december 18th, 2023.it is wet, "squawk box" begins right now. good morning. welcome to "squawk box" right here on cnbc. i'm becky quick along with joe kernen. andrew is out today. joe and i are coming to you from wherever the heck we can get on air. this was a wet and wild ride this morning. good morning, joe. >> i like these things. i don't mind. >> you know how many times i got verted before i wound up here? >> i like the graphics. >> the graphics. yeah. >> i had no issues. zero. >> are you serious? >> dead serious. >> i was twied and turned

around. no detours. i d to talk my way pascops to get here. >> i had trouble with e final wordle. that was my big -- you know ere i come from. >> easier to get there. >> right through the linln tunnel. it was the same time. same nothing. nothing going on at all. i'm glad to be here. >> joe and i did swap. how far are you from where you are? >> normall >> i like the way th works. it takes you an hour and a half and men hour and a half. instead of me ten minus. >> it was a roundabout way of getting here.

its monday morning. anybody on the east cot, look out. >> we may have to do it tomorrow. >> anybody on the east coast, be careful. >> is this you talking now? you have to do equities. did we hit new highs in the dow? we are now seven days in a row the dow is higher. it set a new high which it closed. you are looking at impressive gains this morning. impresve because of the gains that they are building on top of. the dow up 54. the s&p up 5. the nasdaq is flat. it is not in the red. you are talking about all of the major averages higher for seven weeks in a row. massive gains on top of massive gains and people keep asking can this continue. if you look at the treasury markets, this is the impetus for all of it. jay powell said we will cut rates three times next year. two-yearield is back to 4.4%. it down from 4.7%.

the ten-year yld at 3.90. this is interesting markets to watch over of the last week, joe. >> do you have the exact high for the s&p? >> i'll tell you where we are from it. >> 4,787. it looks like that's in the cards. >> 2% off the record high for the s&p. i'm trying to look for a minute. we're 8.6% the all-time high for the nasnasdaq. >> the magnificent seven will probably get us there. 75%. all right. new this morning, hence the word news. this is -- maybe you would assume. >> not talking about yesterday he's news. >> sometimes we do. >> that's why we have to say new

this morning. >> the department of transportation is fining southwest airlines $140 million over major flight disruption over the holidays last year. i don't know we have to leave well enough alone, phil. he joins us now with more. hey, phil. >> joe, you are amped up this morning. we will talk with secrety buttigieg next hour. let's talk first about this fine of $140 million. a civil penalty that southwest airlines agreed to pay. this is the end of the year-long investigation into the meltdown that happened that last week of the year last year. we saw the scenes. here is the fine. $140 million. all tied to the failures of southwest airlines when it came to dealing with these meltdowns and cancellations. by the way$90 million will also be created in a fund that

will pay passengers in the future vouchers if they are delayed or cceled more than three hours. that's part of the agreement as well. as i mentioned, is was the scene last year. cancellations meant people were stranded at airports. 2 million peop were stranded. southwest canceled more than 16,000 flights. it was a mess. southwest compensated and spent $600 million compensating passengers at that time. the d.o.t. said we want to make sure it doesn't happen again. that is the reserve fund created. last week, we had b jordan, ceo, at the nyse for "squawk on the street." he said we learned our lesso >> we are ready. we invested in trucks and new pads and staffing and technology. i'm proud of our people. we are ready f winter. we already had snow, big snow in

denver, chicago and we performed extraordinarily ll. overing than thanksgiving, than day, snow and we were 97% on time and no cancellations across the system. >> it was a costly meltdown for southwest airlines. look at thstock over the last year. it cost the airline more than $1.1 billion. that is before the $0 million civil penalty. we mentioned, we will talk with secretarypete buttigieg coming n up next hour. guys, we have a lot of questions about this fine and the broader question which has been the push by buttigieg and the department of transportation to get airlines better prepared for cancellations and more importantly, take care of customers when there are cancellations. lots to discuss with the secretary. that is coming up next hour, guys. >> very good, phil. we look forward to that.

we have a lot to talk about. i'm on the other side of the whole airline complaining glitch. i remember how expensive it was 20 or 30 years ago. i just think -- that's not it. maybe it's that i've tried to drive long distances. i understand what the alternative is here. right, phil? >> yeah. >> you know wh? this was the situation with southwest that impacted them so much more than everybody else. you understand whether you get that. you understand that you can't move heaven and earth to do some of these things. southwest was in a position, and we will talk to buttigieg about this later, but they were in a position where they hadn't spent money to update the systems and broke down and writing new scheduling down on pads of paper an paper. >> it was terrible.

i was at the wings club meeting in new york city last week. bob jordan outlined the investments and changes they made. he embraces the fact they did drop the ball and they had to get better. in his opinion, they have done p what they need to do to make sure it doesn't happen again. nobody knows for sure until we have the type of storm that hits again. southwest paid a hefty price. this is, perhaps, the end of that, paying the hefty price. bob jordan and his staff, if you talk with them, they will outline the changes they made. they are emphatic that they believe they are prepared and it won't happen again. >> the weird thing is $140 million is shareholder dollars. it doesn't punish the people who made the bad decisions. >> yeah. now you are getting into the whole thing with the civil penalties. >> a huge fall from grace which

was thought of as the best airline for years and years. you know what? that guy gary kelly stopped coming on "squawk box." remember? suddenly, later in the day -- i'm not saying that it was the beginning of the downfall, but what happened to southwest? phil, what happened? >> we talked about this last year. they did not make investment in i.t. they did not make investments to be prepared when a maj storm would hit. they completely dropped the ball. that's the only way you can say it. >> when did it happen? >> they opped coming on your show. >> it was over sever years. >> maybe the other companies should think twice. okay. thank you, phil. weook forward to buttigieg.

i loved herb. >> amazing. >> used to smoke would intervie. >> i interviewed him the day they said they would charge people $25 to take their luggage on or check their luggage. his reaction was visceral. he said no way. he started laughing. he said we'll win. that will drive everybody here innstead of going to those places. >> he was a one-of-a-kind. disappointing. i'm not going to say this next story is disappointing, but at do you think the biggest u.s. steel company is on the planet? that represented everything about u.s. strength in the world? >> u.s. steel. >> $7 billion. breaking news. japan's nippon steel buying u.s. steel for $55 a share. we're saying it is a deal worth over $14 billion.

that includes debt. i saw $7 billion earlier. $55. maybe it is that. it had a market cap of 9. before the news, it was 9. 48. you know, the mini mills have taken over and all of the dumping from asia has made it more difficult. bethlehem steel. the city and the rustbelt -- >> my dad spent a summer working at u.s. steel in college. not a good job. >> pittsburgh headquarters. it will honor all kmcommitments including collective bargaining agreements. not going to say it is an

alagory for the steelers. it looked like one yesterday. and the cowboys. every time you think they're good, becky, every time you think they might be good, they play a good team and they didn't have to win. maybe that was it. i tweeted something out. >> i did see it. i saw the pig and the dog. >> what? who is this team? did you see the corgi? dak prescott is mvp? coming up, get ready for the trading week ahead. i'm trying to build up a few followers. what is it, becky? @joesquawk. that guy doesn't have a blue checkmark. he says crazy stuff. >> that's you. >> it is me. we will talk strategy after the break. later, chica fed president austan goolsbee will join us. "squawk box" is coming right back.

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welcome back. on the "squawk planner," we have several things to note. jobless claims on thursday and on friday, durable goods and spending numbers. as for earnings, fedex is reporting tomorrow. general mills and micron on thursday and nike on friday. joe.

thank you. cleveland fed president loretta mester said the fed is jumping ahead. in the interview, mester pushed back that the central bank will pivot. we are back to pivoting to lower borrowing costs. mester is a voting member of the fmoc. we will talk to austan goolsbee about her comments and maybe he has comments of his own. he is no slouch when he joins us in the 8:00 hour. i would be embracing my previously stance of a dovish stance that austan said the whole time. i would claim i have been vindicated. i don't want to put words in his

mouth. investors prepare for the first day of the week after the record high. joining us is stephanie link from hightower. we can't get away from it, stephanie. the big tech names like apple and microsoft. it is the big story in "the journey." it jumped 75% in 2023. it said leaving the other 493 companies in the s&p 500 in their dust. left these other companies in their dust. stephanie, it says that. it must be true. i see what they mean, anyway. >> well, we actually have seen in the past month a healthy rotation, joe. i'm encouraged by that. the equal weighted s&p 500 has actually out performed the market cap s&p by 200 basis points. that is not crazy.

i do think it is encouraging. the equal weight is still 13% behind the market cap weight year to date. i think there is more to go. that is encouraging. a lot of that is happening because the soft landing thesis is playing out. we see lower inflation and decent growth. last week, i thought it was encouraging in terms of the data. that's why we rallied. you go from cpi at 9.1% to 2.6% and go to retail sales in the control group running 4.4% in the last four months and the moving average at 2,000 is something to cheer about. that with rates peaking sets up well for better earnings for 2024 and continuation in other stocks. >> you would see if the dow leads, eventually the generals

and everybody follows. you expect the s&p. you are not macro as much as specific stocks, stephanie. if i were to worry about something for 2024 as an investor, should i worry that because we're going to get rate cuts, it means the economy will be weaker than we believe or does it mean i should be more worried that the fed is not finished and the cuts don't come and inflation stays? there are parts of it, maybe not 9%, but 4.5% stubborn? is that possible? >> i think that is something we have to watch. it is the inflation piece. the fed has a dual mandate. they are looking at jobs. that seems to be quite strong. that's why i mentioned the initial claims. the job market is still super strong. they look at inflation. if inflation starts to go in the

other direction, because interest rates have come down and inflation has come down and growth continues, that's something that we have to watch. right now, it's pretty much soft landing. the thesis is playing itself out. we should ienjoy it and look at the 493 other companies out there in the market for value. maybe some catch-up play. >> you mean heinz? i'm kidding. >> yeah. >> work with me. i'm here all week. >> it's monday. it's early. >> i know. your christmas tree looks awesome. it's back. it made my morning. we need a wider shot. there it is. 493. how many do you have for me? can you give me five out of the 493? >> i can give you so many more than five. i'll tell you this week --

>> do them. quick. alphabetically. >> i'm not -- i'll give you the names this week. fedex falls, for whatever reason, up 62% year to date, then that one i would be a buyer of. stock trading at 15 times earnings. the ground momentum continues. margins have upside. we're inn flektlooking at expre. on micron on wednesday, i don't own micron, but lam research. that equipment p sspend is the theme for 2024. we hear across the industry that the stock is trading at 25 times forward estimate. the number one in etch and number two in data deposition. nike. nike scares me a bit, joe.

it's up 35% since september. they they are doing better. inventories are coming down. freight is coming down. if you see a muted top line, i think you will see better margins and earnings. if that one were to weaken, i would be a buyer. i have plenty of names. >> keep going. you have about a minute left. this is all good. what else? christmas shopping. >> one name i just added back to my portfolio was schwab. the stock is down 15%. trades at 13 times a normalized $5.25. that is why they can do it. with rates coming down, you have less cash sorting happening. less of their deposits moving elsewhere. i think the company is doing a great job in terms of the ameritrade acquisition. there is margin upside.

the ceo last quarter said net interest margins bottomed out. he thinks they can improve in 2024. i like the financials a lot. i still love the industrials. you know i'm all over that. we talked about qantas. i like them all. is that enough for you? >> that is. i can't believe it. i can't believe you mentioned schwab. i feel like carl on th commercials. schwab. thank you. you ha to watch tv. you know what i'm talking about? >> no. >> come on! all that money they spend. that guy and every time he is talking about his brokere firm. someone brings up schwab and he looks bad. >> i know who you are talking about. the commercials behind him with more schwab stuff. >> he's good. he's funny. >> yeah. >> i watch tv.

>> i like to watch. stephanie, thank you. when when come back, "wonka" topping the box office. we'll have that after the break. and then department of transportation isecretary pete buttigieg will be rehe to discuss the $140 million fine on southwest airlines. "squawk box" will be right back. when you think of investment risk, do you consider climate risk?

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at the box office this weekend, warner bros. "wonka" brought in $151 million. the movie tells the origin story

of willie wonka. we are watching shares of illumina. it will divest grail. 2021.est maker it acquired in the deal was tested by the federal trade commission. the federal regulate errregulatt to challenge the purchase on anti-trust grounds. illumina will not appeal and divest through a third party sale. in the european union, it says it has opened infringement proceedings against elon musk's x. becky, i was reading this. i thought it was another u.s. steel story. >> stock symbol. >> the eu remegulator said it

suspected breaches in the transparency and duty to counter illegal content and disinformation and issues with the user interface that it alleges are deceptive. still have umbrellas. >> outside? >> yeah. >> the wind. the umbrella is not going to do you any good with the wind. >> kyle, it is not coming down that hard any more. no. >> i don't think it is supposed to stop until this afternoon. >> what if it was 20 degrees? >> that is what i said several te times. coming up, we talk about the challenges of doing business in china with bob. we have not seen him in a while. in the last few minutes, bp said it would pause all transit through the red sea. take a quick look at the free market trading in that stock. not a lot going on.

up a little. checking crude, which is amazing, right around $70. maybe it will break under $3 a gallon. "squawk box" will be rig back. >> aouncer: executive edge is sponsored by at&t business. next level moments need the next level network. 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...“invitingool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us. (♪♪)

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good morning. welcome back to "squawk box." we have been watching the futures. the dow and s&p are in positive territory. this comes after seven weeks in a row of gains. the dow closg at another all-timeigh on friday. this morning, it is indicated up 56 points. s&p up 4. nasdaq is wn ten points. we want to look at the u.s. and china challenges. we have the former vice chairman and now the lecturer with yale school. bob, when i saw you last, you were preparing for a trip to china. for you who don't know, you have

been going to china since 1973, i think. >> yes. >> what did you see in china? how would you gauge the relationship between us now at this point? >> i had an opportunity, as you say, to enten days there. saw a large number of people. the one thing that iound was the tone of the relationship has changed a lot since the san francisco summit. the attitude toward business that xi jinping evidenced in his speech in san francisco perm permeated the buaucracin being. they are me welcoming of foreign investment. they are lking more deeply at some of the debt issues. they are also looking at some of thregulatory issues. their economy iseaker than theyhought. it is not really that weak.

they will still grow at 5% plus. they are concerned about foreign companies leaving foreign companies diversyingheir sourcing and that has contributed to an unployment problem which they want to avoid. they also need to delop new technologies in some cases, foreign companies are critical to that process. >> what is the sense y get from u.s. companies that are thinking about doing business there? the attitude may be different. the signifials in the last coup years back and forth puts a call on it. >> you are right. a lot of the ceos are not going there or they go with some reluctance. offials of american companies and other companies from different countries have been sort of negative to tentative to

relu reluctant. i think thgovernnt has figured out this is not a healthy thing. they arectually making major efforts to improve the environment. in fact, the invitation i had was fr the ndrc, whichs their planning commission. i spena number of days with them and the tone toward foreign investment was much softer and much more welcoming. they cite comments that president xi made with intellectual property and foreign coanies treated on the same levelith domestic companies. le government interference in the activities of companies in general, both foreign and domestic. the tone toward reign investment is certainly a lo better. >> do you believe it >> of course, the issue is implementation. they set up commissions and committees which involved companies on their side and ours

and officials on their side and ours to try to get through some of the issues. they are tough issues. intellectual property and trade secrets. they are talking now and they have better dialogue than six months ago. >> and think about their own companies. jack ma and alibaba. >> that is changing. thso-called platform compani like alibaba is a good example or tencent they are now recognizing those companies are important to tir what they're trying to do is, on one hand, they want the party to continue to be the powerfu center of economicctivity and economic picy. they don't like the idea and they are concerned about the idea as you have in russia of oligarchs anthings like that.

they have squelchesome of the big companies. on the other hand, they have a lot of technologies and cabilities. they s we will treat you in a more constructive way,ut utilize your strength and digital power, in effect, to try to help some of the aller companies as parof the common prosperity thing and helping the smaller companies that are not doing so well. including private sector companies. i met a lot of private sector companies which you see a change in attitude. a most positive attitude toward them and including the big alibaba companies to be helpful. >> bob, we are almost out of time. your prediction for 2024 about the business climate there for u.s. and foreign companies and p relationship between the two countries? >> i still think they will have significant dertbt issues. they are working on them.

they have a plan to get out it or a period of time. the real estate problem is still going to be there. i would say that american business will find a more receptive attitude on the part of the chinese government. i know from talking to people who are doing th implementation, they will make changes to make the debt situation less threatening and to improve the welcome mat for foreign companies. i think you will probably see a much more positive attitude and welcoming attitude. over tim if the committeesnd commissions which were set up by our secretary and janet yellen, do bear fruit, there will be rules, but some progress is likely to beade over the next year. they need the growth. there is an unemployment issue

with the younger people. it is not the whole answer, but theyre depending on supporting their technology, but they don't want to alienate foreign companies or diversify too much out of china. >> bob, thank you. bohormats, thank you. it has been a while. >> i enjoyed it. thanks for having me on. >> thank you. this is just out on a crypto focused super pac. crypto based. raised $78 million. contributingompanies include coinbase and ark and circle as well as individuals including brian armstronand ron conway d fred wilson and the winklevoss brothers. the super pac has spent more

than $1 million on tv advertising for the election seas. interesting. getting involved to elect people ming up, holiday shoppg. we taka clos look at the beauty category as we enter the final shopping week before christmas. later, don't miss the chicago fed president austan goolsbee. he will join us live in the 8:00 hour. i've spent centuries evolving with the world.

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what? it's the final shopping week before christmas? cou closer look.gan joins us with a do you have that right? one key sector. >> that's right. it is the final week, joe. have you checked off your list? you know, this is nuance. with the categories this year, performance can vary. one area with strength is beauty. a beast right now. beauty is often a top gifting category and big for self gifting as consumers take advantage to stock up, data shows beauty is stronger this year. data shows the average beauty sales are up 36% in october and

up 5% compared to december last year. younger consumers are spending more on skin care and fr fragrances. tweens are interested in retinol. beauty marketing and acceptance is crossing gender lines more often, too. two of the larger pure play retailers, ulta and sephora have divergent strategies. ulta is bust est during the holidays, but sephora is better during the year. the strength in beauty preceded the holidays with all companies exposed to the category. calling it ought t during the l round of quarterly reports. bath and body works and e.l.f.

is all up double digits out performing the etf which is up 12% and the s&p which is up 4.5% over the same period of time. joe. >> i wonder if that is unique, courtney. have you ever seen elasticity in the beauty segment? when would you see that not be resistant to almost anything? >> sometimes you do see tredowns. there are different categories with prestige, a higher price item, and masks. maybe instead of going to ulta, you spend more at target or cvs or walgreens. i think showing that the average selling price has gone up over the last year compared to prior years is a really good exam p

many example how strong beauty is and the demographic of those terested in beauty. thatdjustable market is >> court, we spoke last week. i want to ow, did you get your christmas ca yet? >> i got them that day. i feelt like i needed to send a tweet. >> i did not get mine. weekend.er them thanksgiving it took longer this year for sure. >> i'm thinking about beauty, still. >> thinking about lipstick and mascara? stuck on your mind? >> i wish i could say i had no experien with any of those things. if it is prestige, should i pay up for prestige? is it better or is it marketed? >> the organic and the clean

ingredients. >> yes, in some color cosmetics. many people believe, joe, that the prestige brands last longer throughout the day. you don't have to reapply as much. look -- >> when i start reapplying throughout the day, that's when i know i have taken this all a little too seriously. >> get your compact out and check your face. >> i'm done at 9:00. if i'm reapplying at 2:00 p.m., then i'm getting in a different business. courtney, thank you. i get zits if i leave it on all day. >> we all do. >> i like getting a zit. feel yng. i can get a zit with the best of them. a force be reckon with. no, not you saquon. hm? you! your business bank account with quickbooks money, now earns 5% apy. 5% apy? that's new! yup, that's how you business differently.

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as companies look to tighten belts and prove their bottom line before the end of the year, layoffs have actually kicked into high gear. joining us right now is eer consulting founder and president, jason greer. jason, i noticed last week we were going through a lot of diffent headlines talking about layoffs, and it really does feel like maybe this is no longer a take this job and shove it type of market. >> absolutely. what we're seeing corporations across the board, gm cruise division, hasbro, spotify, going down the line. companies are cutting jobs, especially in the fourth quarter. it makes sense to an extent. what they're attempting to show shareholders is they're still a robust company to the point you should continue to put your money in. it's often a misnomer. people generally think that

companies that are laying people off are companies that are not are profitable. that's just not true. companies who have higher goals, higher targets they want to hit for the first quarter of 2024, and so that's why they're subst instituting these layoffs. >> what does that mean for employees? last year was the work of quiet quitting, where you stayed at work, kept collecting a paycheck but maybe didn't work as hard. >> if last year was quiet quitting, what i'm going to say for 2024 is that 2024 is what i call loud restructuring. for employees you've got to understand one simple thing, these corporations while they value you to an extent they value shareholders even more. develop your talents. develop your skills. you can't necessarily rely on corporations to protect you the way they had in the past. >> for companies, basically, they're doing things they would not have done a couple of years ago. they wouldn't want to lose talent. this is the end of all of that? >> it's the beginning of

something completely different. when you consider it to the point you brought up, during covid employers were doing everything they could to retain talent because employees were going everywhere. what's happened for a lot of these organizations is that they created these incredibly robust employee relations programs that get this actually working. people want to stay. now employers are starting to realize that the pendulum has switched. it has swung to their side. they're starting to cut back on perks. they're starting to cut back on many of the things they did to keep employees in place. >> like work from home andp flexibility? >> absolutely. work from home, flexibility, travel. i think what we're starting to see, and i hear this -- i sit in these board rooms and hear employees talk about this all the time. they say we want to keep employees. we can actually do more with less, that's why you're starting to see cutbacks. >> i think through and we've w watched things like this happen in the past!

yes. >> does some of this kind of comfier, cozier workplace stick around just inevitably? we can get back to shutting down work from home as quickly as i thought we might. it feels like it is a different workplace. >> it's a different workplace because it's a different group of employees, but it's also a different employer. the pandemic taught us a lot. it taught us about to an extent work life balance, but i'm a big employee relations guy. that's what i do on a daily basis, and i'm actually appreciating the fact that we see more organizations that are working harder at creating some sense of work/life balance, but more importantly they're creating an organization or organization where is employees can feel like they're actually part of something bigger than themselves. so yes, we're not seeing the return to the office happening as quickly as i think goldman sachs will like, but at the same time we're starting to see a greater emphasis placed on what can we do to make sure that people feel like they're actually taken care of within the workplace. jason greer.ank you.

>> thank you, it's a pleasure. coming up, a busy morning still ead. we're going to talk to transportation secretary pete buttigieg about his department's $140 million fine of southwest airlines. then later chicago fed president austan goolsbee is going jtooin us live at 8:30 a.m. eastern. "squawk box" will be right back. something amazing is happening here. climate researchers are weathering a data storm. th's because cdw transformed their devices and infrasucture with lenovo thinkpads and powerful edge to cloud solutions, delivering faster insights and increased performance, giving them the scale to stay ready for whatever's next. make amazing happen. lenovo and cdw.

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good morning. futures rising after mor averages rally for seven consecutive weeks. can the street continue in 2024? we'll break down the big move. the department of transportation is fining southwest airlines $140 million over major flight disruptions over the holidays last year. transportation secretary pete buttigieg will join us to discuss this breaking news. plus, a deal for steel, nipon buying u.s. steel for $14 billion. that stock and others on the mo this morning as the second hour of quawk box" begins right now. good morning, and welcome ba to "squawk box" here on

cnbc, i'm joe kernen along with becky quk. andrew is out this morning. here are the futures which made some interesting moves in the last week or so. new highs in the dow, all-time highs. s&p not too far behind. nasdaq maybe a little further. all this had to do with the prospect for a soft landing in -- with that, maybe some interest rate cuts next year in 2024 as a result we did see the ten-year drop low 4% mortgage rates easing. we'll see how all this plays out. waiting for the -- tre they are, there's the tenear now at 3.9%. i'm getting used to these two, beck read these new boards. >> yeah, youe got to train your eye just because change is always -- yeah. >> let's get to dom chu, you don't have to do anything with m. he's probably in a good mood.

there's just no doubt who the perceived cream of the crop is right now, dom, after yesterday. there's just, you know, it's almost the consensus is so strong that it makes me nervous. >> you know what i am in a good mood because i watched pretty much that entire game, and i was -- the big test is going to be on christs, rit, with the baltimore ravens against the san francisco 49ers. but the 49ers being the first team that actually clincd a playoff spot in the nfc. i'm very happy, i think that brock purdy has made his case as mvp no matter how many people want to debate it, he's probably number one in e category for just about any passing category there is right now. i feel pretty good about it. let's get through some of these morning moves soar right now. u.s. steel, we are going ttalk about the massive move higher here. year-to-datep 57%,.s. steel shares are hugelhigher premarket, just around 2or 28%

or so after it agreed to be purchased by neepen steel. if you include the assumption of debt it nd of oses off the ring on a lot of the merger talk. they had rebuffed a smaller deal by cleveland-cliffs earlier on this past year. u.s. steel right n, it's it's still up pretty big ut premarket, is we'll keep an e on that. we're so going to watch shes of amazon, evercore, isi calling it one otheiring to megastore pis. they're making in the business mix there, you can see some movemento the downside fractionally given this idea that the-commerce side of things and the online advertising side of thing s is going to make up a better share we'll end up at shopify, it's down by roughly 1.8% premarket,

just around 15,000 shares of volume. analysts at p securities to market perform from a prior it's more of a valuation call. the stock isearing their $80 ice. it tilts toward mo enterprise customer growth, it's going to lead to lower profit margins overall. opify shares down about 1.8% in the premarket trade so far right now. i just got to say it was a great week of -- the game i really want to talk about is not the one i necessarily watched closely, but it's the bills complete and utter dominance of the cowboys. >> i know. after the eagles game, which i'm teing you, they're like jekyll and hyde. >> jekyll and hyde, that's exactly what i thought, joe. >> it's like who are you? i mean, it's very trange. but i've seen it with other teams too. jalen hurts in the last cole of games has not looked like -- >> and now he's sick, right?

so he's questionab to play tonight because of this illness. >> they didn't need toin, but -- and buffalo got aew offensive guy, coordinator, who has made a huge difference because they're letting, you know, josh be josh, i think. >> and not just that too, mes cook who i have on my fantasy football team turned in a career performance over 200 yards from scrimmage. it was actually kind of n to watch in the rain, bad weather. >> did y see that one play when it like -- 12 guys moved another 15 yards, all 12 of them moved another 15ards down the field. they couldn't stop them. >> yeah. >> did anyone say grab them down at like the ankles? did that occur to anyone? it looked like rugby. it looked like rugby. >> it's interesting because you would thk people would want to wrap up as best ey can, but just the hits, they n't bring these guys down sometimes. >> the producer just said i want

to wrap up. >> joe, i've missed you in your absence. i haven't had a soundingboard for a lot of the nfl talk. >> we have three hours. we can talk about this stuff. question, you know -- it's not going to hurt anyone. it's a huge businesshuge business story. super bowl, where else do you reach that many eyeballs? hundreds of millions for, you know, $30 million for a 30 second spot. business, sunny, it's business sfl. >> iill go at some point, joe, because becky is pbably 100 yards that way. >> i'm not insulted by the fact that you basically said you had nobody ttalk to the last week. >> nobody to talk to about the nfl. >> i wat more nfl than you think. >> joe is always -- >> i don't want to talk to you anymore, good-bye. good-bye, dom. >> i'm going to go away. >> yeah, go away. kkr is out with its 2024 outlook for the first time since the onset of covid.

the global investment firm is forecasting below consensus inflation for much of the next 12 months and says that investors need a glass half full approach to the markets ne year. joining us right now is the author of that thesis, henry mcveigh, he's the head of global macro balance eet and risk also serves as the chief investment officer of the firm's balance sheet. let me ask you this, remind me, what was your thesis for last year? because so many people called it wrong last year just looking at things thinking that it was going to be a really rough year for the markets when the opposite happened. >> yeah, i think to get back, we were actually in the constructive camp. i thinwhat we were saying is when you think about -- there's this intersection of fundamentals and technals and while the fundamentals weren't great in '23, the technicals were iredible. what doethat mean? there was no issuance, there was no m&a so ultimately -- and there's a huge aunt of money on the

sidelines, so that created upward pressure. when we look forwa, it's a similar stor when you look at m&a volume, all-time low. when you look at debt issuance or equity issuance, it's really weak and you've got $5.6 trill $5.6 trillion siing on the sidelines. our base view is that the recession and earnings actlly occur in the second quarter of '23, people aren't talking aut that, yes, we're forecasting slower growth for '24 from gdp, but earnings should make it through. i think more importantly, we need to just get used to a world where we have kind of rolling recessions, rolling recoveries. when you think about what's happening ght now, we're having goods deflation, and we're having very weak performance in the good sector, but at the same time, the services is performing well. when you think about asia, china's growing more slowly. but what's happening on the other side. japan's got its fastest nominal gdp in 30 years. you ally do have to roll up your sleeves. we manage over half a trillion

now. when we look across our bu businesses, we actually see some interesting opportunities across private equity, across infrastructure, and certainly across credit. >> you thinkhat inflation is going to be below consensus. what do you think happened? the supply caneshains just got fixe >> we're still not getting to the central bank mandates, right? we've been saying that ilation would be higher for longer, and we still bieve that for this cycle. i think the next six months, though, you're going to have a disinflationary impulse. goods inflation is going to be deflation for the first lf of the year. that weigh on overall inflation. our longer term narrative is this cycle is different, and it'sriven by four secular drivers. one is -- joe talks about this all the time. there's a lot of fiscal impulse. two is the energy transition is bumpy, right? >> the third thing is labor continues toe a problem in

terms of labor shortages and then you've got geopolitics, and what we see, right, we own over 150 companies globally, is that you see a reconfiguration of supply chains. while at's bullish for capex, it does mean a less efficient global supply chain. those impulses are going to play out over years, but in the next six months, i do think you're going to have lower inflation, which is a change in our thinking. we don't for long-term investors, which is what we do, we still want infrastructure, asset-based finance, things that this is not a time to speculate capital structures and take really risky bets. but the market has spoken, and it's saying that if you can create free cash flow conversion, it's going to pay up for that. >> and i guess if you're just kind of pushing back through, one of the things that you point out is that the fed has this really tight policy, but fiscally we've had a lot of loose policy. you don't think that the

government speing around the globe adds to inflation. that's the one thing people have been pointing to. >> i do er time, i think what we're talking about is wve been at 6 and 8% inflation. we're saying it's going to go wn to 2.5 and 3. that's not the fed's mandate. i would ask you to envision a race car driver o's got one foot on the accelerator. that's the fiscal. he'sot one foot on the brake. that's the monetary. the good news on the monetary is that, you know, we're going towards almost all the central banks were tightening going into '22. as we look towards '24, none of them are. the second big point that most investors under appreciate is the power ofhe central bank's balance sheets, right? even though they're doing quantitative tightening, that's still a massive tailwind. what happed when svb hit? the fed tually saturdayed to do qe again, and it took collateral, so yes, money supply is turning negative, but the still in the system kind of to s

your point from the fiscal stimulus and the covid handouts, it's still a massive number, and it's continued to support assets more than most investors have thought. and so you've seen a lot of people kind of watch this from the sidelines, say i'm happy with cash, a i don't like the valuation of the s&p, but go look through the note. there are markets all over the world that a cheap, across credit, small cap, japan, even parts of europe, and so i think what you're seeing from us is like what we're saying is as the fed is anand other central bankw the tightening, the bid ask is ing to narrow. the cost of capital becomes more defined. that's one of the key changes we're forecasting for 2024. >> okay. got it. always good to see you. henry mcvey, and we'll talk to you soon. we appreciate the forecast for next year, though. >> okay, all the best for the holidays, thank you. >> you too, happy holidays. when we come back, transportation secretary pete buttigieg will join us to talk about the news this morning of a

$140 million penalty against southwest airlines because of numerous consumer protection violations. and later, an outlook for crypto in 2024 wh e o itthceof gray scale. "squawk box" will be right back. tailor-made for trader minds. go deeper with thinkorswim: our award-wining trading platforms. unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. and sharpen your skills with an immersive online education crafted ju for traders. all so you can trade brilliantly.

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♪ ♪ ♪ ♪ the department of transportation has announced a

civil penalty against southwest airlines for stranding over 2 million passengers over the 2022 holiday season. joining us now, transportation secretary pete buttigieg, and cnbc's phil lebeau who broke this story earlier here on "squawk box," and mr. secretary, always good to see you. mr. secretary, mayor secretary. you always play along with whatever we go, but it's good to have you on. >> good to see you, thanks for having me. >> good to see you. >> i mentioned to phil earlier that -- i mean, we're going to talk about this. phil broke this story, wants to talk to you all about it, but it just seems like things have gotten a little better this year. i don't know whether it's your efforts as the transportation secretary, but we are going back a whole year to highlight these problems, and we've been through some pretty busy periods where the weather wasn't perfect, and i'm just wondering is there h--

has the industry done something to manage better? it seems like it has, or the transportation department. >> i would say so, and there's a lot of credit to go around. look, today's announce suspect a big penalty enforcement action related to failures that took place a year ago. but i would also say that over the course of the last year, we've seen much better outcomes than we had a year or a year and a half ago. i think a lot of that has to do with the pressure that we put on airlines, and a lot of it also is the airlines should be credited for stepping up in response to that pressure. this year we saw some of the biggest travel days ever. as a matter of fact, the day after -- the sunday after thanksgiving, that was the most passengers to board airplanes in the united states of america in our history, and the cancellation rate was less than one-half of 1%. part of it was that weather was better on certain key days. then again, we went through some storms storms, and the big problem we had a year and a half ago, even

on blue sky days there were breakdowns, cancellations, that kind of thing. this is really reflecting that therhas been real improvement over the last year, but, you know, part of what we saw with the interest breakdown a year ago was that it's not just about the weather, right? the entire system, if you remember where we were right around christmas 2022, the whole stem got clobbered by this major winter storm, but then all of the other airlines got back on their feet quickly. southwest was a different story. this is about accountability and a frankly, changing the incentives for airlines to make sure that can't happen again. >> mr. secretary, it's phil lebeau here, good morning. i'm curious from your perspective how important is part of the agreement in this action with southwest is the crtion of a $90 million reserve fund if you will. a delayed compensation fund. i know that's something you've been talking with thairlines and pushing them for for some time. they've been resistant to that. now southwest has said, yes, at

least for the next three years will have this fund where people who are delayed more than three hours can receive compensation of like $75 voucher. how important is thato you in your perspective, that this is the next step for the industry in terms of taking care the passenger? >> yeah, i think it is important. southwest is going to be leading the industry, if only becaus they've been ordered to, and we want to see how the industry and the market respond to that. look, e $35 million cash, that was important because we really feel that the cash penalties in the past haven't been enough to change behavior by some of these companies. i think the biggest one we've done historically is air canada at 4.5 million. this is almost ten times that. as important as that cash fine was, we didn't want the majority of this beg in the form of dollars going to the treasury. dollars going back to customers. that's what the 90 million is

about. it's a requirement that for the next three years with these $90 million, they go into vouche, $75 on top of needing to get your meals or hotel or anything le that covered, if you have a long delay and it's the airline's fault, you get at added cash compensation. i want to see how -- again, how the market responds, how the industry responds. in parallel, we're working on a rule looking at how this could become an industry standard to have some kind of direct compensation. but we don't want to have to wait on a federal rule to, you know, the process which can take a very long time to become a reality, and so even though it's part of a penalty tion, i'm excited to see this kind of customer benefit that will be available to sthwest passengers starting in the spring of next year. >> do you really think other airlines will do this voluntarily, or do you think it will take a rule? >> you know, wve seen a couple of them respond not to this level, to the call we put out, to offer some kind of

compensaon. it's a very different story in otheparts of the world. in europe, you can -- depending on how long you're delayed -- get hundreds of euros as cash compensation. again, the idea there is not only does the airline need to rebo the air, cover your meals, there needs to be some accountability for wasting your time if it's somethinghat's the airline's fault. again,e know that nobody controls the weather. we're not punishing airlines for bad weather. we're holding themesponsible and, you knows we've seen a lot of appetite ever since i was with the president earlier announcing that we were launching this rule making process, we know the flying public is terested, and i even think it's to the benefit of the sector, the industry as a whole for people to have a better feeling about what to expect i their passenger experience. i think this kind of compensation could add to that. so i think at the end of the day it can be a n-win. though i know the airlines way. necessarily see it that >> mr. secretary, we're going to have perhaps the first time ever

more than 3 million people flying in a day, perhaps by the end of this year during this next holiday travel rush, are the airports -- the air traffic controllers, is the system ready for this surge of traffic? >> well, again, earlier is year, we had some record numbers, 2.9 million on the day -- the sunday after thksgiving, and the system held up quite well, but the real answer to your question is there needs to be mor growe growth is more work on all fronts. a does too, and that's why 're urging congress to work with us to add controllers. you know, the number of controllers has been going down for more than a decade. we finally reversed that. we've got it going up again headed in the right direction, but in order to have hiring take place faster than retirements and separation, we really need the funding to stay ahead of attrition. it's one of a million reasons y we can't come back in january and go rig into shutdown because that would shut

down our training and hiring. the airlines need to do more to get ready. weeed to make sure we have more controllers and air traffic third leg of that stool is the physical infrastructure and one of many, many reasons why the infrastructure package that we push so hard for that was such a big priority for president that's needed is that we are s using it to expand capacity at our airports, whether it's making one of the concourses at atlanta wider getting better baage handling capacity in denver or creating better enronments for security check points. most of our airline terminals wereesigned pre-9/11. the whole system is grafted on to an architecture not originally set up with our modern security needs in mind. airport by airport, we're hoping to change that wh this infrastructure funding. >> secretary of transportation, pete buttigieg, mr. secretary, thank you very much for joining us this morning. joe, becky, i will send it back to you. >> yeah, very good, phil.

thanks. still to come this morning, an outlook for digital currency with gray scale's michael sonnen shine. the futures right now kind of mixed for most of the morning. we'll see whether we can start off another solid week in some of the other averages, the dow at new higlevels right now, coming right back. a force to be reckon with. no, not you saquon. hm? you! your business bank account with quickbooks money, now earns 5% apy. 5% apy? that's new! yup, that's how you business differently.

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if you're still cozy in bed this morning, open the window, take a look outside. much of the northeastern united states is under a flood watch this morning as a storm system makes its way up the east coast. new york mayor eric adams issued a travel advisory through this morning's commute warning that the area was expecting 2 to 3 inches of rainfall in about a 12-hour window. it's not just that, it's also the wind knocking a lot of things down, trees, limbs, power lines. officials in nassau suffolk county said they were expecting wind gusts up to 60 miles an hour, and yeah, we saw a lot of it this morning earlier. you can see this is what's still happening in times square. when we come back, we're going to talk digital currencies. "squawk box" is going to be back righafr is t teth.

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probly seen this by now, there was a scare last night with president biden's motorcade. the president and first lady were leaving his campaign headquarters in downtown wilminon, delaware, when a car collided with an suv that was part of the president's motorcade. secret service agents ushered prident biden into a vehicle and other agents surrounded the sedan with guns aimed at the driver who had his hands up, must have been unsettling to say the least for that individual. a spokesperson for the secret service said in his words there it was no protective interest associated with this event, and the president's mote kate departed without incident. except for what we just told you

about. thanks, joe. whene come back, security chiefs and corporate lawyers are wrestling with how much information to report about cyber attacks under new disclosure rules. we will speak to the former ceo of fire ire about how the companies should manage cyber risks. slop with the ceo of vail resorts, "squawk box" will be righba.t ck

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. here's what we've got on the squawk planner this week, several data points of note, we've got november housing starts due to tomorrow. jobless claims and gdp revisions are on deck on thursday, and then on friday we've got durable goods and personal income and spending numbers. as for earnings, fedex reporting tomorrow general mills and micron reporting on wednesday, and nike reporting on thursday. joe. here with us now for a look at the crypto industry heading

into the new year, michael sonnenshein, gray scale ceo, and we've got a crypto super pac trying to get things done. maybe that -- maybe that's what's needeto get congress to filly do something, michael. you part of this? >> so that was actually just announced this morning. you know, for us at gray scale over last year, we've spent i can't even tell you how many weeks on the hill really ensuring that we're advocating for our investors and making sure that as our regulators are looking at crypto, they're doing so through a really informed lens. for us it's been more about education. >> you think the easy gains have en made that people couldn't figure out what was happening with bitcoin? was it moved from 25 to i think it almost got to 45 at one point. but now, you know, we're talking about 41,000, gold trying to get through 2,100. it failed in trying to do that. this was all interest rate-related and pivot-related, and the perception that maybe

the fed eases next year with some cuts. when does it refocus oa spot etf, and do you expect that to >> well, i think if you look back at this yr, the price appreciation you've seen in bitcoin has really been dren by both the macro d my roe forces. i think you're right on the macro front. inflationary pressure, risg rates have caused investors to think about bitcoin as a store of value, hedging their portfolios. on the micro front, earlier this summer when my team had our court victory, i think that certainly unlock a lot of optimism amongstnvestors about gbtc and t prospects for it to uplist. as we turn the corner into a new year, there's a lot of focus on that from the investment community. >> the 65,000, 100,000, i don't know what you think is in the cards, but what -- you think it's already in the asset right

now, if you want to call it an asset? is it alreadthere, once it happens, do you expect it to go to new highs, or it just seems like we've already paid a lot of it forward with the move we sf saw from -- it was as low as 17,000. >> sure, sure, you know, i'm not one to make price predictions. i do think there ia lot of optimism in the market. a lot of investors are adding bitcoin to their portfolios. when we look ahead to the hoful approval it is going to unlock the opportunity to a part of the investment community that for better or worse, but i would say for worse has unfortunately been locked out the opportunity to participate in having bitcoin exposure in their portfoli. so we're really talking about u.s., which is today about he $30 trillion worth of adsed wealth that we hope the approval of spot bitcoin etfs, the uplifting of gbtc will allow for that opportunity and those investors to partake as well.

>> the super pac i think is going to earmark certain crypto friendly members of congss. but you've got, you know, on the other hand, when jamieimon gets in front of senators and says that the only use case for money launders, and then you've got izabeth warren and other senators all nodding, you' got to worry about that. a spot etf is one they think, but an outright ban isn't totally -- look at that, the only use case -- i mean, that is -- i don't know, jamie's a smart guy. it's always kind of surprising to me when i read something like that, but he's not -- he's pretty outspoken and frank about what he does believe. so you can't -- i don't think you can just put the worst-cas scenario aside that eventually congress does something really bad to crypto. >> well, whether you're the ceo of a major financial instition

or sitting politician, you're of course going to be able to have your own psonal opinions about these new technologi. that could be crypto. that could be bitcoin specifically, but it's actually institutions and, you know, the types of bills that, you know, sitting politicians are looking at now that are tually modifying themselves to account for e needs of modern day investors d modern day citizens, and that includes having access to new technologi like bitcoin. so you can have personal opinions, but changes are very much already underway. >> all right, so what's the next -- what do you expect to see next? and you have your -- y know, i know you've got your ear -- what do you put to the ground. whatever you have on the ground pick up what's going on in congress, you're doing it. what are you hearing? what's going to be next? >>ell, i do think that as we movento 2024, you hopefully will see some increased regulatory clarity around the, you know, crypto market overall, how to differentiate between

crypto commodities and crypto securities. you know, coming out of this third crypto winter, investors desperately are seeking that increased regulatory clarity and we're actually hopeful that investors will get it. >> i mean, you haven't told me -- yeah, that's no different an what you could have said a month ago, two month, three months, four months. any specificeople in the house legislation that you expect me actually to move forward in terms of, you know, committees, things like that, at next? >> well, we ve seen two bill pass off of committee, which i think is a he milestonas we ink aboucrypto regulation. this is just one issue that politicians need to focus on, upcoming election, presidential ection in 2024, it's never been clearer that vestors an you know, voters want to ensure th the folks that are voting into offices are fol that are

inform on these issues. i actulyo think this will be front and center, whether it's crypto, whether it's ai, any of these new technologies are things that are certainly ing to be front of mind for those going to the polls next year. >> yeah, so who would that be? >> i think it's a little early to say. you have seen a couple of politicians that have come out publicly on their campaigns and started to speak about crypto, and over time, i do think many more of them will add it to their platform as well. >> you've got a horse in the presidential race yet, does crypto have a horse in that race? >> i don't, and i don't think crypto does yet. >> you have no idea. one party versus the other? you can't even narrow it down from there? >> well, joe, you know that our focus is obviously on gbtc and the uplisting to a spot bitcoin etf, you know, making wagers on next year's presidential election is not front of mind. >> just wondering who is friendlier at this point. i think it's very strange, but -- actually, it's not so strange because it's kind of a

deregulatory -- it has a deregulatory feel, and a defi and decentralized. in terms of regulation and everything else, it seems like you've got more friends that are on the republican side of things with crypto, would you agree with that at least? >> i would generally agree with that, but i think as we examine people on the hill today, there's a lot of different avenues for which crypto's resonating with them. for some offices it's more a focus on national secuty, and that's really their dovetail into crypto. juste lookg arou ctually may technological innovation and americ competitivene. and to your point, some of them may be, you ow, a little bit more akin to deregulation and leading that way when they think about crypto. >> all right, michael sonnenshein, thanks. i'd ask you about stock to flow -- it's impossible to try to value. it's like trying to value go.

stock to flow works on both a little bit, but certainly interesting to wat and synchronously move, because bitcoin definitely gets a bid when gold gets a bid and vice versa. . all right, thank you. >> thank you. up next, 2023 has been the year of hacks. mgm casinos, t-mobile, chick-fil-a, and others. those are just some of the ones we know about hit by cyber thieves, costing companies millions of dollars and exposing your personal information. we'll break down what needs to be improved in the coming year with the former ceo of cyber security firm fireeye. in the next hour, austan goolsbee will join us to talk about the fed's outlook for rates. "squawk box" will be right back. (♪♪)

(♪♪) you know what's interesting these ys? bitcoin. look for bitwise, my friends.

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if you missed it earlier, japan's nippon steel is buyi u.s. steel for $5 a s5 a share. itpittsburgh headquarters in pittsburgh, and says it will honor all commitments it has with employees including collective bargaining agreements that are in place with the unions. news alert for you, structure therapeutics releasing results from i early phase study on obety drug gspr 1290.

the experimental dg showed positive results in weight loss and lowering blood sugar in patients with diabes and obesity. the once daily drug was generally well-tolerated with no treatment related serious adverse events over 12 weeks. portant to note, it is still in the early stages of development, and that trial was relatively small with just 92 participants. >> it's down $21, and weust reported it as if there was positive news that we had. probably ought to look into it a litt bit. a little bit more. but yeah, it's down a lot. >> maybe it was safe, i wonder if it was effective. >> exactly. >> we'll take a look at it. >> wjust reported the results as if it was positive, as you can see at the bottom there. the european union says it has opened infringement proceengs against elon musk's

x. the eu's regulator said the move is in respon to suspected breaches of x's transpency applications and its duties to counter illegal content and disinformation as well as issues with its user interface that it alleges are ceptive. a new s.e.c. rule is compelling companies to report how they them to report cyber attacks to regulators within four business days of that incident. actually, within them deciding -- not within the incident, but within them deciding that the incident is material and that could be a different date. the move has some ceos worried that sharing so much information may cause more hacks and leave them open to lawsuits. joining us right now is kevin mandeant, the former ceo of fireeye. let's dig into this. how big of a deal are these new s.e.c. regulations? you know, it's a great question. we're familiar with s.e.c. regulation. they did staff guidance in 2011, they did some interpretation of

that staff guidance for cyber security regulations in 2018, and i can tell you this will have in my opinion, you look at the fortune 100, they're already doing a lot of what's inthis guidance, so this is more about e other 7,000 registrants and how they should be thinking about cyber security rules, ruly should be reporting it to investors. for the bigs, this is not a surprise. they're already doing ch of what the new rules suggest. but for the smalls and the mids, this is something they may have to consider. >> are the critics right in that they think that it's going to make them give too much information that would leave them open to other hackers? >> you know, i don't think so. it's 186 pages, by the way, and i read the whole thing. there were 150 different entities that commenteon the proposed rules, and they did change based on the inputs from those 0 folks.

that point was brought up, if we dispose all of the technical evidence, first, our investors may not be able to understand it all if we get a breach and get too technical, and we may show the doorways andvenues into our networks the hackers use in the first place. it's clear you don't nd to go into the technical details and you just talk about the marial impact that you believe there will be marial impact on your business processes. you can leave out the critical details that hackers can take advantage of, and try to breach you down the road. >> on some level, i always thought there were a lot more hacks taking pce than we ever hear about and maybe thiis good. i know this is the s.c. doing it for clarity and transparency to investors but maybe it helps with all of us havg a better understand of who the bad actors are, where they're getting to not have a false sense of secuty. >> you know, when i read it, it looked like the reason they did

it is we want more timely notification for the investor community. we have lots of notifications to the cybersecurity infrastructure and security agency, where we have to report to them. we have ftc roles, different state privacy rules. when you look at all of the ways if you suffer a breach you may have to disclose, this is yet another one. and you still have to do it. and it's for a different audience, the investor. i thin they did these rules to standardize what is reported as well as get more timeliness in any of the disclosures. so the content of our disclosures will also be more similar in the future. >> are they right, the critics, in suggesting it's going to leave them open to lawsuits, that there's going to be plaintiffs' attorneys that are trolling looking for lawsuits to throw their direction? >> there's no doubt, you know, when you're breached and you know it, and i lived through this thousands of times with

organizations, every detail you put out there, a lot of times unfortunately is block copied and plaintiff attorneys take advantage. the reality is when you look at all the reporting disclosure rules you open yourself up to some of that no matter what. if you're hacked and you know it, it's more probable than that you're going to be sued. >> we have seen a lot of activity this year that we know about. we're just putting it on the screen. mgm, t-mobile, clorox, other resorts, are there more attacks taking place or is there just more public knowledge of those attacks? >> this is why i feel uniquely qualified to answer. 30 years of responding to breaches, here's what i will tell you. the impact of the attacks has gone up. throughout my entire career, it used to be you could manage through the breach, and there was not material business impact. but today, based on our dependence on -- we're all digitizing our networks, all going to the cloud, all relying

on computer technology more than ever before to drive our business. i think that's why you're hearing about it. attacks have always occurred. they have always occurred in great numbers. now the business impact is just higher. >> it's interesting you bring up the cloud. just the idea that every network is talking to every other network internally. if a bug gets in, it gets to go everywhere. is there a way to make ourselves -- we did this because we thought it was better, more efficient, works to scale, how do you protect yourself in that world? >> i think cloud is for a vast majority of organizations more secure because they have to do that. when you get amazon, microsoft, google cloud, all of them recognize we have to have a substrate that's secure, so they work exceptionally hard with far more resources than the average company to do that. i think when you look at the cloud, people are going to it because it's faster, cheaper, more effective, and in my opinion, more secure. >> but there's no more modes, no

more silos. how do you protect yourself in that world? >> there's still modes and silos in the cloud providers. everybody has their own independent virtual private networks in the cloud. there are moats that protect your data in the cloud from another cloud customer's data. so it is redundant, internional, global, and one thing about the cloud infrastructure is it just helps alleviate some of the complexity for disaster recovery. >> your forecast for 2024, we're almost into the new year. your forecast for cybersecity in 2024. >> wherever money goes, crime follows. until we have no crime, yoll have cyberbreaches. until we have world peace, you're going to have idealogical differences. where modern nations are developing offensive capabilities going into the cyber domain, and figuring out what are nations' policies? you look at 2024, much of the

same. attacks are going to continue to happen, and all of the organizations on the fence are just going to continue to scurry and make sure that their safeguards work. >> on that happy note, happy new year, happy holidays, kevin. >> thank you very much. >> thank you. still to come this morning, chicago fed president austan goolsbee is going to discuss the latest fed outlook and much more. here are the futures this morning. you can see dow is up a little, nasdaq has turned negative, down about five. s&p up jt deusunr six. we're coming right back. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are.

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9 minutes now and counting to the opening bell on wall street. stocks are on a seven-week winning streak. the dow and nasdaq have their own seven-day winning streaks going, as well. this hour, the fed's impact on the market and what's next for inrest rates. 'll hear exclusively from chicago fed president austan goolsbee, and a deal alert. and a storied name from bygone days, really.

how fathings have fallen in our steel industry. nippon steel, a panese company, buying u.s. steel. $14 billion. details of the transaction straight ahead. the final hour of "squawk box" begi right now. good morning, everybody. welcome to "squawk box" right here on cnbc. i'm becky quick along with joe kernen, andrew is off today. but u.s. equity futures are on at least for the dow. dow futures up about 62 points after the dow closed at an all-time high on friday. the nasdaq up by three. the march higher continues. treasury yields, march lower has been the case there. the 30-year falling below 4% for the first time since july 31st.

it's touched just above that again at this point. ten-year is yielding 3.9%, and the two-year at 4.41%. japan's nippon steel is buying u.s. steel for about $14.1 billion in ch. that's nearly double what rival producer cleveland cliffs offered just four mont ago. u.s. steel had rejected that offer, despite the takeover, the company will keep its name and its headquarters in pittsburgh. nippon said they would honor all collective bargaining agreements with employees. morning.k up by 28% this >> we want to make things here, does that just slide through? >> you know, they keep them here, they keep the headquarters here. i'm sure that's part of the reason for keeping the headquarters here, to say -- >> still, japanese company. and it's not a -- newcore is three times the size in terms of market cap. >> you think cfius would get

involved in that? >> that's what i'm wondering. i don't know. new core obviously is coming in, years ago, you wouldn't have thought cleveland cliffs would be the company, in the old days it was u.s. steel, bethlehem steel, all the great companies back in the 20th century that you think about dow component. >> then they went through so much trouble and came back through the other side. the trouble with the bankruptcies. >> they made it, but i just wonder. >> i think if it were china trying to buy it, it would be an issue. i don't know if japan would raise the same level of scrutiny. >> we definitely need domestic production of strategically important things. bp says it's temporarily pausing all transits through the red sea, citing the safety and security of its workers. this follows attacks over the weekend by iran-backed houthi

forces who control most of yemen. attacks on ships have become more common since the start of the israel and hamas war. today, a norwegian owned ship came under attack. u.s. officials told reuters it was targeted by multiple projectiles that were launched by houthi-controlled territory, oil can container shipping in general is being affected by the ongoing tensions in the red sea. and on friday, shipping giant maersk paused all shipments through the water. two other shipping companies joined them over the weekend. >> southwest airlines reaching a $140 million settlement, agreement, to settle a federal investigation which was sparked by a year ago, last december's system meltdown, when southwest canceled more than 16,000 flights. nobody else -- this stranded over 2 million travelers over the holidays. much of that settlement will

goto a fund designed to go to passengers. southwest was pinalized at $35 million. pete buttigieg joined us on the show last hour to talk about it. >> southwest is going to be leading the industry, if only because they have been ordered to, and we want to see how the industry and the market respond to that. as important as that cash fine was, we didn't want the majority of this to be in the form of dollars going to the treasury. we want most of this to be dollars going back to customers. and that's what the $90 million is about. >> for its part, southwest said it was happy it reached a consumer friendly settlement. gave it credit for compensation it's already provided to customers. it said it had learned from last year's chaos. and it's now ready to shift its focus to the future. major averages are coming off their seventh straight positive week. for the s&p, that's its longest stretch in six years.

joining us is noah blackstein, senior portfolio manager at dynamic funds. what usually happens, generals advance, soldiers catch up. the s&p goes to new highs before the end of the year, noah. >> probably, and this should be a lot of catch-up coming in the russell small caps and midcaps as well, which we have seen begin to move higher and have broader participation right now, which is very good to see. it's been for a lot of years a very mag seven focused type of market. participation is broadening out. we have nearly a 100 basis point decline since the end of october. it's good to see this broadening out. that bodes well for 2024 in terms of returns. should be broader based returns for sure for 2024. have to deal with, investors always have toeal with, is that there's what dictates a

price is the mtiple you put on earnings. a lot of times, they're headed in different directions or at least there's crs currents. what brings interest rates down, ether it's lower inflation or slowing growth, could impact earnings. and vice versa. so net net, what does this mean? you expect multiples to pand enough to make up for any slowdown we see that the fed has already orchestrated? >> well, i think one, we certainly are going to have -- the economy has certainly slowed for sure. there's not a lot of precedence to go with. post world war ii where we saw a similar decline in inflation very quick, we had a federal reserve and a treasury department that had agreed to keep rates low during the war and after that. so the only sort of period we can go back to is kind of the mid-'90s where we had that fed tightening cycle in '94 and '95. and then we had thad midcycle

rate cut of at least 75 basis points during '95-'96 period, sort of where we're going. the question is, is the economy at a reasonable level of growth? and rates can come down a bit. you know, you're still going to have a positive real rate. i think earnings always matter, and next year will matter, but we had stabilization in the economy, we'll get relief on interest rates. i think investors could be a lot more stock specific, focusing on the best revenue earning stories in 2024, and things might be a little less groupie or clustered, where it's certain sectors are moving. i think you can be much more stock specific, especially as this market broadens out with small caps and midcaps beginning to participate. >> noah, if inflation does come down a little bit or stays in this disinflationary mode, but

the jobs numbers, if that stays strong, and if the economy stays strong, would you assume that the fed would cut? why would the fed cut? if just inflation comes down, does the fed decide to follow through on three rate cuts or do we get -- have to have a slowing economy? >> i think what the federal reserve sort of said is use of perhaps the taylor rule. you have six-month annualized pc down at 1.9%, which would be below their target, and fed funds at 5.25. if inflation continues to fall, they continue to do qt, and they're leaving fed funds where they are, they remain tightening. so moving nominal yields down and keeping real rates the same or a little lower would actually still leave them in a neutral stance or slight tightening bias. if this 1.9% stays there and you

have 5.25 on fed funds and looking at over 300 basis points of real rates, that's excessively tight monetary policy. i don't want to get too confused between nominal and real rates. i think real rates will remain positive. but the negative real rates is past us, but nominal rates at this level given where inflation is have room to come down. that doesn't mean the fed -- doesn't mean that rates are going to go back to 1% or 1.5%. maybe somewhere in the 3% to 4% range, but nominal yields will come down. that seems to be very prudent monetary policy. >> with what was really historic rate increases, why did the economy hold up so well? was it all the remaining stimulus and spending that we had from the government? >> for sure, i think also since 2008, consumers have been much more insulated from rate hikes

with longer data mortgages, with variable mortgages, housing has had an impact. the lower end consumer,thosis paying rent, have been hit fairly hard. i think higher rates do factor into rent. you know, i don't know a real estate person without leverage. i think the consumer has had excess savings. you look at over $6 trillion in money market funds today. but also, a lot of those mortgages have been locked in at significantly lower rates. the consumer is not what the consumer was two years ago, though. so continuing to tighten or keep rates excessively high is going to have a further impact, for sure. the pivot certain makes sense from where i'm sitting. >> the average s&p earnings per share gain for 2024 is what? and the average multiple of the s&p for next year is what? >> so if i look at the mag seven, they're trading well over 30 times earnings.

if i look at the 493, they're trading somewhere around 20 times earnings, i think. for the group below, i think you can easily get around 10% type of earnings growth next year for a bunch of those companies especially, and certain areas where rates are coming down. i think those stocks even if they hold their multiple have 10% upside, more for companies with better earnings. in terms of the big names in the index, they have done a lot over the last 12 months. not saying they're a bubble, not saying they're going to pop, but they could go sideways for a while as the fundamentals catch up. i would look to the russell or the midcaps for gains in 2024 where the stocks are less expensive. it overall market can still do well, but it's going to come from earnings, not from multiple expansion. rates will provide a relief for a lot of the stocks below the big mega caps. >> those aren't cheap multiples, so if we get to keep 20, that

would be a win. and maybe we do get to keep 20 if rates stabilize or do come down. >> and a lot of that depends on the overall economy. we're both under the assumption we're going to have a soft landing. the question is, and one of the things we have to think about is, did the fed go too far. thus far, the economy seems to be holding in. businesses are talking about increasing investment next year and stabilization in the overall economy. but in terms of where you're thinking about rates, they're going to come down because the fed is lowering them or they're going to come down because the economy is weakening. it's very difficult to see inflation taking off from here, with the economy accelerating from here. stabilization with slight improvement for sure. >> can you say about or how -- is it painful? does your jaw sort of -- is it

constructed differently? my friends that live in boston, and if you go up from there, it's the same thing, the boot, the boot. what is that? i know you're from canada. >> a hockey thing? maybe. because the mouthpiece, the mouthguard in my mouth. >> okay. i got it. i think that might be it. >> come up to toronto, joe. >> it's beautiful and clean and awesome, i know that. >> we'll see you in '24. >> it's about time that i get up there. i have never been. they have a great film festival. i might come up for that. >> there's great golf up here, which you would enjoy. >> there is? not in the winter. all right. thank you. >> merry christmas. >> poutine is good even in the winter. >> what is? >> poutine.

it's pretty tasty. fries with cheese and all kinds of stuff. we have breaking news for you. adobe and cigna have agreed to terminate their agreement. it was based on the joint assessment there is no clear path to get approval from regulators in the eu and uk. adobe is going to be paying a break-up fee of a billion dollars. joe, this is pretty interesting because they had gone through, they got shut down by the markets committee in the uk that had some of the cma had warned about some problems they were facing with this. as you know in the uk, it's very hard to get anything passed because there is no regulatory body to appeal to. you have to appeal back to the cma. that is what microsoft ended up doing. people couldn't believe they got it passed but they did with microsoft getting activision passed even after the cma said it had serious problems with it.

it shows you problems with regulators around the world, the idea of trying to get these deals done. this was a $20 billion deal, looked at as a really big thing, a lot of cs that were going to get back 30 to 50 times their money, but regulatory approval, the same day we're announcing alumna announced it's giving up on grail. it's going to undo that deal, regulatory approval around the globe is particularly difficult. if you thank you things were going to heat up, that would be the biggest issue stopping things. >> i guess the biggest difference is we used to assume that the european model we knew was different from our model on how you judge competition and who can be harmed, who you worry about the most. and here to fore in this country, it wasn't that you worried about whether there might be consolidation. if it was going to be good for consumers you were probably going to let it happen. in europe, they always worried,

wait a minute, how many employees does the company acquired have and how many will be rationalized and it's a totally different system. >> they definitely -- >> now, we may be just as restrictive as europe as this point. >> i don't know if i would say worst, they're equally restrictive and they look to each other to figure out how to tag team on it. >> people have called it that. jay clayton i think has called it almost the regulator, that's all we need. >> look, we talked earlier with henry mcvey from kkr. he was talking about how there weren't really any m&a activity last year. he doesn't anticipate it next year and this might be a big part of that reason. >> why try? it's going to cost you money and th you can't do it. >> a billion dollars in this case. when we come back, an interviewidon't want to miss with chicago fed predent austan goolsbee. he'll weigh in on the latest messaging from the central bank and signals from the economy. but next, as the weather

turns colder, we'll talk state of the consumer and outdoor recreation with the ceo of vail resorts. as we head to a break, let's check out shares of salesforce. wolf research upgrading the stock to outperform with a pri target of $315 a share. wolf says it sees 2024 as the year to own salesforce. wow. that stock this morning up by about $1.26. stay tuned, you're watching "sawk box" on cnbc. move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments need the next level network. [speaker continues in the background] the network with 24/7 built-in security. chip? at&t business.

winter officially begins this week. ounext guest runs their resorts which owns and operates more than 40 ski resorts across the globe. the company currently on an acquisition spee last month that added another swiss property to their rtfolio, a resort about two hours from geneva and says here, five hours from davos, just in case we're thinking about that. kiersten, i remember, it's all coming back to me. i tried to figure out what you

did in life, what do you attribute the luck of ending u as the ceo of vail. it's like, that's like top 1% of not just occupations but just ceos, isn't it? was it in the stars? >> hi, joe. thanks so ch for having me. i do feel very fortunate to be leading this amazing company. i'm passionate about our mission and what we're trying to do a company. so yes, it does feel like a dream job some days. >> and we're going to get to the business of all this, but you know, i do need to ask you how it is right now. what's the base right now? how has it been? there's been some big storms already, have there not? >> yeah, you know, the weather is always variable by geography but i think we're set up for a great season. we have the back bowls at vail just opened which is huge news

for our guests. also, we have over 2 million guests precommitted in a season pass for this upcoming season across our 41 ski resorts. and staffing is really important to us. our front line staff are critical to delivering the guest perience, and we're in a great position on staffing as well. >> it's -- there might be individual mountains that maybe people like more, but just across the board, diversity, size, everything that you have, vail is maybe the greatest place >> vl is prey amazg. and cause we have such our neork iset up is wve t local ski arconnected to major tropolan markets. regional ski areasand then the big destation resorts ke vailr breckenridge or whistler, park city, and even now in europe.

>> yeah, you have copper, a-basin. everybody is right around there, and two hours fr boulder or denver. and not like -- you can't get to aspen from here. you can't get there. telluride, it's almost impossible. crested ed butte, impossible. >> we don't own a-basin and copper, but we have five resorts in colorad >> in summit county. i wasn't implying. you e growing through -- is that the way you have to do it? through acquisitions and through expaions, whether it's in is country or even abroad? internationally? it is one of our key strategies for growth, is through acquisition. and europe, we view as a big opportunity. there are most three times the as there are in north america, e so it's a big market of skiers

and also a lot of ski resos. and we have a new resort in as you noted, we announced ly, another acquisition in switzerland, which we're incredibly excited about. >> need to upgrade the facilities over there in switzerland. just- right, becky? nofor nothing. -- >> nobody is listening to us. >> you can get a nice place in vail. there's a ritz-carlton. you can get -- i would not say the same about a lot of places. let me ask you about the golf course and summer activities, because i don't know if you are doing a good enough job letting people know what the weather is like in vail in the summer. >> and the weather and the mountains in the summer is

incredible. there are so many visitors that are coming in the summer and enjoying the activities in town, but also golf courses, as you noted, also getting up on the mountain, hiking, mountain biking. we have other activities up on the mountain. so it really has become that these mountains are year round destinations for people. >> it's expensive. what's a lift ticket now? i'm afraid to even ask in peak season. >> well, lift tickets can be expensive. i agree with you. it varies by resort that we have, but i would think about it this way. we have lots of choices and options. not dissimilar to the airline industry, if you walk up the day of to buy a ticket in peak season, you pay the highest price. the way we have structured it, though, is if you're willing to commit to in advance. you get the best deal and a great discount off of those lift ticket prices. so you can walk up and pay full

price at the window. you can buy a few days out in advance and get a discount, and you can precommit in a season pass and get an incredible value. that's really what we're trying to do, more than 75% of our visits now are precommitted in a pass. >> kirsten, becky's husband is a knuckle dragging shredder that makes noise and comes bearing down on you. and he doesn't apologize for it. he doesn't -- does he, becky? >> he's very careful. he stays out of the way of skiers. >> he doesn't apologize. >> no. >> do you welcome those types, honestly? >> you have to be so far past the point where you don't welcome snowboarders. >> some places don't. there's parts of utah. >> a few places in utah. deer valley. yeah. >> yes, we welcome snowboarders. we welcome skiers, snowboarders,

and actually, and becky's husband, and we actually want to be welcoming and inclusive to everyone, whether you're a beginner, an expert, persons with disabilities. we are welcoming and inclusive. and it's critical to the future of the sport that we are. >> agreed. >> yeah, i see it's everywhere. i don't. i discriminate against those shredders. they're loud. >> your husband is welcome at our resorts. >> he will be happy to hear that. >> is kyle boarding now too? >> no, kyle is skiing. >> all right, thanks for playing along, kirsten. good luck. like i said, we're envious. everybody wants to be you. >> but we're not. >> what's the forecast, snow today and tomorrow and the next day? >> we're going to have a great season. and i look forward to hopefully seeing both of you on the slopes. >> okay. thank you.

we'll see. coming up, chicago fed president austan goolsbee joins us for an extended conversation. later, robinhood'schief legal officer weighs in on balancing ai opportunities with safety in personal finance. you're watching "squawk box" on cnbc.

coming up, chicago fed president austan goolsbee joins us live. that is next. we'll be right back. our future will demand more . and with innovations in natural gas and oil, america can deliver. but washington keeps pushing extreme policies that limit america's energy. their plan? strict oil and natural gas produced in america. government mandates for how we fuel our cars and cook our food. a future where energy coand more expensive.e tell washington - stop the extreme policies and let american energy deliver. you know what's interesting these days? bitcoin. look for bitwise, my friends. trading at schwab is now powered by ameritrade,

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time for the next big interview we have in the morning. let's get to steve liesman who joins us with a special guest. who happened also to be known as mr. president, steve. >> yes, joe. we're going to have to talk about the title situation in just a few minutes. but joining us right now is chicago fed mr. president austan goolsbee. thank you for joining us this morning. >> thanks, steve. it's only joe who has to call me mr. president. >> we'll get to that. i'll call you austan for the moment. i wonder if itould be useful to start off to a create a baseline, how would you explain to the market what you all did on wednesday? what was the change in policy as you understand it? >> well, as you know, i don't speak for the committee. every member of the fomc just

speaks for themselves. i thought that we we voting that meeting and we voted not to we put out as we do each quarter a statement of econoc ojections, which each of the indivial members says what do they anticipate thconditions will be over theoming year and beyond. so the policy change was no change. we kt the rates where they were. i think we reflected, and in my mind, i see that the data on inflation, which i he highlighted on this program with you, steve, over and over again, is the key thing where we have missed on our mandate and the key thing that should drive our decision making is on inflation, and have seen significant improvement on the inflation front, bringing us back closer to what looks like our target.

and i think that that's reflected in theep dots if you want to think of it that way. >> when you put the word any into the statement to talk about additional policy firming or tightening, what is that telling u? is that telling you all of a sudden there is no longer a bias to hike or is there still a bias to hike for the committee? >> well, like i say, i don't speak for anybody the committee. for me, i believe that if we get improvement on inflation, that we are clearly moving the target and we're still not there yet. we still need toee these markers, but if we get inflation back into the range of our dual mandate goals, then we have got more symmetric concerns, l's call it, about both sides of the dual mandate. >> the reason i'm asking this question about what happened last week is because i want to asyou the question about what

e market heard. and you guys, it looks like on average, on a median forecast, three rate cuts. somehow the market heard five or six. you said i don't know when this is going to happen. the market said for sure in how do you react to how the market reacted to what you all did last week? >> look, i like your phrase. it's not what you say or what the chair says. it's what did they hear and what do they want to hear? i was confused a bit with was the market just imputing here is what we want them to be saying? i thought there was seemed to be some confusion about how the fomc even works. we don't debate specific policies speculatively about the future. we voton that meeting and we voted at that meeting not to raise rates. we put out an sep that forast over next year that the individuals on the fomc

collectively thought conditions are going to not be a ression and inflation is going to be coming down, which would allow us to reduce the restrictiveness. and far be it for me to get into the head of what the market is. i think we would be best to remember the old volker lesson, our job is to act and their job is to react. if we get into one of these sickural, well, let's choose o action based on how they're going toeact, i think we're going to get mixed up. >> i know becky has a question, but did the market gtoo far? just a plain, simple questio is it too aggressive in your mind for what it's pring in, both how quickly it mes and how much comes? >> i don't know. what iill say is the market expectation of the number of rate cuts is greater than what

the sep projection is. so whether that's pred in or difference.in, that is a >> mr. president, let me take one more kind of crack at the same thing coming back through. we had john williams, the new york feral reserve president, bank president, on on friday. and thwrite-ups from what he has saidn "squawk box" friday, what you had said over the weekend, pple put it together and made it sound like you guys are kind of talking back, what the market interpreted from jay powell. ishat a fair assumption? were you surprised by the market's reaction and maybe you're trying to clarify the message a little bit to e markets? >> well, iasn't -- as i say, i'm not attempting to speak for anybody else, for the chair, for john williams. both of them i respect. i was surprised. at i was surprised that the

market reacted and tried to portray that there was some contradiction between what president williams and chair powell had said. in both cases, chair powell clarified that people were not talking -- we were not debating or voting on future rate increases at thameeting. and john williams was saying the same thing. that that's just how the fomc works. we debate the policy of that day. we gather more data, and when we come to march or january or come to whatever the months are, we do not want to precommit. in my opinion, precommitting meetings makes no sense in a ure transitionary environment where we're getting new data and what happens in that ta is going to drive our decision. >> mr. president, we were talking to noah blackstein, and

he actually brought up the taylor rule. i don't know how monetary policy ould work. it almost reminds mef the science of medicine, and i use the term science loosely. it's an art sometimes. i think that's what yodo. some people like rules based, but i was trying to figure o whether if purely a drop in inflation would cause the fed to cut rates even if the economy was still much strongethan most people had anticipated. because for some reason, i alwa think that maybe you're looking for, you know, we hear the fed wants nemploent to go up before it can relax. >> yes. >> if the jobs numbers hold up like they have, and if the consumer is stronger than people think, b inflation does come down, if the pce is out of wack with whe short term rates are, is thaenough reason to get three cuts or do you need to see coincident weakness in the

ecomy to follow through on that? >> that's an important subject matter. i think it depends on whether you think something is hapning on the supply side simultaneously. so, the ylor rule is based on looking back at the past. in the past, we have only ever gotten inflation down significantly coupled with a big recession. i have been saying that there's a possibility of this golden path, that we could get the inflation down without a big recession, and for 2023, we're going to at leashave made a lot of progress on that front. so you can't answer that question just speculatively/hypothetically. if we pt getting improvements on the supply side and we kept gettinthe increase in labor force participation that we have seen over the last six or eight months, then you could definitely still be getting strong jobs numbers, strong growth numbers, productivity growth othe type we saw as

well, if you were getting those things you wouldn't have to have the economy tanking to be confident that inflation was coming down. >> austan, what is the danger here, i was looking at a chart of 1974, inflation started to come down, the fed cuts rates, then inflation came back. how much concern do you have that you're kind of going into a bad monetary policy storical rhyme here? >> well, some concern, but i think the 1974, that same thing happened at the end of the volker episode. they began cutting and then they got nervous about inflation, they raised a little bit. there's no problem with that. as long as we're being data dependent, if we're getting external shocks that drive inflation back up or that make us feel like the economys overheating, i woulde prepared to takthat into account and keep adjusting the policy.

so our job as central bankers is to be paranoid about everything. be on the lookout for what could go wrong, and i will just always than this have been derailed by externalhocks. so we shouldn't pretend like all the external shocks are gone. >> i know that you don't want to speak for the committee, but i also know you're a thoughtful guy. it struck me that you guys have had two different phases here where the communicatns to the market was clear. in the pandemic, the communication was we'rat zero, we'll be at zero. inflation came along, communication was clear. you had to be raising rates and raising them strongly and there was nothing gog to get in the way of raising rates. communication around the soft landing is a little tougher? it's not quite as clear, and that you guys are going to have to figure out a different way to

communicate with what is really a anced message from the fed in a way that you haven't had to nuance in the past, say, three years? >> i haven't thought of it that way, but i see what you're saying about there's a certain subtlety to we're going to be data dependent, because then the market wants certainty, and they're like, we want to give you six hypotheticals. what if the employment rate goes to this, inflation rate goes to this, what will you do? in my view, it's a bad idea to start playing that hypothetical game because a lot of stuff happens as in joe's words, there's a lot of art to that rather than just rule based. it's not chatgpt is not going to replace the fomc that quickly because we got to take the whole picture into account, and there is a certain subtlety to that. i think that's a tougher communication message, yes.

>> all right, thanks for joining us. i hope we'll see you again soon. >> great to see you again. steve, thank you very much. and of course, great seeing austan goolsbee this morning. when we come back, robinhood chief legal officer dan gallagher will joins. we have lots to talk about, including what he's expecting from the s.e.c. in 2024. the agency's latest position on cr restoul and robinhood's overseas expansion. "squawk box" will be right back. 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...“invitingool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us. (♪♪)

welcome ck, everybody. our next guest is with us to talk about financial and especially crypto regulation next year. but we want to start on something s.e.c. chair gary gensler said last fray right here on cnbc on how artificial intelligence is starting to play a role in people's money. >> ai is already being used across fince, whether it's just in cost centers, complian, various ways you can process claims at insurance companies and the like. but it's ao being used in those robo advising apps and brokere apps you might know of. so what we have done is we did put out a proposal with the simple concept that you need to keep the investors' interest ahead of that of the investment adviser or broker dealer. and you can't have the algorithm putting the investment adviser or the broker dealer ahead of

the investor. >> joining us right now is dan gallagher, robinhood's chief legal compliance and corporate affairs officer. dan, that sounds pretty reasonable. why have robinhood and oers gotten so upset about this proposed rule if it'really just making sure the investo' interests come first? >> investors' interests come fit. >> greato beere withou bey. yeah. at a hdline lel it does sound kindf reasonable b the problem is when you readhe rule you finout it's -- it's anything b reasonable. it's, you know, a prosal that would athe end of the day prty much as cmissior purse said when she disisn't on the proposaprescribed certain tenologi that the governmentoesn't lik andi can anshould be a revolution inhe provision of finaial services to the retail investor. it can make things more efficient, cheaper, and from our perspective at robinhood, technology is what obvusly is in our dna. it's what's gotten us 23 million

customers. it's what allows us to provide commission-free serves to customers, so for the government to come in and say, geez, technology is this big awful thing and can hurt investors without even doing the research to determine what the us of ai have been, to come in and say we're going to prescribe these tech swiss, we just think it's silly. >> if the rule -- >> you'll hear from us. >> if the rule was rewritten to do exactly what gary gensler just said which is to say the algorithm can never put anyone's interests ahead of the investor's interest whether that's the financial advisor or the company pitching things works that be acceptable now. >> the rule that needs to be rewritten if there knees to be a rule. >> if it were rewritten simply saying that, would that be acceptable? just the idea that the investors' interests should come first seems like it's not all that cringeworthy. >> yeah, well, that is --that's the actual prevailing regulatory scheme right now, beck, so you don't even need a rule. >> algorithms can't be written

to say anything -- like the algorithm has to say that the investors' interests have to come first. >> the algorithms are subject to the existing rule set, regulation vi, fiduciary diet, the anti-fraud provisions and when the s.e.c. propose it had they cited all these cases that they have brought, know, appointing to the use of technology and misuse in some instances, so the existing rule set works this. thing is like a faculty lounge exercise. i mean, it really is quite silly, and, you know, i feel bad for the agency having propose it had. >> i would have to ask the chair i guess, but why do you think they came up with this rule? why did they explain it like that if the existing rule prevents in a? >> it's a catchy thing and the funny thing if you rewind the tape on the rules proposals it started out as something that called gamification that after the gamestop events that the gamification of trading causes

the gamestop flurry. >> let's go back to that because that is an issue. the gamification where there were algorithms written to kind of log you into wanting to do more and more of the betting on the stock market, the same kind of algorithms that get people interested in staying on facebook or ingram. can i see why that's a problem. you don't want to necessarily appeal to people worst basis instincts when they try to look you into a casino. that's not a great idea when you're talking about reaching out to investors and trying to get them into the gamification of the stock market which redid see when people were locked at home during -- during covid and were doing things like that and robinhood got accused of some of that stuff. >> absolutely and wrongfully accused, and i would say that if the technology is really doing something nefarious. if it's saying one thing and doing another, if it's trying to manipulate investor's minds, that would actually fly in the

face of existing rules right now so the notion that you need this, now there are going to be some market participants, not robinhood, but some of the other newer entrants who do deploy things and agency should be looking tat >> you think it's a bad idea in general, too, to try to lock people into this addictive sort of way of keeping them online? you know, like i said, social media things do this. casinos do this, online gambling sites do this. it probably shouldn't be okay at brokerages. >> well, if -- if, again, you're saying one thing and doing know, i understand that, but providing people the ability to easley go on an app and make an investment decision that's critically important and the fed released its latest study on retail investing and it came out a month ago and "the wall street journal" reported on it today, 58% of americans. >> i saw that. >> are investing. >> which is the heist we've ever seen up from 53% just back in 2019. i think it's a great thing to have people invested.

this is a survey that's only done every three years, and this is reflective what have happened in 2022. you think those numbers have come down at all because there were concerns that people kind of got out of the markets after the crash that came. obviously this year has been a great year, and i don't know what your numbers show. when we take this next survey that i guess will be done in 2025, do you think the numbers will go up or down from 58%? it's great to see americans investing. >> the greatest thing in the world. by the way, on a bipartisan basis for decades policy-makers, s.e.c. commissioners like myself and congresspeople, everyone has wanted an increase in retail participation. it's been dropping for decades, and now we have it. we have it in large part because of technology, and that's why i say this proposal is just silly. let's take the thing that's bringing retail, that's bringing americans back into the capital markets and let's prescribe it. let's make it so impossibly complicated to -- to adhere to the rule, you know, that firms will pull back, and it's -- just

this manny state idea that the government knows best, that these new retail investors, beck, that they can't fend for themselves, and that's what's going to force people out of the market. i think it's going to remain pretty constant. you know, the level of activity might go down a bit as we've seen over the last couple of years. >> less trading. >> yeah, but robinhood are boy and hold. >> better from a tax dagaagpeiv n llher, thank you. >> thanks for having me. >> "squawk box" will be right back.

final check now on the markets. as you can see, we're seeing some positive momentum. maybe we've got an eighth straight week of gains in store. the s&p up a little, up some of the best levels we've seen for the session, up about ten points. not a lot happening in treasuries. just a pretty good talk with austen golsby who admitted i don't know if it should be afraid that it's a seats of the pants more than an art or zeins or it should be rules-based. >> ever seen a set rules you didn't want to break?

mean, we break every day here. >> i try to just never do that. >> liar. >> as you know, and -- take a look at oil. quickly i have -- i have no idea what time it is. i have ten seconds it says here. >> nine. >> there's crude as you can see. >> seven. >> so i will -- how many now? >> three. >> five, looks like. i'll see you tomorrow. >> good-bye. >> we'll be together. >> we will. >> make sure you join us. quawk on the seet" is next. ♪ ♪ good monday morning. welcome to "squawk on the street." i'm david faber with jim cramer live at the new york stock exchange. carl has the morning off. let's take a look at futures as we get set for another week of trading at the new york stock exchange. we're set up for what appears to be a higher open. our road map this morning though beginsith the question, to merge or to