>> 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 unmerge, deamerican?

japan steel is buying u.s. steel but adobe is crack its figma deal but rail, oh, man. we'll goat that as well, and as for the markets seven eks and counting. futures are pointing to more gains at the open. you just saw, that and it's holiday crunch time. we're going to kauj the state of the consumer and impact of inflation. we'll be speaking to the ceo of costco. >> whoa. >> that's a special treat. let's start with m & n, the nippon steel deal, of course, a trans action that our viewers know i've been following here, but must say that nippon, jim, was not a name that i had mentioned at least. it was one that i had rarely heard and oftentimes sort in the abstract, they somewhat surprised got involved like many other company, and, of course, we had been informing our viewers for quite some time. a robust auction as i report throughout last week.

bids were certainly well into the 50s but $55 a share, all cash. it even gets up to an actual number of $14 billion in equity value that's pretty impressive. we've talked for years about how u.s. steel was really a tiny little company. >> right. >> not so much when it sells, and you have to give the board and management their due here. cleveland's cliff cain, said, we're not fled that number. we're going to try to maximize shareholder value, and maximize they d, didn't they? >> well, i've got to tell you, they sure d.i've got to than to them bus nippon is number one in japan, number four worldwide, but really it's not a real player here, so i think that bankrate might have said that given the fact that our antitrust organizations are very, very tough, let's find someone who has very little overlap. when i look at the overlap here, david, it's about as low as you can get, jim.

>> great point. nestically the overlap is very small. cleveland cliffs, steel is a global market. >> right. >> but there could be markets given tariffs and the like that you do need to look at the domestic-makers and what they of course, for example, to the automakers and the look at cleveland cliffs and automakers, this doesn't do that. >> right. >> there's no real cost synergies here and they are paying $25 with no real cost synergies, technology improvements, things of that nature. they are talking about what they will be able to do when it comes to producing a lot less carbon. >> i thought that was really interesting to make that case. >> but off the bat, it's paying $55 cash for, you know, without a clear line of sight to huge synergies. >> what do you do if your a composition from export destination, the most recent bees them, is only 4% north america, so if you're looking at the biggest market in the world and you're saying to yourself how do we get in?

can we start, can we build? new york the answer is we can just buy. now, david, 232, the defense ruling that we had under president trump did -- it was pretty hard on japan, but then they made an announcement of actions of japanese imports of steel february 7, 2022, which let them come in a little bit. >> right. >> but they still weren't really able to do what a big steel company would like to do. david, this is kind of monumental, and when it does say if i'm cleveland cliffs i wish this did not happen, because these guys have a good balance sheet. >> yeah. it's going to be tough. yeah, the unions, we may hear something from the united steel workers. >> right. >> prior to the open. for their part nippon is saying they, you know, committed to all the agreements that are in place. they do have their small operations, they do have two i believe two unionized plants at

least in the u.s. they are going to keep headquarters in pennsylvania. they are going to keep the u.s. steel name. you know, they are saying all the right things. >> they sure are. >> there are something thinking was there a cfius issue, but that seems unlikely. what does cleveland-cliffs do? do they need to go out and pie something else given that they were the ones who started all of this with an unsolicited offer? >> one thing we all have to recognize is the steel companies have all combined in this country, and the combined -- the company that combined them is cleveland-cliffs. yet, they still don't have a hammer lock on auto, but if they had a hammer lock on auto, then this deal would not be allowed. >> and you might get antitrust. >> i could argue that this deal is pro-competitive. brand-new company comes in, stirs things up, maybe even reduces prices, and the next thing you know you have what was a non-competitive try that's gotten competitive.

new corp moved into auto but auto has been a problem for the auto companies, and they always cite that as one of the reasons why they can't keep prices down. if i were jim farley from ford i would be out there saying this is the deal that we need. this is the dole that makes us more competitive versus say nissan. >> obviously they make an owe innous amount of steel for the auto market in japan. >> yes, definitely. >> and now clearly will in the u.s., the blast furnaces and the like. >> great deal. >> great deal for share holders who have been in here for any period of time who perhaps bought in when the company said it was putting itself up for sale and who listened to some of our reporting in terms of the robust nature of the argues that included cleveland-cliffs and a potential number of other bidders. nipon, however, had been quiet throughout and emerges with a bid that was well above my understanding is what was the cover bid.

>> were there other foreign companies involved, because cleveland-cliffs is looking up tremendously this morning? >> i believe there were, yes, but it's not completely clear how far along they were and/or how many bids were made. jim, i didn't ultimately -- a few people dropped out at the very end, made bids. >> you were right on this all along. this was an incredible important piece of business. >> new cord, still co, the argentine company and i had nippon written down, fascinating. >> just one last thing. >> yeah. >> what do you say if we're at the end of a fed tightening cycle, and the best valuations we've ever seen for steel with occurring and are completely counterintuitive and makes me wonder if the cyclical injuries aren't completely underpriced. >> that's a good point. they say they are paying 3.7 times last month's eastbound a.

that's what nippon is doing to saturday of pay to justify the very high pry. they say that steel deals have come in around that, but it's going far more than anyone else is willing to pay in all cash. >> thanks for keeping us up to date on something that's remarkably important. >> ends up being far above what was anticipated. here's win was discussing back in december of 2022 when adobe stock price got hammered when they initially announced the figma deal and over time they convinced shareholders as to why it was such a great strategic fit. >> sfwligt so now what do you tell them after they say we can't do the deal because u and uk regulators were simply not going to give us the approval to complete it? >> when they announced the cash for stock swap their stock was lower.

i think that's wrong. i think that's a really important piece. there an outside called canva that has something much less in price that adobe yes that adobe have very little answer to. it's entirely possible who they may have developed something competitive, something competitive. to the end they have insisted they must have this piece of business, so this is a radical comeuppance versus what i think he was not a competitive piece at all. block competition, if anything, this was a way to compete against canva. just incredible to me. >> do you think they have something when it comes to collaborative photop shop and that's the snuch. >> it is good to have kalobtive photoshop, and you could argue that figma would have been integrated in some or the of ai

fashion. last week during the quarter, in the quarterly comps he really chose not address this. this just happened. >> i know, i know. >> whyidn't they tell us though. >> that's what i want to know. that's exactly where i was going. >> a conversation hi with a couple of shareholders, why didn't they tell us last week if they knew they were going to terminate cooped have given us more information around it. given that it's the same vein, almina and grail. >>gloempt there you've got obviously also the european regulato saying no, no, no. which they said all along. it's just -- the story here, i mean, the timeline on allunmina grail is real unbelievable. january 2016 they spin it it off at a new company andetain 12% ownership and in stember of 2020 allumina buys it back for $7.1 and the eu and u.s. say

we're not sure about any of this anymore. complete the purchase in21 in august and now they say no thank you. >> i think they would rather have grail than their own mpany. their own company is in a dog fighagainst thermo-fisher and the only thing that would make them competitive is grail. grail is the one drop of blood at yields the answer to cancer. >> gives you all you need to know. >> sometimes it caget you very scared about sglings poem thought there were false posive. grail is such an exciting piece of business and they just screwed this u i think you could easily say we're on a permanent vacation. >> carl icahn tried to change that. the sa will be executed

through a third-party sale oar capital markets trans action. they finally throw in the towel after the european commission says you've got to divest this thg. >> can we talk about what all of this is meaning. >> yes. >> and take me to the market if you have broader takeaway. >> i think that the government has a view on things, both -- both u.s. and in europe, that's completely out of sync with what the vest bankers want. repeatedly i'm told that the lawyers refuse to really say wait a second, and the bankers say dot worry about it. this combination has emboldened ceos to make disions that in retrospect were pretty foolish, and -- and very time-wasting for them. >> oh, my god. >> i mean -- >> a value and time and everythinglse in alu myoina deal. >> that's why i say they had an adviser. >> i thinkhat's happening here

other than the verizon therapeutics and amg en deal there'si into would indicate that the regulators don't despise mergers? >> i know how you're thinking about it, particularly with the fec. >> you could argue that microsoft. >> let's keep an eye on albertson's, do you think that will be enough to get you an approval? >> the justice department said that a spin off order to justify a deal is automatically disqualified, and that's because a terrible deal that they authoriz with a long, long time ago with two other steel-makers. >> we've got even more m & a to get to. >> of course we had the safeway ceo. >> we've got this alterex deal, mason deal and then we'll talk

marks. >> all government and then first it's bills. i can't believe it. it's government versus business. >> it's a real positive tone to m & a right now. >> people say i'm going outguess it. >> all right. we've got to go. >> i'm not against that. >> we've got to go. late they are house, by the way, we'll have what is a relatively rarenterview. the costco ceo will join us. we'll talk to him about so mh.uc open of the stock market coming up in 16 minutes and we're up on the major stock averages. we're back after this. trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop

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i'm a little anxious, i'm a little excited. i'm gonna be emotional, she's gonna be emotional, but it's gonna be so worth it. i love that i can give back to one of our customers. i hope you enjoy these amazing gifts. oh my goodness. oh, you guys. i know you like wrestling, so we got you some vip tickets. you have made an impact. so have you. for you guys to be out here doing something like this, it restores a lot of faith in humanity.

let's get to the markets. we're in the midst of a seven-week win streak, and so i turn to you and say can we keep it up? >> well, this would be, of course, highly unusual, particularly because that last spurt was because we had an interpretation of what the fed was saying of what people would say have been walked back, but a lot of move has been about the ten-year. i was looking at the german ten-year bund this morning than was at 10%. i know that you're dealing with a currency that i don't really count on. >> right, and they did have negative rates for a really long time. >> right, at the same time world flows should be right here, and i think world flows do not care about issuance.

david, all of this is happening in the shadow that the government does have to refinance. during the run to five it was talked about but now we don't. we came up a list that was thought to demonstrate ten-year, but if the ten-year is going to keep going down in interest then we can keep playful. >> it's helpful. it's helpful for the u.s. budgets. >> again, these are not, when you look at the broad sweep of history, these are not abnormal rates, but the worry sohm part is given our deficits and the size of our overall debt and the refinancing needs even at this level, it represents a significant interest cost. >> we're ignoring it. >> and we're moving up substantially from where we are right now. >> this is where i would look at it. we are ignoring it for 2023, but in 2024 i think two things half.

one will be some profits will be taken because people were worried about people having to pay taxes in 2023, and then i think we'll be front and center with the issuance which is now going to start to dictate the real rates versus what we have right now which is an animal spirited thing. >> right. >> so i think animal spirits say right now for the next couple of weeks we look good. i am more and more concerned about january, because, man, we've got big capital gains and pele don't want to defer them and 58% of people are invested in stock. >> i saw there's a broader investments. a lot of younger people who sadly don't watch us, they are on their phones but they are involved and own individual nas. that's music to your years. >> i think thas coming back and why younger people, people who stop me in the street, older people presume the index fund and younger people, they be are involved with the inindivid and.

>> and the magnificent seven, as we saw a large amount of broadening, the theme last week was hey, look at the russell in part to your point because rates have moved lower and some of these companies that are burdened by higher interest rates, perhaps, are feeling better and the like that. got a real bid. arc innovation fund. >> yes. >> does that continue, or do we just go back to the magnificent? >> t crazy thing is, david, that you can get a rumor of a macy's bid, ay. you need a lot of debt for it. can you get the u.s. steel. you can see that companies want to merge at the top of aed cycle, and i don't understand that i don't understand how companies are so bullish about themselves and others when jay powell is

starting to worrabout the downside. >> it all seems to work. >> they have all been spinning off and doing the work for quite some time. some feel it's strategically the time. rates go down and make the financing costs lower and they don't seem that worried about a recession. but if powell is worried, shouldn't we be rried? >> what, me worry in. >> exactly. >> alfred e. nman. coming, a made dash from jim cramer and we'll count youown to the opening bell. we'll look at futures one more time. three timea look at futures there. th are. they a still up. more "squawk on the street" right after this.

right after this.

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rare interview with craig jelinek. >> is it rare? >> yes. >> i have one but i can't call. >> is it rare? >> it's very rare. medium ray, i don't know. >> he's coming on soon, and you'll want to hear what he has to say. the opening bell is just minutes away.

i'm going to be as surprised as our vwers when we get your mad dasher, jim, because during the break we talk very briefly about it. i don't even know what >> it's micron but that's a miocosm of a lot of different commentary this morning about the semis. micron, the reason i figured that, cowan is going from 78 to $100 and susquehanna $90 to $112. david, these kind of price targets are usually signs that

people think that there will be a boom. micron has had -- i like to be circumspect on micron because they are, but when you start seeing micron big pieces about amd doing very well. >> what's going on here? by the way, the stock has surged, as can you see, and it lend the year with an excellent perfornce despite the ups and downs and some brutal conference calls. >> oh, my. so i think that one of the things that's happening is that horrible, it's finally about to one, the inven industry down big, and then the other thing is people are saying ai will come to the p krvp believe that. you'll be able to speak to the pc and say can you please change my appointment microsoft a big winner on that, too. there's also a feeling that handsets will do better which is d given the fact that china is looking more restrictive on apple.

more government agenci saying work.e don't bring an apple to i look at it and say that maybe people are getting ahead of themselves. boy, people want you to open the semis. >> they are pushing them hard, huh? >> yeah. they are already up a lot. >> i know. you seem somewhat hesitant then. >> none of them are doing nvidia and they are selling 25 times earnings. nvidia, by t way, is underperformed. >> why not buy nvidia at 25 times given its market share and given its growth potential and given its dominance. >> i completely agree. now i think people are worried about china, but i had secretary gina raimondo in congress and said nvidia is doing what it sglant wants. >> there's a reluctant to pay the best performers. pat joe another one of the best performers of the year, and i coming back and why penalize something that's doing very well while it's now inexpensive with tremendous growth picks.

i like all the ones that are up there, all of them. >> right. >> all right. i picked up my papers here to make sure i know who is ringing the opening bell. it's valero. >> and i've had them on a number of times. >> over at the nasdaq we buy global. you like that company. >> well, thehave missed their quarr several times, okay, and i obviously don't like companies that miss their quarters. interesting i think at bowling sport that they are able to consolidate and it's not proven to be doing that. they cited weather in california which i found quizzical because it's an indoor sport. >> well, yeah. that's true. in fact, i would think bad

weather is good for bowling. >> that's how i view it had. one of those sort of gloomy winter days, let's go bowling. >> i felt that, too. that said, and the stock is down 15%, if you like rollups, this one is one you want to seize. >> okay. >> i think there are other names. >> we can move on. >> we don't want to spend too much time on that. >> we'll get started with trading here this morning of course, the futures, believe it or not, were pointing in an upward direction, and that's what we're getting as we're one minute into trading. let's talk about another deal. alterex. did you see this deal? there were some media reports on this but it's 48.25 about, a $4 billion trans action, jim. this is one of those companies, powers analytics for all with the award winning analytics cloud platform. enterprises can make intelligent decisions across their

organizations with automated ai-driven insights. >> that's actually true. >> how many companies do very or basically have an explanation of what they do that would read similarly? >> one thing i would say before we dismiss it, is that this is a product that a lot of people will say, look, if i'm doing some coding i can toggle back and forth without any pressure. it really speeds up the process that has been the hallmark of this company, and i think it's a fantastic company. >> yeah. >> fantastic. >> you can see not doing much in terms of premium there for the stock price right now because, again, a lot of this had been reported but it is another transaction we wanted to bring your way this morning. what else have you gone? >> my step-son works for insight and i don't talk to him about anything. >> you went from zoom to insight? >> he did. >> with the blessing, by the way, of his people. >> nice. >> and i think that this is a

really smart acquire which is the only reason i mentioned it. insight is recorded new york as being the most shrewd. they do not do a lot of deals. very, very exciting deal, and i wish people would understand that this shows you a very big path to how people do data, how people put together spreadsheets, david. some people feel it's at the end of a spreadsheet. >> maybe it is. it's a good deal. >> anything you want to hit because i've good couple more? >> sure. >> well, i think -- ng? >> i wanted to ask you about windham? >> okay. >> that's a very good company, and i -- steve holmes put this thing together and did a great job putting it together. a great guy and known him for a long time. could e board lose the company? >> i don't know. last week we h the ceo on. i talked to him at some length

about their fully hostile bid. going after thboard. they fired scott a own stock and they are doing an exchange offer. this morning we do to jim's point here from wyndham, and they say we're not intereste no thank you, don't tender. core issues we have articulated we main the same. this is a quotfrom the ceo, likely prolonged regulatory review period of up to 24 months with an uncertain outcome. the pure inadequacy of the offer from the valuation standpoint, includg the significant equity component of choicstock, and they go on and say a lack of wyndham's stand-alone got prospects, jim. i would also add when it comes the regulatory review, the ftc has also now contacted wyndham in terms of a preliminary investigation so last week i told you choichad

filed, they had said we've been contacted preliminarily about an investigation the ftc on the antitrust front and now wyndham is telling us that they have been doing tt. this plays io the argument that this will take a tough regulatory revw. >> i think the shareholders are probably in favor of wyndham because it's done quite a good job. david, this is a domestic change that bore the brunt covid, and it came through. it came through find. they have ne a very good job. this is e the things where the loyalty is in the as deep as i think. >> right. >> i don'tnow. i mean, they have to have some overlapping shareholder bases. not a lot of event-relat hedge funds, not a lot of risk ash teshs and the like in this. they jusdon't see a path perhaps as much as choice's ceo does, so you're reallyelying on overlapping shareholder bases to sort of -- you know, you need

something to bring the pressure on wyndham. >> right. >> y need someone. you need shareholders, and that's what remains to be seen i think. >> look, you can easley argue, wellwait a second, what have we done for me lately? this is back from may of 2021. it hasn't done anything. >> yeah. >> so, you know in, a world, david, where marriott has done stellar, of course, mayor jot a big international company, you can say, listen, why are the guys not doing nearly as well. they could have doubled what marriott has done and they are giving you an amazing return, but, geez, i just feel like -- if you look at may of '21, you' talki about43 rand it's down 220. why couldn'tt have done as well as yor lot. >> >> firm shares are down 5% this morning you've got a morgan stanley piece thatays taking a firm stand post-recent exuberant, and they do downgrade it to an underweight. we talk a lot about th

resurgence in this stock about being reflective to a certain extent of retail investors getting more exuberant as well. >> againstnstitutions that felt this company had to have real problems buying up ter as the fed kept raising short rates. >> and a lot of instors on these institutional fronts m have been short the okay. 22% short. >> i spoke a lot about the two worst days that the hedge funds have seen on the short side of their books in many years beuse of all of the stocks moving up dramatically. >> and upstart has a 43% short position. these arall, dare i say, many gapestops. mini memes. >> young investors who felt they mid a lot of money on a short posion and if the fed rates e peak you shouldn't be worry

about a firm which had very few loan losses, a much better company than upstart. those concerned about their balance sheet was wrong. it's very solid. i don't feel the same way about upstart but i do feel the same about short positions. you shouldn't be everybody short it so i should stay short. what were they hoping for,ates to go 6, maybe sw jamie din thought rates could go to 6. they call him dangers world dimon. >> downgraded from a hurricane, dangerous, tropical storm. looks like we've been having that. having a diamond storm in the new york area overnight. >> you know who is calm in the

storm? >> let's go to coast co-the company boosted the top and bottom line, and craig jelinek who is the outgoing ceo of costco joins us exclusively. thanks so much for coming on. >> well, thanks have fog me, jim and david and carl. thank you very much. >> well, craig, i want to talk about the zeist geist of costco before we get into the actual nitty-gritty. could you tell me how it's possible that you have the best benefits, the best wages for your employees and at the same time you are the most profitable retailer in the world. that seems a little counterintuitive, by the way, when you think of wall street. >> well, you know, that's been the culture of the company since day one, the first day that we opened up our first building, and -- and, you know, you're only as good as everybody around you. we don't want to turn a lot of employees. people deserve to have good wages and good benefits, and as

i said we're not a margin business. we want to sell a lot of stuff and that's what we do. i can't explain about everybody else. i can only say that it works for coas costco. that's the way we run our business and will always run our business. that's the way we'll always do it. >> one of the things the ceo told me you don't have to have new people all the time and training staff equates loss, isn't it true that the have the most long-standing employees and your new incoming ceo started as a forklift operator 40 years ago. >> whether it's attorneys and people that come from the outside in tech, but we've promoted from condition and created good jobs and great careers and that's one of the success. if you don't have a lot of turnover you don't do a lot of training. can we get better in the training that we do? we can. we can always improve, but as i

said this has always worked for us, and it will continue to work for us in terms of ron. ron has been with the company for 40-plus years. he's been in every position in the company. he's ran real estate. he's ran buying and he's ran operations. he's been president the last two years. he'll take the company further in the future. >> well, craig, one of the things that i've always enjoyed in your conference calls. they are run by -- i'm going call them brilliant and also incredibly funny. and i think one of the things that he does best is he makes you realize that if there's going to be deflation in this company, you guys want to be on the forefront of t.again, i know what your job is, to sell volume, but how are you able to have these low prices without losing money on everything you sell? >> well, we have to negotiate good deals. keep in mind the membership income is part of the equation,

but, you know, we can -- as you know, we don't have a lot of different great selection in our business. you won't find ten peanut butters. you might find two. our kirkland signature which has been a great brand for us is also a way of creating deflation in the marketplace and lower prices, and also it makes it a nice item for the -- difficult item for the suppliers also to have to compete against, so, you know, that's always worked for us, our own private label, and that's part of the trick in terms of having great prize and great sales. >> well -- >> it's not terribly complicated. >> something that is complicated you're offering a mickey minutele 1951 rookie card on sale for $250,000. you sold a babe ruth autograph card. you're selling gold. how do you come up with these things? is this something that's

intuitive, or do you use some sort of artificial intelligence because these are eye-catching things that you want to go to the store to see? >> i wouldn't go too far on artificial intelligence with us. we have creative buyers. yes, you can see we sold a lot of gold. good great buying group. we always want to make ourselves and separate ourselves and be a little different from everybody else. that's why y pay a membership and we always turn merchandise. we're always looking at something exciting that we can create a value for. at one time we had caskets. we sold all sorts of great crazy things and it seems to work for us. >> now, a $15 special dividend seems to be a good way, craig, to be able to cap your career as ceo. how do you make those decisions because shareholders absolutely love them? >> well, you know, we start on this is i think our fifth special dividend over the last 11 years, and, you kw, we do

well for the company. we're going to continue to reward our shareholders, reward our employees, and as you ca tell the stock has also appreciad relatively well over the last actually four years since we went public i think if i wa to say 1958 and 1986. so we've grown and compounded about 17%, 18% a year, so the stock has done well. we continue to generate a lot of ca. we don't do a lot with our cash other than open up more costcos and give it back to our shareholders, so that's the way we run theusiness, and it's the exhasn't we can reward our shareholders we'll ton do so. >> i'm glad you mentioned basically opening because the opening say ofhina, have you five stores in china. when you opened shanghai the empty at 11 so had you to close it andethink the whole game plan, but i need ask you. when you have the lowest cost

prices, isn't that the hallmark of being able to open in every single country in the world? >> well, what we found was that r model basically, everybody wants a value no matter what your economic level, is and we've been successful in every country that we've done business inand we feel that we will ton do so so to the extent that we can do business in other countries we will continue to grow our international business. >> well, that to me says that the shareholder which might have a big position that the owth path is far greater than if you were adjusted to domestic retrail. >> in my onion, yes, absolutely. there's lots of opportunities out there. you just have to be intelligent to how you go about it and d't overextend your management team. >> now, one ofhe things that i do, i'm going to go there before thanksging, we buy the pumpkin

pie. in the alone. you sold 2.9 million pumpkin pies in the three days leading up to thanksgiving. arthis signature dishes in other countries that do just as well as pump kip pies? >> our flan pie does very well mexico and in asia we do very well in certain types of fish in asia and do well on a lot of americ goods in asia, but, you know, and wegovy bf is huge. we've taken a lot of items and take them over here to the u.s. and done very well so being global company, true globa company, we take them back and forth and move them from country to country. >> craig, it's david. just curious aboutou.

you know, you're going to count the days now until you step down as ceo. i know you're saying in an advisory capacity until april, and when a you going to do, and when you look back on all of your years obviously on running costco and just being a part of it, what do you thk about? and i will be up again for board of directors for the following year in january, so if that goes well i'll stay on the board for a period of time also, and then, you know, the one thing i'm going do is try to spend a lot of te with my grand kids. that's the first thing i'm going to do, but other than that i don't ow. i'll play it by ear. i may look to get on se other boards. i want to say close to costco for a period of time. i've been doing it for 40 years and i'll dthat for a period of time and then i'll figure it out as i go. >> you've done a remarkable job,

craig. i want to thank u. as a shareholder my trust thanks you. you're in a long line including mr. senegal of amazing ceos who have done everybodin the world, every consumer, a great turn, so thank you very much, craig jelinek. >> thanks for having me and all my left. >> and to you. >> and to you. >> thank you. >> craig jelinek. >> costco is remarble, a300 billion maet cap if you're keeping track. let's keep you up on the bond market this morning and check out how treasuries are faring. yeah. we see that ten-year yield, of course, still below. not still, but is below 4%. 3.961. twos over 10. figure it out. do the math during the break. we'll be right back.

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again, a cyber intrusion, a cyberattack, this time it's vf corp. the actor disrupted the company's business operations encrypting some i.t. systems, stole data, including personal data. vf is experiencing certain operational disruptions. >> oh, man. bracken darrell came in there trying to do a great job. this is the last thing he needs. >> clorox this hurt badly. >> i have palo alto on tonight to deal with the fact that everybody has to comply after -- in four days, but this is horrible for this company. >> yeah. >> i think the turn was at hand very quickly. bracken is fantastic. >> incident has had and is reasonably likely to continue to have a material impact on the company's business operations until recovery efforts are completed. >> christmas is just -- well --

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piece. it's an upgrade to apple and salesforce. marc benioff must be just cackling because this piece is growth story.esforce is a value can you imagine where we've come. this is value. as people think. moving as much i'm astounded. >> do you agree? >> no. i thk it's a pure growth stock. wouldn't call it value. the activists got involved. 10,000 fewer people work there. but it's still accelerating and i just think that's a misnomer for this great company. it is,et's say, versus al lorix 's cheap. it got taken out. >> i can't believe allorix got a bid. such an expensive stock versus salesforce. if this thing is a value stock, then it has a lot further go. >> what do we have on "mad" tonight? >> palo alto. this hack, really right there,

no matter what, i want to see is there a price that you can spend where yoreot hacked, or where peopleay, u know what, that outt is covered by palo alto, let's find somebody that's not, you know. this is in a parkingot, which doors are open. >> take over your i.t. systems an encrypt them. >> dtroy you. you can't fulfill your can -- customers' orderers. >> crowdstrike will come in d thing i will say, is that i think everyone's vulnerable. even palo alto, but lo alto's people have a great record. >> look forward to hearing from nickish. >> yeah. >> i have a couple more. >> enjoy yourself. >> coming up bank stocks are on a tear this month. we'll ha a look at the playbook for thagroup. >> we'll plait back. >> keep it here.

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i'm sara eisen with david faber live for you as always from post nine of thie new yorktock exchange. take a look at stocks in the early action. a little bit higher, building on the seven street weeks of gains we have just come off of. the s&p up 0.3%. plenty of winners in today's session. energy is going to be ther because oil prices are higher. most secto are actually up besides energy, communication services, consum discretionary leading the charge. the only two lower right now information technology and real estate. take a look at treasuries. bonds have been a big part of the story and the giant rally we've had that was super charged the fed last week. a littleit firmer. goes the other way on the the 10-year yield still below 4%. obviously, very notable. the 2-year yield continues to move lower 4.4. 30 minutes into the trading session. three big movers we are watching. got to start with u.s. steel surging after japan's nippon steel said it would buy the

company at $55 per share. david has more color on that deal in a moment. shares of affirm under pressure as morgan stanley downgrades the stock to underweight from equal weight, saying its valuation is too tough. stock has been a winner this year. watch shares of vf corp as a cyberattack is disrupting its ability to fill orders. stock down 30%. hasn't been the best retail performer this year. but overall, david, just the setup, as we go into the last few weeks of the year, it's been a breathtaking rally. about 15% off the october lows. the dow reaching record close after record close. the treasury rally, 100 basis point move in less than 40 days of trading, lower yields. i mean, inflows into tlt, the bond etf that we watch. here's evercore isi quote on the markets this morning about how everybody is rethinking the narrative. markets shifted from asking can nothing go wrong to making a

statement, nothing can go wrong. eps disappoi, geopolitics, high inflation, slowing economy. all forgotten. which gives you a little sampling of the risks there. they took a look back at the period between the last hike and the first cut, which is what everybody is always looking at and say there's a defensive stocks rule the day. communication services, utilities and health care, typically the best performing groups during that time period. that's what everyone is trying to game out, that and david, how long that gap will be between last hike, first cut, from the fed. >> and typically it is how long? >> well, there's nothing typical about this situation, right, but the market now is pricing in odds that it will happen as soon as march. the market is now pricing in about 150 basis points cuts coming up. so it's faster than the fed itself is talking about, and we

continue to have like mini walk backs i would say of the extreme dovish reaction. >> talked about it on friday with williams and austan goolsbee was a guest on "squawk box" this morning, not sure if you heard anything there that sort of got your attention. >> he said there was no real disconnect between williams and powell. >> he says, there's nothing to see here is what he seemed to be indicating. why are you something of this. >> he spoke over the weekend and said there's work to be done on the inflation front. a good chart today would be a basic one, what's happened with inflation, cpi. that's what the fed is targeting and investors need to pay attention. i made a chart of headline cpi versus core cpi. this is one we should be checking every day anyway. here's what you've got. you've got the deceleration, especially in headline, that's the blue line, and oil prices a big part of the story, core if you take out food and energy, it's at 4%, which is still elevated above the 2% where the fed wants it. the risk has not gone away and i

think the fed has cover to say, look, we're, you know, we may be taking it slower and more cautious about the risks, but the market may be too ahead of itself on cuts. loretta messer said as much in the ft this weekend. markets are a little bit ahead she said. they jumped to the end part which is we're going to normalize quickly and i don't see that. the market has ignored it. >> totally. >> last week 3.88. >> it's hanging right in there. what do they see that fed is not telling them? >> that the fed, when it starts cutting, doesn't usually stop cutting. it's not making adjustments. it's bringing it down to neutral where it doesn't disrupt growth, and from there the market thinks the fed is going to cut further. the question is does that have anything on the recession along with it? will they be able to do that even? look, oil prices, i don't know if you guys were talking about this morning with the bp decision to stop shipments

through the suez canal because of the houthi rebels, in the red sea, on top of almost every major shipping company stopping shipments, hard to tell how prolonged this will be. the instinct the shippers will see higher rates, longer delays, supply chain issues, not what we need at this stage again. it's a risk i wanted to point out while we're talking about inflation. >> yeah. and that is a reversal from what we've been seeing recently in oil which not long ago was below 70 and has been down sharply over the last let's call it few months. >> yeah. the ceo will be joining us to talk about that. >> flexport. >> yeah. >> home builder sentiment came out as well. rising 3 points. 37n december. the national association of home builders monthly index just out. street wasooking for a read of 36. confidence had fallen in

november to the lowest since december 2022. we know why confidence is rising again. mortgage rates are down, lower interest rates helping sew the conditions for more activity builders who have struggled to attract buyers because othe muidecade highs for mortgage rates. they're feeling a little better. thanks to those lower rates. >> although nobody wants to sell their home if they have a great mortgage a most do. waiting for people who are having a change in life, where it's not a lot of maet. >> no, but if they were on the sidelines wanting to buy and they didn't already lock in eir low mortgage like you did at 1% -- >> wasn't that. >> without a doubt. r under %. >> the journal writing the are buyers, no sellers. you have to make a market. >> yeah. no floodgates opening but more activity. >> maybe. speaking of activity, we've got a decent amount when it comes to m&a this morning. start with u.s. steel, a company

we've been following here for me time, given they put itself up for sale in late august or so, and it received an unsolicited bid from cleveland cliffs. the deal i think surprised a lot of people in terms of the price and perhapthe buyer. japan's nippon steel, and the price tag is $55 a share in cash. you can see, of course, the stock is up dramatically and this is off of what it already had been an elevated stock price with the expectation being you would get a significant price here. we reported last week that there we a number of bids well into th40s, but frankly, 55 i d't believe many anticipated the price would get that high. they are japan's largest steel maker. there's no real synergies in costs to speak of here, so, you know, there may somebody technology improvementover time that can be made on both sides. they wl honor all the

agreements they say between u.s. steel, and its unions. more on that in just a minute. they will keep the headqrters in pittsburgh. retain the name as well. but again, it really is the price tag there, even with the lack of synergies. now nippon steel, and its advisors will tell you we're on paying 7.3 times trailing 12 months ebitda, which is in steel industry that have been acquired, but it is gher than many anticipated and far higher than evethe cover bid for this deal that i'm aware of. now, back to thenions, because there was a question and initially we saw ithe press release, they have two unionized plants nippon do and a small presence in the u.s. seem to be impact because they have no significant share here unlike cleveland cliffs and u.s. steel which did represent a potential antitrust challenge, but there may be a challenge when it comes to the unions.

we got this, sara, pss release. the usw, the u.s. steel works, does not believe that nippon understand the full breadth of the ligations of all of our agreements and do not know whether it has the capacity to live up to our existing contract. that one part of a press release that went out a shortime ago in which they, the headline is, they slammed nippon plan to acquire u.s. steel. alof this could be an opportunity for negotiation, for example, but it did take the stock price down ever so slightly. >> also, cleveland cliffs just issued a statent, they were the -- on the losing end of this. >> they were. >> but they say that, you know, they first -- they identified u.s. steel as an under valued company, congratulating them on the al,saying even though they decided to go ia different direction with a foreign buyer, the me, they say, validates their view that sector remains under valued by e broader market. >> cleveland cliffs is benefitting right now from the

fact that they didn't end up buying it. and so the stock may have -- as a component of it perhaps there was some pressure that might have been applied there. the question continues to be as well, will they go out and look for another asset because clearly under their aggressive ceo they've been looking to acquire. we'll do rail later moving in the other direction wi the sale or disposition of illumina. >> that's en a saga. >> what a saganot a good one for the management of illumina. >> cost the ceo his job. >> cost the ceo his job. >> by the way, i love lorenzo, the only one that puts out statements like this, we believe our shares are significantly undervalued he said. >> the ceo of cleveland cliffs. >> major averages off of seven weeks of gains as we mentioned. the s&p less than 2% away from its all-time high. julian emanuel has a price target of 4750 and joins us at

post nine. you expect the market to do nothing between now and end of 2024? >> the market will do plenty between now and 2024. >> your target. >> that's true. from our point of view you think about it, it has been an amazing year in the last month and a half. no question about that. and look, what we see is, again, and you mentioned this, you know, the statement now, nothing can go wrong, and so the way we think the market is priced is that whether it's inflation running slightly too hot, the economy running slightly too cold, or earnings, frankly, prior to the last couple weeks, there's always been this knowledge that earnings system were likely going to come down, and too high for 2024, and that makes sense. but there is now a belief that that may not be the case. we think things are very, very fully priced here, and the disappointment is, is that something doesn't go less than perfectly, and you get a typical selloff.

frankly the typical selloff in an average nonrecession year is 13%. >> i love the statement which is why i quoted it this morning. i love the research you looked at between hikes and cuts to show which sectors clearly outperform. is that the playbook? >> yeah. that is the playbook. you have to think about it a little bit differently because, well, we all know the cycle has been incredibly different in the first place. do what maybe have been skeptical of communication services being defense now. in fact, there are several elements to a sector like that that has the more traditional rate sensitive, sort of telecom aspect to it, but also think about this year. that's an area of the market that even if we go into a recession and evercore is calling for a mild recession, is that you're still going to get ad spend because of the election and because of the olympics. so very positive there. >> what if i say forget your defensive names. i want to own the magnificent

seven because they go up every year and 2024 will be no different than most of the years we look at. >> look, again, going back prior to the financial crisis, you cannot fault that logic. the only year where you could fault that logic was 2022, and part of what our concern about the consensus being so dug in right now, is that at the end of 2021, it was that mindset, growth stocks. obviously, that didn't work. from our point of view what you're likely to see given the fact that you've had a concentration of return in those names is a pause. generative ai has driven a lot of these names. long-term the earnings growth trajectory looks fantastic. but we think this is actually a time where the companies that are actually deploying generative ai are going to benefit as opposed to the companies that enable it. >> so your advice would not be to buy an index fund for next

year if you don't think the s&p will go anywhere. >> it would not. we've had this conversation a number of times in the past, is that one thing you don't want to do and if you think about the last two years, people have done this very, very frequently, is give in to your emotions, the emotions are very strong right now, very bullish. this is the time to sit back and we're right about expecting between a 10 to 15% pullback, you have to see yourself as a buyer there. the answer is if you can't see yourself as a buyer, then that kind of pullback, you know, you either lighten up a little bit of cash, but then ultimately, skew towards defensive because that's going to outperform in both sides of what we expect to be the cycle. >> will bonds protect you? >> to a certain extent. the difference being that if you get an ecomic slowdown, you're not likely to get e yields to fall as much because we have come through and we're in a

secularly different environment where the fed is doing quantitative tightening and international appetite -- >> the 10-year now close to 4, am i really a year from now going to feel bad about that? >> no. you will clip the coupon and just buying -- >> probably not -- >> maybe betr. >> probably not, yeah. >> julian, thank you. good to kick off the hour with you. we head to break here's o road map for the hour. financials just a breath away from hittingew 52-week highs. we've got aplaybook for the big fwhoonks -- banks in 2024. >> the crypto rrency are joining forces. andresen horowitz some of those names. what they're planning to do. >> china sounding an optimistic tone about the economy next year and accerating its iphone ban. live to beijing. "squawk on the street" will be back as more sectors tn green. only information technology in the red right now.

welcome back to "squawk on the street." check out that recent rally in financials. you can see it thereight at the end of the chart really. it's one of the best performing sectors over the last month. just a bit away fr what would be a new 52-week high. joining us with her 2024 outlook for the banks is erica najarian. erica, can they continuehis bit of momentum they've suddenly established here towards the end of the year as they move in to and deeper into 2024?

>> i think they can continue their rally into the end of the year, but i think it's going to be a pretty dry january for the stocks to be honest. so, the market got really excited. we hit peak rates and now pricing in 150 basis points of rate cuts, but what the market seems to be forgetting, is that, number one, these banks are actually largely asset sensitive, which means that it's positive for earnings when rates go up, and so they're -- when rates go down the opposite is true. in january as we get outlook from the bank management teams themselves that include the forward curve, i think you can see consensus estimates move down and throw a little bit of cold water into this rally. >> and given that, and we should point out all the banks, big banks, other than jpmorgan are down slightly so far in trading this morning, given that, what are your sort of names that you think are going to be able to perform well, despite it? >> yeah.

so despite it is exactly the phrase that we need to think about, and that's where wells comes in to mind, right. wells fargo has things going on for it other than just dependency on macro. the story, the earnings story there, is not dependent on, you know, how many cuts the fed has in store or what kind of loan growth that we have. i think that a lot of what they're doing is continuing to remediate the regulatory issues, as well as investing back into their business and their revenue growth is a little bit better than peers and their fee generation is somewhat in line with peers. so we really like wells fargo because it does have a self-help component story and we like the franchise underneath the surface. >> are they ever going to get the green light from the fed to >> sara, i know as much as you, soyou know, it's been a guessing game. i think the last time -- i mean, when they got the asset cap the philadelphia eagles won the super bowl, rit.

it will be interesting if we get know, the fed, but to be quite u fran since it's an election year, i'm not sure if 2024 is the yearbut what i like is that we're seeing continued progress at wells. it's hard for us to guess in the stock that asset capeing lifted, t i do like the progress we're seeinthere. >> on regionals, doesn't seem like you're convinced. we have mostly neutrals on the regional banks aer a tough year and a big comeback in the last few weeks. why? >>, so i think there are a few headwinds for the regional banks still. they're much more dependent on interest income than the money centers. not only do you have to think about the impact of rate cuts, but you ve to think about loan growth as well. we think loan growth is going to be weak. even if we get a mh better economy, a soft nding, a goldilocks next year, banks are no longer a perfect transmission mechanism for economic growth,

given how much the nonbanks have taken in terms of market share and keep in mi we have regulatory, you ow, headwinds that are, you know, an overhang for that kind of growth. that being said, where i could be absolutely wrong in terms of, you know, staying on the sidenes of regional banks, is it's a mket and especially with the banks start pricing in election resul that would favor republican win in november, because i think that the one thing that could really light a firender the regional bank stocks is a republican victim in vember. >> why? >> because i think what you're gointo start pricing in is two things -- one, the prosals for stricter capital rules could be delayed significantly or even softened by a reissue of the proposal, and second, the hope that consolidation comes back significantly. >> all right. erica, thank you. appreciate your time. >> thank you. >> bitcoin has been soaring this

year up 140% and now some of the biggest players in the space are joining forces to make crypto's big issue heading into the elections next year. 'll tell you who is involved and what's at stake, next. all right, shea, are you throwing a dress like a dad party, a birthday brunch, or a vow newal for your dogs? yes! the right drinks delivered for any party. drizly.

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a group of super pacs backed by crypto executives and investors are aiming to be key influences during the pivotal election cycle. our kate rooney has the details. minus a big investor that they've had in the past, sam bankman-fried. >> exactly. elephant in the room here. sam bankman-fried is missing from this. political action committees, bank rolled by the crypto industry are kicking off the new year with a 78 million, that includes three super pacs fairshake, seen donations from 20 wealthy players in the space since launching this year. that includes coinbase ceo brian armstrong plengds more than $1, andreessen horowitz, which has its own multibillion fund among others, fred wilson of union square ventures. part of that is to fill the void

left by bankman-fried, sam bankman-fried, one of the faces of the industry in washington, who was convicted of fraud earlier this year. the pacs will use the cash to support pro-crypto candidates running for senate and the house and unclear who they will be supporting. the industry lost an alley in patrick mchenry who won't be seeking re-election. they say it's bipartisan. crypto executives have been clamoring for new rules. the technology needs updated guardrails different from the ones that govern traditional markets. sec, though, at least they say otherwise. on friday the agency denied a petition from coinbase that asked the s.e.c. to right new rules, gary gensler the chairman of the sec has said that existing laws apply to crypto and dot need to be updated. back to you. >> on the show last week. thank you. china's stock market on pass paste for losses this year following fears about the economy. ofalcis sounding optimistic. 'll head to shanghai for the details.

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i'm pippa stevens with your cnbc news update. the defense secretary and cia director are meeting today with israeli officials about the war in gaza. william burns is in talks to push for another humanitarian pause in the israel haums war and rescuing more hostages. lloyd austin is meeting with benjamin netanyahu and the israeli war cabinet. he said he plans to reiterate the need to protect civilians from harm during the war. a landmark ring came out the vatican today. pope francis has formally allowed priests to bless same-s couples. however, the blessings do t represent marriage and cannot be a part of regular church rituals or liturgies. the vatican says the policy change is a sign god welcomes

all. supreme court justice sandra day o'connor is lying in repose today in the court'sreat hall. o'connor, the first woman to serve on the high court, died earlier this month at the age of 93. tomorrow in a ceremony that will include a eulogy from president biden. back to you. >> thank you. chinese ate officials saying they expect their countrs economy to see more favorable conditionsnd opportunities in the new year. eunice yoon is live today from shanghai with more. how should we read these comments? >> well, sara, this new information isnteresting. it's been emerging after about the outcome leadership meeting that took place last week that focused on the economy for 2024. now, state news agency xinhua has quoted saying a shift from a sustained consumption growth to a post-pandemic recovery, the

real estate market stabilization will be achieved and bond issuances, interest rate cuts, free cuts as well as other policies would continue next year. now what they didn't say could be more interesting for investors. they didn't indicate any siificant stimulus. there was major policy change to address some of the major structural iues that china is facing, and no reform agenda. in addition to that, there wasn't a whole lot of information to really restore the confidence in the fall off and, in fact, what people have described here as a collapse of private sector investment. another point that people have been talking about who, of course, are t in the government is the fact that to skip the first part of this d conference breaking norms. that has raised a lot of concerns that president xi himself either isn't that concerned about the economy or isn't necessarily prioritizing

it. this comes as a backdrop where the communist party was supposed to hold a major meeting on economic reforms this year, right around now, but it looks as though, at least for now, they have decided to skip that. now separate to that, one of the focuses that the government may have is on rooting out some u.s. technology from its midst. there have been increasing reports that government agencies as well as state-owned firms now expanding to eight provinces at le least, have decided they are hoping and instructing their employees not to use foreign branded devices including iphones. guys? >> yeah. it didn't cheer up the chinese market overnight did they set out a growth target for 2024 and is china going to make its 5% growth target for 2023? >> reporter: well, the government says that they're going to hit their growth target

of 5% for 2023. no word on what a growth target would be for 2024. i think that's what was so interesting about the congress party plenum, the conference people were expecting, normally focuses on economic reform, but there's been a lot of speculation as to why they haven't been holding it. is it because they're not interested in it? they don't know what the policy should be? but because there hasn't been a whole lot of transparency and looks as if president xi is focused elsewhere, on geopolitics, there's a lot of concern about the direction of where china is headed. >> eunice, thank y. our next guest thinks the fed is more likely to cut rates in may rather than march because improvements in inflation are likely to slow with ronger consumer demand. chief economt dine swan joins us now. tell me what you're expecting about the consumer ande more

specific, perhaps, about what is going to push the interest rate cuts further out than the market thinks right now? >> well, we've always had them further out that the market thinks, and i think the fed is willing to experiment with growth but they didn't commit to a march cut. what's important is that we are going to see continued strength in csumer spending, particularly in the service sector. that is the strength in the consumer that we've seen already, has been remarkable. it has beeresilient. and they are hedgemore than the rest of the economy from rate hikes because of the fact that they're locked into those long mortgage loans or paid them off entirely. we've seen oer baby boomers actually be able to spend a lot more than they have in the past because they're earng interest on savings accounts they have. you have a l of things that keep the consumer from collapsing, and that's good news in that the fed is lookingor this ever so soft landing, if landing at all. they would settle for the plane

sort of going down to a lower cruise speed and not landing. if that was enough to bring down inflation. i do think we are going to see enough consumer strength that inflation does come down next year but not as rapidly as it hathis year. that said, stranger things have happened >> yeah they have. you know, back to fed powell, fed chair powell, and his comments last week, which you term 1 degree shift from the apoach that fed had previously specifically to that 34-second speech he gave at jackson hole in 2022. what is he seeing that has dramatically?approach so >> well, really, in august of 2022, there was a -- they were convinced, the fed was and fed chair powell was and i was hot inflation that we had, you needed a recession in order to derail it and as appalling as that tradeoff was, it was better than a tradeoff of having a more

persistent inflation that got embedded into the u.s. economy. now, they've realized they've been able to see ilation come down much more rapidly than they expected and it's not been as sticky as they thought it would be, and that has shifted them to be able to experiment with growth. this is not the first time that we've seen the federal reserve exriment. we've seen the federal reserve experiment repeatedly during the greenspan years with growth. in 1994 fed chairman greenspan had a checklist, thought he knew it, started raising rates to preempt what was a nonexistent inflation and then had to turn around and cut in 1995. we also saw under chair yellen thpush for a high pressure economy. let the unemployment ratfall with inflation so low. i think that's what we saw again with powell in 2019 when they reversed and cut rates. this is a d that does tend to favor, iit can, growth over higher unemployment rate, given thathe acceleration in

inflation we've seen. >> with the stickier services inflation, diane, you exct the first cut to come later than the market. do you expect many cuts of the market? the market is up 150 now by the end of 2 2024 ich is double where the fed's dot plot is. it's more than we have, we have 1% cut over the course of the year. one of the things that was clear is that the fed thinks it's ne in rate hikes, left the door ev cracked open for an additional rate hike, but not very far by the change in their language on the statemen the other important issue is they funmentally believe that dissent on rates will -- decent as rapid as the ascent. there's a sense that marke wants to go back to 2010. that's not t norm. that was the anomaly. that side of it, the economy has proven it can handle higher rates without collapsing. that does suggest we might be going wards a higher

nonflationary rate going forward. i think that's something the markets have not fully digested. also we're talking about a world economy that is much more susceptible to supply talks than we've seen in the past. even passes through the suez nal or panama canal getting disrupted from climate to conflict. those are important things to remember the wor we love we push through the proverbial looking glass to the mror image of the world we were in, unlike through that looking glass we don't get to wake up at the end of the fairytale wh our cats in the lap and ba in the study of our home. >> diane, thank you. thanks for taking us to alice in wonderland as well. >> that was good. good metaphor. oil giant bp as diane referenced joining shipping companies suspending travel in the red sea following attacks by the houthi militants. we'll speak with the ceo of

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shipping giants avoiding the red sea as iranian backed militants increased attacks to show their support for hamas fighting in israel and gaza with 14 vessels attacked. our next guest posting on the x platform he has 2,000 shipping containers impacted by the halts and the attacks adding to global shipping state of uncertainty. flexport ceo ryan persen joins us now. so, ryan, you're the software supply chain logistics guy. explain where you fit in and how you're affected by all this. >> flexport has freight built around modern software and help businesses move cargo by ocean

freight, one of the top ten by volume in the world. again helping companies place orders to their factories and get containers delivered on a ship or a plane, so we have thousands of containers right now in the region of the red sea that were meant to transit the red sea in the next couple days that are either being rerouted around the southern cape or just sitting around waiting. >> how much delay does that add? i read somewhere if it goes around the cape of good hope in africa it adds another up to three weeks? >> yeah. it takes about 20% longer. maybe more like two weeks. but here's the thing, a lot of it is about replanning all the containers. for example, on one of these m -- the ships that was hit by the missile is an msc shipping company, a swiss ocean carrier, largest in the world, and flexport, we had -- that ship was scheduled to pick up four containers for flexport in spain and take them to morocco next

year next week. that ship will not be able to take the containers and they have to replan everything in the network and imagine the delays that happen because, right, the ship is not in the right place or the coniner is not in the right place at the right time. >> so how does this get dealt with besides rerouting ships? can't the u.s. government and other foreign governments get more involved to protect the routes? >> yaep. the u.s. navy announced, we'll see more updates from them today, to find out what they intend to do or what the strategy is. we may not know right away. they are sending a carrier group to the red sea, to the gulf of aden to that region. huge amounts of military resources. how they deal with it is a little bit unclear, but remember, that is sort of the founding mission of the u.s. navy back to fighting the pirates off libya in 1798, was to keep -- to allow for free trade and freedom of navigation. i do think we're going to see

the navy step in, but how to deal with this is difficult because it's terrorist attacks and hard to target the source of the missile. >> we may be able to target it. it's a question if we want to launch our own missiles and attack yem, right, the houthi base there snooigs i'm not an expert on that but i'veguess. >> i've seen the u.s. navyire missiles at a lot of people over the last decade, so it wouldn't surprise me. >> you are an pert on moving stuff from one place to anotr. so, what are your expectations from the longer term ramifications of this? how ng it may continue. i know that's difficult to predict given the current circumstances. >> can't s anything about how long it's going to continue. we'll find out. so far nine of the ten largest mission carriers in the wod representing about 85% of container capacity have rerouted thr ships or paused, but i thinmost of them have just fully committed to rerouting and going around the cape of good hope. so, that is out a 20% decrease in the supply of shipping on

that trade lane. on any -- and 30% of all ships go through the suez. 6% reduction in the capacity of container shipping, plus all the planning that i was just alluding to. that's going to be a huge imct in cost because -- and then ultimately for the shippers, of years is a small decrea in e capacity, 6%. maybe that's kind of small, maybe large, i don't know. a 6% decrease in capacity could lead to a price increase for shippers for the companies that need to move cargo of two to three, even 4x. we'll see where the price shakes out in january but i think you'll see much more expensive shipping freight for t next month or two, at least. >> i was going to ask about the inflationary impact. we were just coming off the supply chain issues that were causing prices for freight and shipping to go up. now we're coming from a re deflationary environment, right, this changes that? >> the price of shipping from

asia to europe has been very, veryheap for the last -- really for the betteback part of this year. you might see early inclinations of rate increases of 3x from asia to europe lane at a low rate. we're talking about still probably one-third or less of what it was at peak a couple of years ago. the industry has proved adaptable and we couldet back to trying to grow our businesses. >> appreciate you talking to us and sharing yo perspective on what you're seeing. pleaseeep in touch as the situation evolves. ryan peterson, the ceo of flexpo. on that note, we've got another programming note for you. we'll continue this shoem, the ceo of maersk will be joining "money movers." another company affected by this and chosen not to go through the red sea route. >> 6% is not insignificant, as

you heard mr. petersen say, but depending how long it continues or if there's a response from u.s. navy. we spoke to him here at cnbc a number of times, including back in august of 2020. that is when we were having a conversation about the near-term prospects for this ev trucking and hydrogen company. take a listen. >> the next four months are going to be the greatest four months in nikola's history, hands down. that's what's exciting -- >> i'm keeping that tape and i'm going to play it back to you next time if you don't deliver. just so you know -- >> if i don't, you guys -- i'm okay with that. if i don't eat the hell out of me all over the -- >> i will just beat you silly. >> yeah. >> iwill be a tag team. >> got a little jocular there.

heas quite a promoter. >> you were skepcal. >> we were skeptical because he was just such a promoter. so aggressive about it nikola, by the way, still exists. let's get to phil lebeau and bring us up to date on mr. milton and where things stand for the company itself. >> oh, it's a far different company now than what trevor milton was promising back in 2020. shortly after that interview, david, remember, he arranged to have a relationship with general motors. and he was on our air with mary barra. they were going to be working together. and then hindeerg research came out and said, you know what, not sure a lot of these aims are really true. that was the beginning of the end for trevor milton. so, here are the crimes heas convicted of. wire fraud and securities fraud, twcounts of wire fraud, one count ofecurities fraud. basically prosecutors say he's accused of misleading vestors. his attorneys say that's not true. they deny those charges. nonetheless, t prosecutors are

seeking 11 years in prison by the way, the hearing, the sentenci hearing, that's beginning momentarily in new york. nikola's false claims were exposed in 2020, shortly after that interview, and that's when hindenberg research put out their report. there was the video hindenberg research said this truck that appears to be on its own, powering itself, that'actually on a hill in utah. that's what hindenberg rearch said. that was the beginning of people saying, wait a second, what's really going on here? is there a hydrogen-powered system behind this truck? nikola settled itself with the s.e.c. for $125 llion. going back to its ipo in june of 2020, look at how things have changed dramatically. at one point, guys, this stock was worth $30 billion. and there were a lot of people saying, wow, maybe they -- they are the future. evs are e future. they were going to have the badger electric pickup truck.

that turned out not to be the case. we'll find out what the judge sentences trevor milton to. by the way, his attorneys are asking for probation. remember, he lost an arbitration hearing two months ago in october. he lost an arbitration hearing where he has to pay back $165 million to nikola. so far that payment has not been made. >> he did have very significant wealth for a period of time there, including properties in, i believe it was utah. what about the technology underlying it though? where are we in terms of hydrogen powered trucks and so many difrent things nikola and for a riod of time their gm were trying to help make happen? >> forget about the ev part. that was -- the badger pickup truck, that's gone. that disappeared very quickly. if there is a value within nikola, it's the fact they are building hydrogen fuel-cell class a trucks. now, they've had some problems

getting that production up and sustaining that production, but many believe that is the value within nikola. again, it has a long ways to go but not evs and pickup trucks. >> phil, thank you. ph lebeau. we'll keep you apprised on that sentcing when it actually occurs for m milton. we have a lot more live market coverage for you straight ahead. don't go anywhere.

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good monday morning. i'm sara eisen with david faber. welcome to "money movers." ahead this hour, stocks on a seven-week streak but a warning in technicals weighting? our next guest says the burden of proof falls to the bears. jeff de graaf is coming up. the ceo of pg&e will be here at post 9 on the recovery of her business, her controversial plan to put california's power lines underground. call it pretzel logic. a resilient consumer stayed snacking durg the height o