nasdaq up about 75, 76 points. treasuries if you look at the ten-year and two-year, they look, jay powell talked it down, talked it down, ten-year now 3.960. a special thanks to the one and only mike santoli. >> always fun. >> thank you for hanging out. and we'll see you all, becky, tomorrow morning. make sure you join us. "squawk on the street" begins right now. good thursday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer and david faber. futures are holding their gains after the dow's all-time high. the fed pivot in full display. retail sales, upside surprise. jobless claims lowiest since august. the dow crossing 37k for the first time, markets set for further gains at the open. >> apple shares hits an all-time

closing high, and they're within striking distance of what would be an intraday high. those stock gains fueling a $1 trillion boost to apple's market cap. that's just this year. and is southwest airlines poised for growth next year. their ceo will explain why he's optimistic. he's going to join us on the set of the new york stock exchange. >> as is phil lebeau. >> that's worthy of an announcement as well. >> good to have phil in the house. let's begin with the fed fueled rally. we said yesterday the coming 24 hours would be key. >> well, i have to tell you, i was surprised at how sanguine he is. i think you have to own that. i have been saying he's going to do a soft landing so i was not offbase, but i thought he showed a level of flexibility that is unusual for a fed chief. usually they like to leave it that way and see how many people get hurt and take action.

he didn't do that. david, there's an element of this man which is unpredictable, even as he looks like he's completely predictable. >> does that make him exciting? >> no, he's definitely not exciting but he did take a shot at the bears. he said oh, yeah, we're going to have a recession, they were wrong. that's it, he showed something right there. that was the quote. >> are you in the camp now that says all right, the focus is now not just on inflation any longer but also on employment? and the dual mandate, the second part of has now come to the fore? ? i was surprised because there really doesn't seem to be a reason to worry about unemployment yet. but you have goldman, bank of america, holiday gift a dovish pivot arrives. powell breaks out the punch bowl. these are all the things that say don't abandon the market but

rotate into other stocks. no one wants to go buy regions financial or zion's, but when you get a percentage move in these regional banks i'm talking about, when you get a percentage move in these things, it's much bigger than what you'll get from my dog nvidia. >> reminds me of bill gross's tweet yesterday, said your bond strategy should be looking at a positive curve, a stronger curve. says reits, the kre, like the 49ers trashing the eagles. you see that? >> no. i didn't see that. bad enough, lost to dallas. i was there. looked at that big scoreboard, screaming at my wife. she didn't deserve it. probably a little too much information. >> focus on return to positive yield curve. great day for the curve. regional banks, mortgage rates up 4 to 5. >> they said are you going to come to the niners/eagles game.

at least he showed some respect. >> kicking butt, that's what it was. >> david. >> sorry, what is it? >> in your world. >> my world? >> in your world where -- >> my world of m&a, what is my world? >> restructuring, m&a, pe. >> pe? >> i'm going to give you one. it's going to shock you. >> tell me. >> david, people want to buy warner brothers. >> they want to buy the stock. >> yes, they do. >> because it's going the other way. or refinancing risk is getting -- it's going down. >> of course, david zas off wouldn't say it's a bad leverage. >> we're generating a lot of free cash flow and it's the usual. >> i'm getting a lot of calls on the lightning round about this stock. >> are you? >> yeah. >> we have made the point those companies with levered balance sheets and/or a lot of

refinancing risk have benefitted over not just yesterday but over the last six weeks. >> sure. >> since we had the significant decline in rates. we have come down 100 basis points. >> but i think people are trying to find stocks that really haven't had big moves that -- well, look, ford and gm. gm, the story today should have been they laid off nine senior executives, but instead, it's going to be margin expansion and rates coming down, people buy more cars. it's a very positive story. that's what you rotate into. >> positive also for m&a, the idea your borrowing costs are going to be less. it makes your return higher, it makes you perhaps more likely to do a deal you might not otherwise have done or round up the financing you need. not seeing we're going to see an avalanche of sponsor-led deals. but it helps. it all helps. >> i'll give you a quiz because you like quizzes. of the mag 7, also known as

magnificent 7, which stock actually went up after the fed made the announcement? >> they all went up. >> no, they all went down. >> they did? >> yes, except for tesla which is viewed as a rate play. they all went down. that was the tell. that was the tell. right there. >> that we're going to broaden out? >> yes, we're going to broaden out. microsoft was a huge indicator. nvidia was up huge. >> they all went down? >> that's kind of what i do for a living. >> i barely pay attention after 11:30. you know that. >> i was wondering what you do at 11:30. >> enjoying my life. >> 89% of the s&p now above the 50-day, that's the highest percentage of the year. just speaking of broadening out. >> i think larry williams said that november would be great and then december would be unbelievable is saying listen, enjoy it. it's not going to be picked when we get to january. he's looking at cycles, at

market history. when he came on, he said november is going to be great, december. i was like, really? and it was the best call i have seen of anyone in this market. even ed, larry williams, of course, is the oldest historian and he does great work. i wish marty was arrive. he would say don't fight the fed. fed, you're not fighting them anymore. how about the soft landing? your tray tables are up, david. >> you don't have to worry. you can keep them down because it's going to be so soft. >> i'm taking off my seat belt. i'm on the jetway. >> yeah, today's meeting points to dovish risks to expectations of just three rate cuts already next year. that's deutsche bank, again. >> how about the press immediately saying, there must be something wrong, this has to be bad. why are you doing this? i mean, the press -- the press is so gloomy.

>> two things. one is that as the wires point out today, the fed rarely cuts at a measured pace. >> yes. >> compared to the hikes. then citi today, they say bringing torward the rate cuts doesn't show that a soft landing is in progress. it shows how difficult it's going to be to engineer a soft landing. >> i saw that, the journal said that. what that says is -- let's go back to the niners example. this guy has won, won, won, won. why do we think he can't win here. no one thought he could get to this point. think of two years ago when you had that new strain of covid, and he didn't raise rates and we had all these billionaires saying he's the worst, the billionaires have been silenced or they're focused on colleges. >> it's still hard, though. it's still hard. just because the climb, you're almost at the summit. it doesn't mean the last bit where the oxygen gets thin

you're going to make it. >> he's been good so far. >> maybe you're 10-1 and then in week 12, 13 -- >> this guy has a buy. he has home field advantage. a bye and home field advantage. that almost always guarantees a spot in the super bowl. >> how about super bowl at sofi stadium, 2027. >> i say vegas is fun. i think that i got to give him credit. i do think that, i have been working on his housing thesis, and i think what he did is pivoted. he realized every time he raised mortgage rates, it made it so everyone with a 3% won't do it. if he lowers mortgage rates, they'll have rates that are not so disparate. they would put their house up for sale. it may work. >> lean into the softness. >> i think it's a work of genius. that makes so much sense. you need to get those people off the schneid and starting to sell their houses. the only way to do it is to lower rates. why wouldn't toll brothers by 20

million shares when they saw that. >> by the way, we get of course fresh data today. retail sales indicate a positive start to the holidays. november retail sales up .3%. surprise gain, up .2%, x-auto, best control group since i think august or july. it's definitely in a few month here. which raises the question, is the data or the additional fed speak we're going to get going to push back on or solidify this pivot? >> i think the number of what people are buying, the amount is -- it really is dictated by employment and how and wages were up nicely. there was an interview this morning that frank holland did with an amazon logistics guy. they are, i mean, the amount of stuff they're shipping, they'll ship on sunday, christmas day. it seems like they would be up 10%. i don't know what they're already going to be up. the most important note that i saw today about retail was a

call that shrink -- >> ubs? ubs on shrink. >> but david, they said this was a peak in shrink, but it was not evidence level. >> i can't believe i thought about you when i read it. >> it's no evidence behind it. >> it's anecdotal. >> somebody grabbing it out of the air. >> they cite shoplifting data. we're in a lower rate of shoplifting than pre-pandemic. >> by the council on criminal justice. shows the average monthly reported shoplifting rate peaked in december of '19. >> except for new york. >> you have to strip out new york. >> do you? >> i went to cvs last night to get some cough syrup. and i asked the guy, i said look, i really don't want to pay. i said, i see everybody else not paying. i have been watching the people at self-checkout, no one is paying. using it and not paying.

and he said, i think it's fair that you pay. i said, but no one else is paying. come watch these self-checkout, this was one of the biggest jokes ever. great piece in atlantic. that all has to go because none of those people are paying. i felt like a fool. >> that's why a lot of them are doing a u-turn on self-checkout. >> you have to. >> i felt like a loser and a lunatic paying. >> walk out. >> brought my american express card out. everyone was laughing. >> we use it. we all buy our lunch. >> do you pay? >> i pay, absolutely. >> i say take a rain check. take a rain check. >> all right. >> when we come back, exclusive with southwest airlines ceo bob jordan at post nine. we'll talk holiday travel, capacity additions, the game plan for 2024. a bunch of calls to get to. live nation, deck, six,

marathon, we'll talk adobe and apple when "squawk on the street" continues. [ "i'll be seeing you" by the five satins ] ♪ ♪

♪ ♪ ♪ ♪ ♪ ♪ southwest airlines looking to avoid a repeat of last year's turbulent holiday travel season. ceo bob jordan joins us on the set. our phown phil lebeau is here t. i want to ask immediately, i

know you're getting people on jetways who learn to deice. you have people more dispersed because you had so many people in certain cities locked in. if we have a storm again, are you ready? >> we are ready. we have invested in trucks and new pads and staffing, and technology, very, very proud of our people. we're ready for winter. we had already had been snow in denver, chicago, and performed well. thanksgiving day, there was snow, 97% on time. zero canceled across our entire system. >> at one point, you say we give the customer what they want. you talk about your terrific affinity system, i think that's great. but isn't that what you just said, isn't that real? on time, that's how southwest is. >> you know, above all, they want to get to where they're going. if you think about, i'm really proud of our team this year. we got a new order with boeing. we got all our jets flying.

we're staffed. and i'm really proud of all the accomplishments. we're taking a lot of momentum into 2024. it's all about operating a great airline, improving our efficiency, and improving significantly our returns on invested capital. >> you talked about some really interesting travel patterns post pandemic. talk to me about tuesdays and wednesdays. >> you know, our travel demand is really strong right now. leisure and managed business. but the business is just not restored to pre-pandemic levels. it's getting better quarter to quarter to quarter. i actually am really proud of our southwest business team because they're winning market share. they picked up three points of share in one single year, but the patterns are different. it's real a because the business travel that typically would have been there on a tuesday and a wednesday is just not restored. so our schedules before, if you looked at a monday to a tuesday, that was about a one or two-point difference. now with the new schedule in

first quarter '24, it's eight to nine points different. at the end of the day, you want to match your schedule to the demand. >> bob, a big part of your scheduling in the first quarter, you guys took a lot of criticism in the industry for how much capacity you added in the third and fourth quarter. you pared it back considerably for the first quarter. are you pretty confident that you have the right balance, starting in the first quarter, and as you move into the year? obviously, things can change, but you feel like you have the balance in place? >> i do. it's hard to know because travel patterns are very different. and we have optimized our 2024 schedules and changed them, changed the network significantly. it's not just taking out capacity but changing where the flying is. as we continue to see change, we will continue to modify the network. but next year, again, is all about optimizing the network and driving efficiency. >> we have seen a real change in the industry in terms of air fares in the last year. i know you can't predict what air fares are going to be six

weeks from not, let alone six weeks from now. do you expect it to stay roughly where it is right now? if somebody said what do you expect for the industry for 'wour? >> at southwest airlines, we're proud. >> i know what you're going to say. >> low fares. if you go back to pre-pandemic and look at fares today, they're about 8% higher from 2019. so if you ran just normal annual increases forward, the fares today are well below where they would have been but for the pandemic. >> you know, as you think about it, you have a lot of airlines taking capacity out, moderating. there's probably some room to move on pricing, but we're completely focused on driving efficiency, and again, getting our returns above our cost to capital. >> and paying down your debt. i know that's a big part of it. and look, jim and i have talked about this. you guys, and i say you guys, the airline stocks, you're the unloved children right now because of your debt levels. and whether that's fair or not,

that's the perception that is out there. does that change this year? do you think that perhaps there's a little less of i don't think these guys can pay down their debt, to okay, they're making the moves that are needed to be made? >> we always have been known for finance fiscal, a strong balance sheet. we're the only airline that exited the pandemic with cash over debt. we have about $12 billion in liquidity compared to $8 billion in debt. we do have future debt towers that come in 2025 and beyond. so we're holding a little bit of cash in excess for that. but no, we have a very, very strong financial position. very strong balance sheet. >> one of the continual themes in everything that i read about you is margin improvement. margin expansion. some of that could come from ad spending. i know you had spent on letter x, which i found quizzical because that means you're in with the scrum. you're a high, and there's a lot

of things that are said on twitter that to me would be unbecoming to your customers. is it time to pull the plug entirely? where are you on that? >> we constantly evaluate all channels. because you want your ad spending to be not only the most effective in terms of the channel that you use, but how you spend your advertising, whether that's social, mass media, and we also want to be in the places our customers are because you handle your customers through those channels as well. we'll continue to look at that. >> the same time, this affinity program sounds great, but i want people to know what rapid rewards means. you mentioned it 100 times. what do i get? i get points that i actually use? that was an odd thing. i thought we all use our points. >> you know, we're very proud of our rapid rewards program. it's growing faster than the airline. it has for a very, very long time. we're gathering record numbers of customers every quarter, record engagement, record spend on our card.

and when you see other airlines leaning away from customers, we're leaning toward them. you have points that never expire. you now have same-day standby. you have tier status that is actually easier to earn, not harder to earn. we made it easier to earn. we're leaning into our customers. i'm very proud of our program. it's award winning and the best in the industry. >> basically, yeah, you're going to be cutting back on your cap-x, long term, you announced that yesterday. the max cadence in terms of deliveries, how comfortable are you with where it is, where it's headed in '24, '25, '26? >> we have a wonderful cost effective new agreement with boeing that takes us out to 2031. we have a lot of flexibility in that agreement. we did moderate our 2020 to beyond midsingle digits to low to mid. that allows us to manage our

cap-x which lets us hit our target sooner. the max 8 is a wonderful aircraft. i'm very optimistic. it's really boeing but i'm optimistic we'll see the max 7 certification sooner rather than later, and we need that aircraft. and it's a wonderful aircraft. >> i want to thank bob for coming on the set, and phil for visiting us, because i have been negative on the stock, as you know, but i have changed that stance. it's just too good an opportunity. >> we appreciate it. thank you all for the time. thank you, jim. >> when we come back, a look at cramer's mad dash, another look at futures holding in. ten-year still sub-4, and the 30-year just about 1bas in away. don't go away.

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. futures remain green. so many interesting numbers this morning. ten-year, 3.96. vix is right at 12. the dollar index almost back to 102. and of course, the all-time closing high on the s&p, 4796. just about 90 points away. we'll get the opening bell in four minutes.

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let's get to a mad dash. you have very little amount of time. >> look, raj is not getting the recognition at fedex. can they put points on the board in a bad market? yes, they can. this stock, as high as it is, goes higher because he's doing a killer job. >> margins keep going up.

>> yes. and look, fred smith built a great company. time for new blood. raj is taking it into overdrive. i like the stock for very, very much. >> let's get to the opening bell. the big board, celebrating the sponsorship of bryant park. one of the best places in new york city, at the nasdaq, land management company. jim, up to 4723 today. >> yeah, look, i think that there's a big pivot. ia have to watch mag 7 versus everything else. watch zions bank. watch comerica which everybody was worried about. those are the ones that i think can really have a move. and then, even though they're up big, home builders will do better. but i just think that this is also a home depot market. like, if you start feeling better, you're going to remodel

and renovate. and a lot of people are not remodeling and renovating. that stock may be another stock that you want to be in. >> what did he say yesterday? he's one of the old founders. the returns on that company's stock since inception are since it went public are amazing. >> yes, they are amazing. if you think that shrink has peaked, they have a terrible shrink problem. you look at their private label brands that are for sale right now on amazon. >> yeah. >> they don't sell on amazon. >> oh, so people are stealing and selling them. >> then they have a website. it's not a really good thing. >> no, it's a bad thing. >> yeah, but you can get some great deals. i think everyone belongs in jail. >> yeah. we got to figure out something. look at the return.

there it is. thank you, guys. >> look at that. >> look at that. >> and it's fun. the stores are packed. >> almost a million percent return. >> the stores are jammed. my wife said, more than she's ever seen. gorgeous, too. >> 42 years, but -- >> david, it's a fantastic place to shop. >> jim, that's wealth creation. >> yes, it's wealth creation. look, discovering home depot. >> come on, did you know it was a million percent? a million? >> a million percent, no, but i do know this is what the market does. maybe we should sit here and talk about wealth distribution and the rich and the poor and congress. and how we ought to look at the two-year and ten-year and forget that million percent, david, because that's only available for people who do their homework. >> you could have come with the mad dash in 1981 and said, home de depot, and you should have shut up for the next 42 years.

>> you think i would be here? >> i love this company. home depot. my wife was sending me pictures two days agofrom home depot. the sheer number of people. incredible. >> jim, your point about the regionals is a good one because schwab, citizens, truest, key, zions all helping to lead the market, up four more. >> that's a percentage gain. that's what you want. we play for percentage gains. it's -- we don't want four more points of microsoft. we want to get to 5% in regions financial, which we thought was left for dead. eight times earnings, 5% yield. i feel better about the yield, and that's what you're looking for. people say where is regions financial? it's in the south. >> adobe. you had them on "mad money" last night. adobe stock down 6% after reporting earnings after the bell yesterday. it seems to be despite what was a strong fourth quarter, that they did lower their fiscal 2024

guidance. >> not the first time he's done that. >> what to you think? >> you wait for another day, maybe tomorrow, then you buy it because even though he lowered guidance, every division is on fire. and he's done this before. usually wait a day or two, and you get back in. now, of course, in a fed rate cut, it may not be the ideal stock to buy. but david, i'm going to go back to your world, okay. >> adobe shares. >> this figment deal is very important for them. >> they're still waiting on approval. a private company, by the way. they paid a huge number for. >> $20 billion. i think the justice department doesn't want it to happen. we were batting back and forth that there are so many new companies in the area that since the justice depart got angry, this is difficult. when justice department went after google, that was before tiktok. i mean, tiktok is killing google. so why should we worry about google? kik tiktok is killing everybody.

>> that's the old criticism of antitrust policy in general. it can never keep up with the dynamism of the market. >> that's good. >> thank you. every so often. >> he's so good. >> dynamism of the market. wow. look, this is just one of those moments where you look at what it's worth, decide if it's a good balance sheet, if it has a good balance sheet, you can get in. which brings me to foot locker. foot locker upgraded. okay. >> by piper. >> it does not have a good balance sheet. my trust owns it. it's been disappointing but not anymore. they're talking about full-priced merchandise. what's bedevilled them is discounting. a billion dollars in inventory that wasn't good. they're going to close 70 champs. it's never paid the bet. she turned around ulta. she's going to do it again with foot locker. even as everybody feels that she

doesn't have the horses. she's got nike, she's got -- new balance is doing incredibly well. people don't talk about new balance. don't forget, hoka is doing well. >> we're going to get -- we have foot locker upgrade. piper goes to overweight. we'll get costco tonight. >> costco is one where we say, well, that's an a student. i'm looking for a c student who's going to become an a student. >> that was an all-time high yesterday, and again today, think, maybe etsy, these layoffs. bernstein today calls it the new ebay, and a good short. >> that is so aggressive. i think that's wrong. i think that josh was overstaffed. i think that there's a lot to like, but it was one of those companies that are like ohahna, like salesforce had. it's not as interested in the ohana. we're a hawaiian family. >> the hawaiian word for family is ohana.

salesforce had a more ohana approach. when they got a bunch of activists, they focused more on margins. that was less hiring and firing people. your point on etsy is what, they were overstaffed? >> i think etsy could be a remarkable stock again. they had two big a table of employment, right here in brooklyn. >> look, i happen to think that obviously, they're worried about christmas and probably not that good. but i also think it's a franchise. a good franchise. >> you do? ? yeah, i do. >> let's talk about moderna because that stock is up sharply. it does trade in big increments on news, but this morning the news is potentially a real positive for people with receptive high risk melanoma. they have been testing their cancer vaccine, essentially, for lack of a better term, with keytruda, one of the great

cancer fighting drugs from merck and got good results. >> when i first interviewed them, it was at the jpmorgan conference. the stock went up big. he said we're going to develop vaccines for cancer. i said i'll believe it when i see it. then he dead it. >> he was a guest on "squawk box" this morning talking about the latest trial. sort of the headlines on it right there. take a listen to what he thought. >> now after three-year mark in the same study, we shrank almost 50%, meaning the two curves are differentiating further as time goes by. that's really exciting because not only we think it will have a huge impact on the markets, think about the number of lives that can be impacted and what people can be saved and live a normal life despite a diagnosis of cancer. >> very exciting. now, we know cancer, people

think that cancer is all one disease, and it's not. but i just think that this is something that tells me that the original franchise is finally here, and that's something that's worth more than just where the stock is. but david, as great as this is, the stock that people keep talking about is vertex, because if you have a pain drug and it does not cause habit forming behavior, then you have to buy the stock. it's coming down so it's an opportunity. >> it was up yesterday. of course, we discussed it, the positive phase two trial, i believe. >> they publicized that, which means their confidence level is high. >> that conaceivably would replace opioids. we're in the midst of an absolute crisis in the country. we don't talk about that often. >> why don't we? it's at the core of a lot of the problems with employment, health

care, and we don't talk about it enough. >> 300 people a day dying of opioid or opioid related -- >> if you had something, you could change whole towns. >> got a record high on apple, jim. 199.62. citi today named it a top pick for '24. the bears are missing iphone premiumization, the silicon sources, they think vision pro and ai is just an upside catalyst. >> look, i have to tell you, i think -- i thought that report was very good in terms of talking about the service revenue. they're using 16%. i think they're low balling. but mike seaver at t-mobile when i interviewed him last week in seattle, these guys are an amazing partner. and it would not surprise me if they partnered on some bigger stuff than they're doing right now. but mike said that just opening an account with an iphone is the easiest thing in the world. and their numbers are the best.

>> speaking of chips, intel is going to announce some processors today that might improve the ai story. that's the second best down name of the year. >> i know. i have to hand it to them. they are making a turn, but amd is ahead of them, and nvidia is the king. >> nvidia is the king. >> the king. did you read the piece, the journal, or the piece in the new yorker? >> i did read the new yorker piece, yeah, on jenson. absolutely. a great piece. >> i think that's a great story. >> remember what he said about intel? i flee intel every chance i get. >> that was fantastic. you need to know who this man is. >> in our never-ended discussion about advances in ai and where we are, i don't know if you saw the latest entry from tesla in terms of its optmous robot. see what this thing can do.

it can pick up an egg now. that's a robot. >> all right. okay. >> there's an egg. that is, by the way, that's huge right there. >> i see you an egg. >> because that was really, hand manipulation is key here. it can walk, it can dance, but now it's got brand-new hands. >> i see you with the hand -- >> you could put generative ai in that thing. >> i see you with the hand and the egg, but how about a dog that can pick up jell-o. dogs picking up jell-o. bingo. no? >> we all need jell-o picking up dogs. >> you know how hard it is to pick up jell-o? >> this thing can walk all over your house, can probably make you breakfast pretty soon. >> i did not talk, but i went -- >> by the way, they say they'rr?

one-on-one ratio. >> i know. i'm just more worried about the sam waltman. >> and it dances, if you want a dance party, take a listen. ♪ >> you've got moves. >> those were nice moves. >> now, david. >> yes, jim. >> this makes you even more fearful, i presume. >> of course. >> last night, adobe said don't have to worry about it. >> because it's going to have an off/on switch, sure. you remember that will smith movie? good movie. i-robot. >> i thought it was a device. i think that the fear i have is

the fear of they have 100 -- this brain that's an nvidia brain. >> when it's got higher intelligence than we have and it's fully mobile. they're going to just be our slaves. no. i think maybe it could be the other way around. >> well, jenson -- he will give this, he'll say i want a summary of this. and he gets the summary of it, and he does this actually in real life. gets a summary, i'm sitting here reading. i'm sitting here reading about wk kellogg, and he's like, got the summary, and he knows he doesn't need to read it. he has the edge on me. jenson. >> so he's thinking about humanity and the war with machines and you're like, buy, sell, hold? >> sanitarium in michigan there? wasn't that what it started with, and then he gave everybody a nice breakfast. >> all i know is that, yes, kellogg, all i know is that i

read the things that are su superfluous. j jenson would say don't give me the superfluous. >> if you have a lot of debt, you're having a heck of a day. they're eving buying altice. it's up 22%. >> be careful. but rivian, lucid, in other words, if you have a huge need for capital and huge refinancing needs, your stock is up sharply. by the way, i would add on rivian and lucid, both are up 9%, they signed a deal with at&t. >> new pilot program for fleet cars. >> they're going to buy some rivians. >> these are -- look, we're in a moment where what was left for dead is fantastic. >> how about you want to bang out oxi berkshire. >> looks like warren buys it all the time. he's got a huge percentage.

>> $600 million in three days. >> what's he up to percentage wise? >> 27%? 27%. pretty amazing. >> that's a lot. i mean, by the way, of apple, though, you know, you say all these things and his apple position alone is $1 billion something. >> brilliant. >> i mean, you can do a little dart throw here and hit a lot of stocks. >> you can. it is a nice day. the broader averages, but if you are to the point, carl made with the banks or the lever ed balane sheet, need for capital, you're having a good day. cable also, comcast shares are up almost 3%. charter is up 4%. >> we work for comcast. >> yes, we do. >> also, if you're a disaster in terms of your capital structure -- >> dish. dish is up? >> 10%. >> we have a holiday where we can buy whatever we want? >> yeah, today is the day because they're going to live on

for longer. >> walgreens, boots leads the dow kind of day. >> what's amazing is in phase energy, which has been the consummate dog because it turned out not to be solar. it turned out to be finance. second day in a row the stock is scorching. scorching. think about that one. >> you think jpmorgan is only up a lot less than the big banks because jamie dimon has not been right on rates so people are taking it out on him? >> he also -- that's the least levered. i would rather own u.s. bank. >> i'm kidding, but he was saying where are we heading, 7%? >> he was wrong on that. >> although his geopolitical worries, no reason to think those are less relevant right now. >> i do know that this is about -- this is a rally about finance. companies that need finance. that's what's happening. >> well said. the guys are right. 1% gains for the banks, for energy, industrials, consumer discretionary. a lot is working well even with

the dow up only 100 points. you can get on the cnbc investing club with jim. sign up and find out more at cnbc.com/jointheclub or use the qr code on the screen. there's a little more data on the way today. business inventories in about 15 minutes. fed balance sheet tonight. but it's all about the curve and certainly what rates have done in the past, say, 18, 24 hours with the ten-year still below 4. back in a moment.

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they were at 3.2 and go down to 2.7 and the b of e says it's too early to speculate about cuts. interesting also a surprise hike out of norway. 25 basis pntois. dow for the meantime up 83 points. we'll get stop trading with jim after a break. ways. i promise that our relationship will go well beyond just investment decisions. it's the intersection of your money and your life where we can make the biggest difference. [announcer] charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people achieve their financial goals. visit findyourindependentadvisor.com

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. let's get to jim and stop trading. >> it is a times that are changing, bob dylan market. people, the slow ones now, later will be fast, what i see is this. i don't want to buy the lts. i want to think about the next day. i don't want to recommend a stock up three to four that has no value. procter & gamble has been hurt. they're said to be $800 million hit. wipe out their gains for decline in commodities. they got crushed in argentina, moved out of that. this is the company that has a good yield, a dividend aristocrat, will do well. today it's an a-student. in the end you come back to the honor roll and this company is summa cum laude. >> no worries about pricing pour power? >> no. they've been able to take price consistently. it's not the kind of stock people want now. i'm mindful of what david was

saying, they're buying stocks that if, you know, trying to buy something the algorithm is saying buy it and have someone take you out of it. i like a stock like this because it's for sale, and it is the biggest beneficiary of the big cap stocks of a weak dollar. >> how about tonight? >> i have a stock, chewy, which takes pictures of your dogs, is a company that prospered for a long time and then amazon came in and i think amazon crushed them. i think they have a good business model and we'll have them on tonight. >> what a wild day. >> it is kind of crazy. >> it is. >> russell is up, strongest in more than 10 months. >> yeah. someone on frank's show that talked about that's where the action is. i prefer to buy a wells fargo or a morgan stanley, my travel trust owns, lag the market hideously, down a lot, and that's another thing to buy. wells fargo, doing great job. no one cares.

>> no. >> scharf is great. you know charlie, right? >> i do a bit, yeah. >> should we call him? >> no. >> after you dance a little bit more on our way out. >> we don't need to call. >> thank you. >> it's going to be a great robot future. one big dance party. >> david, that's probably what we're going to have to take up because we won't be needed here. >> how about a split screen here. really quick before we go. one more. >> send us to break dance thing. >> know. look sam altman. no need for any of us basically. >> "mad money," 6:00 p.m. eastern time. when we come back, art cashin's playbook for '24 in a minute. (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.

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that's effective and non-invasive. it's for people 45 plus at average risk, not high risk. false positive and negative results may occur. ask your provider for cologuard. ♪i did it my way!♪ good thursday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber, live for you as always from post nine of the new york stock exchange. take a look at stocks. the post-powell celebration continues right now. the s&p 500 up 0.5%. the nasdaq up 0.6%.

again after the big rally that we saw yesterday in the wake of that bond move, big bond rally, after powell, every sector higher except for staples and health care. the charge led by real estate. interest rate sensitive sector. there's the story on yield. 10-year note yield below 4% which is where it got after powell yesterday. more buying of treasuries and more lower yields. the 2-year at 4.3. 30 minutes into the trading session here are three movers that we're watching. adobe under pressure after issuing a lighter than expected forecast for 2024. the company says it's carefully looking at spending and remains focused on closing its $20 billion acquisition of sigma. that deal being probed by antitrust regulators. moderna on the move announcing positive data from a mid-stage trial of the company's melanoma treatment when combined with merck's drug keytruda. the combination, reducing the risk of recurrence or death for patients by 49% after three

years. we're watching apple trading at all-time highs on pace for its seven straight weeks of gains. the dow rally past 37,000 for the first time ever. more apple news and talk more about some of the other names leading the dow a little bit later this hour. >> business inventories out this morning. to rick santelli. good morning, rick. >> good morning, carl. yes, if you recall home sale inventories have been negative month over month for 2023. business inventories a bit of a different model except for this month we are down 0.1% as expected. that means you would have to go to june when we were down 0.1% to find a he lower number you would have to go to march. four months so far in the year have been negative. that's about half on the wholesale inventory side and does underscore how things are slowly starting to get back to normal. you want to pay attention to these numbers, especially if you're monitoring, of course, the beginning of the fourth quarter and how things may fair

world war to holiday sales. one thing i want to point out here, if two-year is close right here they would be at a 6 1/2 low month yield of 10s, nearly five months but more importantly, look at the following charts. two-year note yields are down on the year. they closed last year at 4.43. we're hovering at 4.36. ten years are getting close, closed last year at 3.88. they're currently trading 35.95. sara, back to you. >> so we wiped out a year of high yields basically? >> whole year. >> unbelievable. thank you, rick. it speaks to how ferocious the treasury rally has been post-fed and we got in the last hour the news conference from ecb president christine lagarde, who also paused on rate hikes, but had a very different message for the market surrounding rate cuts. listen. >> we did not, we did not

discuss rate cuts at all. no discussion, no debate on this issue. i think everybody in the room takes the view that between hike be and cut, there's a whole plateau, whole beach of hold. >> that was very different than the message we heard from fed chair powell yesterday on the subject of rate cuts. listen. >> the question of when will it become appropriate to begin dialing back the amount of policy restraint in place? that begins to examine into view and is clearly a topic of discussion in the world and also a discussion for us at our meeting today. >> they discussed it at the meeting today. so very different message, david. i think it underscores why powell was remarkably and surprisingly dovish. it started with the three rate cuts that were pencilled in to their summer of economic

projections. a lot of people were surprised by that. then it continued with a statement where we knew they were going to maybe make tweaks around the language of the tightening bias, any policy instead of additional policy firming. that was pretty well telegraphed signal that they're in a different mode. and then the biggest came in the news conference when he said they're talking about cuts, when they're probably at peak rates. a number of different ways you can point to it, but he did not talk down the market from the rate cuts, and, in fact, added fuel to that fire and the economists are out revising their cut schedule next year adding in faster and more of them. >> as you pointed out, not what was expected. >> look at this pivot. december 1st, the last time we heard from him, less than two weeks. it would be premature to speculate on when policy might ease. yesterday, rate cuts are coming -- >> what changed in 12 days? >> we did get some inflation

reports, pce and cpi and they continue to be benign. i don't have reporting on whether he's been speaking to treasury secretary yellen, but after my conversation with her yesterday, he very much is coming around to her view. remember, this is what she said about the potential for rate cuts. she wouldn't go that far because she doesn't want to interfere with fed policy at treasury but listen to what she said. >> as inflation moves down, it's in a way natural that interest rates should come down somewhat because real interest rates would otherwise increase, which can tend to tighten financial conditions. but they have two risks to manage, one that is inflation doesn't come down, back toward their target, as they envision, and the other is that the economy becomes too weak. i'm going to leave that call to them. >> leave the call to them, but

said it's natural to think of bringing interest rates down as inflation comes lower and she also made some news saying she expects inflation to have a 2% in front of it. in other words to get to the fed target by the end of next year, it feels like powell and yellen, again, are simpatico here on their view and he's really come around to this idea of not worrying too much about sflooigs worth reminding people, most of our viewers know, she was chair of the federal reserve. >> she was chair of the fed. >> and right before he was. >> i always ask her about the fed even though she doesn't want to talk about the fed as treasury secretary, but why her economic views have been important and spot-on. i'm sort of sick of the term soft landing because that's what -- especially after talking to her, it's all soft landing, and it has been and expects that to continue into next year. we got two data points this morning, guys, that confirmed the soft landing or maybe we can call it immaculate disinflation or growth without threatening inflation, but it's all the same

point which the market loves, which is, we're still getting growth and inflation rates are coming down. jobless claims continue to defy expectations. they're super low. they fell again last week. then retail sales came in better than expected on the month 0.3% gain. eight out of 13 categories rose. restaurants led the way. that's the only services category in the report. online sales were good, electronic sales were good. >> real quick, coming back to the top of your report, what accounts for the differential in language between the ecb and our fed? >> one factor could be that the ecb has a single mandate on inflation and so if it's not at their target they have to be squarely focused on fighting it and can't let their guard down. that's the language she used. the fed has a mandate to keep employment strong and they look at growth. so because they're weighing both of those the fed doesn't want to wreck the good economy it has in the face of falling inflation. that's a big part of it because bank of england was out this

morning and much more on the ecb camp of, you know, we still may have some work to do. i think they used that term on inflation, and not signaling cuts, because they're much more focused on the inflationary story. but i think we will continue to debate on this indoor and in the market about whether the fed is premature here when it comes to talking about rate cuts with core inflation still at 4%, double the target, and the unemployment rate at 3.7%. which is not really threatening a big -- with a big decline in the economy. >> there's no doubt about that. we're definitely going to debate it. yields falling, stocks off the highs here. dow up 43 now, on the heels of powell. steve liesman joins us with more on what comes next. speaking of which, steve, i see referring to claims and retail sales, these -- they say no signs of a pick-up in layoff activity but do not think these provide fundamental support to the outlook on the fed funds?

>> yeah. i mean, we might be back into the zone now, carl, where good news is bad news if you really want those cuts to come early and there be many of them. i think also the retail sales report is going to flatter the gdp numbers. i haven't seen upward adjustments yet. we're waiting for the inventory numbers to come through. but later this afternoon or just in a few hours we'll get a few. my guess is that people will upgrade that outlook for the fourth quarter which you remember the third quarter was a surprise. why? because the consumer was spending. the fourth quarter might be a surprise, too, because the consumer continues to spend. our cnbc-nrf retail monitor data was spot on where the government came in and pointing out this unexpected strength we've had in the consumer. let me go back a second and add to sara's answer about the difference in the ecb and the fed. i would also add to her -- i agree with all of her points but add that the fed was earlier in terms of raising interests, and

it also went further than the ecb went, so the idea that they would pivot earlier also makes sense here. laggard not ready -- i liked her comment it's not time to let our guard down when it comes to inflation. she's not ready to make that call and i would underscore sara's answer about them having the single mandate, where powell is trying to really balance both mandates and you heard a lot yesterday from powell, in my opinion anyway, about how much concern there is about the other side of the mandate. i don't know if the fed is looking at something scarier. i think you're asking the right question. what happened between december 1st and today. i went back and re-read the whole interview and it's hard to get from powell's last interview to where he is today. i've got a couple suspicions. one is that the inflation numbers, he had a more dovish read than the market did on it. that was one. two, maybe his committee started to get a little more dovish than he was or he was ready to go and the downside of all of this,

which you guys are already toying with, have financial conditions loosened too much now that's going to make the job of fighting inflation harder. >> on that point you mentioned gdp. goldman goes to 2, almost double consensus, and jan's point last night was some of the easing conditions from october on, they think are durable because of what inflation has done. >> i think that's right. remember you had rick point out that 2-year is down on the year, which is quite remarkable. we did have michael on "squawk box" this morning and thinks financial conditions are still relatively tight or tight enough for the federal reserve. we'll just have to play it by ear. i don't think -- if money is not free again, just to be clear, right. when you look at what the average fed official is planning and you think about it in terms of real interest rates, which is how many of them have been thinking about it, the fed is not seeing itself loosening up very much at all. do the math and take the fed funds rate minus the core pce

rate which is imperfect according to a lot of the wonks out there. it's a benchmark way of thinking about the. they're still looking at 2.2% real. the only reason they come down according to their own forecasts is because inflation comes down. they are not reducing interest rates to ease financial conditions, so to speak. >> steve, thank you. and continue the conversation, of course. more on the market implications of this move. bring in senior markets commentator mike santoli. we've remarked on many of those companies that are highly leveraged or reliant on the financing markets for future growth and/or just keeping their business going are benefitting today. what else are you seeing? >> yeah. david it pushes off the day of reckoning if there was going to be one for highly leveraged companies. it probably puts a little refinancing, refresh cycle out there. going to stoke a push of housing demand as well, mortgage rates crashing. all those things under way. i think what the market reaction did is, it basically set the

don't fight the fed and fight the tape rules in sync to say, you know, that we have this really pretty impressive bullish uptrend, breakout in the indexes, and mostly, not just because, you know, the market is craving and pushing for lower fed funds rate down the road, but because powell explicitly tried to further delink fed policy in the short term from what the economy has to do to get us there, right. the fed doesn't need to feel like it needs to really kneecall the economy to get the -- kneecap the economy to get the job done. what changed recently, i think it's the preponderance of benign inflation numbers that have built up. you've got this run of data that have not just been pretty much right center in line with the soft landing thesis, but also, coming in really close to forecast. so i think no surprises and numbers that are exactly as you might want to draw them up have combined to create this

confidence that the disinflationary trend is reliable at the moment, and there's time to figure out how that develops without having to do anything on rates for a little while. so now, in the very short erm, the stock market is quite extended. you know, we did have this breakout, nearly brought all to the good, but you are getting a little bit stretched out there and so many things have been working together. you have the short squeeze, low quality rally in stocks that have been left for dead. you had the rate relief rally, pressure off the bank's balance sheets. the soft landing celebration. the repositioning, people were not prepared for a strong stock market and need to raise exposure. i think a lot of that stuff has played out, maybe it's the first quarter's business to try to reconcile some of that and have a gut check and maybe we have to reset a little bit, but for now, it really did kind of check off all the market's boxes. >> i know it's fed first when it comes to the market these days, and the equity rally, but now that we're getting to these levels, i do wonder, mike, with

the gdp picture subdued, even if it ticks higher for fourth quarter after retail sales, earnings expectations, how realistic are they into next year? >> yeah. that's the question. first of all the fourth quarter earnings forecasts have been cut pretty significantly. it probably sets off a pretty ease beat cycle once we get the reports. but i think the test of whether 2024 earnings are plausible, it's out there probably a couple of quarters. it's a back-end loaded forecast at this point, as you wouldn't be surprised to hear. it is typically the stronger growth coming in the latter half of the year. i think what the fed's message and the sturdy current economic data do is gives a longer leash for companies to prove that those numbers are plausible, so the market might be able to look through a little more weakness than you might expect. we got warnings from adobe and oracle and pfizer and etsy and they don't really seem to be causing that many ripple effects in other companies because they think we're willing to give the

benefit of the doubt. >> they're coming from companies that had been weaker and struggling, whether it's etsy or hasbro before. thank you very much. mike santoli. as we head to break, our road map for the rest of the hour. the road for auto stocks in 2024, we have top picks for you. >> the dow topping 37 k for the first time. the stocks fueling those gains. >> home builders are ligament new highs. what is -- hitting new highs. what is ahead for companies and stocks. the fed focused on potentially dos xtearatene yr. n't go anywhere. it takes years of dedication to get to this milestone. the new york stock exchange is a symbol of what america is all about the potential of an american dream. it is day one. a lot of work has happened to lead to this historic moment. the only way you can move a society forward is a true expression of freedom.

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welcome back to "squawk on the street." earlier this week ford announced plans to cut production for the lightening ev pick-up truck. our next guest is baeish on the auto industry but does like heade headed '24. joining us the senior analyst for wells fargo and has a buying right on the stock. it's that time of year, your best picks, hard pressed to find one? >> i liked them for a while. >> why? >> why borg? >> why are you bearish on the auto snekts. >> sector. >> we're at peak profits a lot driven by pricing. we're at record pricing.

detroit three they've gotten $10 billion of pricing help since covid. two, people haven't paid attention to capacity. the industry is probably going to see close to a 20% increase in capacity. that's terrible for profitability. what happens is automakers feel pressure and feeds into the pricing concern. three, electric vehicles. people are very excited by the fact that there's moderation in ev demand because these are unprofitable but they're missing the regulations that are behind all of this. for 2026 you're going to need 9, maybe 9 or 10% evs for the detroit three they're at 0 to 4% right now. they will need more of the unprofitable vehicles to get there. the last thing i don't think people are paying attention to are pick-ups, historically the vast majority of profits for the detroit three, their inventory creeping up and the sales are fairly flat. it's been distracting market with the strikes and the supply

chain volatility. at the end of the day there's a good coalition between housing starts and pick-up sales because contractors are a big customer base. i think you have a lot of negative reasons for the industry into next year. it's very little that's actually good news into next year. >> now we'll go to boringwarner. why do you feel that's something to buy? >> if you look at it, the suppliers can perform well, especially high-quality suppliers even when customers are struggling. this is a globally diversified company. they're cheap. if you look at -- strip out some of the pricing help this year suppliers have been getting from cost recoveries they're one of the fastest growers this year and not trading at a premium to the group, they're trading in line with a group. it's a company that has executed really well since covid when there's been so much volatility and we'll see more volatility for the suppliers next year and have labor cost inflation, some fx issues. i would rather stick with a name executed through all the volatility recently. >> on the demand question, the

retail sales report today, auto motor parts, parts dealers, 6.1% growth from this time last year november number. it continues to show strong demand, doesn't it? >> we're still seeing sar up year over year. sar has been flat. auto sales have been flat lining in the low 15s, creeping up a little bit. there's probably upside. inventory is up all around and if demand was so high at current price levels, we would actually be at a 17 million sar where we were before covid. normal demand 16, 17, so a problem that we're only at 15 and we have plenty of inventory out there which means we're going to need to cut prices to we want that volume which goes back to the capacity issue. if we have unused capacity there's pressure to cut prices because you're sitting on fixed costs. >> we're going to leave it there but thank you. >> thank you. still to come this morning, as we said the dow tops 37k for the first time. a closer look at some of the stocks leading that charge. plus, it's an annual

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the dow closing at a record high crossing above the 37 h,00 mark for the first time ever. let's get to bob pisani with what's leading the chart. >> 350 new highs, over 300 on the nasdaq. take a look, apple all-time high, visa at an all-time high. talking about that all week. ibm, six-year high. bogey up 23%. jpmorgan home depot, goldman, intel, all new highs. so the market is very overbought. how overbought. this is the big conversation. what should we do in january? 89% of the stocks in the s&p are above the 50-day moving average, very unusual, really, really broad rally here. relative strength indicator is at 78 for the s&p. anything over 70 is considered over bought. it's hard to keep the market advancing every day when the market keeps going up by that much that quickly. it's very expensive. you get towards 20 times forward

earnings, 19.2 now, the market gets a very picky. they don't like paying that much. normally the historic average is about 17 here. so there's a game that everybody is going to play now when you have a big up year. that's the january mean reversion trade. that is, let's pick at the edges of stuff that didn't do well in 2023. small cap value, value doing well, small cap under performing still. better recently. you got to believe interest rates are going to come down really big. consumer staples we saw smucker's and hersheys down here. that's not a big play if the market is going to be stabilizing around the soft landing. energy down, but you got to believe here that oil is going to rally, probably not going to happen. china, big geopolitical plays. one note we have the triple witching tomorrow, the last liquidity event, lot of volume here, rebalancing on the s&p, nasdaq index is rebalancing. uber going into the s&p 500 along with j build, sillver going out. want to see the effect going out

and coming in, look at this. this is uber in the last month. it was $40 a month ago. earnings came out. everybody realized they were suddenly a candidate for inclusion in the s&p. s&p, they're up 50% in one month. this is called the s&p inclusion effect. stock tends to rise going in to the s&p 500 and after that tends to move sideways to down. yes get all of the value going in as it's going into the s&p 500. >> tomorrow is going to be big. want to talk art cashin. >> what's great here, we caught up with art. this is the annual predictions here. despite the 20% run up in the s&p 500 this year, i met with art over at harry's. art's very enthusiastic about the setup for 2024. i was surprised about this. he's telling me election years with a sitting president tend to be strong ones. >> it's an election year, and that tends to be good for the market, as people are making

projections and promises and programs, and even the upward bias on an election year, when a sitting president is running for re-election, that compounds it even more. the best of all those historical patterns is when an incumbent president is deciding to for re-election. he needs a decent economy to back him up. >> that decent economy, art says, requires a lot more spending, and that goes to the first issue that worries him in 2024, that flood of new treasuries and less demand for our debt, particularly overseas, may keep rates a bit higher than people think. >> the chinese were big buyers of u.s. treasuries to protect their currency. not to put them at a trade disadvantage. years before that, the japanese,

too, were enormous buyers of u.s. treasuries. so we had that demand which allowed us to run deficits and never start to choke up. the chinese are having their own economic problems so i don't know they have have the latitude to buy u.s. treasuries in the scope that they have. >> a second worry is what we were just talking about, stock valuations. the broad market is very pricey, valuations are nearing extreme levels in some, but not all sectors. i asked if that would be an issue in january, when some people who had poured cash into money market funds in 2023 might be tempted to come back into stocks at very high prices. >> of course it is. and that's the problem, you know, with fear of missing out, the idea that the train is leaving the station, the idea i've got to get on board, and so

you begin to ignore multiples and you pay up and that's where bubbles come from. people go in and say yeah, but the train is leaving the station and am i paying a high premium? yeah. but i've got to get on board before that train is gone. and that is a risk. >> my full interview with art is going to be up on cnbc pro later today. art also talks about another worry, the looming commercial real estate problems he thinks are still going to be there for banks in 2024. he also said surprisingly strong endorsement of the benefits of artificial intelligence for the economy in 2024. this from a guy who still uses a flip phone, writes his morning newsletter by hand, calls in to his secretary, very interesting observations on artificial intelligence and what it will do to the economy. >> the hyper bull thesis is a golden age of productivity.

>> yeah. >> and hence corporate earnings. >> he talks about that and the influence on some of the retailers and where it's going to go. it's great to see art and to be back. we didn't do it last year. it's a 20-year tradition. full interview on cnbc pro later on today. >> love it. in the holiday bow tie, of course. >> he dressed up and looked great. it's -- i can't describe how important that man was to me in the 1990s and what a great mentor he's been over the last 25 years and always cheers me to see him. >> nice to see. we miss seeing him here every day. thank you, bob. >> okay. >> bob pisani. still ahead former dallas fed president robert kaplan with his take on where rates could be headed in the new year. when he's expecting the first rate cut. the biggest gainers on the s&p 500 this morning. no shortage of them but moderna out with some good news on the melanoma vaccine along with

merck. 12% higher. there are others as well. most sectors are higher. the bank are having a good session, real estate, energy, materials, all leading the s&p. don't go anywhere. [alarm clock ringing] [upbeat music starts] (♪♪) [transaction notification] [car door closes] [lights turn on] [inaudible kitchen chatter] [bell dings]

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i'm julia boorstin with your cnbc news update. national security adviser jake sullivan is in israel to meet with prime minister benjamin netanyahu and israel's war cabinet. sullivan is there to talk about the timetable for israel's war with hamas. the israeli defense minister said in a press conference this morning it will last more than several months. russian president vladimir putin said today moscow is in talks with the u.s. to bring home jailed american evan

gershkovich and paul whelan. his comment came as a russian court once again rejected gershkovich's appeal against his pretrial detention. putin said he hopes russia can find a solution to that could suit the russian side for gershkovich and whelan. the pope is the latest person pushing for more controls on artificial intelligence. the appeal is somewhat personal for the pope, pope francis, who is seen in a viral ai generated image earlier this year wearing a luxury white puffer jacket. he called for an international treaty to make sure ai's developed and used ethically. back over to you. >> thank you. julia. interest rate futures are now indicating a higher chance of rate cuts starting in march after the fed's new rate projections signal the end of the tightening policy and a lot of commentary from powell backing that up. robert kaplan is currently professor at harvard business school and joins us now.

were you surprised at the extent to which he endorsed the market's view of rate cuts and even fueled that fire even further? >> well, not so much what he's looking at is, as inflation comes down, the real fed funds rate actually goes up, unless you begin to cut rates. the fomc was going to have to start discussing the conditions for cutting rates. what i mean by that, if the nominal fed funds rate is 5.25 and inflation depending on your measure is running at 3.5, it means you have a real fed funds rate at 1.75. if inflation goes down, they don't want the real wait raitt to go up. they want it to staythe same or go down. they've got room to start considering cuts if they see sustained improvement, and there

will be a point at which over the next year or so, where they're going to also think that the real fed funds rate doesn't need to be as high. this was a conversation destined to happen. you had to preview it some time, and he chose yesterday. >> agree. and i think actually that was a great explanation for it and a lot of people think that, obviously, worry about that happening, the tightening going on, beyond them stopping to raise interest rates. it's the financial conditions on the other side loosening pretty significantly here. they were into the fed meeting and they're doing even more so out of the fed meeting. whether that risks some of the progress they made on inflation. >> yeah. yes. so that's why people, people should not overreact either to what he said. he left his options open. he thinks they're done. it's likely the next move will be down, not up, but he's keeping the option open. and the things that they're going to -- and if i were there i would be watching closely. what does -- what does service

sector inflation do? goods inflation has been very weak, but the service sector is still over 5% and they want to see some improvement there. you've got -- you've had a big oil rally. we've got the benefit of it in the inflation numbers. you could easily have that reverse. you see that today. oil is up. and then the other thing is, we are spending at historic levels. you've heard me say this before, on the fiscal side. that he probably won't talk about, but i think that's a big factor. we're on our way to running a very large deficit this year and you've got unspent ar pa money, inflation reduction act projects, infrastructure act projects, so they're going to want to see into 2024 at least two or three months of sustained improvement and there's some reasons it might be bumpy, but if they do see the sustained improvement, they're going to be prepared to take action. >> robert, on the fiscal side,

though, you know, again, they won't address it, those who have said they have to be aware of the interest cost in the budget and what that's going to mean. i'm just curious, like, you know, is powell looking at that as well, running regresses on what that's going to look like over time? >> no. it turns out, listen, this rate rally is good news for the fiscal side in that the issue for this coming year, let's say we have 27 trillion of debt in this country held by the public. okay. the treasury is going to have to issue $9 trillion of new debt this year. seven refinance and another two to finance the deficit we just ran, and the debt rolling off is probably in the low 2s and it's going to get refinanced even in a positive case, probably in the low 4s. that's 200 basis points or $180 billion more of interest expense

before we've started the year. i don't think the fed is explicitly going to focus on it, but i'll tell you, i'm focused on it and i think the markets will be focused on it. we've got a substantial amount of treasury volume that we've got to issue in the years ahead, debt to gdp is over 100%, and i'm more focused right now on what the 10-year does over the next three to six months. i'm as focused on that as i am on what decisions the fed makes and the timing of those decisions. >> do you think the 10-year stays below 4% through next year? >> i mean, i don't know. the reason you've got estimates all over the map, for those who think it's going to come down a plot lot more, they're expecting a severe slowing in the economy and even a recession. those who think it's going to be sticky here, they're thinking the economy will be resilient. i personally think if we continue to run $2 trillion deficits into 2024, and we keep

spending on these projects, i think the economy is probably going to be more resilient than people think and the treasury is trying to respond to this very quietly by front-end loading issuance in bills, not testing the market's capacity for the 10-year and the 30-year, and i think this will be one of the things i'll be watching closely, is how deep is the bid for duration in the treasury market and i think the treasury will be careful about going overboard in testing that. >> agree. thank you, robert kaplan. really good to get your insight, as someone who is in the room recently. >> good to talk to you. >> former dallas fed president. we got news on that pending proxy fight from nelson peltz that we've been talking about for some time. it's now official. just a few moments ago, peltz's trian putting out a press release referring to what jim cramer reported a few weeks ago, they would nominate two, not

three, two board members for disney's board. of course if you recall, peltz a year ago was in the midst of a potential proxy fight to seat himself on disney's board and then gave up that proxy fight right after an interview i did early last year, early this year, with bob iger. they're back. and this time, it is not just penalties but another nominee jay rusulo, an interesting name to note, because mr. rusulo had been the cf o at disney from 2010 to 2015, and also had run the parks and resorts from '05 to '09. the disney i know and love has lost it ways, he's quoted as saying. independent voices in the board room, nelson and i are confident the combination of his decades of experience at disney and nelson's board room skills and history at driving positive strategic change, will get

things back on track. those are my words, not theirs. what i would share with grew their letter is the following, they say the root cause of disney's under performance in our view is a board that is too closely connected to a long tenured ceo and too disconnected from shareholders' interests. the board we believe lacks objectivity and focus and alignment. the appointment of two new directors to the board is a step towards greater objectivity. on the eve of a proxy contest is insufficient because the new directors were chosen without shareholder input and they don't seemingly own any amount of stock. they talk about, sara, the fact that nonmanagement directors own less than 15 million of disney stock and that iger has sold the vast majority of his ownership stake as well. i would make a point i believe 26 of 33 million shares of trian

lists are actually -- >> which has been a disney argument. >> without a doubt. >> if you look at the stock price, nelz peltz called off tht fight. at share it's at 93 right now. two questions, what's wrong with disney and is peltz going to get what he wants? >> very much unclear if peltz will get what he wants at this point. i would have said it's an uphill battle for him, potentially to seat him sself. jay is an interesting nominee no doubt given his experience at the company for quite a period of time in parks -- although parks is not the issue here. again to answer the other part of your question it's about getting streaming to profitability, dealing with the collapse of the linear cable ecosystem we've all been a part so many years. iger talks about these challenges very much up front, and he has cut costs significantly, far beyond, in fact, what they originally had

targeted, and so while you certainly can make an argument, sara, that there needs to be more accountability, and that board is too closely connected to iger so to speak, i'm still seeing or not seeing specifics here at this point in terms of what they would recommend they do from an execution stand ninth isn't already perhaps under way at disney. my expectation will be that will be disney's argument with that recent board refreshment adding gorman, for example, from morgan stanley to the board. >> expectation is that trian will do so as we get into the proxy contest as well. they usually release white papers and have all sorts of recommendations. >> exactly. >> getting news out of d.c. let's get to emily wilkins with that. is this about defense policy? >> yes. so congress has passed a major must pass defense authorization bill. this bill is almost $900 billion, incredible critical piece of legislation congress is getting done today before everyone goes home for christmas. a lot of this bill does have to

do with the military a 5.2% pay raise for service members, additional funding for ukraine, but there are a number of provisions in here that deal with other interests and topics. one big one is ai. we are seeing dozens of provisions in here as the pentagon and the military really look to adopt this new technology, that includes trying to see if they can hold a competition to get someone who can identify watermarks on ai and ai generated content so you can tell what's real and fake. they are sponsoring a program telling hackers, come, test our ai, see where our faults are. we want to make sure that we are putting out a really strong product when it comes to the ai models as well as cyber defense models. there are pieces in here on china and taiwan having the department of defense basically train taiwan military and help boost up their capacity and we have another provision in here dealing with the u.s.-mexico trade. a huge package for congress to close out the year with, but, of course, a lot that did not get

done this year and will need to be addressed very soon in 2024. >> we'll sea them in a weeks. thank you. still to come, with some potential rate cuts on the horizon time to start betting on housing stocks. we'll get top picks in '24 when we're back in a minute. [ "i'll be seeing you" by the five satins ]

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quick programming note. biggest coming up, s.e.c. chairman, gary gensler fresh off news that they are investigating adviser's use of a.i. we'll talk about wins and losses of 2023 and what auto he's looking for in 2024. that's coming up in the next hour on "money movers." dr holerton and pulte at ne highs. the fed expecting more rate cuts next year. what is the outlook for housing stocks in that environment? joining us is oppenheimer's

tyler. good to have you. an important 24 hours we just had. what is this new rate environment do to some of these builders' margins and orders? >> it's definitely a tailwind, certainly. you look at the playbook for next year, which is definitely going to be turbo charged by what happened yesterday. i think the playbook and outlook for next year looks similar to this year, actually, for the friday. still limited existing inventory out there. we don't really see that changing. there's a market share shift under way where new homes in a lot of locations are the only game in town. the public builders have size, scale, access to capital that allows them to grow their inventory, buy down interest rates. that's attractive for the end user and buyer. there's a market share shift going on with demand that's being funneled to new homes, funneled to home builders. for stocks we think it's a group that's grown up. these management teams, the public builders collectively, they're very focused on returns.

they have adjusted how they think about deploying capital. so, you roll that all up we think there's some fundamental tailwinds here. and i think an outlook that's really quite positive for the sector overall. >> is there an argument that if rates come down enough, it unleashes a supply of existing homes and the new builders do face more competition? >> yeah. it's odd to think lower interest rates might not be a good thing for home builders. the tailwind in terms of existing inventory, the reason there's not much existing inventory out there is because 40% of those homeowners with a mortgage have a rate below 4%. if you have a mortgage rate at 3%, 3.5%, trading that for a 7% mortgage doesn't really make a whole lot of financial sense. obviously, if rates start to tick down, that math starts to change a little bit more. it's possible you could get some incremental inventory coming onto the market next year. our perspective is, lower rates

would be a good thing for demand that would offset incremental supply that might come. for the home builders, if rates are lower, they don't have to offer as much for incentives. that's a tailwind. with rates potentially moving lower next year, we think that's a till wind still for the industry. >> it was a funny environment for home builders because the stocks actually did fine as inventories were low and prices remained high. is there worry prices could go even higher if this unleashes a lot of activity in the mortgage market, which would make the fed worried again? >> yeah, it's definitely a potential risk in the supply/demand imbalance that's in the market, i think, does give builders pricing power. you look at what homes will be running through their p&l this year. you'll see higher activity level than in early 2023.

you look towards next year, the back half of the year, if interest rates cooperate, even stay the same as where they are right now, there's going to be demand and builders are trying to meet that demand with more supply. the key to this whole story is there's not a whole lot of existing inventory out there on the market. there will be more demand than there is supply and simple economics and that sort of situation should give builders pricing power and the ability to raise prices. >> we're watching that 30-year fixed below 7% now. as you say, long way to go to get out of those velvet handcuffs for a lot of homeowners. tyler, thanks. >> thank you. in the broader markets we have continued the rally we saw after yesterday's fed decision and particularly after yesterday's comments from chair powell at his press conference with the s&p up less than half of 1%. notably absent from the rally are many of the big seven names, or magnificent is what we call them more often than not.

apple is up. new highs there as it approaches $3.1 trillion. as we said earlier, many companies that rely on the financing markets with business or have highly leveraged balance sheets are the beneficiaries of this rally today. and the banks, as you might expect, also given what it means for rates and for the curve in terms of their borrowing and/or lending, also a positive tone there as well. we've got a lot more market coverage for you right after isre.k don't go anywhere. unlocking the power of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization. and track market trends with up-to-the-minute news and insights. trade brilliantly with schwab.

good thursday morning. welcome to "money movers." i'm carl quintanilla with sara eisen live at post 9 of the new york stock exchange. today a fresh all-time high for the dow as powell signals this dovish pivot. when can the street expect cuts? gary gensler, new rules on cyber security and short selling, plus the latest on how he's tackling a.i. and, of course, crypto. how are airlines going to maintain pricing power in '24? we did see southwest under pressure yesterday. frontier's chief executive going to join us. right now,