yields ten-year was above 4.2%. the two-year is at 4.7% almost andrew, safe travels make it home safely. >> thangtks >> somebody do us a favor and twist one of these pictures for joe. go ahead lean it one way or the other you got two seconds >> see you, jonathan >> see you monday. time for the "squawk." ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at post nine of the new york stock exchange. final jobs number of the year, slightly above estimates unemployment, 3 p.7%. the best participation rate since the pandemic we'll get to it all. it's where our road map begins, that jobs report, of course, november numbers topping estimates. futures try to climb higher. plus, lululemon is the biggest laggard on the s&p this

morning following its tepid holiday outlook. and honeywell agrees to buy carrier security business. the price tag is $5 million. we're going to speak with honeywell's ceo later this hour. let's get some reaction to the jobs number. as we mentioned, some of the metrics here, jim, lowest annual wage growth in a while participation is encouraging >> major focus is exactly what you just said, and i want to say something that it's really bugging me there's so many people who are looking for a rate cut in this weird world that we're in, in finance. you look at what we've got here with these numbers, and if you're jay powell, you're saying, let's just play it out why do we have to start cutting? we have good numbers let's be sure. let's have six months of numbers like this. david, it's only on wall street that they look at something, they have to make a decision no one wants to say, hey, you know what? there's no trade here. >> right >> they have to trade. >> i guess they have to.

>> they have to. they're jonesing for trading >> i guess they are. i was on the phone with somebody who typically would, and i said, you know what? don't do it. stay on the phone with me. they did they stayed on the phone with me they ended up not losing, because i bet they would have gone short, and you saw what happened to the futures right after and now they've come almost more or less all the way back >> david with a series of great calls. >> i did save somebody, i think. it was an old friend of mine, and i know they tend to do that. i was like, don't do it. don't get off the phone. >> the bias toward action by them is very unrealistic if i'm jay powell jay powell says, look, i can keep rates up. we got a 3.7% unemployment rate. shouldn't that wait until i gets to, like, 4.5% right now, we're just beating inflation over the head. let's keep beating it. >> there are people starting to slice and dice, take away the

uaw effect, take away sag-aftra, and take away health care and some of these noncyclical areas, you're looking at 26,000 for the month. >> manufacturing is a little bit strong we're spending a trillion dollars in reshoring and could have created 20,000 jobs a lot of people are confused by that health care number because we just don't see it in the system, and you look company to company. but this is a very strong report, and i think that those who keep looking for, you know, revision that's down, you know, you get a revision that goes the wrong way, but i think good is good is what i'm saying. i think that when you read some of these strategy notes we're starting to get, their biggest fear is a recession. they should wake up and smell the coffee they really should >> meanwhile, we got gasoline futures, two-year low. oil's on pace for seven weeks down haven't done that in several years. meaning, does the tone of the meeting change next week >> i think that the meeting can be, look, we're going to watch and wait if we see weakness, we'll take

action >> look at cpi and ppi >> right before. >> that's my point on oil. the headlines -- >> look, it's important but don't they have a statement? you think they change the statement on cpi i don't know we have been dealing with companies all week, like take toll brothers. the homes are a million bucks. that's not what the federal reserve wants. >> yeah, but there aren't that many of them >> the price of the house is up 40%. there was a really great moment in the dollar general call by the way, extraordinary call because they have the old ceo's back it cost them 30% more to make a store than it did three years ago. well, that just makes the prices go up at the stuff -- or they take out an oreo you know how you do that you buy a package, you say, wait a second, i think there's, like, there's some mike and ike's

missing. >> now you're getting to david's mallomar s >> thank you, carl you've been listening all these years. they cut back from ten to nine years ago, and now they're smaller. i think mondelez has stopped the shrinkage for a while. >> i'm worried about shrinkage there. not stealing but the toblerone. i bought it in italy i think it was -- i don't think it was a yard and a half i think it was a yard and five inches, but it was in metric they fooled me because of that metric system. >> it's better for all of us we w we won't have to go on glp-1s >> that toblerone is a weapon. it is. that thing is too much by the way, the shrinkage in dollar general, frightening. a hundred basis points >> all of which is to say in terms of the economy, things -- i mean, the lower end is getting hit a bit. we know that >> a bit >> but joblessness remains

>> as long as you have a job, you're going to spend. >> remains low >> i heard someone talk about the credit card debt is bad and car debt is bad. if you have a job, you're going to pay for that car, because you got to get to your job >> i know. also, when you look at delinquencies, the fact is that they're not even back to -- they look worse, given the surpluses everybody had a year ago or two years ago as a result of the government money, but they're still historically not bad at all. >> we have to ask for a crazy period where you were getting checks >> that was to prevent economic scarring, which every month we get an indication worked >> right i agree. >> speaking of the low end and the high end, lulu today falling in the premarket current quarter guidance comes in shy of consensus, despite the q3 revenue beat and positive comments about the start of holiday. meantime, "the journal" has this article highlighting how luxury retailers are trying to unload excess inventory at the high end

as shoppers pull back. they cite one online merchant, jim, inventory is up 44% in luxury >> look, luxury is the area that's not doing well. we got that with andy jassy when i spoke to him at length at amazon i do think that we've got this -- that the lulu is a misinterpretation. those are chinese. those all trade china. obviously, european companies. >> that's ultra-luxury a lot of that is related to demand from china >> you really have to parse the lulu calvin mcdonald is a fabulous ceo, and the numbers are all great. so, the big conundrum is, how could he be so worried about the quarter if it started so well? does he know something we don't know and he got a little defensive at the end. for a guy who's one of the great merchants of our time. >> although he had a pretty healthy movement in price targets. increases at morgan stanley, oppenheimer, key and some others >> people recognize that's just

him being -- >> stock was looking worse after they reported the number >> because the headline -- they did the -- whatever the chatgpt. it basically says, immediately, hey, listen, this is really bad. and then you listen to conference call, and the analysts seem to be more influenced by headlines than a long time. carl, i think that everyone was just saying, over and over again on that call, what do you know tell us what you know. and finally, just said, listen, i got to be prudent. what's the matter with prudence? and i think he's being prudent but i think he's going to make good numbers >> i think we have some sound racked if you want to hear what we heard last night. take a listen. >> we're pleased with the trends we've seen at the start of the holiday season that being said, the majority of the quarter remains in front of us we remain aware of the uncertainties in the macroenvironment, and we continue to plan a business for multiple scenarios >> is that not what you should do i mean, when i was listening to it, i said, oh, okay

you know there are a lot of scenarios out there. got to plan for them, right, david? >> yep yep. jim, i want to come back on a couple things in the market the last few days in terms of, well, a.i.-related and just in general sort of what seems to be this retail trade again >> okay. >> lot of the stocks that are heavily shorted, moving up like coin or affirm. bitcoin, obviously, itself i don't know if robinhood is doing any better >> it is it went from 8 to 11 oh, whether the company's doing better >> more people are using it. >> affirm is doing better. they didn't screw up max levchin did not have bad buy now/pay later. >> this move in amd and google yesterday, a day after news the gemini thing came out at 10:00 on wednesday, a.m. eastern the stock moved 6%, google, yesterday. >> yesterday was 1999.

>> i don't get it. >> yeah, you know yesterday was 1999 >> and amd did not have great things to say, and then the stock ran 10%. >> i think that people are excited about -- she took the $400 billion from $200 billion that she had in august for generative a.i yesterday, david, seemed like a realization that maybe alphabet's got something going, a realization that there's enough room for amd's chips. it was odd, because the move should have, at one point, tapered off. it just kept going >> didn't react to tape prior when the actual product was unveiled, so to speak, or didn't react nearly as much as it did the next day, and i -- there are questions about how do you monetize gemini and then there's the whole question about search and how that's going to change and are they going to be giving up share in search at google while gemini may be something that can compete >> when i was in seattle, the thing that people keep saying

is, this is not search this is not search people, like, are putting in, you know, they're asking gpt, tell me about five good mexican restaurants in the area. it's like, no. draw a picture of glass pants, and it does a picture of glass pants. >> glass pants >> that's from -- remember that show with bill cosby and robert culp "i spy"? glass pants. >> taking us back to the '60s. makin making sure. >> i'm just saying -- oh, i think you're doing rock, paper, scissors i don't think that's the fundament of generative a.i. but boy, is it fun and how funny is the guy he was the like the guy used to do, "i want to work at the goldman slacks." >> we'll get to what jassy told jim about the dangers of a.i. after the break. we got news on tesla,

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eligible xfinity rewards members can get 25% off a storm ready wifi device. i happen to think that generative a.i. is going to change every customer experience, and it's going to make it much more accessible for everyday developers, even business users, to use, so i think there's going to be a lot of societal good but you have to pay attention to some of the dangers of generative a.i., and you have to have the right security, and you got to make sure that the models

are not overly hallucinating, and so you do have to care about safety and that, and in the businesses we operate in, whether you're talking about consumers in our consumer businesses or enterprises in our aws business, they're going to care about the safety piece pz so, we have a lot of focus there, but i also don't think that you should throw the baby out with the bath water. i think this is going to be hugely helpful in every customer experience >> you got so much stuff, you had to break it into multiple days >> we did. we spent a lot of time together. he's a very, very thoughtful man. that was in relation to some of the concerns that david raises about safety, and what i thought was terrific is nothing glib there's these two camps out there. it's like, hey, it's terminator or don't worry about it, and then there's jassy, which is i think where you want him to be you got to be thoughtful don't overreact, but understand it could be used negatively. i thought that was really a refreshing view.

>> yeah. >> middle of the road. >> yeah. >> don't panic, but be real serious about what could go wrong here >> right the question is, what safeguards will be available and/or put in place as things move at a rapid pace >> well, i think that -- that's the big issue. >> and they are going to fuel rises for the companies providing a.i. services with a backbone of a.i. it's obviously a great profit opportunity. we talk about it endlessly you're taking a look at number one there, nvidia, in terms of beneficiary. >> they have a good relationship people think they don't. >> productivity in the workplace over time as those apps become available in the enterprise to companies. but you move at break-neck speed, jim, you're going to break things >> but i think what people have to recognize, he used a bunch of examples, but i happen to like the lee child "jack reacher" series it's just a good storybook and he knows that i know that i

have ordered it, and he's got the movie, so he's got everything about me, and he has predictive information that says that i will buy the book, and i did, and i had it a couple hours later. he knew. i didn't know that the new book was out. he knew there was a new book and i would buy it and he knows this for about 100 million people quite exciting so, i got it same-day. >> right >> well, i didn't have to go to a bookstore. by the way, if you want to know, i happen to like the new fellows at run walgreens, but they're the big winner of shrinkage and the big winner of plexiglass, get the key, ring the button, because they know they can get that thing to you at home, which is why you want it anyway, so why go to walgreens? very big existential threat, particularly because they have a great pharmacy it's existential for these companies. >> listen, every day -- it was interesting to listen to his

comments are they going to have their own offering as well or it's only really how amazon's going to incorporate a.i.? >> they're not offering. you'll be able to use -- >> i mean, within aws, certainly, there is already -- >> right, look, don't forget, they've got the best analytics remember, adam is there. he has a great sense of -- you can get a dashboard. they have a great relationship with salesforce. they don't talk about it marc doesn't talk about it marc benioff, the ceo. but that's the interaction if you want to figure out how to use it best for sales. by the way, out there, when you talk offline about, does everybody know what they're doing, some people wish that people would rent the cloud, this is the snowflake model, so they could understand it before they just spend fortunes >> before you make a long-term commitment that you're locked into with one of the cloud providers. >> right, because everybody's worried that their customers are going to spend fortunes and it won't be valuable. >> meanwhile, you got more on a.i. from seifert at t-mobile,

right? take a listen to what mike told jim last night >> gen a.i. is going to usher in a sort of lock in the era of cloud even more. it's going to do the same for 5g, because when you're moving massive amounts of information from your person to be processed by a.i., in the cloud, that takes connectivity, and of course, you know, that's going to showcase the advantage of our unique world-leading 5g network here >> so, now, we're moving from picks and shovels to platforms >> yes, and i got to tell you. you speak to people while they're getting micced up and stuff. one thing is for certain if you were worried about there wouldn't be any more share take because the whole country is pretty carved up, he said, you're looking at it all wrong it's the amount of data that's coming is so huge and the services we have -- i got the sense that the era of the price cuts, price cuts, price cuts is over by the way, the apple, the 15, it's still the best way to open

an account and take people's business and i think one of the things that people got wrong about the 15 is mike sievert is the man who's sell you the 15. >> all i've heard, all i would want from an investment standpoint is own, like, datacenters. own as many datacenters as you can or involve yourself in datacenters. >> then you're oracle. >> or you're vertiv. did you see the digital realty deal today with blackstone their $7 billion deal? they're going to build four giant datacenters. they're going to produce 500 megawatts or consume 500 megawatts of power that's 86,000 homes. frankfurt, paris, virginia, $7 billion coming in to pbuild these things that's the picks and shovels, right? >> right and vertiv, i think we had them on it's an amazing company. and dave coaty, the former ceo, is the chairman of that very

active i have to tell you, i was blown away how real this thing is. i came in ready to just shred it, okay and i came back. you know the mentalist he has nothing on jassy. jassy knew everything about me well ahead of what i know. >> oz is pretty impressive we had him the other night it was great >> we'll get more on that. news on microsoft and apple tied to both of those story lines we'll get cramer's "mad dash" and countdown to the opening bell one more look at futures on this friday ( ♪ ♪ ) ( ♪ ♪ ) ♪ (when the day that) ♪ ♪ (lies ahead of me) ♪ ♪ ( seems impossible to face) ♪ ♪ (a lovely day) ♪ ♪ (lovely day) ♪

♪ (lovely day) ♪ ♪ (lovely day) ♪ a bank that knows your business grows your business. bmo.

get to a "mad dash." we've got an opening bell about six minutes or so from now p broadcom, $436 billion market value. reported earnings after the bell, jim. what's the take we're hearing? >> the profits were great. the revenue was not as great i'm saying not a consequential quarter because what they're doing is so rapidly shifting, this vmware, and making it so you can on board the cloud jassy said it's still 90% on premises this is a way to get on cloud with vmware. they're going to go and buy back their stock aggressively now, you know hock aggressive means real. >> yeah. >> like, done. and i think that one of the things i was most excited about, everybody raised the price target, is that i think that he -- at times, he gets -- he raised the dividend. sometimes he just thinks the

stock is so cheap that it's time for the run for the roses. >> $14,189,000,000 in cash about $12 billion at the end of the quarter. >> they're $7 billion to buy >> ebitda, adjusted ebitda, margins of 65% $17.6 billion. that's for the year. fiscal year '23. $17.6 billion in free cash flow. that's running at roughly 49% of revenue. >> he's the most lucrative of anyone in tech, and by the way, in partnership with nvidia which, david, if you don't have a partnership with nvidia, you're naked like, i walked out, and i said, geez, i forgot my pants. that's not like having a partnership with nvidia. everyone's got one >> everybody's got one a.i.-related sales crossed $6 billion a year. run rate in q4, this is a b of a report, and we expect that to accelerate growth. early stages of a multihundred billion a.i. datacenter

opportunity. >> it's for real hock got it. >> back to the picks and shovels and the datacenters. >> because of what you just said, i think the $7 billion -- i wouldn't be surprised if he bought it all between here and europe >> in terms of the buyback >> stock is so cheap >> does that move the needle that much? >> yes, because all the analysts love it. there's just -- it's an inexpensive stock that is a.i. >> yeah. >> it's not bad. >> we'll be keeping an eye on shares of broadcom, and we got a lot of other stocks to watch for. the opening bell also just four minutes away don't go anywhere.

honeywell announcing it's agreed to buy carrier security business for about $5 billion in cash, part of an effort to enhance and strengthen its building automation capabilities carrier says the proceeds will go toward paying down debt which is things like electronic locks, jim, for hospitals and hotels, for example. >> they own the hotel market i think that this is a deal that helps them both. i know honeywell, frankly, it's beyond me to think why this is down three it's going to be accretive it makes a lot of sense for divisions that needed to grow, the security division. you can never have enough security, never have enough

safety carrier, obviously, they had to get proceeds and i think there was people who think they couldn't get this deal done. i think it is good for both companies. my travel trust owns honeywell the stock had been creeping up we got the announcement, and -- >> we'll talk about it with them in a couple of minutes let's get the opening bell at the cnbc realtime exchange, at the big board, american equity investment life celebrating its 20th listing anniversary at the nasdaq. shipping company united maritime so, one more notch in the december data. does that set us up for what was classically the santa claus rally period, jim? >> yes if you can take recession off the table, i mean, we get these notes. you get these -- people are starting to do the year-end notes, right people are saying, listen, there's still going to be a sense that the slowdown will snowball, and i read the numbers today, and i say, no

that's your own paranoia there's no panic coming in, and i like it. what don't look at me what, i'm supposed to be as negative as these analysts i have -- this is like the analysts who are negative. this is the analysts who are positive guys, their lives must be miserable. i don't know maybe they had, like, one of those quarterbacks who went down in their fantasy league. >> the amount of paper that you waste every day. are you really going to read d.e. davidson's sector brief on food products? >> i was all over that they like mondelez >> is this the key chart, jim, on page 26 gross margins? food gross margins have contracted 300 basis points since 2009 >> yeah. >> with each cycle's peak and trough lower than prior. did you know that? >> yes, and that's why the multiple's shrinking constantly. david, the only one that's

multiple's going up is clorox because they figured out where all the clorox was after the hack >> i'm glad you got this i'm going to quiz you on it later. >> eventually, a.i. will get it. >> eventually, you'll have one page on every single thing that goes through all of your research in the morning. >> that's what a lot of -- by the way, cfos and ceos i talk to, what do you do how are you using it well, analysts will write reports about my company, and i just summarize it. period >> geez. >> i can make myself look so much better. please >> what, than the bouncer at the nightclub? >> did you look at gemini? after that, i said, i look like daniel craig they drew me as daniel craig >> actually, it's strip club bouncer. that's what i was going for there. lululemon is the biggest loser. we didn't mention rh

>> gary friedman has been on the show a number of times, the ceo. he was quite defensive, and was making the point -- he spoke about the huge number of shares. making the point that this is the worst housing market ever, and then he walked it back and said, after 2008 and 2009. >> it is the worst >> because it's frozen >> there's nobody -- i mean, yeah, toll is doing fine we know that, but what are the numbers? what is it 3.2 million? something tiny overall >> their sales -- >> they've never had a lower number >> the fulcrum of their sales are new homes for rich people. >> is that true? >> right all right. so, they're basically furnishing all those homes. >> right, right. and the highest end, and they're talking about munich there's great stuff about muni but if you're in home sale it's not going well for you right now, particularly. >> that's why he's just saying, listen, frozen housing market is the worst for him. >> and it is frozen. >> mortgage rates down for the

sixth straight week. uk, sub-7% >> doug yearley saying, look, it's just going to make it so there are even more homes that they can do -- they're actually going to build a few more than they have spoken for they were just building the ones that are spoken for. look, it's a bad market for gary, but -- >> it's still the differential in terms of where your mortgage rate is now -- i'm sorry, where your mortgage that you have and the mortgage rated you have to get is so wide given that rapid increase in rates. >> right and what's the big sticking point is how many people actually didn't finance and they don't want to give up that 3.5%. >> are they going to really wait to get back to that exact level? >> gary things they're going to. gary's kind of negative short-term wow. i felt for the guy, because the analysts were, like, no. see, 2008 was bad for housing. they didn't realize, he's speaking about transactions. but no one said the obvious, which is, hold them. laura albert, williams sonoma. >> that showroom they have in

meat packing >> how great is that >> it's amazing. >> you can't find more couches apparently, this pilgrimage to the london -- >> i don't know what you're talking about. >> -- mansion that they have paris, you can overlook -- it's with caviar. >> that's nice >> munich. >> i like the rh guest house very nice. >> and you know which one got highlighted after munich, after paris, after london? indianapolis >> really? >> yeah. mansion in indianapolis. david, let's get on a plane. >> to indianapolis sure, why not? >> gardner minshew playing some football >> we'll make it a new cities of success. >> that would be something nashville is by the way, people liked the series >> carl, are you going to get lobbied heavily now? >> i get emails from chambers of commerce every day >> you really are. i bet. well, amazon is, i think, ready

to have a bigger office there than anywhere else in the country. >> where >> nashville >> oh, yeah. they're building twin towers it's amazing >> i said, are you going to have that big room where you can have a taylor swift concert, and it was like -- andy's so smart. i think he was thinking, oh god, cramer wants a full quote. next, he's going to talk about travis kelce look, i said it. if you had a concert that was available for prime, there would be a substantial number of people who would sign up for the concert. he said, absolutely. that made me feel that i'm not off base i'm not off base on this >> he's got to be happy with thursday night's -- yeah >> happy i said it was 25 it was 27. it is electric for them, and one of the things that i think is so cool is that generative a.i. follows like the first quarter, and they see all the tendencies and they can predict the blitz

for everybody, and who's going to blitz, and i made the joke that maybe the coaches should have your program on the sidelines, and he was like, they don't? he didn't say that, but the idea is that, if you can know where the eagles are going to blitz dallas on sunday night, well, you know, from generative a.i., if you're the cowboys, you got a leg up but same thing, micah parsons, they'll know exactly where he's going to blitz because -- well, it's on our network. >> speaking of streaming, paramount is leading the s&p on some of these headlines. >> i got the story from -- it's a deadline story earlier i've spent way too much time through the years talking to people about paramount its future and the challenges the company faces. the story is along the lines of, hey, is there somebody out there such as red bird that would be interested in trying to acquire not the company but the control position via national

amusements it's -- it's not a novel idea. it's been around for a long time as a possibility i don't know anything. red bird's got plenty of their plate, including, obviously, as i think i've reported, being interested, at least, in participating in some way in what's going on with the pga and liv and whether they can figure it out, but as being a significant investor there that group of potential money bidders, so to speak, has gotten smaller. so, red bird, certainly still there for that i don't -- you know, a number of significant executives have sort of made their home at red bird or will make their home at red bird in the industry but i take a dash of -- >> salt? >> thank you i was trying to think of what spice should be used here. but yes, salt. >> i like mccormick, but it sells at 27 times earnings >> thank you, jim. was that in the food products

report >> they should have put it in. i was let down >> thank you, d.a. davidson. warner is leading the ndx as well in the uk, the cma is considering whether or not to probe microsoft openai meanwhile, ftc, second request, chevron hess >> they're doing, like -- they're doing requests on -- >> well, everybody -- you're going to get a second request on exxon, on exxon pioneer. you're going to get a second request on chevron hess. the question, really, is the one i asked darren woods yesterday exxon, obviously, their junior partner in guyana is hess and there's this fear that the venezuelans are going to become more bellicose and try to take control tof this disputed regio and potentially move offshore and try to cause trouble for what is an enormous oil field there. >> but you're -- the answer he gave you, that there are other

interests that will make it not happen who's he talking about >> i should have asked to follow up we were at the very end of our interview. i assume he's talking about greater powers, such as the u.s. or even others >> that's what i felt. >> they will step in and defend guyana, but i did not get an explanation. >> military? >> i believe that's what mr. woods was referring to, yes. or in some way >> flash point big flash point. >> if you're chevron right now, are you worried? guyana is the biggest single portion of value at hess >> you know what i would say you have to be worried. i'm working on adobe for next week i'd be worried they can't seem to get that deal closed all the deals -- albertson-kroger, it's like, they take their time, too. that's another thing that the ftc does >> yeah, albertson-kroger, there was some talk it's going to be this week or next week i'm -- no. that's not the case. >> i worry about --

>> ftc is taking its time. >> microsoft, ever since they learned their lesson during the steve ballmer era, people think they have processes. they do. i'm not -- it would shock me if that's -- if there's really something there. >> what are we back to i'm sorry, what deal are we back to now >> the cma deal on microsoft looking into it >> you're talking about openai >> yeah. >> i just think -- >> you got to tell people what the story is before you comment on it. >> i thought everyone knew about it >> why do you think everybody knows the cma is investigating microsoft and openai >> because it's so -- it's so prurient >> people sitting at home in their underwear. do you really think that they know >> i don't want to think about that >> sorry >> all right thank you, david >> you're welcome. all right. honeywell announcing plans to acquire carrier's global access solutions business in an all-cash deal for $4.95 billion,

and joining us now, a cnbc exclusive, honeywell's ceo, vimal kapur. great to see you on this show. thank you for coming >> good to see you again, jim. >> i look at this deal, and i think -- i know it's cliche to say win-win. dave at carrier needed the money to keep his ratings solid as he finishes his acquisition of a company in germany but for you, safety and security are industries that you can really take over here, because it's been the mantra even from when dave cody ran it. is this one where you're going to take over that hotel vertical there's very few that don't use it or i've been working on the idea that maybe this is all those companies that are reshoring and all the datacenter companies that need security and that's got to be a great growth business for you >> no, absolutely, jim you know, automation is a, you know, i talked about my strategy to focus on -- focus anyone on

three mega trends. automation, aviation, and early transition, and this one is right in the wheelhouse of that strategy we have a good business in building automation space, and security business from carrier fits right in. the trend we see, and jim, you pointed out very well, historically, we thought of security as managing people access, factor cards, smart security control means, but now it's pivoting to managing assets, assets like datacenter, pharmaceutical production, semiconductor fab, so we see growth at a higher trend rate. therefore, we are excited about this business and how it becomes accretive to honeywell, both for growth and for the margins >> there was an interesting article about lionel s 2 partners with apple to provide companies with employee badges and apple wallet you also will be focused on who can get n, which i think we

know from cybersecurity, they want to get in through your pc, but they want to get into your buildings, and this seems to be the way that everybody is trying to stop that from happening, and it will be your business >> absolutely. there's going to be more and more convergence of physical security and cybersecurity and increasingly, customers are asking us more and more around how to convert the two worlds. what i like about this business is outwardly, security business will look like, you know, a lot of hardware, but this business has done tremendous job to build a very strong software franchise, which fits very well on how the cybersecurity integration will happen here so, a lot of good momentum on the call, but some of the new macros are going to help this business a lot >> people don't realize, this company is a big company, and you have, what, about almost 50% of the fortune 100 used already? >> i didn't hear the question, jim. >> almost 50% of the fortune 100 use this company that you're

buying >> oh, absolutely. absolutely the penetration into the big companies is pretty strong and i expect that to grow, you know the value honeywell is going to bring in, we do a good job of having a lot of large accounts you talked about datacenter in the example. we are only going to increase penetration from top 50 to many other larger organizations in u.s., in europe, and rest of the world. >> dave cody once told me that you'll never see a rollback in safety and security. no one says, you know what, we have too much safety and therefore, you want to put your chips in this this seems to be an asset that fits right into dave's idea that you are just going to have more security and more safety around the world, and your new company will play a big role in that >> yep the safety and security, i absolutely believe in that how the world is shaping up, the parameters required or the

offerings required around safety and security are only going to increase we have a very good business in this space in our automation, and this asset just has a multilayer effect. higher growth, more margin expansion, better cash generation, which really excites me on this theme >> i think people may think, and judging from the stock, that maybe somehow you're done, but you have $25 billion in firepower. by no means are you done reinventing honeywell. >> yeah. i mean, we are actively looking at many opportunities, this being one of them. earlier this year, we acquired a $700 million deal for compressive control, another automation addition into our portfolio. we will constantly look at improving the portfolio quality to m&a that's our strategy. bolt-on m&a is our strategy. every time you bring in an asset, we look at how it grows the core business but also adds to revenue so, the firepower cushion, absolutely we keep looking.

and if the deal makes sense for the strategy, and if the terms for honeywell as this deal has it, we'll continue to stay active in the market >> i spend a lot of time reading stuff by steve tusa, because he's been critical about some companies and not others i know he thinks you're doing a terrific job but i would be wrong not to bring up the long cycle business it just seems like aerospace, people like boeing, but your aerospace business, is it fair to say that it's the strongest it's ever been >> oh, yeah. the aero cycle is probably strongest, absolutely, for a long time. the commercial aerospace business is doing very well. the defense and space part of the business portfolio is also performing extremely well. two unfortunate wars generate demand, but we also see trend line on many nato countries and other allies of u.s. spending more money, so our business is not growing only in the core commercial area but also in defense and space and business, so i see growth momentum in aero

for a few years ahead, probably one of the best times for the aero industry. >> switching back to the acquisition, there's a part that offers electronic locks, hospitality, access, mobile credentials. nine out of the top ten hotel chains are using this. i mean, is this just -- is it a subscription business? i mean, it seems like it must be consistent revenue >> yeah. the hospitality is a big part of our segment today. we do environmental controls in hotels if you go to hotel and the fancy thermostat on the wall, it saves a lot of energy. this acquisition brings more capability in the space in the form of electronic locks i believe electronic locks are going to have more expansion in other applications, so not only we going to get stronger in access controls, which we talked earlier, but electronic locks. there's a lot of goodness in this deal. that's what i really like about that >> i want to thank you for coming on, vimal, and i think

that this is the beginning of what i have been waiting for, because i know when you came on the show, you said there's a lot of things happening. that's vimal kapur, the ceo of honeywell. thank you. >> thank you very much >> look, he's prosaic. i like prosaic i don't want a long-ball paramount deal here. i don't want him coming on saying, did you see "yellowstone"? >> this is a screen pass for ten yards. >> yes it's a screen pass for ten it's kind of something that happened on sunday night with the eagles and dallas goddard. i'm going to the game. i'm the loudest person in the stadium. i'm good for about 20 dallas fans >> just watch the voice. >> don't come back here with no voice. >> why >> what do you mean, why >> you don't leave it in the locker room. you got to do it right there >> as we go to break, let's look at bonds today little bit elevated. people watching that unemployment rate at a

four-month low average hourly earnings, three-month annualized, 3.1% that's not bad castle.

let's look smat s&p gainers for the week today look at the cruise lines continuing to power forward. up double digits, as the s&p's trying to continue this five weekly gains streak and off to a two-year high still. the dow up another 67. don't go anywhere.

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let's get to jim and stop trading. >> j&j had an amazing week and i thought that they had a great story. just all sorts of good things about drugs, pipeline, but we're back in talc hell. this morning there's a story on bloomberg about an ex-j&j warrior, someone who did defense work, proposed $19 billion talc cancer case settlement, that's twice what j&j has said it would like to pay. this is back on the red hot griddle. a minnesota case coming up it's -- i just cannot believe

that in three days we forget all the good things j&j is doing and back focusing on talc and cancer it won't go away. >> the jury element, the unpredictability. >> oh, my gosh. >> i spoke -- i hired a lawyer to figure this thing out because i thought i was not getting a straight story these are some of the most sympathetic plaintiffs you could ever have, and a jury feels for them j&j, they're hard cases. >> good hour. >> thank you by the way, personally, congratulations on nashville people talking about hey, you guys are doing stuff about what's really happening and that's so sensational. >> lot of good work and great stuff on jassy and amazon. "mad money," 6:00 p.m. tonight. >> great job, guys we also like david. >> i like this. >> thanks for coming back. at least i'm not alone here amo. nyre

>> goldman jan hatzius on the jobs number after a break.

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is. good friday morning. welcome to another hour of "squawk on the street. i'm sara eisen with david faber, live for you as always from post nine of the new york stock exchange carl is on the move this hour headed over to goldman sachs for a big interview next hour with the firm's co-head of global banking and markets. we're going to check in with him in just a few. take a look at stocks right now. we're up, we're down we're up now about 90 points on the dow and heading north. the s&p 500 up 0.2 we're going to talk about the jobs report and the reaction we're getting. treasury yields also just to give you a flavor of the initial take, they sold off in reaction to jobs and continue to do so with yields firmer 4.1 on the 10-year to 4. 2 and that's where we are. 30 minutes into the trading session. movers we're watching, carrier global a top gainer on the s&p and honeywell's a laggard after the news that carrier is selling its security business to honeywell for about $5 billion shares of rh are under pressure. the high-end furniture retailer

blaming high mortgage rates and frozen housing market for it surprise third quarter loss. we're watching lululemon as well the company's outlook for the holiday quarter at the low end of analyst earnings estimates, though revenue guidance was higher we'll break down those numbers in just a bit as well. >> first we get to consumer sentiment since that was out moments ago. rick santelli has those numbers for us rick >> david, there are some significant surprises here on university of michigan now, granted, these are december preliminaries. in a couple weeks they'll change every metric here is kind of wild let's first take the headline, sentiment number, 69.4 last look was 56.8 so we basically have jumped to the best levels since july if you look at number two, which would be current conditions. our last look 68.3 zoom, zoom, zoom to 74.0 the best since august. if we look at the future

expectations, 56.8 was our november final 66.4 that's the best since july it doesn't end there if we look at one-year inflation, well, 3.1 this is -- the volatility in one-year inflation by these respondents is off the charts. it was 4.5%. our last look that was the highest since april of this year, drops down to 3.1, which is the smallest, to find a smaller one go to january of 2021 to equal 3.1. if you go to march of 2021 finally five to ten-year, same scenario at being at 3 to 3.1 forever it jumped up to 3.2 last time to find a higher number than 3.2, you had to go all the way back to july and august of 2008. now it jumps back down to 2.8 and 2.8 is the lightest since september of last year when it

was 2.7. so everything about this number is beyond expectations and if we look at interest rates they've hardly budged. so i think they're looking at the volatility as maybe we shouldn't pay as close attention because rates are still up as a matter of fact, the 10-year right now hovering around 4.22 is up 7 on the day, but only up 2 on the week. two-year note yield at current pace is up 15 basis points on the week sara, back to you. >> but just to recap, rick, it's kind of mixed, right better consumer sentiment, falling inflation expectations maybe that's right in the sweet spot for the fed >> exactly right. better consumer sentiment you would thing would push yields a bit higher obviously, dropping in inflation should push yields a bit lower really, they just didn't move. >> kind of a push there. thank you, rick santelli we add that to the jobs numbers we got today and i think the feeling on wall street just talking to some traders and

investors about it is, maybe the market got a little too excited about the rate cuts starting to price in a 50% chance in march that goes lower the march rate hike expectations after today's number why? because they were pretty decent numbers. 199,000 jobs added in the month. that was better than expected. there were revisions lower by 35,000, wasn't too bad if you look at average hourly earnings a little hot as well, at least on the month-to-month data, 0.4% increase on the month in wages but that comes off 0.2% gain the prior month. that could be why the big jump and if you look at the yearly number, 4% rise in wages from a year ago, that pretty much held steady with trends so you don't have to get too excited about the higher wage numbers. we got a better labor force participation. the rate ticked up it's notable we got lower unemployment in the face of higher labor force participation. all of these point to a consumer

and an economy not in recession. you can say that unemployment lags, jobs lag it's a lagging indicator for sure. >> it does. >> and also, we had some snapback in jobs, especially manufacturing, as a result of the uaw strike. >> right. >> so that helped. however, the underlying picture here is not one of a very stressed out labor market, especially after 525 basis points of tightening and all the excess savings running out and sentiment at the corporate and consumer level being kind of weak it's not bad. >> no. next week, ppi-cpi. >> fed meeting the cpi will be important, obviously, but we won't get a reaction. >> the most important. >> the fed wants lower inflation. it's great to have a good jobs environment and labor market, as long as inflation is coming down that would be the worry that, you know, as long as we continue to have strength in the economy at this period, inflation might be harder to fight back down

this last leg. i think of jeffrey solomon, head of cowen on yesterday, the only one that comes here and says the fed should raise rates and squash this make it clear they want to get rid of inflation, one and down, because there's still some evidence of a strong economy and i think he would point to today's labor market as an example of that they won't do that they made it pretty clear they want to pause right now, but is the market's expectation a little too giddy around rate cuts coming sooner rather than later next year? that's the question. that's why the tone of chair powell next week will be so important on those cuts and how he's thinking about changing policy this is not a number that screams we need to go from hiking to cutting. >> we get cpi and ppi prior to the fed meeting. >> cpi prior to the fed meeting. >> we're going to get commentary at least from him that will incorporate that, whatever that number is. >> the expectation is we'll continue to see -- >> decline, n right

>> higher than target inflation but trend is coming down we got some consumer earnings to talk about you know i always look for the consumer, what's happening i thought the caution out of lululemon was interesting given their numbers have been so strong, especially around holiday spending on thanksgiving and cyber monday here's what cfo is saying about the outlook. >> coming off of strong q3 performance well, did experience some very strong performance during our cyber five period we are mindful of the macro economic environment, as we pov into the balance of q4 and still with two-thirds of the quarter in front of us, you know, being mindful of the pressures out there and contemplating that and how we are guiding we are also planning the business for multiple scenarios to be able to capitalize on any, you know, potential upside >> they're being cautious and

conservative. >> stock has turned around. >> the analysts are saying there's no evidence of weakness there, and they're probably just being conservative and expec expectations when it comes to things like margins they've held the line on full price items and not gone into promotions and seeing double-digit growth and high innovation. there's not much in there, at least that the street doesn't like we'll talk to an analyst about that, but i think it gives you a sense of how everybody is proceeding cautiously because nobody quite knows what's going to happen. just one more data point to mention, u.s. household net worth we got numbers that got buried last night about that in the third quarter, they dropped by the most in a year. why? the stock market had a rough quarter and so that was -- it was the equity holdings. home values stay ved very strong but decreased 0.9% it's a trend and another data point to feed into when wondering what kind of shape the consumer is in. >> all right let's dig deeper into the market

reaction to today's jobs data and any number of other things that sara just introduced as important subjects as well our next guest says there's no room for error in the current market valuations, and investors should consider the realities of an economy under stress. joining us now is morgan stanley wealth management chief investment officer lisa shalllet why do you feel that way let's start there. >> you know, look, i mean this continues to be a market that is selling at a forward price earnings multiple of almost 19.3 times forward, which is where we were when 10-year real rates were sub-1%. the 10-year real rate is 2%. in the long run, you know, valuations tend to follow real rates. i think one of the things that has decoupled here in the current environment is financial conditions have not been following real interest rates

since the middle of the year this has been the conundrum for the fed. they have kind of lost control a little bit of actual tightening, and the fact is, is that the liquidity environment for this economy remains as accommodative, quite frankly, as its been, you know, for over a year yes, we've had moments of tightening of financial conditions from july 31st to october 31st, but as we know from the month of november that has proved extraordinarily short lived. why? because we've had this wild and unpredicted fall in oil prices, down 27% i think that's one of the, you know, underpinnings of this, you know, sudden shift in consumer sentiment and inflation expectations, and we've had oil prices decouple from the dollar,

right. all of these things have loosened financial conditions and while the fed wants to be tight and wants to, quote, unquote, stay on hold, i just don't see any way that they can move towards cutting with financial conditions where they are. >> interesting lisa, on the valuation front, you know, there are those who would point to the seven stocks that represent 29, 30% of the market cap some of them have lower not particularly high multiples, but a couple have fairly high multiples. when you look at the 493 companies or stocks in the s&p, you get a lower multiple what do you make of that bifurcation? is there a case to be made for, you know, going after, perhaps, some of the lower multiple and/or the broader market that doesn't include the big seven? >> yeah. 100%, david. i think that that is certainly been our perspective all year.

we've been recommending, you know, more of a blend between the market cap weighted index and the s&p 500 equal weighted index for passive investors that are more active approach for those who want a stock pick because to your point, those other 493 names are selling at a much more reasonable and coherent and analytically grounded multiple of somewhere between 16 and 17 times forward, and that does make sense to us so the concentration that we're seeing in magnificent seven was last seen kind of back in 1998 we know that this type of concentration tends not to be permanent, and ultimately, it gets undermined. you know, our best guess is if the fed does begin to cut rates at some point it's not going to

be the defensive, you know, secular growth teflon names that are going to lead the market it's going to be more value-oriented, cyclical type companies that have deeply sold off. so financials, industrials, some of the discretionary spaces, some of the small and midcap spaces are where we're searching for value in anticipation of the ultimate shift and rebalancing in leadership. >> i guess, lisa, just on the cautious view about next year, even if you don't think the fed is going to start cutting earlier in the year first half or anything like that, isn't the data telling you that maybe they don't need to and the economy is just going to be fine? after an employment report like this, consumer confidence improves on the back of lower gas prices and so do inflation expectations, by the way, i mean, isn't that a good environment for earnings and for

stocks, if the economy can hold up, which is more important ultimately than whether the fed cuts or not? >> to a certain extent, except it -- depending on the shape of the economy next year we may get a validation of this soft landing. if we get a validation of the soft landing and the economy is strong, it makes putting a 19 times forward multiple on the market very, very hard because what it says is, we're not at trough earnings anymore. we're going to be at mid-cycle earnings, moving towards a re-acceleration, and anyone who has kind of studied market cycles knows that multiples cycle, right, price earnings valuation multiples cycle in the inverse to earnings and so if earnings are reaccelerating, your multiples are probably compressing. so, you know, one of the points we've made to investors is we may be in this see-saw type

tradeoff where the better and better earnings are, the lower multiple investors are willing to put on those. >> lisa, we're going to leave it there, but appreciate it thank you. >> absolutely. as we head to break,s here our road map for the rest of the hour lululemon shares have rebounded from earlier losses. we'll talk to one analyst who calls the stock a buy and has one of the highest targets on the street. >> retail traders seem to be jumping back into the market, at least at levels that we haven't seen for over a year where their money is going, what it may mean for trading to year end. as new york's wealth migration a myth new data you need to see big show still ahead we're continuing to climb here stocks up 120 points [ "i'll be seeing you" by the five satins ]

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lulu shares bouncing back from lows with a beat on the top and bottom line, but the athleisure company warning of a weaker holiday look. john cur ran joins us now and has a buy rating on lulu it's a little confusing, john, because the numbers were strong during the quarter and they beat and raised, so what's with the outlook? >> yeah, happy friday, sara and david. thanks for having me i think the outlook is conservative i think they've proved over multi years they guide fourth

quarter revenue they tend to come out and beat that when they issue a press release around icr. we expect them to raise revenue and eps guidance as early as january. >> we were talking about the promotional environment, clearly fourth quarter, always has that. how much has lulu been able to hold the line? i notice the margins look good, but what happens now in the coming weeks for pricing >> the margins are phenomenal. q3 gross margin was up 23 basis points to 58%. that's the highest q3 gross margin in the company's history. they are holding the line on pricing and promotions, where peers and competitors are being more promotional we think there's more gross margin upside next year. >> why because they can why is that? >> inventory dollars are down year overyear for the first time in a long time they have more innovation coming we think margins of their international business can move higher, particularly china up

52% year over year last quarter. >> the question for a bull like you, john, is what is the right valuation? what is the people premium valuation lulu deserves, given the outsized growth, but growth that is decelerating from where it has been? >> it's decelerating but in line with their strategy. i think they've managed expectations around that our price target is 36 times next year's earnings we're pretty significantly above consensus where we think margin and top line play out next year. the stock is trading a five turn discount to its historical valuation. it's cheap, relative to history. its return on investment capital sitting at all-time highs. the financial model is still inflecting despite the fact that domestic business has decelerated a bit. >> it's cheap at 38 times earnings >> versus its own history it is. yeah. >> does it have that same growth ahead of them? >> lot of growth ahead of them

one of the highest return on capital businesses in consumer discretionary. we think there's a lot of room for upside here. >> thanks for joining us with your take. appreciate it. that's one reason we saw the turnaround, the positive sentiment, john curran from cowen. >> thank you, sara as we head to break, check out the biggest gainers in the s&p this morning led by paramount i might need to make a phone call or two it's on this deadline story. sort of pause in the idea that red bird might be interested in a controlled interesting interesting. >> are you poo-pooing it iav'teen able to make calls. >> "squawk on the street" will be right back after this all right, tandy, what's it gonna be, the drink made from whatever was laying around, or the one made with your drizzly haul?

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news and insights. trade brilliantly with schwab. cathie wood ark innovation etf, bitcoin, coinbase, a number of names moving right now that seem to be doing so as a result of a lot more interest from retail investors in the market. in fact, we haven't seen this much interest in over a year kate rooney has been sort of following the money. there's a meme-ish feel to

what's been going on again what's your take >> yeah. fair to say, meme-ish feel sums it up nicely november is a slow month for trading activity not the case for this year we've seen the stronger retail close since march of last year according to data from jpmorgan, individual traders invested $6.8 billion in the past week half of which went to individual stocks. there is evidence they are ramping up risk as well. one sign is money flowing out of money market funds, seen as a proxy for cash, a way to play higher yields and seeing record close as rates climb for the first time since may, flows to money market funds and the etfs fell into negative territory, according to vander research it's seen traders instead move out some of the big tech defensive names and then into some of the riskier, smaller cap stock names of the russell 2000 that includes some of the crypto proxy stocks we've talked about.

jpmorgan noted an uptick in gamestop in flows. the original meme stock and poster child for risk taking there has been more buying in tesla, the most widely held stock by individual investors, 12% weight in the average portfolio. again according to vander. analysts say if retail flows maintain the trajectory they're on, they could support tesla's stock price and embolden retail traders to make on more risk thanks to portfolio wealth effects around tesla back to you. >> i said meme-ish is there any sense there's a focus on heavily shorted stocks again? >> absolutely. coinbase and micro strategy are among the most heavily shorted out there. something like 18% of the float for both of those. the crypto proxies especially. those are high risk, really volatile stocks and also happen to be some of the most highly shorted. there tends to be an attraction for some people, there's a lot of traders that chase volatility, which tends to

coincide with short selling, not necessarily the right long-term strategy, but absolutely a sign of risk taking there. >> so is the headline the meme traders haven't been wiped out >> apparently not. there are pockets and they're making a resurgence. a lot of this has to do with yields and people repositioning as they assume rates are going down next year you have some more sober trading activity out there in general, but absolutely pockets of meme stocks, risk taking, and crypto investors are back. >> kate rooney, thank you. still to come, goldman sachs chief economist jan hatzius joins us it is jobs day he's going it break down the numbers, and weigh in on what it means for the fed's next meeting and beyond we're back after this. ♪ ♪ ♪

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welcome back to "squawk on the street." i'm bertha coombs. here's your cnbc news update at this hour. israel has agreed to open a new, larger border crossing into gaza a senior u.s. official said the opening was agreed to on the request of the u.s the karem shalom border crossing will be open for screenings and inspections of humanitarian aid. the supreme court is scheduled to consider today whether to hear cases that could determine the legality of the abortion pill. the biden administration is defending the pill's federal approval and is advocating to keep it available by mail. if the justices decide not to take up the appeals, a lower court's ruling would go into effect, restricting availability of that drug. russian media reports today that president vladimir putin announced his candidacy in the presidential election next march. putin is expected to face only

token opposition and is all but certain to extend his rule until 2030 sara, got a feeling that there's just not much doubt in the outcome of that election. >> least surprising news ever. thank you. bertha coombs. the november employment report showing a gain of 199,000 jobs last month. that was slightly more than expected unemployment rate drops to 3.7%. average hourly earnings slightly hotter than expected, as well. let's talk about it with goldman sachs chief economist jan hatzius. he joins us at post nine nice to see you as always. >> good to see you as well. >> on jobs day, so the market now is liking this number because good jobs growth, wages, a little bit firmer, but nothing i think too hot. what's your take >> overall, i think it's a very friendly report, and it i think takes away any concerns that

households are weakening and have been running weaker since the establishment survey so the unemployment rate had been drifting up in recent months and some of that was reversed. that's reassuring. payroll growth is firm, but gradually decelerating, towards the trend pace i think the increase in average hourly earnings helps on the income side, but doesn't really take away the gradually slowing trend in wage growth i do think wages are gradually decelerating to something more sustainable in the sort of 3.5% range by late next year. >> are you sure about that that's the one that fed is going to be most interested in relative to some of the strength in the labor market, right wages are still growing 4% from last year? >> i'm not sure about any forecasts because it is a forecast after all, but i do think that if you look across the different wage indicators, things are gradually coming down to something more sustainabl and i would also point out the

union labor cost numbers that came out this week, unit labor costs are up 1.6% on a year on year basis, which is very benign and consistent with inflation getting back to the fed's target. >> given these pretty friendly numbers on jobs, did the market get too excited and ahead of itself on rate cuts next year? >> i think potentially a little bit. there's been a step back on that post this report the market is looking for cuts pretty early, march at this point, half priced or so, and i think a lot would have to happen for them to go that soon you know, i think the key thing, though, from a broader perspective is that they can cut. if the economy were to see more of a slowdown than we expect, then the fed could cut and could provide some support, and that means the risk of recession is,

in my view, quite low. we're at 15% over the next 12 months. >> what's realistic to expect as far as the first cut where are you? >> i think in the second half of the year is more realistic than in the first half, but again, the -- it's going to depend on the data and they could respond to a slowdown more quickly or if inflation comes down even more quickly to the target than what we have in our forecast, they could also go somewhat earlier. >> what do you expect for inflation into the fed meeting next week? >> we are looking for a firmer number on core cpi, 0.3 rat -- rather than 0.2. i don't think that necessarily feeds through to the pce numbers, which is the index the fed is most focused on because there are quite a lot of differences between pce an cpi this number could look firmer along the lines of what we saw in today's report.

>> jan, to change it up for a second, your team at goldman came out with projections in terms of productivity gains as a result of ai we're a number of months later, so much news i'm curious, i think it was a $7 trillion addition overall to global gdp, at one point 5% percentage point increase over a 10-year period in productivity are you still there? are you updating the numbers given the advances that have taken place? >> we're still there there's, obviously, a lot of news, but it's still quite speculative because it's still quite far away our basic view is still that there is a lot of low and mid-level administrative programming and research in the economy that will be replaced by ai over time not next year or next couple years but on a ten-year horizon and that can really boost productivity growth over the longer term. >> the productivity gains you're

talking about is not part of a forecast that you would make in any near term trend? >> not in the near term. we have not made any changes to our near term productivity forecasts. we're still thinking about 1.5% in the next couple years if you go out a decade, we did lift a longer term potential gdp growth forecast by 0.4 of a percentage point, which is, you know, a reasonably sizable amount, even though we adjusted for some of the offsets if you invest more in ai and generate ai benefits, you know, firms are going to probably invest a little bit less in other types of technology and so you need to adjust for the offset. nevertheless, we're getting a meaningful number. >> finally, just as we game out 2024, jan, big question about the consumer, especially with some of the warnings we're getting from some of the retailers. jobs are in good shape, so that bodes well for the consumer, but excess savings are running low

i mentioned the household net worth numbers which came down a lot in the third quarter can the consumer avoid a recession next year if jobs continue to remain healthy and tight, or is there a risk? >> yeah, because -- i think yes, because jobs are one aspect of overall real income growth jobs are still growing at a decent, though slowing pace. wages are still growing at a decent, though slowing pace. and inflation is down a lot, so at this points, real wages are growing. a year ago real wages were falling, despite 5.5 or 5.75% for nominal wage growth. if you put all those pieces together, then real income of households is growing at a good pace we think close to 3% next year after something like 4% this year and that is more important than excess savings

excess savings were crucial in 2022 when you had abig decline in real income, but now excess savings in some sense are nice to have. what's helping consumer spending grow is the increase - >> you think they can pull the whole thing off without a recession. >> 2% or so for real consumer spending growth next year is our expectation. >> jan, thank you very much. it's good to talk to you on jobs day. jan hatzius, chief economist at goldman. still ahead a look at new york's so-called wealth migration and new numbers pushing back on the myths. stay with us 'vlo se ea56 points. wee stomstm. s&p goes to the flat line. go. and go and go and go. (tense music) but what if you. (tense music) stop! you work hard. it's time for a bank that'll work hard for you. everbank performance savings is built to put your money to work with some of the highest rates in the country.

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welcome back to "squawk on the street." carl joins us now live from goldman sachs hq what do you have ahead >> sara, pretty nice treat in the world of live television

we're live on the trading floor where later this morning we'll talk to ashok varadh about everything on our plate. very rare interview in terms of television we'll talk about inflation and rates and m&a and the economy and the playbook for next year and kind of try to put into perspective some of the things that happened earlier in the year, why certain trades that the consensus believed in, didn't happen. china's reopening, regional banks in the spring. a great conversation coming up at the top of the hour or just after. >> thanks, carl. despite multiple calls new york city is seeing an exodus both during and after the pandemic, new data is showing the flight of wealth has been greatly exaggerated. robert frank here's with some numbers that i guess was it a myth that wealthy were the ones departing? >> it depends on how you like to see these numbers. the reports from the fiscal policy center saying the wealth flight from new york during

covid was temporary. the report said new york lost about 430,000 residents between 2020 and 2022. nearly a third were making more than $172,000 a year. by the end of 2022 the out migration rates for those top earners returned to prepandemic levels the report said 24 hundred millionaire earners moved out yet the state created over 17,000 new millionaires. the overall millionaire population during the pandemic grew, despite that 2021 tax hike in new york state. quote not only is high earner tax migration largely a myth, the report said, but there is no need to fear for the state's fiscal and economic future state controller tom denapoli issuing a report saying out migration still exceeds the prepandemic levels he said given the importance of high earners in new york state, quote, policymakers need to make sure the state remains an attractive, affordable place to work and live.

this debate will only intensify as new york faces a $4 billion budget deficit next year legislators are urging the governor to raise taxes on high earners. this is becoming important as to what effect higher taxes have on the high earners and tax base. >> $4 billion state or $4 billion city the city also is going to be facing - >> the city is facing one. >> the immigrant crisis and housing. >> it's part and parcel because the city takes a lot from the state. they're asking the federal government for money a lot of this is about spending. if you look at spending today versus prepandemic, it's about 30% higher on a statewide basis. the budget was $1.75 billion in 2019 now it's $230 billion. >> add in new york city's budget of over $100 billion. >> that's right. >> and you are -- we're equal to florida, the city of new york. >> that's right. >> in terms of budget. >> they've got 19, 20 million people in florida.

>> remember the combined city and state tax rate and federal for someone who lives in new york is about 52% right now. 52%. >> don't need to be reminded of that, but thank you. >> the question for legislators and governor hochul saying, look, we don't have room to go much higher once you look at a combined rate of 14% state and city. >> speaking of bad, bad numbers, did you see the california deficit today. $68 billion. that was a record for california i think also hints at the exodus from that state. >> yeah. and the question that states will have, all these high tax states now that they're not getting revenue from the federal government and not seeing the big capital gains increases we had in 2021, do you cut services, which they're trying to do in new york with a lot of pushback, or do you increase taxes? there's not a lot of room on either side politically. >> yeah. >> from the progressives to cut spending or from the more moderates to raise taxes this is going to play out -- this will be the big story on the state fiscal level as to

what these states do. >> meanwhile, new york state did have an exodus of people no doubt about that. >> no question. >> it may have been people who were dealing with higher prices who chose to go to places that it is less expensive to live. >> it's not mutually exclusive some people left for affordability reasons and others because of taxes this report seems to suggest well, most people left for affordability reasons and, therefore, we shouldn't worry about taxes. both could be true the fact is, out migration is still higher today, especially for the top 20% of earners, twice as high today than it was prepandemic. even though it's coming down from that 2020 peak, it's still higher. >> come on, you and i --i coul name -- we could name so many people we know really rich people who moved to florida. a lot of that is, obviously, also for the end of life stuff. >> it doesn't take that many of them, those really high end earners, top 1% pay 40% of the income taxes in new york state, doesn't take that many to affect

revenues >> thank you. >> robert frank. still to come, another strong jobs report this morning. unemployment rate falling to 3.7% national urban league's mark morial joins us with his take on e mband why he sees a soft landing ahead stay with us whatever you see, 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. ♪ unnecessary action hero! ♪ -missing punches? -unnecessary! -check reversals? -unnecessary! -time sheet corrections? -unnecessary! -unentered sick time? -unnecessary! -go! -unnecessary! -go! -unnecessary!

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let's get back to the final jobs number. the unemployment rate is 3.7%. that's a four-month low. our next guest predicts a soft landing ahead, mark morial, former new orleans mayor i'm curious about your soft landing prediction, what you're basing that on. >> this is important to recall there have been many commentators who have predicted a recession the last 24 months it has not come to pass. when you have consistent job growth in the manner in which we've seen, a continuation of a decline in inflation, continued growth in the economy, it points to a year, 2024, where we could have even a stronger economy so, i don't see signals that point to a recession i see signals which point to the

continuation of job growth if the fed, as i believe they should, should put the brakes on interest rate increases and really begin to consider whether interest rate decreases would help the economy, then 2024 could be a strong year for the people it's a continuation of the comeback of the economy after the post-covid recession engineered by the president's policies and the federal reserve's efforts to kind of navigates between inflation and promote continued growth i don't see a recession. i see a grow ing economy in 202. what could stop that an international crisis in what we could see, could have an effect that's beyond, if you will, what is happening here on the public policy front when it comes to the economy. >> mark, i wanted to ask you

about your role at the national urban league you have dedicated yourself fighting for economic equality we talked to you a lot about this over recent years given what we're going through, the testimony we heard from the presidents of harvard, m.i.t. and penn, which i believe is your alma mater, what do you make of some of those comments and what we're dealing with, especially on campuses and anti-semitism? >> so, i did not see the testimony before congress, but let me say very forcefully, i believe in the right of all students to free speech to free pretest. but free speech is not hate speech there's a distinction between the two. i abhor and condemn anti-semitism, as i abhor and condemn anti-black racism, islam phobia and the right we must create climates on

college campuses and say to students, you do have a right to free speech but there's a line to be drawn in condemnation of people based on race, religion, ethnic origin, sexual orientation is inconsistent with the responsibility that goes along with the exercise of free speech that is what we believe. that is what we all believe. we in this generation balance the two is what we see being tested on college campuses today. >> it seems like a simple and basic sort of idea, but if you watch the testimony, it would seem none of the three presidents were able to characterize calling for genocide against jewish people as harassment. they said it depends on the context. i do wonder, given your experience with dei departments, if you think that something has gone a little rotten within some of these dei programs at

campuses, potentially in corporations as well, where they're focused and whether they are all-inclusive when it comes to protecting diversity and inclusion? >> i think that type of argument is a diversion i think it is scapegoating programs that have at their core the necessity to include all people what has created this is trumpism it has created this -- the type of actions you saw on january 6th and in charlottesville the notion that harsh rhetoric and violent threats, that is what creates the environment not the idea of diversity, equity and inclusion that is an effort to place the -- >> why can't these dei departments protect jewish students on campuses and make them feel safe >> the responsibility to protect jewish students is not on the dei department

it's on the board of trustees, it's on the executives of universitieses, it's on the presidents of universities not on the dei department. it's bigger than that. the protection of students is the responsibility of every university not this department, not that department i think it's important for college presidents to say, we condemn anti-semitism as we condemn all hate and we're going to make sure that our university is a state of free speech, but that free speech is not hate speech. >> preappreciate you taking time with us this morning. >> appreciate it thank you. >> mark morial. before we wrap up here, sara, again, i just come back to movements in the market, particularly the sector i focused on for so long paramount, discovery, warner bros. both up on this rumored story and deadline about paramount in particular and national amusements and the

control position they have there and whether or not somebody might be able to buy that. if you were to actually follow that scenario to its logical conclusion, you'd be paying the premium for the national amusement stake, not for paramount. just wanted to make that point again, i've got nothing to share at this point. my calls, one i was able to make during the break - >> i'll give you an hour >> it's friday, man. it's friday. >> it's 11:00 a.m. >> these are heavily shorted stocks, i would add, as well, so they are moving in particular. >> there's always been this idea that paramount might get bought. >> i think next year you have to consider consolidation broadly speaking amongst some of these companies as a real possibility. regulatory oversight, though, continues to be a potential impediment. have a great weekend, everybody. sara is staying right there. you have another greatouof quk t seet.r

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our award-wining trading platforms. unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. and sharpen your skills with an immersive online education crafted just for traders. all so you can trade brilliantly. good friday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla live from goldman sachs trading floor in lower manhattan sara eisen at new york stock exchange a rare interview with goldman's head of equities >>