whether this is coordinated or not among all of the fed folks. meanwhile, look at the dow, it's in the red. becky quick, i don't know what you think. we have ten seconds. >> i think i'm glad it's friday. leave it up to somebody else to figure out from here on out. >> fair enough. fair enough. make sure you join us next week. have a great weekend, everybody. "squawk on the street" begins right now. ♪ we're getting ready here. it's friday morning. clearing our thoughts. welcome to "squawk on the street." i'm david faber with jim cramer. we're live at post 9. carl is off this morning. let's look at futures. things have changed since we heard from williams sitting down with steve liesman. we can see a higher open for the nasdaq? let's get to our roadmap.

the s&p is closing in on a new record, but futures are paring their gains as the new york fed president told cnbc they're not really talking about rate cuts now. we have costco reporting another strong quarter. says it is starting to see some prices come down, but not for food. we'll hear from jim on that. and blackstone, a little fun here, getting in on the taylor swift craze. christmas cards with singing and dancing. alternative music era video. let's look at the markets and the comments from john williams. they were made about rates to steve liesman moments ago. take a listen. >> we're not really talking about rate cuts right now. we're focused on the question in front of us, which as chair powell said, the question is have we gotten monetary policy to a restrictive stance to get

inflation down to 2%. that's the question in front of us. that's the question we'll continue to think about for some time. >> any changes from what you expected? >> the fed chief didn't say that. the fed chief said he's worried about a slowdown. dot plot indicates there will be cuts. i think there's -- maybe there's di dissension here. the idea that there will be rate cuts next year, you can't take that off the table if you put it on the table two years ago. >> now. i don't know what now means. now could mean literally that. not march. >> powell changed his mind. powell felt, unlike most fed chairmen, that he's now worried about the regular person losing his job because the rates are so high. >> what -- you know, everybody has been trying to understand what the take was. we had a cpi number, nobody

acted with rate fervor because it seemed inline, what was expected. that may not have changed things. but what did change here then based on the data and what we had in terms of expectations? the fed seems to be seeing something that the others are not. >> i do know that the fed realized that unless they take rates down, there will not be enough supply because the anomaly of the 3% mortgages made it so nobody wants to leave. if you get rates down, the price of housing will fall. he's worried about that because rates have not come down at all. he decided that he thinks we're far enough along that we can think about being sure that we don't have a tail spin. i thought it was natural. >> right. >> what williams is saying is basically, no, we didn't say that. no -- did he -- who made him fed

chief? >> well, what he really -- he said a lot of things during the interview. what we just showed people there, have we gotten monetary policy to a restrictive stance to make sure rates get down to 2%. that's what we're focused on. >> he said, listen, now we have to focus on being balanced. look, we can just go over the words of powell and just say, well, this is in conflict. what's the matter with saying that? he's in conflict. >> yeah. >> he doesn't speak for the fed chief. the fed chief speaks for the fed chief. who speaks for the fed chief? the fed chief. jay powell is an independent guy who has made up his mind and we cannot two days later say, no, he didn't say that. you got that wrong. that's not -- that's not the way it's played. >> right. >> anybody who is deciding, wow, i bought a lot of stock, now i'm hurting -- well, if you bought

the right stocks you're fine. >> let's talk about that. a lot of stock has been bought the last few days. to echo something you have been talking about more recently, the broadening has begun to occur in a significant way. >> yes. >> even, in fact, the russell, which long lagging russell -- some of the more speculative stocks which are a part of it, or companies not even earning money, ones that have a lot of debt and/or leverage that will benefit from a lower rate environment, but they have surged. >> yes, they have. >> it's not like the s&p has not had a good week but the russell has had a better week. >> the weakness of this rally is -- i call it the affirm rally. upstart rally. these are companies that have doubled. stocks have doubled. you don't want to see that, but they are related to if rates go down, they do much better. there's -- it's not all fanciful. >> it's not. there's affirm. you can look at the arc fund.

cathie woods' arc fund, what a week it's had. >> there's a lot of -- you've looked at toll brothers and lennar came out and said we won't forecast gross margin, which is interesting. >> one -- there's ark on the week. up 5.5%. sometimes i'm looking in the wrong place here. one area of the market and/or investor base that's been hurt is the hedge funds. they were short a lot of these names. >> right. >> i was looking, thank you to b of a, worst day of 2023 was yesterday in terms of shorts versus longs. looking at relative performance of consensus longs versus consensus shorts amongst large caps, there's the chart that we're going to show you. longs fell by 65 basis points. shorts surged by 3%.

>> wow. >> what we're trying to show you -- see that arrow? that's the worst -- this is a measure of three days in terms of how much you're losing on your shorts over the last many years. it's one of the worst days of all time. sorry, five years. you can see, there's only been a couple days that were worse. it was the worst two-day period since march of 2020 when you combine the last two days together. you look at the spread daily neutralizing for beta, today's moves scores a negative 3.5, worse than any other year to date by a lot. you saw that on the chart that was encompassing a number of days. the hedge fund is getting crushed on their shorts. >> the great peter lynch described the fact is the reason you have to be in, a couple days a year is where all the performance is. we just had them. do we have a chart of caterpillar? it's insane.

you know i think the world of caterpillar. >> i know you do. >> it was up 14 yesterday. people say, wow, i got the short wrong. even was telling me to be short. everyone said that rates are going up. everyone said that all the -- that there's big inventory problem. oh, my god. panic. there was panic in so many names yesterday. >> i didn't see caterpillar. i was expecting we would have it. >> i think that's in the dow and that -- >> does that and or was does it mean? is this broadening outgoing to continue? >> ex-williams, the broadening out can continue a little bit, but already people are saying the banks -- you can't tell from there, it's the right -- >> the last point there. >> the banks, there are already downgrades of zions bank because they think it moved too fast. i think that's wrong. these are banks, we go back to

the march banking crisis, most of these stocks are still there. if we lower rates, they'll do fine. >> right. >> i'm not buying it. do we have a -- i shouldn't call for these charts. >> what? >> wells fargo. >> you want a wells fargo? you got it. >> wells fargo was once the greatest bank in the country. this stock is still well below -- >> that's not it. we're trying. we're giving it our best shot. >> let's talk about woori financial. i've had it. there we go. >> there it is. >> you look at that stock and you say charlie sharp has it going. if you look at a ten-year chart, it's done nothing. nothing. i think in some of these situations, they're catching up to where they were. >> ten-year, you're right. >> still stunned by yesterday's home depot chart since it's ipo. >> what a stock. >> 1 million percent. a dollar invested in 1981 is worth $1 million today. >> you could have been in cds.

>> $1,000 makes you a billionaire. i want to look at microsoft, a few of the others. >> that's 1998. >> the retail measure is pretty much gone. they got brainwashed, so they're not allowed to pick a stock like home depot because it has to be in an index fund. they can't pick costco because of an index fund. why? let's get some bad retailers to balance off the good retailers. >> there's the one i was looking for. look at that. >> you have to have -- >> i had to come back to it. >> do you know what's going on in this country? >> no, i don't. what's happening? >> nobody has home depot because you were told about a thing called single stock risk. this is ill-advised logic because when you listen to ken

langone, he's not saying home depot is great, but we need tapestry in there. i just think single stock risk is a joke. it's a joke. >> let's stay in retail and move to costco. those shares are up. quarterly earnings came ahead of the consensus balance. demand for groceries was a part of that. an increase in paid household memberships. the company declaring a special dividend of $15 a share. here's what costco's cfo had to say. he was on "mad money" last night. >> our estimate for the quarter just ended. inflation was in the 0% to 1% range. furniture sets due to lower freight costs year over year and things like domestics, bulky, lower priced items, again, the freight cost is significant. some deflationary items were as

much as 20%, 30%, mostly freight related. tvs, the average sale prices have been lower and units have been higher. in talking to buyers, our sku counts are in good shape across all areas, and we had a good sell-through. >> that was the call last night. >> i think this is the great test case. this stock is perfect. what's been happening is the perfect stocks have been going down. the imperfect stocks have been going higher, imperfect stocks we believe were held back by higher rates. did you know costco was down last night? here's a quiz. >> bring it on. >> how many pumpkin pies did costco sell in the three days leading up to thanksgiving? >> how many pumpkin pies did costco sell -- >> 2.9 million. >> i would not have gotten that

one. >> we're supposed to be in a & p, remember that? >> of course. i do remember it. your takeaway is quite positive, i would think. >> well, just so you know, rich galanti talks about selling a babe ruth autographed index card for $20,000. mickey mantle perfect card, near perfect card on sale for 250,000 -- >> what does that have to do with the company and having a good quarter. >> when you have a cfo this confident talking about these things it's because they are making money hand over fist. >> ended q1 with 71 million paid household members. 125 million card holders, up 7.1%. 33.2 million paid executive members. they were increasing across the

board in all their membership ranks. >> we're executive. david, $100 million sold in gold. they announced the gold program on "mad money." $100 million. you can't even get it online. i tried to buy it every day for a month. you have to go to the store. fantastic. this is the most creative company, not just retail, it's really creative. >> yeah. >> i got upgraded once by jelinek. they had something for $74, i said i just paid $93 for it. that's mismarked. he said, no, we're a volume business, not a price business. everyone in the world will talk about it and come here and they'll buy toilet paper. >> it worked. >> yeah, it did. >> i know. hopefully you're buying more for your next big party.

i'm not a scotch drinker. all right. that's our first advertisement of the morning. we'll have a few others coming at you as well. before we do that, let's get over to rick santelli. we have new economic data coming out from the fed in five seconds. take it away. >> yes, david. we're expecting our november read on industrial production and capacity utilization. if i had to pick some important aspects before the number is out, when we look at industrial production, our last look, which was down 0.6% was the biggest negative month over month change in two years. we want to acknowledge that. utilization rates, they're also on the weak side. 78.9. last time was the weakest since october of '21. you're looking at two years there. industrial production, up 0.2%. that's definitely in line with

expectations. utilization rates have not imp improved. 78.8. that continues to hover at the lowest levels since october of '21. 78.9 in the rearview mirror. interest rates today have climbed just a little bit on the day. on the week, no doubt, we're down 28 basis points in twos and tens on the week, each is up just a few basis points after hitting 6 1/2 months lows on twos and nearly five-month lows on tens. "squawk on the street" will return after a short break.

when you think of investment risk, do you consider climate risk? changing weather patterns are impacting the way we live and the value of businesses large and small. this can mean disruption to supply chains, changing demand for products and shifting regulation. what does this mean for your business, your clients, and your investments? ice offers data and markets that can provide critical insight. manage your climate risk with ice.

loving this pay bump in our allowance. wonder where mom and dad got the extra money? maybe they won the lottery? maybe they inherited a fortune? maybe buried treasure? maybe it fell off a truck? maybe they heard that xfinity customers can save hundreds when they buy one unlimted line and get one free. now i can buy that electric scooter! i'm starting a private-equity fund that specializes in midcap. you do you. visit xfinitymobile.com today.

look at home depot. all these years of covering wall street, my math skills are not bad, but i was an english major. i was relying on you to change my ckcal calculations. it's $10,000 per dollar. it's a million percent, but not a million per dollar. but if you invested in that and held that money, you have done extraordinarily well. but not a million per dollar. >> you make the point, this is important for viewers at home, this is what you should be doing. you should be looking for one stock, i don't mind an index

fund, that you really believe in. let it roll. like nvidia for me. >> we'll start looking at some of these since ipos. coming up, jim's mad dash and counting you down to the opening bell. before you use ai to transform business, accelerate growth, predict trends, you need to begin with trust. introducing watsonx governance. helping you govern any ai, as data, models, and policies change, so you can scale it responsibly. let's create ai that begins with trust, with watsonx governance. ibm. let's create.

(adventurous music) ♪ ♪ ♪ be ready for any market with a liquid etf. get in and out with dia.

let's get to mad dash. you have a little less than eight minutes before we get started with the final day of trading. it's been an eventful week. >> sure has. >> to say the least. where do you want to go? >> i want to go to darden, which is olive garden and also longhorn steak, which is very good. you'll see the numbers. the numbers are better than what people expected.

however, david, they did point out -- this is kind of a bummer, that they were not able to raise the price of food -- their menu price as much as the food price that they had to pay. which is bad. they said there's a softness of check. this is the kind of thing where jay powell would say this is what i'm talking about. there's been so much inflation. inflation is peaking, at the same time people can't afford things. >> margin under pressure a bit as a result of an inability to pass along to some extent. >> exactly. i continue to come back to jay powell being a friend of the working person, not a friend of wall street. he frankly doesn't care that much about, which i like him for. this is america. darden is america, okay? >> what's america? >> america is beginning to -- america is a little beleaguered. it is.

minimum wage is 9%, okay? >> i'm sorry, gone up 9%. >> yeah. it's not enough. you say why is he -- doesn't he have to stop inflation now because that is not enough? no. he's thinking the other way. he's thinking, look, we don't want to hit these people more than they're getting hurt now. he sees food coming down. costco's food did not come down. it was transport that went down. food is next. i think that costco is america. darden is america. we have to get out of the idea that the two-year is america. two-year is not america. the inverted yield curve is not america. everyone on wall street is a snob. they probably have not been to a longhorn. they probably don't know what a great bloody mary they make. >> i didn't know that either. >> get a designated driver go to longhorn because they're blow your mind. >> we'll keep an eye on darden.

may be down as much as 3% pre-market. opening bell coming for you in five minutes. you can catch us any time and anywhere by listening to and following us on "squawk on the street." we're back after this.

they're waiting for you. hey, do you have a second? they're all expecting more. more efficiency. more benefits. more growth. when you realize you can give your people everything, and more. thank you very much. [applause]

ask, "now what?" here's what. you go with prudential to protect, empower and grow. with everything you need to deliver, you guessed it... more. one more thing... who's your rock? learn more at prudential.com

let's look at shares of lennar. you can see down over 5% in the premarket. that's just despite quarterly results that were ahead of estimates. gross margins came in narrower than many analysts were anticipating. the home builder posted a 19% jump in deliveries from one year ago. net earnings for the fourth quarter, 1.4 billion. 1.5 billion if you exclude adjustments, to give people a sense as to size and what that means. diluted earnings per share, $4.82 to give you a sense for perhaps the -- >> they said they would not guide full-year margin at this time as the interest rate environment is rapidly evolving. that one statement did

everything that leonaw lennard. the ceo of toll brothers is anxious to tell people, this is no longer a cyclical business, it's secular. i think this is a backlash. lennar is too much. i think it's a great company. this stock was at 102 in november, and now at 150. you could argue that's too much. it's just too much. >> yeah. new orders up 13% year over year to 69,111 homes. that's full-year 2023. deliveries up 10%. they delivered over 73,000 homes. again, just to put into perspective, $13.73 a share. that will give you a sense on the year. you like this name.

you liked it. you continue to. >> i do like it. i know that if you go down, obviously it's one of the best performing stocks. it's an amazing home builder. it's always been a great home builder. steve miller does a terrific job. this is giving up on the idea of rate cuts. this is a john williams selloff. >> yeah. there you heard it. the opening bell for this friday. final trading day of the week. look at the realtime exchange back at our headquarters at the big board, zkh group, a maintenance repair and operations procurement service platform from china. going public today. of at the nasdaq. marketing technology company banzai. >> there you go. any thoughts, key to the market stuff you want to share? >> nvidia. that's why. stacy, a frequent guest of our

network, is saying that -- i love this line so much. it's strange to complain about nvidia's stock performance and then he come on and says it's been disappointing. the stock has been disappointing. he is saying since the last quarter it is. >> it has flat lined over the last few months i guess. even though they reported a historic quarter. >> right. it's mid-20s pe, even though it's probably the greatest stock of our era when it comes to ai. i think the stock should be higher. i recognize in terms of what we said with lennar, people are saying some stocks have moved too much. there's no radar gun on a stock. nvidia missed the quarter in the spring. >> right. >> he said to lisa, i had the biggest miss in history, but it

was to the upsitde. that was a funny thing. >> was funny. not that funny. >> you didn't have to gloss over it. >> i just moved on. i did. i moved on. you've relayed funnier stories. >> i have. i was talking about amd catching a bid. people are all over intel. they like intel. micron. >> how does the ai story if it changes at all in the new year, how do you think about it? we talked about the same stocks as we should have led by nvidia, of course. sometimes advanced micro. intel trying to add itself to the conversation with its introduction of ai-related chips. >> it's speed, it's how hot it burns, most importantly it's software. neither of those have the software level that is the teaching part of ai. that's why nvidia is a much undervalued stock. it's become very much a software

company. in the same way that adam jonas argues that tesla is not just a car company, but there's one difference to that, right now tesla is just a car company. right now, nvidia is already developing things. people underestimate power of software. >> almost every day i like to have a bit of our conversation about ai, about advances in it, particularly generative ai, because you have to distinguish the detail and the large language models that power it, what it will mean for productivity gains, and the risks that it poses as well. jeff bezos, not an insignificant voice when it comes to technology, and main we'll look at amazon, did an interview, sadly not with me or somebody at cnbc, but with this podcaster guy who gets a lot of good people. he did talk about -- he talked about the risks of ai and

frankly he sees it the other way around. take a listen. >> my own view is that these powerful tools are much more likely to help us and save us even than they are on balance to hurt us and destroy us. i think we humans have a lot of ways of -- we can make ourselves go extinct. these things may help us not do that. they may save us. so the people who are overly concerned, in my view overly concerned -- it's a valid debate -- but i think they may be missing part of the equation which is how helpful they could be at making sure we don't destroy ourselves. >> that's kind of an interesting take. >> he's so smart. i think he sees the value of ai probably maybe -- it's so much easier to calculate what you need to do to land on mars. when i was at nvidia, the

problem with landing on mars, you have to get close enough and then go back up a little. >> i don't even know what that means. >> he's calculating mars at all time. ai could probably just do it for you. >> i don't know what it's going to be capable of. it's hard to not imagine all the things -- >> you know a player by the name of sauce? >> sauce gardner? >> yes. >> andy jassy will tell you he can predict when sauce gardner will blitz because of the third quarter because of generative ai. >> that's not generative ai, it's just regular ai. >> it's generative. >> generative is when it's creating things for you. >> yeah. >> that's the thing they've been advertising on amazon with the whole thing and the percentage catch. >> don't you love that? >> that's old. give me something new. >> god, you put me down at all -- >> i'm not putting you down. i'm just telling you -- i don't put you down. >> no?

>> no. >> let's move on. >> what do you have on the list? >> so, david, one that i've always liked that you know i've been a big aficionado of, tractor supply. >> i remember those days when we would talk about it all the time. >> can we have a ten-year chart of tractor supply? >> sure. >> people started -- one of the things they did during the pandemic was left the city and went to the country and created their own little farm. >> like green acres. >> yes. >> like eddie albert. >> exactly what i was thinking. >> of course you were. >> these guys at b of a say that's over. they're taking a neutral to a sell saying that's something that went on during the pandemic, let's move on. >> they're coming back to park avenue now? >> i guess so. i like this call. if people are coming back, then tractor supply will not do as

well. i'm always trying to figure out what people are doing. in san francisco, we have differing opinions about the vacancy rate in offices. >> mm-hmm. >> our piece saying last night it is down the lowest than ever. those people are still farming. maybe jamie dimon's people are knot farming. >> no, they haven't been for quite some time. they have been expected to be in the office every single day. >> did you see -- speaking of in the office, gary gensler was not in front of the fireplace the other day when he was doing that interview. >> back in the office. >> he wasn't in the office either. he went in front of the fireplace. >> i think the fireplace thing sent an interesting message. >> i think it did. for years. >> most of my lawyer friends have not gone back to the office. they feel everything can be done, go back and forth. that's part of the conundrum of real estate. david, there's an outfit that bought some interesting real estate, it's called blackstone. >> yes. >> they bought 20% of the

signature real estate. >> they did. they took a stake in signature bank, 16.8 billion. >> those guys are serious. they don't joke around. >> they are typically quite smart. >> i thought commercial real estate was supposed to be crashing? >> depends on where you buy it. commercial real estate is not a pretty picture. we need to distinguish when we say commercial, that encompasses a lot of things. data centers, pretty darn good. distribution centers pretty darn good. office space part of commercial? not good. bad. quite bad. that will continue. what we forget sometimes is with rates coming down, you get a loan to refinance, you have to put up more equity. nobody knows where that equity check is coming from for many of these properties as they are forced to refinance the debt on them already. >> the $80 million piece of paper that they will send the keys back. that doesn't work if you're a

bank. it doesn't work ultimately if you're an insurer. >> nobody wants to own a lot of these things. that said, the loan portfolio includes over 2,600 first mortgage loans on retail, market office properties. in new york, they were held by signature. signature was one of the three that went during the mini banking crisis led by silicon valley bank and then signature and then a number of weeks later we got first republic. >> that's very bullish. they do a great job. >> yeah. >> maybe signature was supposed to be high end, i just -- that was in your face when i read that. listen, don't tell us commercial real estate is awful. we're buyers. they did a lot of things that are gutsy at blackstone. jonathan gray is the best. >> speaking of jonathan gray, this has been making the rounds, their holiday card, so to speak, a video card of blackstone, i

don't know if you got a look at this. >> i didn't get it. >> everyone has been watching it. every year they seem to up the ante at blackstone in terms of the production values involving a lot of people at the firm. talked about john gray. this is a different side of john. >> has anyone here heard of taylor swift? >> yes. >> yes. >> no. i mean, yes. >> we've been going about everything wrong. we need to go on tour, like taylor. we will raise a billion dollars. >> there's no way steve would let something this ridiculous happen at blackstone. >> go on tour, like taylor swift? but a blackstone version? i love it. >> just this once, i hope people do confuse us with blackrock. ♪ ♪

>> all right. >> that's about as good as it gets. >> it was funny. it's a funny -- >> it is funny. >> -- well done. they really gave it their all. by the way, it is not just blac blackstone. we don't talk about them nearly as often as blackstone, apollo up 46%. a very strong leader they have over there. kkr, shares up 79%. >> remember, this is -- you talked about the business model changing? >> yeah. and then eric getty came on from aires and the gains in that stock extraordinary. >> incredible. >> it is worth talking about them more. blackstone by far the leader at

a trillion dollars in assets under management. >> we have to pivot and talk about these firms much more. fred smith's note, the founder of fedex, he talked about how the money that these firms have, it's worse. >> it's enormous. brookfield is another one. we talked to them a few times as well. the power of these companies and their -- it's not -- they still call them the private equity guys. private equity is so far down the list now. apollo is essentially a giant insurer with huge annuities business and they take all the money and their private credit. >> this is -- these are all middle berkshire hathaways. >> in some ways. >> recently completing an announcement to buy an insurer they took a position in a number of years ago. there's blackstone's christmas

card. a quick little update, u.s. steel moved up since earlier this week when i talked about a number of bids being above -- perhaps well into the 40s. it's now a $39 stock. all i can update you on is the board will meet again this weekend. >> wow. does that mean we get an announcement sunday night the way we've become accustomed to? i don't know. perhaps. i won't read anything into it at this point other than to tell you the board will meet again to go over what appears to be a number of significant offers. >> storied property. >> we may have an answer on monday. i can't say with certainty that that will be the case. >> i think they're an amazing company. i wanted to ask you, speaking of m&a proxy fights. >> yeah. sure. >> what do you think? >> we did it yesterday on the show. you left -- you had told us we would be two board members, some

said three. two is the right number. jay resulo is an interesting guy. he ran the parks. he was in contention for a period of time as a successor. he's also perlmutter's guy. i didn't say this yesterday, i should have. i was in the moment and trying to remember a lot of things that i didn't, one of them was he was the guy that perlmutter wanted to take over. instead you got chapek. >> nelson peltz has been after a board where people own stock. >> yes. >> i think that's a good reason. you put nelson representing, it's a voice for the shareholders. i like the new executives, but how much stock do they own? >> it depends.

we'll see if we get a white paper from nelson, the fight itself is months away. the point of announcing the two nominees, this board doesn't own hardly any stock, they made the point that iger himself sold a lot of his stock through the years. that may be one of their things. what i'll be waiting to see is what they suggest beyond what the company has started to do, which is not just mitigate losses with streaming, make it profitable, try to focus on the quality of the motion pictures coming out. >> next year will have a good slate. we talked about the strike and how it hurt them. look, i've been wrong about the stock. i've been positive on it. i felt it had a franchise -- the value of the franchise has not gone through the floor. >> no. >> that's disheartening. >> we'll see whether 2024 will

be a different year for disney. i'm looking at meta, alphabet, amazon, microsoft, all up more than 1%. >> microsoft is beating -- >> they were not participating as much in the recent rally as we made the po top of the show as the smaller caps or the mid caps, the riskier names. is this a sign of something here, sort of, you know, money returning to these names? >> these stocks have been -- microsoft has been radically oversold. nvidia, we saw that excellent note. there is a lot of spending going on. mastercard talked about really very aggressive spending. and i just think what's happened is if john williams is the one who speaks for the fed, then you have to get back in these stocks. these stocks are immune to the fed. >> right. right. finally on my new kick of how are things done since the ipo, microsoft, by the way, it -- it

pales in comparison to home depot's returns. >> that's unbelievable. >> microsoft went public in '5 i believe it was. >> yes. >> it's up 501,000 percent. less -- about half of what home depot is. i don't know if we have the chart or not for you. i'm looking at the numbers. march 13, 1986 it was when it went public. >> that's an amazing return still. amazing. >> that's a very different number than what i got here. >> got to reconcile that if we can. >> only $3,670 for each dollar invested. >> i had chewy on last night. chewy is trying to diversify. we know there's -- most of the business is -- they were talking about telemedicine and health care, insurance. now, this is what you -- if

you're in your home, sitting around in the office, yeah, let me get it, the dog picks up the phone and calls? one of the people said, no, see, rather than take the dog to the vet, you call and you show what the dog has wrong, and then you get a prescription. it's just terrific. you don't have to carry the dog to the vet. if chewy can get this to working this stock is good. there's a 21% short position in chewy. >> wow. >> betting against it. there are a lot of stocks that people hate still. but i think, look, if you think they can pull it off, the stock is cheaper. >> we have more nick data to get to. let's do that. this time it's manufacturing and services pmi. rick santelli, what do you have

for us? >> these are the december preliminaries, which means in a couple weeks they may be modified. these are s&p global pmis. on the manufacturing side, expecting a number over 49. 48.2. that's the weakest since august and that makes 10 out of 11 below 50, which means contraction. services, a completely different picture. 51.3. that's the best since july. that's better than the rearview mirror of 50.8, and that means 11 out of 12 are above 50 in expansion territory. finally, the composite together, 51.0. better than expectations, better than the 50.7 in the rearview mirror, best since july and that means 11 of 12 also above 50 in expansion mode. interest rates, well, the longer maturities are hovering very close to unchanged. you're slightly higher in the front of the curve.

you're down huge on the week. down huge on the week. the "squawk on the street" will return after a short break.

hmmm... kind of needs to be more, squiggly?

perfect! so now, do you have a driver's license? oh. what did you get us? [ chuckling ] with the click of a pen, you can a new volkswagen at the sign, then drive event. sign today and you're off in a new volkswagen during the sign, then drive event.

why are we the only birds heading this way? [ screams ] we're trying to get to jamaica. stay close and... everything will be all right. i'm ok. i'm ok. look at shares of amc, they keep selling stock over there. yesterday post close another previously disclosed $350 million at the market. company issued 48 million shares. average price 7.29. they also entered issuing 4.8

million shares in exchange for the cash secondly subordinated notes. the point is they keep raising equity. lot rehas tsndg.mo sreoutain we're back after this. 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 help you find and unlock opportunities in the market. e*trade from morgan stanley. with powerful, easy-to-use tools, power e*trade makes complex trading easier.

react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley (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? ♪ ♪ ♪

what can yo♪ ♪o with spy? ♪ ♪

amc. let's get to a quick stop trading. >> a lot of people feel that service now, which is linked to ai, has become the barometer. an amazing job. the stock is up 12 today. this is the stock that i think is the test of whether the next leg ai. because nvidia is too controversial right now, servicenow is not. it's very good. nvidia controversial because it's moved you. >> incorporating it in their offerings. >> that's the one to watch if you want to know whether ai will have another leg. servicenow. >> have a great weekend my friend. >> you too. >> a cselo aape'lor okt pls record run. keep it here. sinesses are wondeg "what should we do with it?" bacon and eggs 25/7. you're darn right. solar stocks are up 20% with the additional hour in the day. [ clocks ticking ] i'm ruined. with the extra hour i'm thinking companywide power nap. let's put it to a vote. [ all snoring ] this is going to wreak havoc on overtime approvals.

anything can change the world of work. from hr to payroll, adp designs forward-thinking solutions to take on the next anything. ♪♪ nothing like a real tree. ♪♪ oh, fudge!!!

oh, fudge!!! ♪♪ the holidays are joy, except for all the snow, slush, salt, and pine needle catastrophes... weathertech's cargoliners and floorliners are laser-measured to perfectly protect the front, back, and even up the sides. order the perfect holiday gift today at weathertech.com and don't forget weathertech gift cards.

good friday morning. welcome to another hour of "squawk on the street." i'm sara eisen with david faber, live for you as always from post nine of the new york stock exchange. carl's got the morning off. take a look at stocks taking a pause in the post-fed rally. fed commentary we'll talk about in a moment. the s&p 500 is little changed. the nasdaq is higher. dow a little bit lower as well still tracking for an up week

but does look like we're taking a pause in the action. treasuries, the dow down about 80 points at this hour. the 10-year note yield is down below 4% and is still -- treasuries are getting bought today. 2-year yield a little bit firmer, 4.42%. technology, communication services and materials are the sectors that are higher. everything else is lower. health care the biggest loser. 30 minutes into the trading session, here are three movers we're watching. after closing at an all-time high yesterday, lennar one of the biggest laggards in the s&p despite beating earnings estimates. the country's second largest home builder says even with higher mortgage rates it delivered 19% more homes than a year ago. costco is a top gainer on the s&p beating earnings system for its most recent quarter thanks to strong demand groceries. the retailer declaring a special dividend of $15 a share. the ceo will join us to break

down the numbers at 9:00 a.m. hour on monday. and then watch shares of coinbase moving lower. the s.e.c. denying a petition by coinbase for new rules. the reg nater saying existing laws and regulation apply to the securities market. sec's rejection seen as a blow for the industry because proponents for crypto say new rules are needed. david, let's start with bonds and just the scale of the rally we've seen so far. the s&p, nasdaq, everybody is up more than 2% this week on this idea that the fed is not only paused, but surprised us and thinking about rate cuts. john williams, new york fed president, threw cold water on that and talked to steve liesman on "squawk box" this morning. here's what he said about the prospect of rate cuts. >> we aren't really talking about rate cuts right now. we're very focused on the question in front of us, which as chair powell said, the question is, have we gotten

monetary policy to sufficiently restrictive stance in order to ensure that inflation comes back down to 2%. that's the question in front of us. that's what we've been really thinking about for the past five months, and i think we'll be continuing to think about for some time. >> are they talking about rate cuts or not talking about rate cuts? powell -- >> entertaining that same question, like what? what does that mean? >> probably wanted to downplay how much they were talking about rate cuts, because the market is getting very excited about rate cuts starting to price them in as soon as march. i'm not sure it was a coordinated communication, but powell sort of leaned in a little bit more than maybe some of the other members of the fed, including important always voting members like john williams -- >> what do we read into that? is there dissension? is it powell's way, but, you know, not everybody is following? >> i think we read into it that maybe the market is a little over exuberant about rate cuts right now at a time where core

inflation is still 4%. unemployment rate is still 3.7%. you know, the ecb i think, president lagarde set the tone said we're not talking about rate cuts. >> single mandate versus dual. >> correct. >> and suddenly the second part of the fed's mandate seemed to come into focus. >> right. the question is how worried do they need to be about the second part of the mandate when the economy is still showing signs of strength? i mean even retail sales yesterday were better than expected. >> what do you, you know, you've been thinking about this, reporting on it, what do you then think changed, if we didn't necessarily see it in so much of the data, what is your -- >> i think the inflation data changed, and -- >> it did. but the cpi number this week didn't get anybody overly excited in terms of -- >> the cpi numbers and the ppi numbers are coming in, in line, continuing to point to the trend

of disinflation. the overall cpi number is 3.1%, come down far from the 9% where we were. >> does powell see something we don't in terms of a significant deceleration in the economy coming in the first half of the year? >> i think it's a risk, but i'm not sure they have any data that we don't have that would suggest that. i do think that what dallas fed president robert kaplan told us yesterday is important, which is, even if they're on pause here, the real rate goes up because inflation is coming down. right. so they don't want to -- they're at a restrictive level, they're aware of that, they don't want to overtighten and wreck the soft landing that they have and the low unemployment rate and the fact that we don't see a lot of stress in the labor market. they have quantitative tightening on autopilot and we learned this week that they're not thinking about changing that. there's still tightening happening even on pause and that could have been part of the discussion around the table at the fed. as far as the economy, what we

got, we have some, obviously, anecdotal data, darden restaurants, for instance, that's been a strong part of the economy, services and people spending on eating out, there's a quote there from the ceo while we experienced some softness at our fine dining brands during the quarter we are encouraged by the strong holiday bookings we are seeing, which matches up with some of the other restaurant spending data. on the inflation front, they just don't have to be as worried. did you see the costco cfo? he talked about like walmart deflation. here's what they're saying. >> our estimate for the quarter just ended that inflation was in the 0 to 1% range. bigger deflation and some big and bulky items like furniture sets due to lower freight costs year over year as well as some things like domestics, bulky, lower priced items, again, where the freight cost is significant. some deflationary numbers were 20 to 30% mostly freight

related. tvs, the average sale price lower, units higher. talking to the buyers overall our inventories are in good shape across all clanls and so far we've had a good seasonal sell through during the quarter. >> inflation, using the word deflation, and big and bulky items. we've heard that from walmart. that is a reason the fed has pivoted. not because of costco and walmart but showing up in the data as well. goods deflation, along with a little services inflation, but has been coming down. they feel good about that. they probably just think that march is too soon to price in a cut given the overall environment. that's how i read it today. >> okay. williams is just layered on top of that in terms of echoing that? >> i think they look at the market pricing and thought maybe it was a little too -- reading in too much around the cuts. >> right. okay. let's turn to this december in the markets. the major averages up about 4% for the month. of course the key question that

we ask here endlessly, can the rally keep going, or has it run too far too fast? investment strategist mona mahodge joins us now. what are your thoughts about what we've seen this week and what it's going to mean for next year? >> thanks, david. look the fed certainly injected a dose of holiday cheer this week. not only did they outline a dot plot that was really pointing to a glide path towards sub3% fed funds rate by 026, they also implicitly endorsed a soft landing in the economy by keeping that unemployment rate steady at 4.1% through 2026 as well. you know, the economy could cool, inflation could come down, but we won't see a meaningful uptick in the jobless rate. i think that does speak to, you know, that would probably be the primary mechanism we would see any sort of recession play through. they have indicated that they see potentially a soft landing in the market. that's a fundamentally pretty

good backdrop. we think markets have run pretty far pretty fast, but we don't see anything that can derail the momentum fundamentally through year end. now all that being said, a couple of things to point out. one, the nature of this rally has shifted a bit in the last few weeks. it's not that mag seven, not tech and ai leading the charge. it's broadening of market participation, small caps have shown leadership, areas like real estate, even utilities, all interest rate sensitive parts of the market that have picked up a bit. we think that theme can continue through 2024. in fact, the other theme we would point to is the money and the cash-like instruments that have built up over $6 trillion in the war chest as rates are coming down and inflation is moderating, we think there will be an opportunity to deploy some of that into a broadening of market participation in the year ahead? >> yeah. i mean there are some who believe that will still end up going into treasuries perhaps, grab the yields while they're still available or at least a certain level, but you think a lot will end up in the equity

markets? >> we do think historically when you look at the backdrop and a fed that is -- with a fed cutting rates and we are not in a recessionary environment, and by the way, we have an election year, which your forward does tend to be positive, all that does come together nicely in an equity environment that could be positive in 2024. you know, from fundamental perspective, if earnings growth maybe not the 12% that markets are expecting, but 5 to 10% does seem reasonable and you have potential for valuation expansion as well. we do think using periods of volatility which we think will still emerge after the strong runs, but they won't deteriorate into something more nefarious, bear market type environments. really using that volatility if you haven't gotten involved or positioned for a broader market leadership, that's your opportunity to do so. we do like your point on bonds as well. we think that they have some room to run as well. >> so you expect 5 to 10% earnings growth next year. i'm wondering how that syncs up

with a soft landing, de sell rating growth? we're hearing that from companies across industries and that is part of the fed's plan. >> yeah. you know we do think the first half of next year we will see softer growth and we're starting to see not only some cooling in the labor market, but some cooling in consumption as well. so we do think the first couple quarters can be softer, but as we get this environment where the fed is cutting rates and inflation is coming down, consumer will likely start to pick back up again and so we do see a re-acceleration in the back half of 2024 that will probably drive better earnings growth and especially better margin potential as well. >> mona, thank you. >> thank you, happy holidays. >> and to you. a number of gainers powering the dow and s&p. kristina partsinevelos tracking the action for us. no shortage of winners. >> let's start with even the 10-year closing under 4% for the first time since july yesterday on the notion you talked about

it, further interest rate cuts and the markets are continuing their assent. the s&p closed less than 2% from its all-time high last year. with the small caps, russell 2000, moving into bull market territory, up 22% from its october low. you got the s&p 500. you've been talking about it, and it's on the screen, on track for its seventh weekly gain. the longest since 2017. the 30 stock dow did hit all-time highs closing above 3700 points for the first time ever, caterpillar and goldman sachs, the big winners on the dow this week. microsoft, united health the biggest laggards but only down about 2% just on the week or improved now. solar edge, zion and broadcom leading the s&p 500 for the week, but it's oracle and pfizer the biggest laggards. oracle posting disappointing cloud growth expectations for the second straight quarter in a row and pfizer falling to the lowest point in a decade on disappointing guidance, and completed its takeover of

biotech firm seagen. semiconductors stocks having their moment with the smh hitting a high, up 72% theater. bank of america naming its top 2024 chips, nvidia, broadcom, and then nxpi, kla and synopsis. they're saying it's driven by generative ai, auto, the chips act that should be dolled out, more aid in q1 of next year and then jpmorgan likes semi names that have strong exposure to cloud and data center spending and custom chips like broadcom, marvel and memory maker micron. there you have it. >> thank you very much for that rundown. as we head to break our road map for the rest of the hour. apple one of the stocks that has been fueling the rally. the stock on pace for seven straight weeks of gains. how far can it keep going? >> results from our cnbc

millionaire's survey. how do the millionaires feel about stocks and the economy as we head into next year. >> it's the best performing sector over the past month, up double digits. we'll tell you what it is and get top picks in the space for 2024. w g show still ahead. dodown 70 points. "squawk on the street" will be right back.

welcome back to "squawk on the street." take a look at shares of apple trading at all-time high levels dating back to its ipo in december 1980. on pace for seven straight weeks

of gains. our next guest believes the rally will continue and ai and the vision pro will send the stock higher in 2024. let's bring in gene munster, partner at deep water asset management. what's the ai story at apple? >> sara, it really comes to a quote that tim cook had on the last earnings call. look at my notes because i want to get this exactly right. he says this is on november 7th, the company has been pretty quiet on the topic of ai, he says, there's work going on in that and you can bet we're investing quite a bit. he did add, they're investing responsibly. i think when you put the arc of ai around the apple stock, and the apple story, shares have not been going up in anticipation of ai. this is just been a little teaser, at best. i suspect in 2024 we're going to hear a lot more from apple when it comes to ai. i want to outline exactly how i think that that's going to play

out. >> please. >> i do not believe apple is going to come out with a foundation model, something to compete with chatgpt or claude from anthropic. they're simply too far behind. i suspect they'll use an open source, one, two, three, four, five. >> we hear you. >> sounds good. >> i suspect that they're going to essentially build on top of an open source model, and effectively, i think they're going to really juice what they're doing around siri and really power what i see as personalized ai. so i think that this is something that if they just start talking about this, i think you can get multiple expansion. apple shares are currently trading at 29 times 2025, a little bit below microsoft at 31, but given how quiet they've been, i think this is a significant opportunity for multiple expansion and i just do want to fill in one further

piece, i believe longer term, call it three or five years down the road, apple will have their own foundation model. it takes a lot of time and energy to build that. i think they will leverage a third party, at least for the next several years. apple investors should be looking forward to more in ai. >> they've got what you need in terms of the capacity to do it. in terms of money. which is the key part, given just how much computing power you need. there's not many companies that can compare with them on that when you think about what they may be able to offer, another subscription service or a series of new subscription services or ad-on, where they can charge people more, what does the business model look like? >> so, effectively, one piece to this is, allow developers to leverage access to people and so this is something where this will be positive for their services growth. so i don't see this as like a separate subscription, for example, for you to use apple's

products to get generative ai. i think it's going to be something that they will allow developers access to and charge developers for that. separately is that i think that the opportunity that they have within search starts to enter the equation. i'm a big believer deepwater, we own shares of google because we think they're going to be successful on this, but i think apple has an opportunity, as kind of the context of generative ai, starts to include commerce, that's something else that apple ultimately could do, and the third piece is, just their time-tested flywheel here of just building better features within products to drive their whole ecosystem. it sounds like a tired road map, but it's one of the reasons this is on track to be a $4 trillion company. >> so more on that clearly, gene, next year. in terms of where we came from on the stock price and the move up we're seeing, are estimates changing for apple or is it moving up with everything else because the fed is done raising rates? >> shares of apple since they reported their september quarter up 12%, the nasdaq is up 11%.

the other mag 7, the other six are up 8%. apple has outperformed. i think one of the reasons why the share has moved up more recently is a better understanding of what they were talking about with their guidance. there is this, i would say, dispute, misunderstanding, around 13 or 14 weeks in the quarter, the bottom line is this, is that their core business is going to grow around 7% in the december quarter. that's the first growth over the past year up from down 1% in september. i think that's one of the reasons. the second reason why it's been moving higher recently is based on profitability. the margins hit a record 45.2% in the quarter. that's up about 2% from the prior year. even though revenue is down 3%. that's very hard to do. grow margins when revenue is declined. the reasons they're bringing more of these critical components in house, high margin business pieces of components are coming in house. i think you should cannot that margins maintain if not continue

to grow. so i think that's why it's going -- it's been going higher. the reason i'm excited about this for the next year plus is part of ai and part of vision pro. >> gene, thank you for coming on and making your case. appreciate it. >> thank you. >> very bullish. gene munster. as we head to break check out the biggest gainers on the nasdaq 100 this morning. microsoft is on there. there's costco also doing quite well after earnings up almost 4%. broadcom, absolutely soaring. old dominion, constellation, apple turned higher as well, google, meta. the tech stocks doing well. millionaire investors fairly bullish on the market next year but cautious on the economy. find out why and how they plan to invest their money, when we come back in two minutes. 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. (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? ♪ as an independent financial advisor, my promise to you is simple. as a fiduciary, i promise to put your interests first, always. i promise that our relationship will go

well beyond just investment decisions. 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 another excuse, i mean, reason for my family to crave a little pizza time. well, i've got one. my cuisinart indoor pizza oven, ready to bake up some bubbly, cheesy, savory sauciness with that perfect artisan crispy crust in about five minutes. it's great for snack time, dinner time, game time. me time. anytime. it's always time for home baked pizza. rylee! from rylee's realty! hi! this listing sounds incredible. let's check it out. says here it gets plenty of light. and this must be the ocean view? of aruba? huh.

this listing is misleading. well, when at&t says we give businesses get our best deal, on the iphone 15 pro made with titanium. we mean it. amazing. all my agents want it. says here...“inviting pool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us. (♪♪) check out shares of coinbase under pressure today after the sec denied the company's petition for new rules governing cryptos with gary gensler saying

existing laws and regulations already apply to the crypto security markets. chair gensler remember joined us yesterday on money movers and discussed his concerns around the industry. >> there's a lot of noncompliance, noncompliance with the securities laws that are there to help give you the disclosure so you can make the investment decision. but also, to protect you against fraud and manipulation. there's been far too much fraud and bad actors in the crypto field. this is really the wild west, and it's around the globe. i would say, again, this is a small part of our u.s. capital markets, but it can undermine confidence when so many people have been hurt and all they can do is then stand in line at a bankruptcy court. >> bitcoin prices under pressure again today set to end the week down about 5%, david. that was in response to a question i asked about how it's going on the process of approving a bitcoin etf.

he really did not show his cards on that. there's a deadline coming up in early january. >> deadline for what? >> for them to make a decision. yeah. and the market has been very excited about it. >> yes, i know. >> because they did not challenge the court ruling on the scale. >> cnbc's out with its latest millionaire survey and while most of these millionaires seem bullish on stocks, pessimism remains around the broader economy in 2024. robert frank joins us now. he has the detail from the survey. robert? >> good morning, david. good to see you. millionaires still holding a lot of cash and they're worried about washington. cnbc millionaires survey where we poll those with investable assets of at least $1 million or more and found most millionaire investors say the s&p 500 will be up at least 5% by the end of next year. over 20% expect double-digit gains in the market in 2024 and 21% markets to be flat next

year. they plan to cope about 40% of their total portfolio in stocks next year, about 18% in fixed income, still keeping a lot of cash with 25% of their investments in short-term money markets and cash equivalents. their favorite sectors for stocks next year are tech and financials. when it comes to the overall economy, though, millionaires are a bit more bearish. 42% say the economy will be weaker or much weaker next year. only 30% say it will be stronger. the biggest risk to the economy next year, they say, is government dysfunction. inflation still also a concern with the national debt, but millennial millionaires are the most bullish. about half say the economy will be stronger next year and more than a third say the markets will be up double digits. good to be young, david. >> good to be a millionaire. >> good to be a young millionaire. >> are they generally right,

robert? >> i mean, they have a mixed track record. what's interesting about millionaire investors compared to the retailers, they tend to be more consistent. they have gained a lot of cash over this period, and what will be interesting to see is whether they -- that 25% of their total portfolio in cash, if they start moving that into stock as well as bonds next year that could sustain this rally. millionaires hold over 85% of individually held stocks. it's not so much that they're better investors. it's just that they have so much of an influence on the market because they hold such a larger portion of those individually held stocks. >> got it. robert frank, thank you very much. still ahead, another record-setting day. the bulls are on the loose, including that bull that got loose yesterday in newark, new jersey. i thought that was a joke. >> there he is on the tracks. >> not so much. >> are there risks to the rally here? we're back to the markets. stay with us.

i think i'm ready for this. heck ya! with e*trade you're ready for anything. marriage. kids. college. kids moving back in after college. ♪ finally we can eat. ♪ you know you make me wanna...♪ and then we looked around and said, wait a minute, this isn't even our stroller! (laughing) you live with your parents, but you own a house in the metaverse? mhm. cool...i don't get it. here's to getting financially ready for anything! and here's to being single and ready to mingle. who's ready to cha-cha?! ♪ yeah, yeah ♪

♪ welcome back to "squawk on the street." i'm bertha coombs with your cnbc news update at this hour. thousands of documents linked to the sexual abuse scandal surrounding disgraced gymnastics coach larry nassar at michigan state are now set for release. the university's board voted unanimously this morning to unveil the long with held files. survivors have been lobbying for their release for nearly six years. nasser is currently serving an up to 175-year prison sentence

on sex abuse charges. panel of judges is hearing arguments this morning over whether election interference charges against trump white house chief of staff mark meadows should be moved from state to federal court. meadows is charged alongside the former president and 17 others in georgia. if successful, it could set up meadows to claim immunity in the case. a win in court for prince harry today. in one of several lawsuits he's filed against the uk tabloids the judge cited with the royal and found he was the victim of phone hacking and other unlawful acts by reporters at the british mirror group which publishes the daily mirror. the judge said the tactics were used even with the knowledge of their editors. sara. back over to you. >> thank you. traders pairing bets on 024 rate cuts as the new york federal reserve john williams says this morning on "squawk box" talks of any big rate cuts

are premature in march. franklin templeton's chief investment officer for fixed income joins us now with her take. do you expect a lot of fed walk back of powell, which only happened two days ago where he said they're talking about cuts? >> i think he probably advertently or inadvertently really turbo charged a rally which was already well under way. i mean, he finished talking and we're pricing in 150 basis points of rate cuts next year. you know, the strange thing was, it wasn't necessary. the market was already easing financial conditions. by the time he finished speaking we were all the way back in terms of financial conditions to when fed funds was at 1.75. rather than 5.25. >> i agree it was surprising how much he leaned into the cuts and the three on the s&p, but he did it. >> he did it, yeah. >> now what? >> so now what? i think is exactly what we saw a little bit. i have to say, you know, the

horse is gone. it's way too late to close the stable doors. it's going to take more, concerted effort and walk back and it's a bit tough to do. we're going to need the data, help from the data for the fed in the sense that i don't think they plan to say that they were that definite, that mission accomplished had happened, but that was definitely the message that got taken away from the press conference. i think it's going to take a few weeks, several weeks >> so does the trend continue, get out of cash and money market funds and go into stocks, bonds, commodities? what do you do? >> so i think actually in terms of getting back into fixed income, this is something we've been asking for several months. it was always clear it's not a question of how quickly. the market moved very, very fast. but in theory, in principle, looking into next year, people should be getting ready to get out of cash, at least in fixed income space.

i mean, equities are at all-time highs. when looking at something different in the fixed income space, we've probably gone too far too fast, but it is probably a good time to start thinking about moving back into fixed income. i do think we're going to get a bit of a pull back from the massive rally we've seen in the last week or so. >> got it. >> is it prepa mature to say th the fed has successfully engineered a soft landing then? >> i think it's premature. it's brave what they did. i always would -- i would be reluctant to declare victory. it's still early. it keeps coming back. it wasn't needed. >> all right. thank you very much for joining us. with some of the strategy and the take on the fed this week.

appreciate it. >> thank you. morgan stanley's adam jonas, one of the better known analysts that follow tesla out with a note on the company's ai bot called the optimusv-2. he says edge ai is now approaching what he calls the olivia newton-john moment, "let's get physical." saying once ai starts physically moving, will it ever stop and highlighting investment implications. he's starting with $30 trillion market for global labor. jonas goes on to say tesla sits at the epi he center of what he calls an explosion of technology ushering in a new logical era. jonas saying according to our sources and i thought this was interesting, sara, that tesla's ceo elon musk has been focused on optimus in recent months. i was -- itcaught my eye certainly, that's why i used the video of it yesterday, that being the robot, in terms of its

ability to manipulate hands in a much more significant way, picking up an egg, for example, things it had not been able to do. the prospect of it being able to thread a needle is not that far away. there you see the egg. it did -- it caught me as just something worth looking at, not to mention, of course, it can dance. i did wonder whether we would see any analyst sort of pick up on this as a potential real opportunity for tesla far beyond cars. he does say that, you know, musk has talked about sales starting within three to five years, and again with musk, we're still waiting for full self-driving, so you don't know. but he also, musk has said, we're going to -- every person will have their own robot. >> we're getting the dance. >> i know. we're going to -- our viewers will see a lot of this dance because i can't get enough of it. >> it's a pretty dense and colorfully written note for sure. >> it is. >> but anything on the potential addressable market?

>> there's jim yesterday dancing as well. >> oh. >> he's going to have his own robot he dances with at home. >> how much is it going to make? >> i don't know. i don't know what they're going to be priced at and able to do. you have to get ready for ai being -- generative ai being, obviously, part of these robots. imagine in five years what that's going to be in terms of the advances. the rate of change taking place right now and what a robot with the ability to move and do everything and manipulate to that extent what that could do for you. it could conceivably replace labor. >> labor. >> well, jonas says here, what's the addressable market? and then he doesn't give a number but talks about the size of the u.s. labor forceand the size of the global labor force. >> 3.4 billion people are employed worldwide. >> right. >> there you go. there's your total addressable market. >> what we will be doing is very much unclear to me. i guess at that point you'll have to worry about it. i'll be sitting somewhere.

you'll be making me a pina colada. >> i hope not. i hope we're both still here for it. >> i hope so too. >> together. >> together. yes. >> with the dance rogue bots. >> several robots next to us here. as we head to break, real estate is the best performing s&p sector this month and it is a hair away from a fresh 52-week high. top picks as we head into next year in this sector. stay with us. we're back in a minute. (clock ringing) go. and go and go and go. (tense music) but what if you. (tense music) stop! you work hard. it's time for a bank that'll work hard for you. everbank performance savings is built to put your money

to work with some of the highest rates in the country. going, that's what got you where you want to be. we're the partners for your next move. everbank. advantage, you.

trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, 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.

just want to mention a deal that crossed in the private sector, but some names that people pay a lot of attention to in the consumer space. chobani during an acquisition and buying la colombe for $900

million. almost a billion dollar deal. they'll take it into chobani and work on coffee, expanding from yogurt. they've been doing this with the creamers and the half and halves. la colombe has 30 cafes, owned by the ceo and founder of chobani, a third owned by kdp, dr. pepper, which took a stake in july. c chobani will buy out both. $900 million. they get most of their revenue, la colombe does. they have a nitrogen infused latte that founder came up with and that's the driver. we'll talk about this with the ceo and founder of cho banry in. he's -- chobani. he will join us in the next hour, money movers, david faber is joining for as well. i've brought you a deal. >> i love it. >> so we can have that

discussion. >> good guests as well. >> yeah. >> gary cohn. >> money movers, people who move money. that's what we do. >> keep saying it and i don't have to. excuse me. all right. let's go from yogurt and coffee to real estate. it's the best sector month to date if you're keeping track. so far less than 4% from a new 52-week high. analyst john kim joins us here on set. you've actually had some good picks in the past too. i want to start off with what you're thinking about next year? rates have been helpful, most recently especially. you say you are cautious this year and more bullish next year. why? >> lower rates. i mean, interest rates are not the silver bullet for real estate but it helps, earnings, cost of capital perspective, gives clarity on asset prices and we think there's going to be more external growth. companies will be more confident and have the ability to acquire more assets and something that hasn't been factored in the last

couple years. >> all right. so rates keep moving lower. the benefit, obviously, and there is going to be more purchases being made, perhaps. >> yeah. >> which we have to the seen as well. what parts, though, we talk a lot about real estate, obviously, and then everybody wants to talk about office. it's only one part of it. office is still probably not a good place to be? >> we are actually positive on office. >> you are. why? >> it's controversial. there's a lot of value in the office stocks. some of the companies are now realizing that value through asset sales, the conversion of office into other forms of real estate. a company jbgs, for instance, in national landing has converted some of their office into an entertainment complex, getting the nationals and capitals in. some conversions into multifamilies. there's hidden value we're not really placing much into the stocks today. >> but even though rates are coming down, they're still a lot higher than they were when some of these deals went through, and are we still expecting a tsunami

next year when they have to refinance? >> the whole strategy of extend and pretend. it seemed very risky, and it still is. it could work. if rates are going to come down, we're seeing fundamentals do a little bit better, that supply is coming off a lot in all sectors, office no new supply, but other sectors it will have over the next three years, pretend and extend might work out. >> although, i mean for some of these, particularly office, you need the equity coming in as well, though, new equity, because you're not getting a loan to value if it's anything like you have. is that money there? >> the reits are relatively high levered but capitalized pretty well and they have great venture partners. we're starting to see investors from outside of the u.s. value some of this real estate, especially in the cbds of new york, washington, d.c., san francisco. they're starting to value some of this real estate for office or -- >> san francisco is going to

start to come around? i see that as one of your key points. green chutes in san francisco? come on, what are you talking about? >> he's calling a bottom. >> we have to see ai. mention ai and all of a sudden people get excited about san francisco office but that's where the ai growth is happening. so again, off very low, lows. they're farther behind than manhattan as far as the comeback of office space, but -- and utilization, but green chutes are starting to emerge. >> although finally, data centers, distribution centers, that's sort of a key area, warehouses, that continues to be very strong? >> absolutely. the sectors that we are underweight are more consumer driven, multifamily, we put hotels in that basket, retail, but most of the commercial real estate sectors will be very good next year. >> thank you. >> thanks a lot. coming up next hour, as we mentioned former national economic council director gary cohn why he says investors are jumping the gun here. ever wonder what it takes for

goods made in china to make it to your door? jane wells is at the port of l.a. with more on what's still ahead. jane, good morning. >> hey, sara. yeah, two years ago one of the major supply chain choke points getting these christmas gifts to you here was on the west coast. now we've gone from too many ships to mbe tayoo few. that story when we come back. or moments that matter, but you can invest in them. at t. rowe price our strategic investing approach can help you build the future you imagine. t. rowe price, invest with confidence. the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are?

i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. [alarm clock ringing] [upbeat music starts] (♪♪) [transaction notification] [car door closes] [lights turn on] [inaudible kitchen chatter] [bell dings] [inaudible chatter] (♪♪) [transaction notification] (♪♪)

as consumers close in on krumpl time for christmas shopping, cnbc is taking a look at how some of the hottest holiday items get to a factory floor to a retailer near you. with supply chains normalizing, cnbc's own yueunice yoon, courty reagan taking us on the journey of a care bear and it all starts at a manufacturing site in china. >> reporter: while the u.s. fights inflation, china struggles with deflation. that's translating to lower pricing at the factories. during the global supply chain disruptions two years ago, the cost of making a care bear was up 25%. today it's back to where it was before the pandemic. slower growth here has reined in material prices as well as workers' wages.

with u.s. orders harder to come by, factories compete with cut prices. logistics costs are also in check. no more tight covid controls and shipping containers are plentiful at the chinese ports. so, products that had been held up for months on the factory floor in 2021 are now shipped out to america almost immediately. >> reporter: nowhere is the difference in the supply chain more visible than at the ports of l.a. and long beach. when i was here two years ago, there were 65 ships anchored offshore waiting ten days for an appointment. now i don't see anything and ships are going right in. the u.n. says global trade is down 5% and shipping container costs are down 90%. >> 50% of the truck gates go unused every day. that means we have capacity. >> reporter: in novocainer volume was up 19%, but overall for the year it's down. that's partly because labor tensions sent some ships away from the west coast. >> reporter: similar train with trucks and trains. two years ago there weren't enough as consumers loaded up. today there's too much supply and not enough demand.

volumes are down and spot rates have dropped 40% since 2021. with all this available freight, it's now cheaper to ship this care bear from the port to the warehouse and onto the final destination. whether or not all these savings are passed along to consumers can depend on the retailer. >> reporter: the journey for this care bear from a factory to china to a toy store on the east coast is back to two months. two years ago it was twice as long. transportation costs were making up a quarter of the bear's total costs. it's now down to 5%. >> we're just seeing less pressure on the manufacturing costs and the transportation costs, a little bit more pressure on other areas of the supply chain. also our customers are looking for more value. so, we're being skissed a little bit. >> reporter: toymaker was adding a transportation fund and now those are gone. toy deflation, seasonal discount

and consumer's desire for toys, you'll find this about $15 in most stores, down from $17 to $20 two years ago. >> reporter: at the port of los angeles, that boat left china december 1st. once the container are off, they're now getting on a truck or train in three days compared to two years ago when it was 13 days. i want to show you one more visual. marine traffic, an app. if you look at the image from october 2021, the green scares are container ships. look at all those ships out there. flash forward to this week, from 2023, there's like no ships out there. maybe one. they're all at the berth. volumes overall, by the way, are down year-over-year. they're starting to come down because the water levels at panama canal has gone down that a lot of ships can't get through to the east coast now. >> it's fascinating to see how much has changed, jane, between then and now. i almost wonder why more savings

haven't been passed onto the consumer given all those issues and all those chokes and bottlenecks have cleared up. >> reporter: that is a very good question, sara. you know, you've seen these container costs go down from $20,000 for the cost of an average container two years ago. that was unheard of. now they're back under $2,000. where are those savings going? that is an excellent question. >> yeah. janely, the east coast ports seemed to be benefiting from all the problems on the west coast. has that rebalanced? >> reporter: it is starting to. part of the problem is we had labor negotiations which dragged on for 13 months. i think some shippers were afraid there would be the stoppages we had seen in previous years. so, that with the panama canal, they started redirecting ships to the east coast. in the last three or four months, you started to see the turn. last month in november in new york and new jersey, total cargo volume was down 6%.

here it was up 19%. so, there is a little bit of a shift. >> jane, always good to see you. on the water especially. i always like to see jane out in the water. very nice. with her care bear. jane wells from the port on the west coast. >> we bought a bluy bear that looks similar to that. >> was it 15 bucks? >> it came from the grandparents on amazon. that seems high. given all of those savings through the supply chain, i feel like -- and deflation in china, it should be like 5 bucks. >> we'll see. we've got a lot more coverage coming right after this.

what do you see on the horizon? uncertainty? or opportunity. whatever you see, at pgim we can help you rise to the challenges of today, when active investing and disciplined risk management are needed most. drawing on deep expertise across the world's public and private markets in pursuit of long-term returns...

pgim. our investments shape tomorrow today. (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? ♪

why are we the only birds heading this way? what can yo♪ ♪o with spy? what is that? duck à l'orange. what's duck à l'orange? it's you, with l'orange on top.