and he has put together a team of people that is truly outstanding. >> we want to thank you for what you're doing. i've been blown away by what i've seen. thank you for coming in today. >> happy holidays. >> happy holidays. folks, that does it for us today. make sure you join us right here back tomorrow. it's time for "squawk on the street." see you later. >> bye-bye. ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the new york stock exchange. final fed decision of the year, futures holding on to gains as wet get more signals about disinflation from today, ppi, a goose egg. ten-year yields, about 4.16%. our road map begins with inflation and fed expectations. investors await today's rate decision as stock records continue to pile up. plus shares of pfizer are sinking. that ahead of the open on weak 2024 revenue and profit

forecasts. and tesla has some autopilot concerns. the auto maker is issuing a recall of sorts for nearly all of its vehicles sold in the u.s. >> you just called it a recall. >> we'll explain. that's the word that's been used, but it's not really, right? it's a software upgrade. >> and ios 17, i got it in the middle of the night. we'll begin with the market rally. ppi emerging, lowest year on year since june. >> these numbers are all going the right way. i still think that they're going the right way, so why not have them continue to go to right way? you just don't know what's possible in terms of what could come back, so why let it bite you, given the fact that unemployment is still under 4%? as long as unemployment is under 4%, i don't think there's any reason to let up on the fight. >> okay. >> especially because there are some existential issues of how much debt -- what could happen in terms of the there's more spending in washington.

i mean, i know these things seem small, but they all add up. >> they don't seem small, jim. we have discussed them. we sort of do, and then we go for a while, and then we do again. every time there's an auction now, we're going to focus on it more. we look at the maturity schedules in terms of what treasury's planning. so, it's not an insignificant factor. the amount of issuance that has to take place, both for refinancing purposes and for funding these deficits that we're running. it is important. and of course, the words of gundlach a while back when he was with wapner talking about $2 trillion in interest costs if rates were to stay where they were over the next five years in terms of what gets refinanced, that gets your attention. >> yes, it does. it does. there's an amazing document from fred smith -- i don't know if you guys know fred. he built fedex. he did this cool-it speech, which is making the rounds, and it's so informative, talking

about the huge amount of debt that the government has taken on just in the last few years, calling for a debt freeze. but when i read these things, i say, you know what? look. we have to be worried about inflation still, and the money coming from the government, carl, is still gigantic. and i think, potentially, very inflationary for 2024. >> this was the subject of a b of a note yesterday, entitled, in part, "fed can't touch this," looking at areas of the economy that rates have no power over. one is the amazing amount of home equity and liquid assets that the american household has, but government spending is, in their view, going to keep rates higher over the long-term. >> i'm with that. look, i know fred from way back, and i don't want to say, listen, i read this one guy and i feel this way. but it kind of jives with what i have been thinking, which is that we own a bunch of stocks for my travel trust that are based on largess of the government in 2024, and you

know, that's just going to -- that's just a major cause of inflation. and fred talks about how the only reason we get away with it is we have a strong dollar so you can refinance things. if i'm powell, i'm going to say, there's nothing i can do. i got to wait a little bit. let's see what happens. it's not like anyone is calling for a freeze, david. you're not getting anything from washington which says, you know what? we're done spending. kind of the opposite. >> no. i mean, the biden administration will say they've got certain plans in place that will ultimately reduce the deficit over the next five to ten years. let's not forget, it's been -- doesn't matter, party-wise. everybody's added to it. trump, it was like 6 or $7 trillion that was added. >> $7 trillion. yeah. >> yeah. >> and that's disconcerting. i also think, look, you've got auto. you've got home. you've got food. these are things -- you know, you got gasoline going your way,

but gasoline could switch. maybe oil bottoms at $68. the best chartists i know who called the top in oil is calling the bottom in oil, carly garner. i think it's no time to be sanguine. these numbers are going his way, but how many months -- you could argue they have been good for six months, but you can't argue they're this low for six months. if i were -- there's no need to -- >> what's going to happen at the press conference today, jim? >> i think he's going to say to be the data -- data dependent and therefore i have to wait to see how the data goes. nothing wrong with that. >> no. >> i mean, all these people who say they want to cut, they're very wall street cut. they're looking at on high, and there's jason, look, i got a chance maybe to drive the price of a home down, keeping mortgage rates higher than they are. maybe the home builders will have to cut price. or let's wait until all these rental apartments come on. playing for time is not a bad

thing. the one i don't get, i mean, i was with someone, you know, i mentioned the other day, this was someone who is a huge seller of used cars, and you know, they're not a lot of used cars around, and you're paying a lot for them in interest. 30%. this guy was charging 30% interest. i said, you know what? >> seems like usury. >> 30% interest, i'll have my bond. just like shylock. >> ""merchant of venice."" >> autos have to come down in price. homes have to come down in price, and someone could say, well, listen, they're never going to come down in price. i'm not buying that at all. they can come down. >> we got an upgrade of horton today. kbh sees a pretty flat housing market next year, but the builders are going to gain some

share. >> we've got this problem with mortgages, so therefore, there's no secondary market. people aren't selling. everything is cured by lower price. and you're going to have a lower price, because people are not going to be able to afford these homes. someone's going to cut price. it has -- it's been very minor price cutting. i think if you keep rates higher, then there's going to be more price cutting and then powell can at least fulfill that, which is making it so that there's a little more american dream. i just think that -- other than pressure from strategists saying they've got to do it in the second half, they're all just playing this parlor game. these people have been wrong almost all -- david, remember the inverted yield curve of the recession? >> it's the same people now making these calls. they wake up and say, "i got to make this call." why don't you just wait? >> futures look up. could be a nice day. >> dude, this is the best performance between fed meetings since 2009. >> i think there's a rally to year-end. i mean, we're -- look, there's not a lot going on. >> not a lot of time left

between now and year-end. >> look at this. top pick, top pick, top pick. oh, j&j, downgrade. oh, top pick, top pick. this is a sea of top picks. >> is that all you -- >> l3harris. >> l3harris was another one. >> clorox, amazon, google. >> hello. ulta is a top pick. >> why wouldn't it be? >> disney. top pick, top pick, top pick. clorox, top pick. in that environment, you come in, and you got a lot of top picking, and it's -- you just feel like, wow, that's a lot of things i got to buy, other than church and dwight, a spac. >> not a lot of pfizer top picks for '24. the drug maker does issue some guidance below forecast amid the slowdown for demand in its covid-related products. company does say revenue forecast includes the expected contribution from the acquisition of cgen, jim, but

man, street's 3.21. >> the analysts are basing its on paxlovid. no. you have to understand, pfizer -- i had dr. borla on. pfizer has made a series of acquisitions, and their performance in the acquisitions is quite poor. for instance, i have nurtek. this is something when i have a migraine or think i'm going to get one, it dissolves in my mouth in three minutes, and in 15 minutes, i have no migraine. i'm the chief spokesperson -- >> we're all aware. >> that's not the point of the story. >> what is? >> the last full year before dr. borla spent $11.6 billion to acquire biohaven, which was this, it did nearly $500 million in sale. $462 million. in the report this morning, they reported $646 million once they bought it year to date. they had a projection of $861 million. it was -- but when he bought it,

he said he was going to do a billion. i mean, in one year, he was already short $140 million. i said this was execution. this thing should be flying. it got approval to be able to have so if you wanted to do -- >> there are other migraine drugs. there's a new class of drugs that are incredibly effective, and life-changing for some people, frankly. >> well, there's the shot i take. >> yeah. >> but i'm just saying, his projections, the projections that he put to the street, those are like a fortune, david. give them back to me. but when you buy something for $11.8 billion, and you miss the numbers, this is my point. you miss the numbers -- >> these expired. 10/22. >> you use it or lose it, jim. >> there goes that. >> i mean, stock's gone from 52 to 26 in about 12 months. >> well, i mean, what was the -- remember frank, the old cfo? >> of course i do. i remember a long line of ceos

as well. hank mckinnal. remember that? >> he told me, listen, we've got a really bad loss off. we're going to make it up with a series of acquisitions, and we'll use the money from covid. he retired in 2022. >> open to buy a series of companies. se seagen being the largest but there were other acquisitions as well. >> i didn't think the execution was all that great. >> on biohaven, you're questioning the execution given the projections and what the actual numbers are. it's a good point, jim. we've seen other companies buy things too richly and then sell them or not generate the cash flow necessary, and take on debt in order to do so. you know the company i'm thinking of. and it went on. and you can only do that for so long. that would be ge. >> that's a tough compare. >> well, listen, by the way, when it comes to compare, i've pointed this out. it's 23 years of nothing here for pfizer in terms of

shareholder value. they paid a dividend. but there's 25 years, all right? that's not good. >> that wasn't wealth destruction. >> isn't the lesson about sort of thematic discipline? when you're lilly, you stick with diabetes and hammer away at it for 30 years without getting distracted? >> did you hear ken langone this morning, guys? i thought, on "squawk box," langone was articulate on succession and the importance of succession, picking the right person and how critical it is. and he's been in lilly forever. and by the way, the stock did not do a lot for a period of time, and then it exploded, but take a listen to langone on lilly, why he thinks it's going to lot higher. >> i think lilly will be the first trillion dollar drug company in history, why? the pipeline. and god bless john, in the dark years, when everything was falling off a cliff, he was firm

in his commitment to spending the money on r&d, and protecting the dividend. john put the horses in place, and they got a team out there with david riggs and dan, who runs research, and i guess he's got all strategy now. it's all about the people. i don't know how you address pfizer's problems now, because it's huge. it's spread out. >> you guys know the cfo. her level of discipline i find to be as great as i've ever seen. >> you're talking about at lilly. >> yeah. the cfo council, i manage it and say, could you put me next to her? she's so brilliant, and they're so exacting. they have spent fortunes on things. the money they're spending, by the way, on their dementia drug is going to pay off big, i think. >> and by the way, he pointed out, from 2002 to 2018, practically, stock did virtually nothing. then it exploded.

>> which is when you have to defend yourself from activists and others where the pipeline might get thin at times. >> true. >> yeah, and look, novonortis was first. we had jacobs on, and jacobs builds his facilities. huge facilities coming on in europe. north carolina, can't build them fast enough. it's a capacity issue for his diet and for diabetes drugs, and they just had a commitment to this so early. they spent a fortune, by the way, on a lot of different franchises that haven't paid off. >> right. >> but that's what happens. >> what will you do if you're pfizer now, though? what do you do? to you keep plowing ahead? is it oncology? >> next year is going to be the year of some consolidation, yeah? >> i think that the cancers that i remember going over with seagen, the cancers, my mom died

of kidney cancers when she was very young. they got some stuff for kidney, but they have some really terrific combinations for some cancers that, frankly, are fatal that could be made into maintenance. so, i would plow the money into the biohaven because that migraine drug -- we thought it was going to be a $2 million drug when we were analyzing it for the foundation -- when i was analyzing it -- and when this -- i think this seagen is monster. s seattle genetics, they're addressing cancers that everyone thinks are death sentences, and they have something. if i were dr. bourla, i would say, listen, it's not a hail mary by any means. let just throw a long ball to seagen. that's what i would do. >> all right. >> can you get -- what is that? >> see in a second. it's not on the ground there. i'll pick it up. >> i want you to step on it. >> i think october '22 is okay. it's only a year.

>> all right. >> they give you a little cushion, don't they? >> it's '23? jeez. >> it's almost 2024. >> it's good that you haven't needed it. >> well, i didn't take it this morning. >> you took a lot of other things. >> indeed. when we come back, triple whammy for elon musk. tesla caughts, prices for tax credits, denial of a spacex subsidy. some picks for '24, calls on hertz, target, j&j, ferrari, as futures hang in there ahead of the fed decision. don't go anywhere. at pgim, finding opportunity in fixed income today, helps secure tomorrow. our time-tested fixed income suite, backed by over 145 years of risk experience, helps investors meet their goals. pgim investments. shaping tomorrow today.

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tesla recalling nearly all models sold in the united states. more than two million vehicles. the move follows a two-year investigation into crashes connected to its autopilot assistance technology. ntsa says tesla's autopilot system may not have been sufficient to have controls in place to prevent driver misuse. there's been a bunch of attempts, jim, to quantify the number of crashes involving autopilot since 2015. somewhere in the range of nine deaths, 11 crashes. that's just in this country. >> we just had one. virginia sheriff's office says tesla was running on autopilot moments before a tractor-trailer crash. this is a story from yesterday. so, i mean, i do think it's pertinent, but david, the way

that the description of the remedy and the 573 safety recall report, it's a recall, but it reads very much like when you get an apple note saying that tonight you're going to get new software, and so, i'm not saying that it's not related to the deaths. i am saying that there is a notion that this is a great car company that's trying to get things to be better than they are. and i'm going to give him that, because i know that's from your interview, something he would do. >> yeah. full self-driving continues to be the goal. they're getting close, but i don't believe they are officially there yet, jim. >> yeah. ford thinks that the silver bullet is the hands-free, not beyond that. i don't know. i mean, i like that approach, but i'm not going to say that if musk thinks that something can be solved, i mean not going to say it can be solved.

that's silly. >> it is classified as a recall, even though it doesn't mean bringing your car to the dealer, so to speak. >> over-the-air software remedy, which is expected to begin deploying to selected vehicles, software version, new one. >> the same way that apple, by the way, is going to have to -- interesting stories from "the journal," but apple is going to have to update their own security, because people steal passcodes at bars. and then you can get in and get everything. >> any particular bars? >> i don't know. >> i mean, i have a mexican bar. >> just don't share your phone, you know? be careful. just be careful. >> i just think it reads a little different from just a pure recall at this point. >> yeah. we'll talk about it, talk about the loss of some of these credits as well. got some new ev growth estimates from morgan stanley today, pretty interesting. we'll get cramer's "mad dash," countdown to the opening bell. futures look fairly positive in the wake of some of that cool

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take a look at the premarket. even with everything that's been handed us this week, cpi, ppi, the fed, s&p still on track for seven weeks of gains. that would be the longest weekly win streak in about six years. opening bell coming up in just over five minutes, and don't forget, you can catch us any time, anywhere, just listen to and follow the "squawk on the street: opening bell" podcast.

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time for a "mad dash." you hear those -- >> yeah. >> sounds like somebody's hitting something and then whooshing. that's the new introduction. >> all right. >> to the -- >> good stuff. >> to the mat "mad dash." i like you walking by the bull. >> i can't find the bear. i was going to walk around the bear, but it's been seven straight-up weeks in the s&p. >> we're going to do j&j. >> i think we're really hard on pfizer, hard on dr. bourla. we forget that drug companies have -- they struggle, and j&j has the drug, stelaro, and wells fargo today downgrades j&j, saying they don't have enough to prere pr replace it. only at the very end do they mention the possibility of setback in talc. but this is just kind of a tough

business. and if you're j&j, and i think you're sitting there and thinking, wow, i mean, we've got a lot of money. we're doing everything right, but we do have drugs that come off patent. and that's just the clock ticking. so -- and i don't think anyone questions that j&j's not investing. >> no, they're not. i mean, i know. but there's some people -- i'm looking at the longer term. let's go ten years on j&j. it's not bad. it's nothing compared to pfizer. >> it peaked when they lost some talling talc decisions. >> abbvie has done very, very well. >> it's got a big dividend. everyone thought the dividend would have to be cut. no. they made some acquisitions. by the way, they have a rival migraine drug. >> they made back-to-back weekly acquisitions there almost roughly the same size. >> i just think that, let's understand that dr. bourla isn't

the only one with a drug coming off patent. you're not sitting there and saying, i have 17 years and then i got to give away these chocolate bars. let's understand the industry itself. not such an easy industry. >> let's get this under way. at the big board, it's the explorer's club recording scientific expeditions, and at the nasdaq, ecd auto design, celebrating a listing via spac. at 4,650, jim. 50 points from goldman's target for the end of next year. >> well, look, i think that we haven't heard from some of of the more bearish strategists. they like to have a down week to talk, and they haven't had a chance. this is an extraordinary time, i think, because historically, right when you think that the fed's going to pivot from raise to no raise, it's been a great time. just a great time. you're anticipating. no one's saying that the economy is weak, and that's why they're

cutting. it's historically been a halcyon moment, and it's playing out as a halcyon moment, and i think there are a lot of people who fought it, because they figure we're going to be in a recession or stocks are too high, and it's not playing out that way, and it's not just magnificent seven. there was a very good upgrade at the rails today. we're seeing a lot of belief that the pure industrials are going to do well. i just think the bangszks are coming back. there's a lot of things that are working, and i don't want to tell people, well, that's all going to reverse itself, because that seems fanciful. >> just about every sector is overbought on a short-term basis,except for energy, which is oversold. >> oh, my, energy is just a disaster. natural gas. i mean, almost no one can make money in natural gas at 2 and change. we are exporting so much oil, and a lot of people felt that nobody could touch the saudis in terms of being at the fulcrum, david, or the price. now it's us.

and we have -- we're not even spinning the rim cap. we're just getting so much for each one, we've crushed the price here. we've crushed it. >> this is all good for the consumer as we head into the home-heating season. it's good for that too. >> well, remember, home heating is better than gasoline when it comes to consumer savings. >> yeah. >> and we have more natural gas than anyone in the world. we don't know what to do with it. we can't ship it up north because of people fighting the pipelines. >> we do know what to do with it. we have huge export terminals. >> they're doing -- >> by the way, do you have other parts of the world that no longer get russian gas, as you know, so we have had to figure that out. >> david, there's something that has to happen, though. it has to get cold. it wasn't cold in europe. it's got to get cold. >> last winter, there was a potential crisis looming. >> not this year. we'll ship them all they want.

>> what have they done to replace all that russian gas in places like germany? >> they have ours. they have floating ships that have all the natural gas they need. look, i mean, something happened with natural gas in our country. it just turned out to be we had a lot more -- i remember going with aubrey mcclendon to orhio. we went to ohio, and he said, you are going to see oil from -- it will be like spindle pop, and i got there and it turned out to be natural gas. we couldn't see anything. but we had to put it somewhere. put it in pipes, send it overseas. >> meantime, $2 away from what would be a 52-week low on crude. gasoline, thanks to gas buddy, some states are going to see $1.99 gas. ohio, wisconsin. >> that's incredible. paid $2.60 in dallas and just kind of felt, wow, something's

really on -- here's something that's down big. and you felt like, well, geez, you know, that's good for the consumer. look at that, will you? and yet, there's occidental doing a deal, all the time, doing some -- all of them are doing deals, david. >> jim, i want to -- we've talked a lot about pharma this morning, whether it be pfizer or the success of lilly, j&j. let's talk verdex. >> i'm in shock how great that's doing. >> you've talked about their study of a peripheral neuropathy treatment phase 2 trial here. it's a non-opioid drug that treats pain. and the company is saying that in phase two of what they're call, dx-548 to treat patients with diabetic peripheral neuropathy, it resulted in a statistically significant and clinically meaningful reduction in the primary end point of change from baseline, the weekly average of daily pain intensity. >> yes, and therefore, i think

the idea that it's up 29, look, right now, it's diabetes related. if they can say, that's universal pain, well, i mean, this could be one of the biggest drugs of all time. we could make it so that you don't get, you know, three tablets or 30 tablets of oxycontin after you had an operation. >> right. >> you get addicted after six. so, this is really fabulous news. >> yep. i am seeing some research. efficacy actually looks as good as lyrica, although it's a tough trial design. no stack comparison between the arms as expected. a lack of dose response leave a lot of room for interpretation. this is just one research report here this morning. more than 50%, though, respondents, showed pain reduction. useful metric, looks quite good. there will be plenty of time to assess the data as it continues to move on in terms of the trial. >> that's a very interesting comparison that we should mention. i take lyrica for nerve pain,

and that was a fabulous pfizer drug that went off patent. and it was, like, boom, that was a huge cliff. the drug's somewhat effective. unfortunately, it's -- tremendous weight gain. this doesn't seem like it has that side effect. >> jim, a lot of discussion about opex this friday, biggest ever, $5 trillion. the rebalance and the expiration. is that what's going to get us off of what some argue is a stuck position in equities? >> i mean, just -- >> i don't know. i guess, a lot depends on the next 12 hours. >> yes, it does, but you know, let's see. give you the power of this, all right? yesterday, lindy was rumored, the great industrial gas company, we own them for our travel trust, it was rumored to be added to the nasdaq 100. >> i'm just asking, because take two is -- yeah. >> and there was a switcherooni mcfatty. take two got in. gta 6? no, this is more important.

take a look at lin. holy cow. on the rumor that it was going to get it -- now it's down 15. my thinking is, if you've got something indexed, i mean, lin's crush. take two is a surprise. wow. there's a lot of money just waiting to be put to work here. i think it could be amazing. >> you think it could what? >> the indexes are moving. you index something, put more money in the index. >> this is a market that's etf and index-driven and by the ctas, the algorithmically trading firms. we're marginal players here who care about the fundamentals of stocks. marginal players. >> i saw sam alternman last nig at the "time" person of the year. oh, man, are we marginal players. he's talking about the super brain. >> right. >> what are we, like the sub-brain? >> yes. i mean, elon musk said the digital god.

we're going to have a digital god. >> what did peter gabriel say? in the future, the beauty is going to be in the imperfection of things. >> i'm gorgeous. you know, listening to altman, you did get the sense -- openai -- that it's not going to be like years from now. >> right. >> like, maybe nine months from now. >> things are -- they just -- it keeps, you know -- things keep getting faster. i'm trying to think of the term, and it's escaping me. >> sky net. you're thinking of sky net. >> the rate of change is only accelerating in terms of what this can accomplish and what generative a.i. is going to be able to. gpt 7 is going tosh s be so muc more powerful than 4. >> jensen huang, the ceo of nvidia, would tell you, look, you can take the hundred smartest people at your company, and they wouldn't be equal to one gpt. >> so, is this the end of days

here? is this the end of the -- of our non-digital god life? >> on the beach? what are you talking about? >> i don't know. just trying to figure it out. >> let's just say that -- >> what did he say during his thing? did he say anything interesting, altman, during the interview yesterday? >> i thought it was interesting that we're useless. that we are going to -- that the -- that there are machines that would do much better than we're doing. they may not be as entertaining, or they may be entertaining. i don't know. i think that when you list -- sometimes there's entertaining when they go back and forth. i thought that gemini was entertaining. now, by the way, nvidia, up, because secretary raimondo made it very clear that they are not going after nvidia. >> okay. >> there have been stories -- >> in your interview last night with her on "mad money"? >> yeah. there was a concern that nvidia's giving china more than it should, and -- >> what did she say? >> she said, no. i talk to them all the time. made sure they didn't do

anything that was so-called cutting edge. they're complying to the point where they -- there are some companies that i think are not complying and we're not really clear. but i know that nvidia is complying, and i think that's one of the reasons it's going up, because the silver bullet against nvidia was that perhaps they're not playing the game. and they are. >> meantime, google and affirm partnering up on buy now-pay later for google pay even as "the journal" has this piece about how the app store economy is under threat. b of a saying apple might have some headline risk after this san francisco jury decision. >> wow. i think that we saw alphabet got, you know, top pick today from affirm. not affirm. affirm is up. they did not get the defaults that people thought, because they've used -- they use artificial intelligence, which is clearly, in this case, a better lender. >> i guess so.

i guess so. >> i'm bummed out, david. >> what are you bummed out about, jim? what's wrong? >> if we're just not as good as the machines, how do we justify our existence? >> that's a great question. that's a great question. >> people said the same thing about email. we didn't deliver a letter as quickly as it can deliver an electronic piece of -- >> this is a little more existential than email, carl. >> it's just when sam altman's through and talking about the super brain, you don't get -- i mean, yes, the super brain, you can talk to it. maybe it's going to be in your pc. tell me what -- give me what you think david faber should say, but make it better. >> yeah. well, look, this microsoft nuclear news. they're not only going to power a.i. with nuclear, but then use a.i. to expedite the nuclear approval process. >> well, three mile island. i don't know. i'm pro-nukes. >> just bauy uranium. lot of small nuclear power

plants. clean, safe. >> i felt after listening to sam altman how you make a lot of good points about how we're not -- >> we're superfluous. where is your digital god now, moses? >> he always defaults to "the ten commandments." >> why wouldn't i? cecil b. demille. that was a big movie. >> sophisticated. mostly expressions. >> until i'm replaced by my digital avatar, i'm going to do a faber report. they're not going to -- they're going to have to pull me out of here. look at that face. don't we want to keep seeing that? >> that looks better than any machine i've ever seen. >> update on the sale process of u.s. steel. that's what we got for you this morning. board's going to meet today. u.s. steel's board is going to meet today, and they are going to go over what i am told by people familiar with the process

is a number of bids that are in excess of $40 a share. now, i'll give you a little more granularity to the extent i have it, but some of it is fact, and some of it is more in the realm of, i'm not kplcompletely certa. multiple bids are in excess of 40 bucks a share. doesn't mean we're going to get an announcement tomorrow, by the way, from what i'm hearing, because there still could be some back-and-forth here, you know, as they make their decisions, ostensibly about what represents the best bid for the company. you see the stocks moving up a little bit on that. we know there are any number of bidding groups. i have been through them prior. let me give you a little bit of insight on at least two of them. cleveland cliffs, certainly above 40 from what i understand. also, cleveland cliffs, remember, when they made their original bid, kind of put this company into play in a sense, when they -- back in august, it was 35 bucks. it was $17.50 in cash, the rest

in stock. composition of said bid, i believe, is similar, though it may be weighted a bit more towards more cash. again, i'm not certain on price, into the 40s. certainly has to be thought of as a strong possibility. and then, also, including things that are going to mitigate the risk of antitrust review for u.s. steel shareholder base. does that include a reverse termination fee? most likely it does. is there going to be some sort of potential divestiture package? i can't say with any certainty, but again, one would have to expect that that might be a part of cleveland cliffs' bid. in other words, desiring to try to do whatever it can to take out the antitrust risk for u.s. steel shareholders and apearl harbor -- appeal to the board. they had financing that would have allowed them to go up to 45 bucks a share in all cash.

that's in the realm of speculation. i don't know it to be a fact, and it doesn't mean that they made said $45 a share all cash bid, but my understanding is they had the ability to and potentially do so, but again, don't have that -- i'm putting it out there because i think it may very well be the case, but it's not one of the things i would call facts. >> it would be so great for cliffs. >> i'm going back here, just looking at my notes. 40% of flat rolled steel and 6% of auto grade steel, if the two combine, cleveland cliffs and u.s. steel, that would be in the u.s., but they would just make the top ten worldwide u.s. steel producers. they would be number ten combined. they're going to argue, this is not a domestic market, and when it comes to global, we would just be a number ten player. what is clear is this is a asset that has attracted a great deal of interest as we've said throughout the process. the process is coming towards a conclusion, and it does appear they have significant bids from multiple parties above 40 bucks

a share, again, said composition of those bids, you know, are thought to be all cash. cliffs, certainly not necessarily all cash. both cash and stock. some of the others, frankly, not really sure. >> wow. i mean, they would own a lot of the auto market. geez, together? >> yeah. >> and it's -- boy, cleveland cliffs is such a great acquirer. the stock is worth a -- look, i don't know how much it will be cliffs stock, but those guys are fabulous at what they do. everybody knows that. everybody knows they're a tremendous operator. that would be a great deal for them, david. great deal. >> we'll see. >> look, i think ftc -- >> not sure we're going to get the news tomorrow, but it's got to be coming soon. >> ftc might say, listen, they have too much hot rolled steel together for the auto. i mean, look, nucore is in there with high-end, and cliffs is the

number one steel producer for the autos. if you put them together with u.s. steel, they will own a huge amount of the auto market, so i could see some regulator not liking it. >> do you see it as a global market, or is it fairly set a domestic market? >> we have tariffs that makes it so that it's -- you can't really import cheaper. look, i think that i like cleveland cliffs very much. they've done a remarkable job. >> already reached some sort of agreement with the union of u.s. steel ahead of time. >> they're good to go. nucore doesn't it. they run a different kind of mill, but i think this is really worth watching, david, because it would be a colossus, even though we say top ten, but the other ones -- we don't subsidize our steel like so many other countries. like the chinese steel. >> right. >> i mean, what don't they subsidize? watches. >> they're involved in a lot. >> hermes. meantime, dow getting dragged by j&j. vicks almost with an 11 handle.

keep an eye on that. quick reminder, get in on the cnbc investing club with jim. point your phone at the qr code, and it takes you straight there. as we go to break, we'll watch bonds closely today. ten-year was around 4.18%. ahead of the decision in the presser this afternoon. we'll see if that holds. of course, the disinflationary effects from ppi and energy and even rent today. redfin, november rents, biggest drop in three years. we'll keep an eye on that in a minute. power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis help make trading feel effortless. and its customizable scans with social sentiment

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welcome back i'm sara eisen. i'm here at the treasury department here in washington d.c. where in a few moments i'll bring you an exclusive interview with treasury secretary janet yellen. secretary yellen already made some news saying she thinks the

last mile push down to 2% inflation should be move. we'll dig into that call as well as her outlook for 2024 in the next hour of "squawk on the 'lbeig bk.." wel rhtac

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let's get to jim and stop trading. >> there was a note this morning that i really liked. which is a price target boost for union pacific by citi. they talked about how they like all the rails. they said this is the group to play for a turn. you know, one of the things i like is jim bennett is the new ceo. came in and bought a million dollars of stock. i've been looking at companies with insider buyer. there was a tremendous insider buying of broad com with a short fall no short fall here but you have a very good situation where if rails take off this is a coiled spring. i like this call. i think the stock goes higher. >> the ratio of buying to selling hasn't been so hot lately. >> that's true. but i think ben is doing a terrific job and i think people felt the company was under managed. i liked previous management as people but i think there are some good things happening.

>> what's up tonight? >> i have prologic on, the number one warehouse, logistics company for it. and also the biggest builder of data centers. i want to find out with oracle, what's going on. how much does it cost to build a data center? but this man controls commerce. >> they get brought in to build the data center -- >> they do everything. >> or own the real estate? >> whatever you want. they'll sell it to you. but this is who amazon uses to move things around. fedex. you need them. you need warehouse, storage, processing, logistics. >> you order something it shows up after your door -- >> one day because of a.i. they'll know well ahead you need tide. david you're out of tide, the machine told me. >> just have it implanted in your head one day.

>> i didn't get to tell you about andy he knows i like jack reacher and they push the book and then the movie comes and they push the movie. they did this because i have a pattern of buying jack reacher, a new one out, boom i get it. it's incredible. david, it's so much smarter than you, i don't know who to say. >> i don't take offense. >> it's not as great looking as you. >> appreciate that. nice way to end. >> see you at 6:00, jim. mad money". when we come back, sara eisen sits down with treasury secretary janet yellen. dow is up 4. er you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most.

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(sfx: stone wheel crafting) ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf

that inspired the world to invest differently. it still does. what can you do with spy? ♪ good wednesday morning, welcome to another hour of "squawk on the street" i'm carl quintanilla with david faber alongside sara eisen who's live at treasury today ahead of an exclusive coming up. >> good morning from the treasury department. we have an exclusive interview

with treasury secretary janet yellen. now is the time where, end of the year we get the outlooks from investors and rstrategists and economists. i'm looking forward to getting her outlook for the year ahe. policies for an election year, geopolitics withtrading partners like china. we have a lot to talk about we'll bring you that interview in a few minutes. >> holding the cards close to the vest ahead of the fed today, dow up again about 4 points. s&p roughly flat. fareed pfizer getting hammered. verte ve vertex pharma a top gainer. and tesla recalling almost every vehicle it sold in the u.s., nearly 2 million cars. a two-year investigation found deficiencies in its auto pilot system. although the term recall is

contested sometimes. >> yeah. it's used as a term of art but it doesn't mean you're taking your car to the dealership of any kind it's an over-the-air software upgrade they'll deal with. >> meanwhile a lot of sign posts to look at this morning the. >> ppi read on wholesale inflation following the trend we've seen lately from ppi pretty benign, just more evidence that inflation is cooling, good news for the fed. of course today is fed day and we will get that decision, that statement, that press conference and the summary of economic projections, but there's the ppi look, year over year, it's pretty much -- it's less than a percent higher, flat on the month. and core ppi, which strips out food and energy prices at the wholesale level also very benign. good for the fed. what are we watching today?

signals that the fed is still in the tightening bias mode given the fact we have seen improvement on the inflationary front. today's number i think confirms the trend. i went back to the statement in november, carl and david, and that's where we saw the tightening bias first appear in that statement. here's the money quote. we'll see if they leave this kind of language in today at 2:00 p.m. when it is released. last time the federal reserve said, in determining the extent of additional policy firming, there's the tightening bias that may be appropriate to return inflation at 2%, members con curd they would take into account the cumulative tight booksing of monetary policy, the lags with which monetary policy affects economic activity and inflation and economic and financial developments. so i think it'll be interesting to see if they say additional policy firming because what the market thinks here and what the fed may communicate is no more hikes but also no cuts either.

so that's going to be a delicate dance for them to walk the line on that without getting the market too excited about cuts. >> a lot of framing this morning. doish is a good example in which this meeting could be the first in which the dot plots turn dovish, first time since the pandemic. although financial conditions have gotten -- the market no longer doing powell's work for him as had been the case in recent months. that's interesting to see how it affects the tone of the presser. >> absolutely it's been a major changean since the november meeting. you've seen the s&p 500 rally since november, you've seen bonds in a big rally since november and come off the ten year yield highs of over 5%. you've seen the dollar weaken since november meeting. so all of that adds up to financial conditions loosening pretty substantially and the threat for the fed and chair powell is that could undo some

of the work they've done, the tightening of the markets that will impact inflation and push it lower. in fact mohammed this morning on x put out a tweet saying the longer the fed pushes back against such loosening the bigger the risk in financial stable. he thinks that powell needs to talk a little bit tougher and push back against what we've seen in the markets so they don't sort of lose control of the disinflation that we've been seeing. i think that's one of the key questions into today's news conference is how hard will he push back? will he feel the need to push back hard? will that show up in the dots? right now the market is pricing in four cuts next year. >> right. >> consensus is, like september, the fed will probably pencil in two cuts. will they do more because inflation forecasts come down and growth targets go up or keep that and tell the market we're not thinking about cutting any

time soon. >> sara, we can't wait for, obviously, the decision, the presser and your interview with yellen coming up later this hour. let's get more predictions on the fed's next move. joining us allen blinder, a professor at princeton university. great to have you back, professor, good morning. >> nice to see you. >> important day i imagine you've been listening to our discussion. how do you think they tackle system some of-- some of the dynamics facing them today. >> i think sara put her finger on the right thing, every once in a while, now is a once in a while, the markets get ahead of the fed, in this case the easing. that happened before some months ago and it took fed chair and others time to talk them out of that, and they did. i think there's a bit of that now, it's not as extreme because

we are, unlike months ago, at the end of a tightening cycle. i think chair powell thinks that also though i'm not inside his head and i can't be sure. but they are going to be a little bit worried, not, you know -- you know, not catatonic about it. the market getting too hyped up about rate hikes soon -- sorry, rate cuts. there will be cuts but not right away. >> i think goldman's, the title of their report this week coming out of cpi was sooner but not soon. meaning they push forward their expectation for the first cut to q3 they were in q4. does that rhyme with your view right now? >> yeah. pretty much, i don't know q3, q4, second half of the year. i don't see -- i'd be surprised -- let me backtrack. to get cuts in the first half of the year, the economy would start to -- would have to start looking sour. maybe that will happen.

i don't think it'll happen. i don't think the fed thinks it'll happen but it's a possibility. but short of that, i doubt we're going to see rate cuts in the first half of the year. >> why don't you think the economy will go sour in the first half of the year? >> there are no signs of it yet. occasionally you get a surprise but usually there's some signs of weakening, hiring for example, you can say hiring is weakening but really what's happening is it's coming down from a blistering pace. those kinds of jobs numbers we're getting a few months ago were wildly high for an economy in something approaching equil equilibrium, they were more like an economy coming out of a recession, where jobs were being created all over the place. we're not in that kind of condition now but something could happen. you could get an oil shot, for example, a nonrandom example. the price of oil has been

behaving pretty nicely lately. that could reverse. i'm not forecasting that it would. nobody can forecast what's going to go on in the short term with oil. but that's just one example of something that could go wrong and hopefully won't go wrong. >> do you think dissents are going to start to be something to watch the way they have been recently in europe? >> not yet. i think right now the fed -- you know, if i can get inside the head of every fomc member, which i'm not, my guess is they're all thinking the same, all agreed. that was not true a few months ago and probably won't be true a few months down the road where the prospects of cutting rates become realistic in a way that they're not at today's meeting. my guess is they're all on the same page today. and maybe for the next meeting or two, who knows about that, that depends on incoming data. >> one final question on the

politics of rates. does it make you think back to the time where we were moving 50 and more basis points in meeting because powell arguably saw the political pressure that would inevitably come. i wonder how smart you think that looks in retrospect? >> powell takes seriously his oath of office and the parts of his -- everyone takes the same oath of office but has different responsibilities. and the main responsibility -- or not the only but the main one, is to keep inflation down. and inflation will have sort. and he realized and the whole committee realized, as the market says, they were behind the curve and they had some catch up to do. that's miles different from the position they're in today. but i don't think that was at all generated by political considerations. and if you're on the fomc, you

try to close your political eyes and pretend you don't even know there's an election a year from now. of course they know that but they try not to let it influence their thinking. >> alan, great guidance and insight ahead of the meeting and the presser. we'll talk soon. >> thank you. as we go to break let's get a road map for the rest of the hour. pfizer plunging on the week, company holding a conference call get details of that next. >> and a 2024 playbook. talk about three sectors that may -- that you should put on your radar perhaps for next year. and counting you down to our exclusive interview with treasury secretary janet yellen live from the treasury department in washington this morning. that's at 10:30 eastern. big show still ahead. stay with us on "squawk on the street." if your business needs a new application then developers will have to write code. a lot of code.

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shares of pfizer, as you see right there, down sharply. 8.7%. this on a guidance cut w. of course it hasn't helped the s&p health care sector was already under pressure. we've gotten off the call with the executive and angelica joins us with why they had to cut the guidance. >> reporter: i just got off the call and the focus today was the covid business and the acquisition of the cancer

company which they're expecting to close tomorrow. pfizer telling analysts the $8 billion estimate for the covid vaccine and paxlovid are estimates. they say they want to avoid disappointing investor like they did this year. they're not expecting a difference in use of those products next year compared to this year. thinking infection rates and vaccination up tick will be about the same. and explaining why they see the acquisition of cgen resulting in a hit for adjusted earnings last year saying that comes from the long and short-term financing of the deal which should close tomorrow. and growing the dividend remains a top priority despite cutting $4 billion in cost as the covid business shrinks. david? >> on the dividend being a top priority for capital allocation, what follows that in terms of

their priorities at least? >> reporter: they're focused on the dividend. also talking about purchases they say they need to focus on deleveraging before they can get there. >> angelica because that and j&j, health care lagging this morning in a tight market. thank you. >> reporter: thank you. as we go to break check out the top gainers on the dow this morning as we await the fed decision in a few more hours. more squawk on the street, including our exclusive with the secretary of the treasury, janet yellen, later this hour.

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increasingly confident the fed is done hiking and headed for springtime rate cuts fpowell likely to push back i would say. the fed saying now it is, quote, determining the extent of additional policy firming that may be appropriate. that's the language now that's likely to remain. its eventual removal is going to signal a shift to neutral and signaling a hiking bias in its forecast as well. 12 officials had one more rate hike this year. with an average cut of half a point. trouble for the fed is inflation is falling everywhere except in the core cpi we got yesterday. falling globally, down in the ppi and prompting forecasting today to predict more progress in next year's pce price index, that's the fed's preferred

inflation indicator. 46% probability up a little bit this morning after the ppi, probability of a rate cut in march, 81% by may and 91% by june. they are sure. the market willing to bet that eventually the fed and chair powell sees what it sees about inflation. time for the market and the feds to come together today. the split likely remains, david. >> steve, thank you. steve liesman. our next guest oversees almost $80 billion in assets they manage saying cyclical economic trouble can always pose a risk. joining us is tony roth. good to have you here. >> thanks for having me. >> a positive 2024 capital markets forecast. you talk about the u.s. in terms of its economy and our ability to sort of deliver economic

growth and disinflation the rest of the world can only envy. what does that mean from an investor's standpoint? >> from a long-term investor standpoint, the u.s. is in a super cycle right now we look at labor, technology and innovation coming together, the u.s. is creating a set of conditions for sustained economic growth. next year we have about 1.3 to 1.5% growth. it doesn't sound spectacular but compared to europe which is probably in a recession right now. as we get through that period of time without seeing excessive unemployment next year we'll see a period we have accelerated economic growth and an invest standpoint, the rest of the market is not extended multiples. we're seeing more trade expand, more breath in the equity market and playing catch up around the

seven names and achieving growth in the equity portfolio here in the u.s. >> we talk about the market cap of these seven names being roughly 30% of the overall s&p. it does seem out of whack. are you saying as we head to '24 it's the focus on the other that should be paramount for investors? >> that's right. the rest of the s&p is likely to catch up that's where we put an overweight in the s&p in context with the portfolio. weld not underweight those seven names because that's where the technology is coming from. it's the digitalization and the a.i.-ification if you will, i made a new word -- it's the rest of the economy that's creating the gains we're seeing that's allowing us to move forward without seeing the supply side labor crisis we had a year ago. even if wages don't come down 2%

we can live with wages at 4%. so it's on the back of the technology those companies are delivering. we don't want to underweight the technologies but there's a catch up trade with the other 493. we're seeing that. >> that's the bulls putting 25 targets of 6000 and earnings of 300 betting on the productivity boom. are you looking out that far yet? >> maybe if we're looking out that far we're looking at three years. but i think that the opportunity right now is to be market weight in large cap and look for a better entry point because when you consider what's happened over the last few months we've seen two big inflections in the market. they haven't come from the fed, from earnings. they've both come from the tropic treasury secretary. if you recall in october the treasury secretary came out with markets initially far more on the back of the dead ceiling

issues to refund the general account and that caused the market to sell off. then we had the opposite in the beginning of november where she said we were only going to issue 800 billion or so first quarter of next year that was the genesis of the recent rally. there's opportunity for her to disappoint again as we get into next year. >> with we'll be hearing from her soon so a good tease, tony. on the fixed income front not all of your clients are 100% invested with equities what are your thoughts there? >> it's an attractive environment for fixed income because we don't expect a recession, we don't expect to see spreading of any material level within the space you could see spread widening as the economy decelerates. but next year where we think the ten year settles around 3.5%. good opportunity from a credit

and rates standpoints and probably a total return in treasuries at the ten year maturity level of close to 10%. so an attractive market. >> tony, i'll let you end on a rara note. what is it that has made the u.s. economy unique amongst developed countries and allowed us to maintain a quarter 20% of the world economy over these years? >> it's the nature of the labor market, the flexibility. think about the pandemic when our unemployment rate skyrocketed but as soon as the pandemic ended and over the succeeding 18 to 24 months we were able to brinks back those employees into the marketplace and they found jobs. so as i mentioned earlier, that crisis of labor supply is bind us. we're creating around 450,000 new small and mid size businesses every year. so it's that with the innovation from our secondary education system and the lead we have from

the technology standpoint and every time there's a new set of opportunity from a technology standpoint like a.i. right now it seems that the u.s. is the leader. >> appreciate you taking time. thank you for being here. >> thanks for having me. speaking of the u.s. economy. let's head back to sara at the treasury department getting ready for a big exclusive. sara? >> that was a pretty good set up. because the surprise of 2023 has been the resilience of the u.s. economy relative to others as well. can that dynamic continue into 2024? or will weakness overseas seep into the u.s., which is showing signs of cooling. it's one question i'm going to talk to treasury secretary janet yellen about live from the treasury department an exclusive teiecong up right after the break.

i'm kristina partsinevelos. hbo is appearing to defy a request to testify at the cap capital. >> my father was not financially involved in my business, not as a practicing lawyer, not as a board member of bah reez ma, not in my partnership with a private chinese businessman, not in my investments at home or abroad and certainly not as an artist. >> the younger biden said again he would testify -- >> i'll pick it up with audio issues. we'll cover the news updates in the next half hour. let's get back to sara at the treasury.

sara? >> i am here at the treasury department with the treasury secretary janet yellen for an exclusive. good to see you again. >> thanks so much, thanks for the invitation. >> thank you for taking the time. >> i think the surprise was the resilience you've been in the soft landing camp for a while. but this time last year how many people were predicting recession? >> i don't recall there were dire predictions that recession was unavoidable. i always felt what i said was i believe there's a path that the economy could have a soft landing with the labor market staying strong and it was not necessary to have a period of high inflation -- high employment to bring inflation down. i felt inflationary expectations

had been permanently dislodged in a way that would give rise to ongoing wage price spiral that makes inflation self-perpetuating. what i thought was that there were major disturbances in many product markets because of the pandemic and supply chain issues connected with it and that the labor market also experienced a severe shock with unprecedented number of people losing jobs when the economy started recovering rapidly, they had to get back into good matches with new employers. and this was disruptive, it led to job market pressures. we saw job vacancies, job openings were enormously high. and it took a while for people

to settle down into new jobs. the quit rate was high. there was a lot of turbulence in the job market that's really settled down. as that happened, quit and job rates have fallen back to normal and we haven't seen any significant uptick at all in layoffs. the labor market remains strong and inflation has come down meaningfully we're not all the way there, there's further to go for the fed to achieve the 2% objective, but you think we're on a path and you can see the consistent pattern in inflation coming down overtime. >> soft landing, there it is. >> i think it's a soft landing and this is not to say that americans are feeling great about the economy. >> i was going to say you don't get a lot of credit in the administration. less than a third of voters polled think that biden omics i

working. >> i thought it was a hopeful sign you do see an up tick in consumer confidence. consumers are beginning to understand that inflation is coming down. and although wage growth has moderated some, it remains healthy and inflation has come down and now real earnings are going up. so gradually overtime i think people will feel better about the economy. the level of prices in some cases is higher than it was before the pandemic. and people notice that, they notice certain bills are higher. rent would be a very good pam pl apartment rentals, for example.

but we had very big changes in the way people lived and worked during the pandemic and i think it gave rise to pressures on real estate prices, both rentals and house prices went up so young people who aspired to own a home who are renting are seeing rent prices go up. if you're in the middle of a rental contract and it renews, you're likely to see the rent to adjust up to current market levels and that's a big expense and people feel that. but i think we're in a path, and gas prices are way down. number of states where a gallon is running at under $3 a gallon, which is great news for

consumers. we saw egg prices utterly skyrocket, mainly because of the avian flu. they've come down back towards prepandemic levels. but still -- >> but elevated. >> yes. >> so when do you think the fed will achieve the 2% inflation target? when does that happen? >> my expectation is inflation will continue to come down. and i would frankly expect i don't want to do a precise forecast here for you, but i think when we come to the end of 2024 -- >> we'll be there? >> -- 2 is certainly likely to be the first numeral. and i think -- you know, i think we're getting a lot closer. >> how likely is it the soft landing continues into 2024? because we got it in 2023, but there are risks on the horizon. >> so i think there's a

reasonable chance we get it. i think we're on the path. i think my baseline is we'll achieve a soft landing, are there risks? of course, there are risks. we could experience another global shock that could be unsettling to that path, that could jolt inflation upwards or have adverse effects on the economy. monetary policy is an art and not exactly a science yet. and it requires skill and a good dose of luck to get that exactly right. but i think, as a baseline, with solid probability we're in the path for a soft landing and i think that's good. >> what's the recession risk at this point? >> well, i believe in any year, even if you knew nothing about the economy, there's a recession risk that's over 10%. so there is always some

recession risk. i don't think it's particularly high. consumer spending we've seen remain solid. consumers built up a buffer stock of saving and wealth during the pandemic. they've been spending that down gradually. that stock is eroding. but as long as -- it's coming back to more normal levels. and as that happens, expect to see the pace of consumer spending slow somewhat, but probably to a more normal level that's consistent with trend-like growth, which is what i expect. i mean, another quarter like the third quarter, i don't expect growth at that pace but look, we have more people coming into the labor force, adult labor force participation is at the highest level in several decades.

the economy can handle that. it keeps growth solid. incomes moving up that support consumer spending. i think the baseline here is very good. and, of course, there are always risks but they're not outsized, by my way of thinking. >> would the fed cutting interest rates preserve that soft landing next year? >> i'm not going to give the fed advice on what they need to do. i'm very happy with the outcomes we've seen in the economy over the last year or so. and i'm going to trust them to make good calls. >> okay. i'll ask it another way. the market is expecting a number of fed cuts next year and has been very excited about that. it has loosened financial conditions quite a bit. does that improve the outlook and does it risk inflation flaring back up? >> well, both things are possible. and i think the fed has to think

about what path of financial conditions they regard as consistent with keeping the economy on a soft landing path. they surely want to see inflation continue to move down. as inflation moves down, it's only natural that interest rates should come down somewhat because real interest rates would otherwise increase which can tend to tighten financial conditions. but, you know, they have two risks to manage. one that is -- that inflation doesn't come down back towards their target as they envision. and the other is that the economy becomes too weak. and i'm going to leave that call to them. >> on a fed day, no less. the other thing that the market has been paying a lot of attention to lately in your wheel house is treasury options, which is something we haven't been paying as much attention to

in recent years but now are watching because we've had wobbly ones. have you been focused on this? >> i work regularly with our team that manages treasury debt and treasury auctions. i meet regularly with the treasury borrowing advisory committee, which is a group of mainly private sector advisers who help us understand what's happening in the treasury market. we always seek their advice. you know, the corner stone of treasury policy when it comes to debt, is regular and predictable issuance. we issue across the curve. we give forward guidance in order not to surprise markets. the objective is, over time, to achieve the lower borrowing costs we can for the federal

government and that also involves keeping treasury markets liquid and well functioning. and the adjustment -- we did make an adjustment to -- we've had to step up issuance to finance ongoing deficits and refinance maturing securities. and, in view of some stresses we had seen in the long end of the curve, we made a very modest adjustment to where stepping up issuance we're stepping it up at essentially all maturity levels but we chose on do a little bit less at the long end given our understanding of the demand in markets and pressures that exist. >> are investors right to be nervous about demand with all of this issuance set for next year? >>, you know, i think that it's not -- it's our job to keep

fiscal policy on a sustainable path. and as long as we do that, i don't think there's any reason for investors to feel nervous about issuance and. >> are we doing that? are we on a sustainable path here with high growth and full employment kind of picture? >> well, the president has signed legislation that brings deficits over ten years down by a trillion dollars. we have a huge tax gap that means taxes that are owed that we're not collecting, owing to short falls of personnel at the internal revenue service. we've achieved funding to boost that. we see greater tax revenues ahead. and the president has made further proposals over the next ten years to cut $2.5 trillion

over ten years from the deficit path. so we do have a fiscal challenge. our interest costs have not yet significantly risen. we expect -- we've always expected that average interest rates, borrowing costs, would rise somewhat over time as we moved out of the period of exceptionally low rates. now if the interest rate environment remains very much higher than was expected, we'll have a slightly tougher job to control deficits, but the president stands ready to work with congress to take the actions that are needed to do it. and the president's made proposals in his last budget and we have another one that we're working on now, both to boost

tax revenues back towards more normal levels. i think part of the problem with our deficits, it's not the discretionary spending is very high as a chair of gdp. it's actually fallen substantially. but rather, the tax revenues, after the jobs cuts and tax act of 2017, fell to very low levels. about 16.5% of gdp. -- >> capital gains, too, right? >> yes. there were cuts there as well. and, of course, in corporate tax collections, as well as individual. and we need to make sure we raise tax revenue. the president has proposals to do that in a way that we believe promotes tax fairness. and at the same time, importantly when you think about beyond the short term, think

about the medium term and longer term trajectory of the economy. what we need to do is expand the productive potential of our economy. to focus on the supply side of the economy. to boost growth, to boost productivity. and the president believes it's important to invest in america to do that. now the republican agenda has always been cut tax rates and deregulate to stimulate private investment. but there are a lot of things that have been ignored. and public infrastructure, the quality of our roads and bridges, whether or not people haveaccess to the internet throughout the country, our airports, creating good jobs in growing sectors of the economy that are critical to our security, energy,

semiconductors. addressing climate change. making sure there are good jobs for people who don't have a college education and live in parts of the country that have been left behind. there's a healthy agenda for the longer run in our economy and that's what the biden agenda has been. >> are you going to try to push tax increases next year? is that what you're setting up for? >> i think that what we've proposed in past budgets and are likely to propose in the next budget is a package of continued investments in america to expand our productive capacity and address long-term structural issues, at the same time we finance it with higher tax collections by asking the corporations and wealthy individuals pay -- >> pay more. >> -- pay their fair share.

>> what about the global economy? you expect the soft landing to continue for the u.s. we have a negative number out of the united kingdom today. what are you expecting from the other major economies next year and will it drag us down? >> i think if you go back a year and look at what forecasts were for most developed countries, actual performances turned out to be better than was expected. so while there were problems, inflation is generally coming down in developed countries. and the surprises on the inflation front are -- have tended to be positive ones. and we have seen rather robust labor markets in if -- labor markets in, for example, most developed markets out there. so we are seeing slower growth, all in all, i think things are

working out in a better way than we would have predicted a year ago. >> what about geopolitics, the ongoing war in ukraine, the terrorist attack in israel and now war in gaza, does that have an impact on the economic outlook? >> potentially. certainly russia's brutal war against ukraine did have a very significant impact on the global economy. and it led to surging food prices and energy prices that caused inflation that was not all, but it was part of the inflation bulge. we've done our very best working with our allies to address those pressures on both the food and energy fronts. we put in place a price cap to try to both keep russian oil in global markets but also to limit

russia's revenue. and at least for the first year i feel that that was -- that was successful. and oil prices are down considerably. gas prices are down considerably. but -- and we do need to -- it's absolutely -- it's absolutely urgent. we need to fund ukraine in its fight against russian oppression. i'm very focused on that. the middle east clearly has the potential if it expands to a broader regional conflict to affect the global economy. at this point we're focused on the suffering that's taking place there. our hearts go out to all of the people who have been affected by this, but we are closely watching what's happening in terms of economic impacts. >> finally, there have been rumors, secretary yellen, this

whole year and last about how long you'd stay at treasury. you've said, i'm here, i'm staying, and you have. are you staying as secretary through the elections? >> absolutely. >> not going anywhere? >> not going anywhere. we've got a lot of work to do. i'm excited about it. people here at treasury are energized by what we're doing and what we want to accomplish. we have responsibility for putting out all the regulations that will let businesses address climate issues, improve energy security. we have a rare opportunity to really equip the internal revenue service to be an effective modern agency that can both collect taxes and interact well with consumers. we're seeing a lot of improvements. i'm very excited by that. we have an international agenda

that is very important. i'm not going any place. >> you're not going anywhere. thank you for taking the time to talk the us. talking about the priorities and what to look out for in 2024. >> that was great. sarah, thank you. we'll see you in a business as well. let's get back to the markets overall. as investors do await another decision from the federal reserve and we'll digest comments we just heard from the treasury secretary, not to mention the press conference coming from fed chair powell, bob pisani joining us onset. give us your thoughts whether on yellen or the broader markets. >> i think secretary yellen has got two problems. you see she's very closely aligning herself with the soft landing, coming out strongly saying this is the most likely scenario. she's in a camp. number two is, neither she nor

the biden administration are getting much credit for this soft landing that supposedly is happening. she has a very novel explanation for why she can have a soft landing. the problem for her is that historically soft landings don't happen very often. it's a very rare occurrence. her explanation for this is that in the past, inflation expectations have become very well anchored like in the 1970s. the fed had to keep raising rates to keep bringing down inflation expectations. her argument is this is not happening, that inflation expectations are not becoming well anchored. she's talking about job openings coming down, that's why she's endorsing the soft landing. she may be right on it. she's not going out on a limb on it. the other problem is not getting the credit for it. she mentioned the consumer confidence number is up. that's about the only thing she's got to grab on to. right now i don't think they're getting a lot of credit.

i think it's interesting she aligned herself with the soft landing camp and she might be right. she's got to be right about inflation expectations coming down. we'll see. she talked about 2% for inflation next year. that's not a bold call. the fed's own pce numbers have 2.6%. the doves are saying, if they drop that from 2.6 pce to 2.4, that's the signal the doves will be waiting for. they'll pounce on that immediately. so i don't think 2% is a very bold call on their part. >> a fresh estimate, they're looking at .7 as the journal points out analyzed it's 1.9. it's not even 2. >> if i see 2.4, core pce is 2.26 point. if we see that change to 2.4%, that could be a big victory for the doves. we could see all sorts of other things. they talked about inflation

remains elevated in the statement. all they have do is say inflation remains elevated but is coming down. there's all sorts of signals they can put in here. the doves are really looking for any sign that they're going to be doing something in 2024 with expectations coming down which sets the stage for them to enable to have lower rates. >> got to give a lot of space to those concerned that interest costs could eventually overwhelm the budget. she said if rates stay where they are, there could be tougher terms. >> how many times did she bring that up? >> 16.5% of gdp as a result of the trump tax cuts for corporations and the like. as for the broader markets, a couple minutes left on this hour, what are you thoughts in terms of the actions so far. i notice apple shares this morning. >> remember last year this, they raised 50 basis points and said

we're going to keep raising rates until we get inflation under control. the market fell apart. it was a disaster. from thismoment. normally it's an up month. then down almost 20% for the year. fast forward and we're up 20%. >> 21.2% on the s&p. by the way, 39% on the nasdaq. >> pretty remarkable when you think about it. years when there's big down years, there's an interesting fact. normally the market bounces back. down years of 20% or more are very, very rare occurrences. when they occur, your typically will get a notable bounce back. two-thirds of the time you hold within one year. >> although they made this point, people don't seem to know it. when you go and sample the crowd at various bars you may be

visiting. >> people with passion, by the way. yes, this is part of the problem. it's amazing how many people don't understand how the u.s. stock market bounces back rather dramatically. in capitalism, ruthlessly efficient allocator of capital, they know where to go and what to cut. that's why capitalism works. >> we had roth on from wilmington saying the same sort of things in terms of tuchlt s. economy. bob, thank you. our live market coverage of all things business related continues right after this.

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good wednesday morning and welcome to money movers. i'm sara eisen in washington, d.c. carl quintanilla back in new york. ann walsh in guggenheim on today's fed decision. why she thinks the market isn't pricing in enough rate cuts. plus, the pfizer fizzle on this disappointing guidance and microsoft vision over truist today. the ceo of barrett gold after hitting an