advocacy. i understand that there's some advocacy involved, but inquiry is really the goal. and this is the big opportunity right now for university leaders, as far as i'm concerned. i'm not a university president, thank god, but, you know, i have to say that it's -- i have led a big institution in the past. and when thing bad like this happens, this is a huge opportunity to re-state your

goals, to double down on what the purpose of the organization is. you don't look at this as a threat and make it go away on the contrary. state your principles, state your policies, talk about the penalties and sanctions that come from violating those policies, don't be defensive at all. and then talk about the fact that universities and other like institutions, they shouldn't be actually getting into political position-making, anyway. they should be inquiry types of institutions. >> so can i -- i don't know if i'm going to put you in a complicated place, but bill ackman has been out on "x," on twitter, being quite critical of harvard, where you work. and the approach that the president of the university has taken. some of the things that he's seen on the campus, videos that he's now distributing of protests and the like that are happening almost in the classrooms themselves, and i'm just curious on a very personal basis what you think of all of that. >> yeah, i think -- we have a brand-new president and she's dedicated to actually solving

this problem, and i think solving this problem requires that we have very non-defensive, very straight-up positioning about the fact that you can't disrupt the learning environment. it's just not okay under any circumstances, for any reason, political activism doesn't -- it's -- you don't get some special deal, where political activism can trump the ability to actually teach a class. so we need sanctions, we need penalties, we need to state them -- >> we've got to go -- they say we've got to go. i was going to say, i wish someone could ride in on a horse, a historical figure, but there's so much tribalism that i don't have a historical figure that hasn't been canceled by either one side or the other, because i can't say jfk, because one side hates him, i can't say reagan, one side says him. i can't even say abe lincoln. but i don't know how we get saved from this social media morass that we're in right now. but then i think life goes on. and everybody is wondering whether we're just stewing in our own juices.

they say we've got to go, arthur. i wish we had more time. >> i'm grateful to be with all of you. let's everybody stay grateful, we live in the greatest country in the history of the world and it's going to be okay. >> right, and you look at what's happening in the rest of the world, we are so lucky and i feel so bad for, you know, you read every day things that, you know, just -- i don't know. it makes me want to cry. anyway, thank you. >> thanks. >> thanks, arthur. when we come back, we will talk about what's ahead for the markets in 2024. plus, senator chris coons will join us to talk about the issues facing washington, including funding for israel and ukraine. "squa "squawk box" will be right back.

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good morning. futures pointing to a lower open on wall street this morning, coming off of yesterday's losing session. did investors get too far ahead of themselves in expecting the fed to cut rates? we'll talk about it. and u.s. senators, they're going to be hearing from ukraine's president today, as he and the biden administration push for billions in aid. we're going to talk with delaware senator chris coons. and where does bitcoin go from here, as the token hits its highest level in well over a year? we'll talk to top crypto

investor, anthony popliano. the final hour of "squawk box" begins right now. good morning, welcome back to "squawk box" here on cnbc live from the nasdaq market site and times square. i'm joe kernan along with becky quick and andrew ross sorkin. and thank god we have just numbers and stuff we can talk about after, you know, you look at the world, but this is our little mini universe here and it's not great today, it's -- we are seeing some red, but hope springs eternal. it's been a pretty good period, we've seen in the stock market and bond market in the last month or so. maybe we can keep that going into the holidays. treasury yields have been a big part of what has helped. and we've got 4.22 now on the ten-year. and we have seen a big move in

gold and bitcoin. bitcoin all the way up, as you can see now to just -- i got above 42,000 briefly at one point yesterday. >> let's talk about some of the stories that investors will be talking about right now. meta, ibm, and dozens of other companies and academic research institutions forming what is now called the ai alliance. we talked to julia boorstin about this a little bit ago. the members say the goals of the group include enabling the responsible development of ai systems at global scale, as well as creating a catalog of vetted safety tools and educating policy makers on ai. so a consortium trying to take on the likes of open ai and microsoft. meantime, take a look at this. shares of nokia falling after at&t deciding it's now going to be partnering with swedish rival erickson on a new network. at&t plans to spend over $14 billion, that's over a five-year deal with erickson. nokia will see its market share shrink as a result, and some of its equipment will be replaced.

ericsson up on that news. and then there's this. a lot of folks will be focused on this today. the supreme court hearing a case this morning that could upsend big portions of the u.s. tax code. case centering on the question of whether people can be forced to pay taxes on stakes in foreign-owned companies, even if they haven't seen any income from them. this is all actually underneath it about the idea of realized gains. how the justices vote, that ruling could undermine a number of progressive efforts and others to levy a wealth tax on the ultra-rich, and it goes back to this idea of, can you tax unrealized gains? this was a one-time tax, effectively, that was put into place in 2017. a couple had brought this case. they're supported by a number of conservative groups that are paying in large part for the case to be brought to try to put this -- put a point on this. >> the simple notion that we

know how stocks move around, and the pandemic gave us a great look at the pandemic stocks. if you had paid taxes on the unrealized gains of nine out of ten of those stocks, and then paid the taxes that year, and then looked at what you had the next year, it's physically -- it's just -- there's just -- it cannot be done. and that's not even taking into account small businesses that people have farmland. any of the things that people have that you would have to theoretically mark to market, which is impossible to do, and then the vicissitudes -- >> it's very -- the real estate comparison is totally fallacious. it's just -- >> the problem is if the court -- look, i think all of us agree that the idea of taxing unrealized gains is nutty. the problem is, there are parts of the tax code that is already

based on that. >> corporations for anybody who owns a partnership. >> different ways of getting at it. >> and if the court takes a narrower view, it can may be rule out the idea of taxing unrealized gains for individuals, without undermining the entire -- >> and none of it goes back to the original question, as to whether, if someone has built up a vast amount of wealth, as a w-2 earner or someone who's paid taxes all along and already paid taxes on everything, it's complete double taxation on your -- a wealth tax -- >> can i -- >> already on what you have in corporations. if you're a stock owner and own 10% of the company, the company pays the 20% tax that's there. you later paid a dividend on that. >> can i just say one thing? we often conflate things, and i fear that the audience doesn't totally -- i mean, i think they get it. but the idea that the vast majority of americans or even, i mean, 98% of americans would

ever even have to have this conversation that we're having at the table -- >> it starts at $100 million. >> is effectively an irrelevant conversation. >> it starts at $100 million in income. we understand that. >> but that's also how -- >> it doesn't make them bad people. it doesn't mean you have different laws for them just because they're rich. >> if you think it's never come to you, haas not the case. >> there's a fair question -- i'm just saying, the conversation that we're having, i think that there are americans who watch us and think to themselves, oh, my goodness, they're coming for my unrealized gain tomorrow. and i think the truth is, there has never been a conversation, an actual conversation in washington that would have impacted, as i said, more than a thousand people in the country. >> anyone with 450,000, that's -- look, i quoted john dunn to you before. that's not for whom the bell tolls, dude. it tolls for you. and it will. >> it may ultimately toll for me. >> it probably does now with all of your vader iried interests.

>> i would be proud if that was the case. >> so would i. but you wouldn't be proud to pay taxes. >> the constitution says that the congress has the power to lay and collect taxes on incomes from whatever source is derived, but not on things that aren't income. >> but what's interesting about this case, by the way, it was a tax law put into place by the trump administration. >> but let's just be honest about what's happened here. the trump administration was the one who proposed this law. it was a one-time -- a one-time tax law -- >> for companies for you to be able to bring back overseas assets. >> it was effectively looking back over 30 years, frankly. and it's a very detailed and very specific situation. and may have wider implications. it's very possible that courts look at this in a very narrow way. >> republican paul ryan -- >> because paul ryan was the one who proposed it.

>> he wonders how he undermines the existence of the taxes. >> i only say this, because here we have a bunch of republicans who were the ones who actually put this law into place. >> that's so unlike you to point that out. >> otherwise, i don't think people understand what's happening here. >> not only republicans, but trump -- >> they have this view that somehow this is this crazy, progressive effort. when the truth is, this was put in place by republicans. >> the wealth taxes of progressives, there are situations we've talked about that have, to discuss whether if you're going to use loans to avoid taxes. maybe you need -- there are things -- and we've always said, we're overseas already, in terms of how much money we're spending. we're spending more than we have. >> you're not going to solve it this way. >> we're going to have to solve it by doing two things.

raise revenue and cut spending. it's the way of the world. no one wants to have the actual conversation. >> but, like i said, you're going to run out of rich people, and you're still not going to be anywhere near paying it. >> i'm not saying that's the only way to do it. i'm going to say, you're going to have to do both of those things. if you say one isn't possible. and i'm happy to cut. >> that's not the case. i agree with that, too. you have to raise revenue and cut expenses, but you have to do it fairly and constitutionally. >> fairly means different things to different people. >> let me just say, you have to do it constitutionally. how about we stick with that? anyway, they're yelling at us, have been for a while. let's get back to the markets and bring in victor kosla. victor, what do you think about the tax code? >> better to talk credit markets and economy, yeah? >> well, you think next year is going to be a slog for the world economy. why is that? >> rates are higher, much higher. yes, the fed is supposed to start cutting rates next year,

but even at the end of it, at the end of 2024, interest rates are high. and once you have high rates, you've got a slowish economy. outside the u.s., the u.s. is fortress america, europe is really struggling. china is not as strong as it once looked. you put all of that stuff kind of together, and you're just going to be slogging. not just next year, becky. we think over the next two, three years. >> there has been this huge move in the equity markets based on the idea that the fed maybe is going to cut rates sooner rather than later, and that will come to the assistance of investors. you say the fed is not your friend. why is that? >> the fed has not been your friend for the last 20 months. rates have kept on going up. it has had to fight inflation. and as a result of that, it's switching, we believe, to

something more neutral now. now, in terms of kind of a lot of a rate hike is behind us. but the last 20 months, it was not your friend. >> but you think there are still opportunities for investors and you like things in the credit markets. what are you seeing? >> you know, becky, in a way, if you're in the high yield market, right, the junk bond market, which is how most leverage buyouts are financed, until six weeks ago, you were borrowing money at 11%. now, after the moves lower in rates, you're moving money 10%. on trillions of dollars of deals have been done in a 5% rate. people have borrowed at 5% to do trillions of dollars of deals. so very simplistically, as those

debts mature and you have to refinance all of this stuff you did at 5%, at 10%, or even 9%, you've got problems. and that is what we think, especially in the deal markets, in the m&a markets, in the high yield markets, as we look out over the next two, three years, we see that maturity wall, and we see that slog. >> meaning that there is going to be great things for vultures who can come in and scoop up at better prices? >> i wouldn't use the word "vultures" quite like that. but i do think that it is an opportunity. to kind of make some really interesting investments in this re-working, which has to kind of happen. >> so, tough deals to find. they're playing us out right now, but they'll come back and talk about some of those opportunities as you see them? >> sure. love to. >> victor, thank you. >> pleasure. coming up, we're going to speak with delaware senator

chris coons, ukrainian expe president art of h is set to discuss this with billions in the balance. you're watching "squawk box" on cnbc. enjoy richer, bolder flavors complete with velvet smooth crema. now brewing peet's coffee. ♪ upbeat music

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welcome back to "squawk box." ukrainian president zelenskyy set to address u.s. senators in a classified video briefing that's going to take place today. it comes as the director of the white house office of management and budget warning that the u.s.

is in danger of running out of money to send weapons and assistance to ukraine by the end of the year. the white house pushing for more than a $100 billion package for ukraine, israel, and other priorities. joining us right now is democratic senator, chris coons of delaware. good morning to you. we've been talking about this very issue now for several weeks, if not months. where do you think things really stand and do you think the balance is going to shift, as a result of this briefing that's going to take place today? >> well, andrew, several weeks ago, president zelenskyy came and addressed the entire senate in person, in the old senate chamber. and following that address, senate republican leader mitch mcconnell and much of his leadership declared that they are united with democrats in their strong support for ukraine. in fact, senator mcconnell said no one is a stronger supporter of ukraine's fight for freedom than i am. this is an opportunity for us to make that real. to find a path forward. we are going to move forward, i

believe, on president biden's request for more than $13 billion to help secure our border, $60 billion for ukraine and their security, which includes tens of billions of dollars of investment in american manufacturing, to make the munitions that ukraine needs, as well as vital humanitarian assistance for dozens of countries around the world, and support for israel. my hope is that following today's briefing, we'll realize we've run out of time to negotiate the perfect package, and we need to move forward with this package. >> that may very well be, but there is still a raging debate between democrats and republicans over this issue, over the funding on the border wall or the border. how much money that should ultimately be. is $13 billion enough? and what do you do about the house of representatives and where they stand right now? >> to be clear, president biden's request would be the single largest one-year investment in border security.

it would hire thousands of border patrol agents, customs and border protection agents, asylum officers, build new processing and detention facilities, and help fund deportation of those found ineligible for asylum. so, i was part of the bipartisan group that negotiated the last big bipartisan effort at immigration reform. we, after months of negotiations, agreed to put together a similar amount of money, but over ten years, president biden is proposing to invest it in one year. there are also some changes in policy that we've been discussing. but we're still very far apart. and i'll remind you, andrew, former president trump, who's running in this upcoming election, is proposing truly extreme measures, like renewing the muslim ban and using the national guard to forcibly screen and then deport people throughout our country. >> when you say that you're far apart, just tell us where the exact fault lines are? what are the details and where

do you think you could find a compromise and where do you think right now u.s. just is looking very difficult? >> andrew, the speaker of the house has demanded that we take up and pass hr-2, which is a house bill that has a very wide range of proposals, many of which are similar to former president trump's policies on immigration. i think we can find common ground on asylum standards, recognizing that roughly 85% of the people currently crossing our border who claim asylum are ultimately adjudicated ineligible. i'll hold fast for the proposition that the united states is a place where you can flee if you are being persecuted for your faith or your political views or your outspoken opinions. so we need to make sure that those who have a credible claim for asylum are still able to come here, but speed up the process for which those who don't have a claim for asylum are adjudicated and supported. i do think we can come to some

agreement in this area. it's difficult. not all democrats will agree with it, not all republicans will agree with it, but it's an area where there have been some real progress in the negotiations. >> what about the tax piece? we were having a debate about taxes and the supreme court case that's happening today. but one of the things that mike johnson has proposed, of course, is reducing the budget for the irs as a pay-for, if you will. do you think that has any chance of success? >> no, it is explicitly not a pay-for. it is a way to reduce the revenue to the government of the united states. it's striking that the first bill that speaker johnson sent over to us here in the senate would give billions of dollars in military assistance to israel in its ongoing conflict against hamas, but as a proposed offset, he would cut the funding that is scored as raising revenue for the government of the united states by helping to fund customer service and audit staff for the irs, which is not a pay.

for, in fact. it scores as reducing revenue to the united states. i don't think that's going to be part of any final package here in the senate. >> we laugh at cbo predictions all the time, though. you know that, senator. and democrats point -- >> i'm sorry, joe, i didn't hear that question. >> i say, we laugh at predictions from the cbo all the time. and depending on which side of the aisle you're on, if it fits your argument, we say, the cbo, we're supposed to be at a $1 trillion deficit this year and we're at a $2 trillion deficit. so i don't know whether -- and when you spend a certain amount -- you spend what "x" amount, and you're actually going to get 2x back. i mean, that's like fuzzy math. we'll see whether it works. we could reduce a whole deficit then, if we would spend $32 trillion. then we can get 2x back on what we spent on the irs and the deficit will be gone, right? >> well, joe, you and i can certainly glee there is a tax

gap. there are tens of billions of dollars, at least, of unpaid taxes that are widely believed by economists not just cbo, to be easily recouped by the government, if there were stronger enforcement. particularly audits of those making over $400,000 a year. >> why do you think -- >> but you're right, joe, that there are diminishing returns. you can't just simply, inevitably, increase auditing of every american. >> why is it a political issue, if it's so obvious. that sounds like you're saying that one side of the aisle just likes tax evaders and their friends are all rich, and they don't want them to have to pay taxes. is that what you're saying about republicans that are against the funding of the irs? >> yeah, pretty much. >> joe, i didn't make that point at all. what i said was that it scores as not paying for -- >> that's not. >> you had senator marshall on -- >> you don't worry about weaponizing the irs again? you were there for lois lerner,

weren't you? maybe you weren't. >> yes, i was. >> do you dispute that the obama administration weaponized the irs, like so many agencies seem to have been weaponized? if you have "patriot" if your name, you were audited. now, you put 80,000 new agents or whatever it is, you don't see any reason that some people might not -- might think that that's going to be intrusive and not get to the end result that we're looking for? you could have that as a -- >> joe, can i answer any of these points that you're making, please? >> go ahead. >> pick one, i'm happy to answer. >> don't obfuscate, go ahead. just answer. >> do the weaponization one, i think that's the one that is the thing that there are a lot of republicans who have used that as their rationale -- >> you don't think it happened? >> i think the larger issue to starve the government of money is the real goal here. >> that's not a bad idea -- that's the problem.

>> when you can't do it any other way. >> we're not doing very well doing it. >> yes, there is a legitimate case to be made that in some instances in the past, the irs has overused its audit authority. but the dramatic cut in the staffing to the irs in the previous administration resulted in a growing tax gap. somewhere in between those two points, making sure that audits are appropriate, credible, transparent, and professional, and providing adequate resources for appropriate audit levels, somewhere in the middle there is the right result. >> okay. senator kocoons, we always say, it's a longer conversation, and it is. and we hope to see you in person. >> the punch line, i hope, is we have to stand firm behind ukraine, and today is the chance for the senate to show that we mean it when we say we're going fight for freedom. >> you're my favorite guy or gal

on that side of the aisle, too. so this is,, you know -- >> thank you, joe. >> at least we can have a conversation. >> high bar for joe. coming up on the other side of the show, we'll head to dubai. we'll talk cop-28, the climate summit there. where the debate over the future of fossil fuels is going strong. ayun.d you're watching "squawk box" on cnbc. o you have a second? they're 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?" here's what. you go with prudential to protect, empower and grow. with everything you need to deliver, you guessed it... more. one more thing... who's your rock? learn more at prudential.com

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we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security. chip? at&t business. perhaps the biggest debate at the cop-28 climate conference currently underway in the middle east is over the transition to more renewable forms of energy. there are several different threads to this story, diana olick is live in dubai and she is following all of them. >> good morning, becky, energy and financial industry executives here at the cop are reacting to the first major agreement on emissions. 50 companies pledged to nearly eliminate methane emissions by the end of the this decade. and that's not just from coal and oil, but natural gas. i spoke with the ceo of the

williams company, a u.s. nat gas processing and transportation firms, who said he's here not because he's worried about his business, but because he wants to grow it. >> frankly our industry, and the gas pipeline industry has always been kind of off the radar screen, and we've always liked it that way. but it's really time we get our voice out there, and talk about what an opportunity there is to utilize natural gas to reduce emissions around the world. we're continuing to grow coal use around the world. and the fact is, natural gas is one of the few things that is more economic and therefore, it's one of the few things that we can deploy in scale without government subsidy to reduce emissions dramatically around the world. >> there has been plenty of controversy around this cop being held in a major oil-producing nation, not to mention that the head of this cop is the ceo of adnock, but some argue that that is as it

should be. >> to say that we're not going to get the energy industry as part of this process, and this transition, and we're going to defund the energy industry, is going to throw billions of people into poverty. and there will be chaos in the world. so you've got to have both sides working in tandem to the same common goal, which is how do we make this transition happen. >> and the methane agreement is just the beginning. really, one of the biggest items on the agenda here is the language in the final cop agreement. will it say phase down or phase out the use of fossil fuels? as of today, there are reports that in the initial draft, it does say "phase out." becky? >> that is a pretty big difference, and something i guess there will be a lot of negotiation and bartering over. diana, thank you very much. good to see you. >> sure. when we come back, takeaways from bitcoin's recent jump with crypto investor anthony p pompliano. stay tuned, you're watching "squawk box" and this is cnbc. se

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i want to get back to one of the big themes on wall street this weekend. that is crypto. optimism over the odds for future bitcoin etfs pushing that token above 42,000 for the first time in a year and a half. things have pulled back a smidge, but we are still looking at a roughly 20% gain. that's just in the last month alone. crypto investor anthony pompliano is here as the founder of pomp investments. and you are now a new york resident again. >> i am. as of august. >> so i thought miami was

supposed to be where it's at. >> it is. ken griffin, a bunch of other people moving, jeff bezos. i think what you're going to find is people want to live both in a density of individuals, like in new york city, and then people also want to live where they think that capital is going to move. that's a place like miami. >> maybe we'll get back to that. let's talk crypto right now and bitcoin, specifically. $42,000. what do you ascribe the move to? >> bitcoin is a free market asset, and i think one of the things that people forget in finance is that markets are forward looking. what we're seeing here is people are allocating to an asset that they believe is going to go up in the future, obviously. things that will drive that are the bitcoin etf, but as people are allocating to 70% of the circulating supply of bitcoin has not moved in a year. the reason why this is important, this is an $800 billion asset that has gone up 150% over the last 12 months. when an asset goes up 150%, you would expect people to sell into the strength and take profits? that's not happening. bitcoin reverse not selling that bitcoin, they're not selling it to wall street, so wall street will continue to drive up the

price in order to -- >> what about the share issue? the 70% has not changed in this past year, but i don't think that has changed for many, many years. >> it's always been very high. 70% is the all-time high, so it's been creeping up, which has this reflexive feedback loop. if more people won't sell and price goes up, price continues to go up even more rapidly. >> the other 30% that is moving, do you think that that -- i mean, i don't know if you can look through some of the numbers, is that -- are those new buyers, are those the old buyers who owned the original 70% saying "i want more." what is that? >> it's interesting when you look at the data. it's a little bit of everything. there's definitely more accumulation happening. people who already had bitcoin are continuing to buy more bitcoin. an interesting statistic is if you dollar cost average every single day with $10 from january 1 fs until now, you're up 100%. with the boom, the bust, you're up 100%. so just dollar-cost averaging alone gave you a great return. there's also this net new wave of capital coming in. you have the institutions, but

also, you have a bunch of people sitting on the sidelines saying, if plaque rock wants bitcoin, maybe i should buy some as well. that net new capital is definitely starting to come in. and i don't think we're actually going to see it -- >> but the real move, i think, seemed to happen as a function of this idea that the federal reserve, the new wisdom, whether it's conventional or otherwise, or right, even, is that they are going to ultimately have to turn things around, and lower interest rates some time in 2024. is that what you ascribe -- i mean, there was the etf piece. everyone said, oh, over here, it's the etf piece. now it's this. >> markets are forward looking. if you go back to 2021, bitcoin started to fall, as soon as the fed started talking about, we are going to cut rates. people were like, wait a second, inflation was high in the summer of 2022. it was because bitcoin and the holders saw what was going to happen. same thing is happening right now. bill ackman is betting that interest rates are going to get cut in q1, the market is pricing at 100% likelihood of an

interest rate cut in q2. bitcoiners right now and people who want bitcoin say it's going to happen even earlier. >> where's the share right now internationally of ownership of bitcoin? meaning, is it predominantly in the united states? is it predominantly in china? if you were to make a pie chart of the ownership on like a globe, what would that look like? >> let's separate bitcoin and hash rate. hash rate, about 35% or so is in the united states. when china banned mining, the united states was the big winner there. ownership is a little bit harder. there are so many wallets that we don't know geographically where they are. you can see capital flows. the united states and asia seem to really be driving a lot of the capital flows right now. the european region is a little bit behind, and not allocated nearly as much. so i think that america is going to be a big winner in the bitcoin and cryptocurrency race. we see companies being built here, coin base being a fantastic example of 330% over the last year-to-date. and what we've watched is regulators are stepped in and

they basically are slapping the wrist of anyone who is not operating within the american financial system. >> michael sailer has had i guess down to 17,000, there were people that thought that he was going to get a margin call or something. he's back now. i don't know how much he bought -- >> he has 174,000 bitcoin and is up $2 billion on it. >> he made some weird comment the other day and that was about what percentage of global financial system in his view bitcoin will represent and came out with a crazy number. it was like 5 to 10 million per coin. >> the bitcoin just simply matches gold, it would be 500,000. >> just matches gold. >> at $10 trillion. if you continue to look at other assets it could eat into it, if you have a dollar today and you want to store wealth, you historically could have bought gold, you could have bought fine art, you could have bought real estate, whatever.

young people are saying to themselves, i want to buy the hardest asset i can find, which tends to be bitcoin. and it's liquid and it is the best-performing asset over the last ten years. >> but the sailor question is how much of it becomes part of the quote/unquote financial system and does it -- is he suggesting that there has to be a payments element or an actual transa transaction? >> but he was saying gold. if it became part of the payment system, it could become much bigger. >> this goes back to, can it become part of the payment system and have actual and continue to increase? as we've discussed a million times, if it keeps increasing, nobody's ever going to use it -- >> except there's that company that we had on that uses just tiny little pieces of bitcoin. and it doesn't matter that the little mine schedule variations on a daily basis. >> wherever i talk to someone private and they ask me about bitcoin, i say it's very simple. if you think that the federal reserve and other central banks will have to print capital or print money in order to finance all of this debt, you'll want to

be in something other than dollars. >> you've got get andrew onboard. you're still not onboard. >> are you more skeptical -- but at 25,000 -- >> i was proud early on. >> there was a number you once said if it hit, you would think about buying it for your kids. and 5,000 bucks. >> at 35, you were really saying, this is way -- now it's 42. you've got to eventually throw in the towel -- what number where you'll say, i believe in it? 100? >> i just think it's a very -- because it's such a abstract concept that it's like a nonexistent thing, even though i know it's a thing for some people, i think -- >> but all money -- >> maybe. >> i know, it's very philosophical situation. >> but you can describe why goal is worth, it's not because it's pretty, and it's not because it's used in jewelry. it's immutable, it's cross-cultural, there's only so much around. and these are the characteristics of money since the beginning of time.

>> but everybody has gold in their portfolio. >> this is the -- >> if you understand the distributed ledger nature of bitcoin, you can see that it can represent barter for -- >> here's one of the crazy parts about this, is a lot of people who question bitcoin's efficacy or legitimacy, they're using a world view that is dominant in traditional finance. things like intrinsic value, et cetera. what we're watching, though -- >> this is a very -- god bless him -- charlie munger view of the world. >> and you've been right for 50 years having that world view. bitcoiners are coming in, there's a different view of the world. something like intrinsic value. if i look at an asset and i say the value is "x" and yours is "y," it has no intrinsic value. and bitcoin is showing there's this new view of the world, so far it's been right, and it continues to be right, there will be trillions of dollars

that flow into the asset. >> andrew pompliano, a true new yorker. thank you. >> thank you, guys. coming up, a lot of taxes here and a lot of irs agents will be watching you now. just so you know. just because you like bitcoin, they're going to be all over you. just get used to it. former world bank president david malpass on the big opportunity that he says we are facing right now. we're coming right back. changing weather patterns are impacting the way we live and the value of businesses large and small. this can mean disruption to supply chains, changing demand for products and shifting regulation. what does this mean for your business, your clients, and your investments? ice offers data and markets that can provide critical insight. manage your climate risk with ice. fresh, warm hot dogs! when i'm not selling hot dogs, i invest in a fund that advances innovations like robotics. fresh, warm hot dogs, straight out of my torso!

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in a recent "wall street journal" op-ed, former world bank president david malpass addresses how he thinks the fed can boost economic growth. he says it comes down to fur th four things, the central bank must shrink its balance sheet, stabilize the dollar, get capital flowing, and speak out about fiscal proflegacy. >> yeah, it's a worrisome. you know, fed basically has become now just a giant hedge fund. it's lost $1 trillion, you know, and counting. it's going to be a gigantic loss. what it does is borrows money at 5.4% from banks and then dumps it into government bonds. so think what that trade does. that causes the government to think it's better offer than it is. so that encouraged the government to be short, when rates were zero. so why did the government borrow

so much in t-wills? well, because the fed was buying the bonds and it made it seem like it was going to stay low for long. we have multiple problems that are going on. and it endangers the dollar. that's the basic case. >> instead of the fed having such large balances, wouldn't the private sector be startinging businesses and risking capital and bringing returns and adding to growth? wouldn't all of that money be better if it wasn't with the fed? >> that's right. and we're depending on private equity. so as the banks get squeezed out -- >> they're not lending it to other people. it's a floating rate loan so it can buy government bonds. if that were freed up, that would allow the banks to threet consider this.

and this is on a global basis. and this is all the them take money from the economy in order to buy government bonds. we need to be clear on this. i heard the previous segment. they talk about money printing. there isn't any money printing on it. it's just money borrowing, and they pay top dollar for it. the fed pays 5.4 to banks, and 5.3 to money-market funds. so to the fidelity and vanguard and so on. >> you think that the fed has a big role in helping us with growth? and that's the only way out of this mess? >> it shouldn't have a big -- it should try not to do harm. and that means to allocate capital to government is going to slow global growth. so we have this problem facing the world of growth forecasts going down into 2024. the population is going up, the fragility of the world is getting worse, as we see all over the world, refugee flows

are increasing. and that comes back to the world should be making enough capital, enough profits in order to grow the global economy, and it's just not doing it. in part because so much of it is going to government. a big problem is, the government always gets first dibs on every dollar that anybody earns. if they want to borrow it, they're the lowest cost borrower in the whole world. if the u.s. government wants to borrow $60 trillion, the world will step up and say, where's my chance? and that is really harmful to the business climate, because you're altering the risk/return ratios. >> you say a lot of similar things to judy shelton when she comes on. do you -- are you familiar with her take on things? >> i know her. and so -- >> how do you differ? >> well, she's talked about the gold standard. i think we need to use gold as one thing to look at for the fed

to see when it's maybe off track -- >> but just in terms of being the fiscal authorities and the fed being attached at the hip. >> yep, so the fed is way too big. it's also, we haven't talked about, but the regulatory policy aspect of the fed is dominant. you know, it didn't used to be that the fed was the major regulator. there were bank regulators, but now the fed is the dominant bank regulator. so they're basically doing two things. they're deciding how much to pay banks, and then how to regulate banks at the same time. and so that's really a conflict of interest that -- and so i think the answer is one of compromise, just bring down the balance sheet a lot. there's no reason why the fed needs to have such a giant balance sheet and make such a big bet on the government. it's not fair to the people to have the central bank making this -- you know, it got all the way up to $9 trillion.

it's not -- it's come down a little bit. but not fair to have an agency of the government making a bet on the government. >> how would -- i mean, if you abolish the central bank -- >> i didn't say abolish. >> you need a taylor rule?one, restraint by the fed to recognize that it shouldn't be -- >> it's a different guy every couple years. you would need something written down that people have to follow, wouldn't you? >> in general i'd think the fed and economists should agree that the central bank shouldn't be buying maturities beyond three-month. it's okay for the central bank to own treasury bills. they can borrow from banks and put it into treasury bills, and that's kind of an arbitrageable situation. for them to decide whether to buy a five-year or nine-year bond off the run or a ten-year bond, how does the fed know how to do that? it's not an issue at all of

abolishing the central bank. it's saying they've gotten way too big and are being followed too much by all the financial markets. they shouldn't be in the middle of all of this. i'm also concerned about the inverted yield curve. think of the oddity in finance of having a 5.5% fed funds rate or policy rate and going all the way down into the long term? it helps the rich and it hurts people that want to borrow floating rate. so all the little guys around the world are -- not just in the u.s., but worldwide, have to borrow at the short end whereas wealthier people can borrow at the long end. it's just not a balanced situation. as i argue in the "wall street journal" article. easy enough -- not easy, but the fed can engineer a course out of this simply by saying, look, we're going to defend the dollar by allowing some of our balance sheet to burn off.

it's already doing that, but have it burn off faster. >> from a frooef yous conversation let's not have it burn. people are dying. i heard that yesterday. >> shorten the maturity of the balance sheet. >> thanks, david. >> thank you. when we come bk,ac we have some top stocks to watch before the opening bell on wall street. we'll be back after a quick break. power e*trade's easy-to-use tools make complex trading less complicated. custom scans help you find new trading opportunities, while an earnings tool helps you plan your trades and stay on top of the market. e*trade from morgan stanley. they're waiting for you. hey, do you have a second? they're all expecting more. more efficiency.

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want to get over to dom chew. a bunch of premarket movers. >> take two inter active down 2.5%, off the premarket lows, just 90-some shares of volume. the video game publisher is in the news after the trailer for the highly anticipated grand theft auto 6 franchise earlier than expected. that was following a leak on x. some of the downward stock pressure may be tied to details on that trailer that showed it will not be released until some time in the year 2025, making maybe no financial impact on the company to take place in 2024. maybe that's some of the story there. also an earnings headliner this morning, autozone very thin trading volume so far. the auto parts retailer reporting quarterly results that

top most of consumers' estimates. sales growth by the way, established international store locations came in at a much higher clip than the comp star sales in the u.s. we'll cap things off with lululemon, 60,000 shares of volume. the athletic apparel retailer is getting a downgrade this morning, this time from raymond james. it goes to outperform. it was a prior strong buyer. much like yesterday's wells fargo after a big run higher in the stock. they still like the higher quality growth standard, those shares up 43% year-to-date, becky. i'll send things back over to you. >> dom, thank you. joining us for more on the markets including tech and the recent performance of the magnificent 7 is sylvia jablonski, ceo and chief investment officer at defiance etfs. what does the future hold for the magnificent 7, sylvia?

>> good morning, becky. i think november was a great month for the magnificent 7. nasdaq up 46% year-to-date and picked up 8% to 9% last month led by the magnificent 7. i think the future is very bright. it consists of the ai conversion, right? all the components that go into ai, machine learning, sort of super computing, quantum computing are made up by the magnificent 7 plus or minus a couple stocks like nvidia. if we're talking 2 trillion in growth in the cloud, another trillion in ai investment, these are the names poised to be there. although they remain up, i think the future remains bright. >> you're talking long-term future. you look at a lot of stocks as something you have to hold, not for the next three months, the next year, but much longer than that. >> exactly. i think if you held them for the last couple months and bought on the pullbacks in august,

september, october, you're pretty happy right now. they've fallen a little bit over the last couple days, it might be a good time to pick up into year-end. i think these are longer-term plays. these are stable companies with strong balance sheets. taking two of them. amazon 236% epps growth. microsoft, 46% of revenue growth in the next couple years. you want to hold these for the next three to five years. these trends like ai, machine learning, quantum xuth are in their infancy. it makes sense keeping them in your portfolio. >> sylvia, you've got a contrarian view when it comes to the airlines. not very loved lately. >> i do. alaska got some good will going in the markets for airlines. the consumer is still spending. if you just look at thanksgiving, 55 million people traveled, the cruises, the

airlines, the hotels have been picking up. it's certainly not slowing down. the wage growth is steady. it looks like the trend is continuing based on what we heard in the last earnings calls. they've seen an increase over the last couple weeks. they've said that the last ten days or so around thanksgiving were the busiest days in years with tsa check-ins for airlines. i think it's not over. that for me is going to be shorter term, though. that's a trade i'm looking at for the next 6-12 months. i think inflation coming down, people get excited. it's holiday time. little trade winds for the airlines. >> sylvia, thank you. we'll talk to you again soon. before we go, let's take a final check on the markets. futures under pressure this morning after the markets closed down yesterday. dow futures right now, about half hour to go before the opening bell, off by about 90 points. s&p futures down by about 17 right now. you've still got the nasdaq down by about 70 points.

nasdaq was the big loser yesterday, down .8% versus a drop of .1% for the dow. also watching yields very closely. the ten-year sitting right at 4.2%. the two-year is getting close to the 4.6 threshold. 4.61 right now. that does it for us today. it's tuesday. we'll check that off our list. we'll see you back here on wednesday. right now it's time for "squawk on the street". good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. bank ceos presenting at the goldman conference. our roadmap begins with this rally pause. stocks coming off their worst day in a month. >> china's growing debt risk, moody's cuts the credit outlook to