reaction straight ahead. it's wednesday, december 20th, 2023, and "squawk box" begins right now. ♪ good morning, everybody, and welcome to "squawk box" right here on cnbc. i'm live from the nasdaq stockmarket in times square. i'm becky quick along with joe kernen and andrew ross sorkin who are in parts all overer the place. guys, it is good to have everybody back together. >> kind of back. i mean it's good, but it's kind of back. >> at least we're here on screen. we're all on screen. >> spanning the globe. >> we are. >> not all of it. >> tri-state area. >> anyway, it's good to be here and have everybody on screen together. we're watching the u.s. equities futures this morning. after another day of gains for the market, and the dow for nine

sessions in the a row, you're sg more. this morning the dow's indicated off by just under 30 points. s&p futures are indicated down by 9d. the nasdaq down by 50 points. let's take a look at treasury yields. right now it looks like the 10-year is yielding 3.89. the 2-year is at 2.38%. andrew? >> let's get straight to the story joe was talking about at the top, to the court decision that may shake up the 2024 presidential election if it hasn't already. colorado supreme court ruling that former president trump's candidacy in the state's pry may next year, prohibited under the provision of the 14th amendment which prohilbits officers involved in inrrection. it overturned the lower court's

ruling finding the president is an officer of the country that elected him and barred him from being named to the colorado primary ballot. the court put its action on hold until january 4th to allow for further appeals. a spokesperson for the trump campaign bashing the ruling and signaling that an appeal to the u.s. supreme court was forthcoming. republican presidential hopefuls weighing in on that decision. vivek ramaswamy pledging to withdraw his name from the colorado ballot itself unless trump's name is restored. let's show you reaction from nikki haley and chris christie from separate campaign events last night. >> i don't think donald trump need os to be president. i think i need to be president. i think that'sood for the country. but i will beat him fair and square. we don't need to have judges maki these decisions. we need voters toic matthys decisions. >> i do not believe donald trump should be prevented from being presidenof the united states by any court. i think he should be prevented

from bng president of the unit states by voters in the country. meantime ron desantis said the u.s. supreme court should reverse that decision. others said every american should be troubled and says it deprives the merge people of their right to choose. so a lot of debate happening. also i think i saw the gop -- one the official gop accounts comi out and saying effectively they're trying to take the entire g somehow off the ballot in colorado and everyone would be put on indep independently? i didn't understand what they were suggesting, but, of course, raising all sorts of big issues. then, of course t question is do her states follow, what do other supreme courts do, et cetera, et cetera. >> all four judges were appointed by a democratic governor. i don't know if there is a debate. i haven't seen a single democrat

say it's a great decision and we applaud it. >> i think it's ear the supreme court will take this up and they'll be forced to pretty quickly. hopefully that happens. it was a courtf seven judges and ey said, look, this is a situation wherdue process wasn't given precence on this and it should. happen. i thinthe supreme court is going to take this up prty quick. >> no doubt. >> it's very interesting -- go ahead. >> the supreme court's taking. some other cases about whether someone that has the power to the presidency even has to deal -- it's very bizarre. and then you're going to hear, i guarantee you, even though you're not hearing a lot of people say this is great, this probably like any othewhat looks to be a negativehing for donald trump turns out that his numbers go up, you certainly have heard it postulated that

you probably should. have one presidential candidate able to use the power of the presidency to hurt his rival. this loo like it just starts, you know, feeling like that ain. i don't know how it's emboldened his supporters. i don't think it's going to go very far but there's probably to other states that are doing it. >> hold on. but this was not a move that was put up -- >> no. >> -- by the biden administration. >> i'm not saying it was, but democrats -- you just said -- >> democratic governor, democratic appointees and unelected judges. >> you're going to have unelected judges determining -- >> the supreme court. >> you know what the supreme court looks like. ifou are a constitutionalist and you do read through the constitution, you would have to determine that he was involved in an insurrection. but if he was involved in

insurrection, by the way, it's right there in the constitution. so -- that's why due process comes up. this was the 14th amendment to the constitution that was put in place after the civil war. it's never been tested by the supreme court. it's never been enforc holistically by congress. >> anyway, and then there's -- >> it is an amendment consider. >> there's an interesting states right case to be made here which is, again, in thisery unique sort of bedfellows thing going on on the republican side, typilly everything is state rights and you'rgoing to have the state making the decision. >> but it's based on federal constitutional law. >> the whole notion of wther he inspired this and calls the violence and definitely was behind it, that's a rorschach test for tribalism >> again, that's the due

process. that's the first amendment. >> it's not -- he's going to be on the ballot probably in every state. that may be the scary thing. >> the only thing i'll say is at least it steps up the argument and makes it start happening now because this was an argument that was going to come later. it's good to have the supreme court weighing in on it quickly. >> they're still mad at the supreme court for, you know, not counting all t hanging chads. so it's going to be politicized. we're going to hr about that as well. >> the supreme court says -- let's also be honest. >> they try and stay out of it just like the feds do. >> if you look at how the country looks at that -- >> you don't remember. swuns again, that's in the eye of the beholder. it's as political as it's ever been. we don't want to add another

four liberals, andrew? would that make it fair? that's not the right answer. >> i don't know what the right answer is. >> you won't reject that -- there are too many conservatives right now, there's just no doubt about it, right? >> you know what i do know -- >> on a relative basis to the country and the way the country votes, yes. >> o okay, all right. >> if you're measuring how the country fairs and how the court -- the court does not on a holistic represention -- >> this is your opinion again. >> yes. >> okay. >> i think it's a miracle. everybody can -- >> i think it's mathematical. i think it's mathematical. >> you use tt rain thing that if it's raining outside and some people say it's not raining, there's a lot of knew yauns ming from both sides. >> i'll tell you what i do know. this is empirical. fedex shares are falling. check this out. earnings of $3.99 a share, it

was a big miss. the company lowered its revenue forecast. fedex is now expecting a low single-digit decline in revenue for the fiscal year. that would be down from a previous forecast of flat sales and it says its express unit had a particularly rough quarter with lower demand as customers shifted to cheaper services. that stock this morning -- this is shocker too -- down by almost 10%. $252.52 is the latest trade. andrew? >> thanks, becky. the next big shocker, the uk inflation dropped. that's the lowest annual reading since september. they expect a modest decline of 4.4%. that would be the largest downward constitution. it came from transport of food and nonalcoholic beverages, joe.

the european union is delaying a tariff on whisk can. it gives the distiers a 15-month reprieve from a trump tariff that had been suspended but was set to be reimposed and double to 50% in less than two weeks. a spokesman for the kentucky distiller said they would use the next 15 months to try to remove that tariff permanently. >> we've got a lot more coming we're going to talk to retired general mark kevin mccarthy it on the attack on the red sea and responses. and later kevin warsh is going to join us on inflation and a much more when "squawk box" comes right back.

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welcome back to "squawk box." we've got a developing story. the red sea attacks continue to challenge shipping routes and the obal supply chain. our next guest has firsthand experience in combatting this issue. joining us now, general mark kemmit. he served under president bush. he organized the maritime task force to combat piracy off the coast of somalia. we thank you for joining us now. this is such a vital stretch of ocean and clearly we now have -- i was looking. 15% of european exports

transported through this part of the ocean unto itself. how quickly do you think this could get under control and w do you do it? >> well, first of all, i think 's even more significant because we talk about the red sea, but we're not talking about the suez canal. you're talking about 30% of the coainer traffic going through the suez. most of the government revenue comes from the suez, and i suspect that's going to y prty sn. directly, i think it's goi to take months unlet aggressive action is taken against houthis. >> what does that direct action look like, entire sri required? >> first of all, there's got to be a defensive capability in the water to protect the ships going in and out of that area. they're putting that in now. those ships will be equipped with anti-aircraft capabilities, radars, good communications,

they will probably put drones over yemen for quite some period of time to defend and collect. but if the houthis show no indication of stopping this or there's a major mary tied sea accident, i would expect there are plans in place to actually condt air strikes on those houthi positions. they won't put boots on the ground, but i can see air strikes coming about. >> i think thas the concerning part. this is carefully orchestrated handoff onhis, thiishe houthi not tm. if we rn aroand have stkes on hthiswhatoes an do. we feelike tse are orchesated moveso try the ddle et, butvery sten is littlcloser tdoinjust that. >> no, becky. you're exactly right. i think we've got to recognize

and acknowledge that the houthis are simply sock puppets for the iranians. i ink the iranians themselves don't want this to get out of control. this wl, in fact, broaden the colict in the region. you're seeing hezbollah fighng. you're seeing inside of iraq israel fighting. you ok at the war. it's going to fall by the wayside and it will be a much, much larger fight. >> general, is there anything you would do? as becky just mentioned, iran says that they're sep rahhet from this, but is there -- do you have to sort of go with the -- at the top somehow or no? >> i think we're doing the right things. bill burns, the cia director, verying very experienced mid east hand, clearly is reaching out to the orient and saying you're playing with fire here.

let's try to dampen the challenges we're having right now rather than expanding them. i don't think iran wants to see a regional war, but they do want to continue their proxy war against the west, against e united states, and against israel. so as you said, as becky said, this is being carefully orchestrated so we don't either trip into a larger war through mistakes or miscalculation. >> general, in terms of our capabilities and how much this is going to cost, what do you think something like this actually costs to actually combat this in a serious way, and we talk about the next couple of months, but i imagine there's going to be years more after that just to sort of police things, no. >> you're talking, i think, two different issues. the cost of this maritime task force, in fact, won't be much larger than you might expect

simply because thoeps boats are already in the water. if you're talking post-gaza governance, that's a pretty high bill. i know the world will have to come together. primarily eu will be involved in that and the gulf states, but there will be somewhat of a cost to us. it will certainly be less than the unilateral conductions we've had with afghanistan. >> can you comment more broadly on the situation with congress leaving without approving aid for ukraine and israel? is that a problem? does the milary handle that and when do we hit a deadline >> well, in the case of ukraine, i think if you taka look at the bill, there were very,ery few dollars devoted to going t ukraine in the form of weapons and ammunition.

than's being taken care of by other accounts. the bottom line is there will be measured in months that a delay would not affect the sittion. but i would say that aer june if we don't get that money in place, there will be problems. >> general, i want to thank you. appreciate your perspective on all this this morning, and i hope we get an opportunity to talk to you again as hopefully there's some progress on this front. >> let's hope so, andrew. >> thanks. becky? >> thanks, andrew. when we come back, rite aid has been banned from facial recognition for five years. we will tell you why next. later, former fed governor kevin warsh will join us. "squawk box" will be right back. —- your life is just as unique.

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facial recognition for the next five years. it's part of a privacy trade commission which says the catcshoplifters.sed it tore it's been used in large cities including new york, los angeles, and baltimore without notifying customers. they used low-quality images and put them in their databases and sent alerts to those coming into the store. it came up with ousands of mismatches. that led to employees following customers around the store, callg the police or falsely accusing people of shoplifti. rite aid agreed not to use that

technology for five years. w big of them. and to delete the images it's collected so far. but, guys, i think this really brings up some of the problems that come with it. i don't know if you've seen the dolan family has gotten in trouble at madison square garden to use facial recognition to ban people they didn't like from entering the building. i was thinking about it. at whole foods, when you check out, they're taking video footage. you can see your face looking back at you. >> whole foods i'm fine. >> they wouldn't accuse me of shoplifting. >> i might be embarrsed if i was buying kale. but drugstores just should not be a place where people are watching what you're doing. i was just trying to come up with how many things i wouldn' want people to know that i'm shopping for. >> i will admit.

i will admit some things i gin to cvs -- >> preparation h, diapers, toe fun i guess. >> tre's a million things you don't want tocome back to you. there are things i bo it that i do not put my phone number into the database because i don't want them sending me ads for more of this stuff. >> stay away from this stuff. i don't wear a mas when i'm in a drugstore, i pull my hat down and wear a mask becae i don't want people knowing who it is buying all these embaassing -- >> just for the record, i never had toe fundus. >> preparation h. compound w. >> guys, two things. i assume- i know becky does. joe may not. we all order stuff on amazon. if you ever look through the search hisry -- both your search history -- search history of anything on google or what

you boug at amazon over the last decade, they know exactly wh you're doing. >> this is different. >> there are these new amazon stores where -- we talked about this befor you literally walk in, put your phone on the register -- not on the register but like on the door as you're walking in and the whole thing has cameras everywhere. i mean millions of cameras and it's looki at everything you're buying and you literally walk out. >> this is different. look, wee all given up on our privacy. you're right. if you're using ese privacy apps or puing in your phone mbers, you're giving it up. the problewith rite aid is these wereow resolution images, they were accusing people of being shoplifters and getting it wrong which is completely slan does andibel -- not libel because you're not printing it,nd having store

employees following th around the stores. we've all given up the right to privacy looking at the cameras and -- >> google, every date"dateline, what are the best bone saws on the market right now. >> that's how they catch people. >> they always look up stuff. you cat believe it. >> we have the guy who wrote the book that google is the new god. we tell google everything. >> there's a funny brat pack movie where a kid goes in to buy trojans. he bought 15 things. i bought this, this, this, this, hefrmt doue need any of it. candy. that's what it reminds me of. anywaycoming up, we could do this for a while, i think. you heard me mention just for men. i have never bght just for men. i want to go on the record and say that too. no hair die. ne that. >> you're more concerned about

fesing uto that than toenail fungus? >> adult diapers, i never ught those. >> you're sending out for ose. >> yeah. no, thank you. >> becky, can you pick this up for me while y're there? >> could you just -- yeah. we're going to talk portfolio strategy for 2024. u.s. futures as you can see are uncharacteristically in red. we haven't sn that mump in the last three or four weeks. more than that even. as we head to break, here's a look at s&p 500's winners and losers. >> announcer: executive edge is sponsored by at&t business. next-level moments need the next-level network. move to the cloud. - so, the question is... - cyber attack!

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good morning and welcome back to "squawk box" live from the nasdaq market site in tomb square. if you take a look at the futures this morning, this is a rare occurrence. you're seeing a few red arrows. futures down but only by 34

points. nasdaq is down. every time they're hitting a new high. with i'll see if the record can continue today. in the meantime general motors has cut the size of its buick dealerships roughly in half in the united states through an ongoing voluntary buyout program. an executive told cnbc says the reduction in storms aims to increase the amount of profits and increases at remaining they're allowing business owners who don't want to get into the ev business to bgone. >> opppontiac and obldsmobile i gone. >> oh, but i love buick. >> buick you love? >> my mom has one. >> exactly. >> you look at fundamentals and and if fair. for more on the market let's

bring in joann feeney. i wish there was a, i don't know, treatise or how-to on when when sentiment moves from negative to positive and positive runs aloening that continuum. initially it might be okay when people suddenly give up on the bear thesis. wee not going to test the october overflows, we're not going to do that, and they get more positiv the market broadens, buthen you start worrng about too much bulliness. are you there yet? >> good morning, joe. we have to remember how we got there and how bad things were the past cup of years with all the volatility. some of the reality we've seen has simply been recovery with stocks selling off too much, trading below their intrinsic

value. rather than look at the whole picture, what we t to do is focus on individual stks and companies and where their valuatns are sitting. we still see a lot of opportunities here, particularly because of the path of interest rates and what we see going forward. honestly, that's been a lot of the broader rallies, that interest rates are going to start falling or at let go no higher. yeah, there are opportunitieses still even with that fanfare, joe. >> if you did have to make a macro call, we are -- you say fanfare. we're in aetter place. people are no longer talking -- some are. they're still talk 35g 00 on the s&p. a technician. i think he was from -- i can't remember. i can't say. but one of the major firms. so there are peoplaround like that. but there are people around 5,000 or thereabouts for the s&p. is that good or bad and wher are you? >> yeah. so we're not making a market call because we just invest in

like 35 or 45 stocks, so we can say, look, we'll do -- what we want to do is cus on the fundamenls. it's fundamentals and fanfare. what we saw was encouraging. on the other hand, the fedex results shows there's some slowdown going on. the big picture in our view is that the economy's pretty resilient, consumers are resilient. they're still sitting on some savings, and, more importantly, they've still got jobs. we see what they're spending on, services as well as goods. that's encouraging going forward. we have interest rates that have topped out, likely seeing cuts coming up eventually. we think this market is a little bit ahead of t fed here, but when you look at the groh driver's fundamental, you see opportunities in ai and health care, particularly life sciences toolthat got caught up. if you look at moderate dividend

players, they were substited at slow growth. dividend payers er into bonds. we think that's a trait that like lie reverse ts coming year and that gives support to stocks that really sold off, ilities, staples, even some >> what did you say, 35 to0 names? what's your biggest -- what are your top five holdings right now? >> yeah. it will vary by strategy. broadcom is actually one of the biggest holdings at the firm across all varieties of strategy. the reason for that is because not don't they pay an attractive differ confident but they can generate substantial rowth. you can see stock has doubled over the last year. that's a big holding for our income strategies and growth strategies. we hold microsoft in a substantial way, we hold amazon

and it vaers. income growth which is more dividend yornlted, obviously that's going to be skewed toward financials and energy and business development companies and reits. some want the income, some want the growth. that's why we pick 35 to 45 or so stocks to basically tailor the stretch for what the client really wants to live with. >> you just can't avoid the fed for some reason. again, it's the lede story in the journal. we're going to have kern kevin on. i've watched goldman on "squawk box." he's making rounds. he's out there for a reason, to tamp down expectations, i think. i guess my question is you think that we've driven a stake into inflation? have we vanquished it? because this could be what a stop/start mistake looks like.

no one knew back the last time this happened when the fed says we'll go up, they're done, they go back again. it was a stop/start thing that really killed markets. are we absolutely sure this last mile, we're going to conquer it for inflation? >> no, jo, we're not, and neither does the fed. they recognize inflation has not yet come back to target and there's still more work to do. yes, austan goolsbee and others are saying, look, don't asme this is done. the fed's going to stick with the higher-for-longer as long as it takes in order to drive inflation back to the 2% target. we think the market is ahead of this. more importantly, we think people are misinterpreting. those are a survey of the economists at the different federal reserve banks and the board of governors as to what would happen if things played

out exactly right. it's not a fed policy forecast. you have to be careful about building in too many rate cuts next year. the labor market remains pretty tight. 1.3 jobs for every person. it's better than it was, but we're not done in terms of taking off the pressure of wages. we think the fed still has more work to do p we think the fed is going to stick to its guns. that's why we think the market is getting a bit ahead of itself in terms of fed rate cuts. that eases the pressure on high valuation, growth stocks going forward, and we think it takes the pressure off a lot of those life sciences tools companies that were really hurt by the funding challenges of the high interest rates. we think that starts to ease given the strong demand for a lot of those companies. >> we're out of time, but the only thing i was going to add, you look at the red sea and what's happening with the shuping costs, it raises the question whether inflation is

going to be back on the global scene quickly. >> that is a concern. the fed hasore work to do, and everybody ould recognize that. >> we're going to end it there. joanne feeney, good to have you on. the red sea, that's the sea that -- >> -moses parted. >> yeah. how do you explain that something went on? >> when a tsunami comes, the water goes out before it comes in. >> usually you find a gnl historical precedent for some of these things. >> or it could have been a miracle. >> or it could have been a miracle, like all of us together. >> it's a miracle. it's a miracle. coming up, we're going to take a quick break. when we come back, we've heard much over the last year. organized crime at retail stores is up next.

and then the cargo version. look up squawk pod on your favorite podcast app and listen any me. we're coming right back.

i'm andrea, founder of a boutique handbag brand - andi - and this is why i switched to shopify. it's the challenges that we don't expect, like a site going down or the checkout wouldn't work. what's nice about shopify is when i'm with my family, when i'm taking time off, knowing that i have a site up and running and our business is moving forward because we have a platform that we can rely on. that is gold to us. start your free trial at shopify today. 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? restrict 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. ♪ i love you always, forever ♪ ♪ near and far, closer together ♪ ♪ everywhere i will be with you ♪ ♪ everything i will do for you ♪ ♪ i love you always, forever ♪ ♪ near and far, closer together ♪ ♪ everywhere i will be with you ♪ ♪ everything i will do for you ♪ ♪ i love you always, forever ♪ ♪ near and far, closer together ♪ ♪ everywhere ♪ ♪ i will with u ♪ welcome backeverybody. let's talk about a major issue for retailers, cargo theft. courtney reagan joins us. what's happening? >>his is fascinating. there is debate, of cose,

whether or not organized retail crime is increasing or getting morettention, but cargo theft is getting worse. it's expected to spike this week. when consumers are shopping, so are the bad guys. total cargo theft to total more than $50 million. the average is $143,000 per instance. travelers insurance says that cargo theft expert tells me according to his nearly three decades of experience, cargo theft is at an all-time high. >> all the things that the supply chain has put in place over the last couple of decades to make itself faster, more efficient, easier to use are the same exact things that the cargo thieves are taking advantage of right now. >> this deo from travelers shows a cargo thief cutting off a bolted lock on the back of a tractor trawlering, putting large boxes into a carom here's another clip of a cargo thief

cutting off the lock, looking over his shoulder, clis inside the trailer, and opening the boxes inside. they're stealing vtually entire cargo loa. creating fictitious pickups, changing invoices, and so much more. while six or seven years ago it ended up ilegitimate retail place online and at flea markets, now they're going overseas. who books the lost cargo theft? it depends, where in is suly chain the ods are stolen and how the contract is written. oftentimes it does not seem that the retailers are booking these losses becau they've not taken ownership of them. it goes to the lodge it is ticks companies or truckers. >> it sounds like organized crime. >> it's very organized, very sophisticated. the people doing this underthe supply chain and are exploiting

this. everything that's been made more efficient is exactly what they're taking vac of. >> it's like cyber crime. >> exactly. there will be a job posting saying i need a trucker toick this loadnd a baduy says, m avlable. sometimes they kw what's in it. off p times they don't. oftentimes there are good guys that get involved aloening the way and bad guys. they may not realize they're trucking a cargo of olen ods. you know what'the number one item being stolen right now? food and beverage because it's consumable, it can go back into the supply chain without being traced. once you have a pallet of stolen gatorade with legitimate gatorade, nobody knows. fedex cuts its revenue

guidance for a second straight quarter. and later don't miss an extended interview with former fed governor kevin warsh. that's coming up at 7:00 a&m eastern time. stay with us for that. we've got a lot more ahead. "squawk box" will be right back.

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welcome back, everybody. fedex shares falli steeply quarter results after the close yesterday. fedex lowered its revenue forecast for the year, no longer expecting flat sales, it says, but now looking for a low level decline. joining us rig now for more on that report is don bratton, managing partner at bratton capital. fedex shares, down by almost r 10%. is what you heard from the

company -- doeit warrant that decline in the shares? >> i d't think so, i don't think so. ok, fedex shares produced a 25% increa in earnings per share on a 3% decline in revenue, whichs far better than what u.p.s. reported the previous quarter. u.p.s. reported an almost 47% decline on earnings on a 10% declinon revenue. they're far better. they didn'change full year guidance. i think that's important to note. also important to note, you know, becky, you and i tked about this over the years, many times, fedex is one of the most game stocks out there. seen as a bellwether for the global econo, the tech economy, the e-commerce economy, rightfully so, but it moved literally -- iwas $140 a share last september. it has been as high as $280. just six weeks ago the shares were $225. so, often weive people the --

in there betting on what is going to happen, they're going to beat and raise, they're going to beat and raise and they do and the stock falls back. that's part of what's going on. the stock is a little ahead of itself. >> not only that i think what is going on here, it is a restructuring of the company. a lot of people look at the stock as you mentioned, bellwether for the economy, what is this teing us about the broader economy, about the reorganization they're doing there? >> if you look at the reorganization they're doing, they're making great progress. here is a company that is more than doubled its dividend in the last three years, and they're aggressively -- still have plentyf cash flow to aggressively repurchase shares. and, oh, they just posted a better operating margin than u.p.s. for first time since u.p.s. became blic. i mean, they're doing a grt job with what they have. they need international air is freight volumes begin to pick up.

d it looks like -- november s a pretty good month. volumes up 18% in november. so, it is possible things are beginning to turn. and once they do, all that cost cutting could really power some really strong earnings to the bottom line. >> okay, what you're saying is really weird. if you're saying that numbers were up, indicatn that the economy was much better globally in november, we have got all the people thinking the fed is going to cut rates early next year because the economy is souring. so, from your macro economic perspective, what you see in these numbers, does that pan out? >> yeah, no, it doesn't. we got a whole group of ople on wall street, who are literally waiting for -- they keep waiting for the recession, waiting for the recession. and air freight numbers have been weak, but they're beginning to pick up in the last two months, suggting things are starting to get better in that marketplace. and that's the problemor fedex. the ground d extraordinarily

well. extraordinarily well. and express is the laggard. but press is 47% of their revenue. so, you know, one percentage point of improvement margin in express is $1.38 a share in earnings. >> what is the problem wit express? is that people are going other places f cheaper services? is that not willing to pay for quick delivery? >> a couple of things. one is onshoring is becoming a tidal wave literally the u.s. is moving a massive amount of nufacturing, assembly back to our shores. and -- >> that's actually good news overall. >> iis. but it just means less demand for international air freight. >> okay. i mean, that's an actual -- these are hu macro economic trends we can see through this, and if you say we're actually

moving a lot morof our sourcing here, i would say that's good news for us overall as an economy too. >> if you look at what we're spending obuilding new manufacturing facilities in the united states, we have more than tripled that spending in the last two years. it is literally -- you look at the chart, it is literally gone log rhythmic. >> what do you think is fair valuation? >> we're buyers at this level. it has gotten ahead of itself at 20 280 in the short-term. today's price, 250. this is a company that ought to be able to produce in the next three years produce more than $30 a share in earnings in the next five years, close to $50 a share in earnings. i think that's worth more than $250 a share. >> tom, thanks, not just for analysis on fedex but the broader economy. that's useful. we need to speak with you more often. thank you. >> thank you.

up next, former fed governor kevin warsh will join us for an extended interview. the fed's rate path, progress bringing down inflation or maybe not, and a lot more. then later, live to washington for the latest on the funding battle in congress. representative french hill is going to join us at 7:30. "squawk box" coming right back. you know what's interesting these days? bitcoin. look for bitwise, my friends. (fisher investments) it's easy to think that all money managers are pretty much the same, but at fisher investments we're clearly different. (other money manager) different how? you sell high commission investment products, right? (fisher investments) nope. fisher avoids them. (other money manager) well, you must earn commissions on trades. (fisher investments) never at fisher. (other money manager) ok, then you probably sneak in some hidden and layered fees. (fisher investments) no. we structure our fees so we do better

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good morning. all three averages headed for a winning december. this morning, we are seeing the futures slipng slightly. ever so slightly, we should add. the fed and interest rates a major focus for markets next year. former federal reserve governor kevin warsh joins us here on set for an extended interview. america's most loved billionaire, cnbc's all america survey has that list. we will reveal it later this hour. and a stark warning to congress from the pentagon. funds for ukraine will be emptied by yeaend. we'll have the details and congressman frch hill will join us with his reaction. the second hour of "squawk box" begins right now. back to "squawk box" here on

cnbc. i'm andr ross sorkin with becky quick and joe kernen. let's show you where things stand aheaof the market open, two and a half hours from w of the right about now it would open off 47 points. nasdaq down 47 points as well. s&p 500 off ten points. treasuries, we're ing to talk to kevin warsh in just a moment. you're looking at the ten-ar at 3.888%. and the two-year at 4.382%, cky. let's talk markets and the fed right now. joining us is kevin warsh. as you kw, he's a distinguhevisiting fellow at thhoover instuon, former memberf the fed board of goveors, and, kevin,reat have you here on set. >> hey, becky. great to be here. >> let's talk about what we have been talking aut for a week at this point. jay powell spoke last week. the markets thought they heard

that they were going to be lots and it was off to the races.r, since then, we had a parade of fed officials here on this program, john williams, austan goolsbee and oths, they all seem to be walking back what jay powell said, throwing more cautious into this and telling the markets they basically -- you're interpreting this a little bit differently. what is your take? >> i'm thoroughly confused by this discussion. so i don't know how much lht i can shed on it. it should have been quite clear from the testimony, from the speech, from the dots that the fed gave, they were saying the party is back on, and markets took that seriously. they spent most of last year and a half putting the punch bowl away, lock up the liquor cabinet. and a week ago, less than a week ago, they put the punch bowl teenagers they were going away for the weekend, so they bought some new bottles of alcohol and they somehow are surprised the

party got going agai it is verystrange. i suspect th think that markets have now gone too far, but this is an incredibly unproductive discussion about what are they talkg about, what is the big issue, they should be having a hard discussion about wt is happening in the economy. why have their inflation focasts been so wrong. what are the driversf global supply and demand, and instead we're talking about what they're lking about. i think it is a very dangerous thing. they should be creating option vae. the world unrtain and instead what they did was a week ago w tie their own hands behind their back. >> let mrun with that analogy a little bit. my take on it was that they maybe thought the teenagers had grown up and were adults and could handle the truth because what i heard from ja powell is that i'm not really sure where things are headed. and even at the time, we were talking, saying, that's unusual for a fed chairman to be not

more oblique, to kind of say, yeah, we're not sure where things are headed . the market heard what wanted to hear. what i heard was a fed chairman speaking a little more openly and honestly than we have in the past. >> what i heard was premature triumphalism. what i heard was, hey, we won, we finally beat inflation down. what i also heard was, you know, it really was transitory. we didn't make any mistakes, it just longer for supply chains to work and the rest. i just don't believe that. i think the reason inflation came down is they finally got the policy rate up. i think what i heard was they think the economy is in great shape. the labor markets are strong and everything is great. and that they're going to get inflation back to target. so markets took that and they said, fabulous news, you know. what i think is most troubling is the asymmetry. when inflation -- when inflation is running a little below their target by a couple tenths of a percent, they take out the punch

bowl. they spend a year, year and a half trying to show they're resolute, making references to paul volcker. we still have inflation above 3%. a lot of cross currents in the economy, hard working americans still trying to get take home pay that is higher than their inflation, take out the punch bowl again. listen, i don't know where the economy is going to be next year. but neither do they. the fed's comparative advantage is in the -- in the printing press that they have been provided. not in their prowess and forecasting. and all this talking strikes me as deeply counterproductive in an uncertain world. >> part of the problem the dot plots themselves. if you have to make a guess where things are, it maybe lends to too much credence you believe in the expectations. i look at what is happening in the red sea right now and wonder if that's going to be something that brings inflation back in a real quick way. >> i think you're exactly right. first of all, the chairman and his committee can decide what to do with the dot plots. as i thought from the outset, they should throw them away. this forward guidance is deeply

unproductive. i really don't know why they continue to be at it. the red sea as you referenced is one example. imagine a new front on the war in the middle east. imagine provocations in the south china and east china sea, oil prices can go from $70 to $90 in which case they're scrambling. american people will feel more inflation. inflation expectations can move back up. and so what are they going to do, race the other side of the boat again. it is an uncertain world, the politics in washington are a mess as you've been reporting. the job of the central bank is to be a sober beacon of stability. i suspect that's what they're trying to do in the front page of "the wall street journal" today. but this looks to me like an unnecessary error. >> you're talking about the article by nick timarose. >> higher for longer because they said it so many different ways and as stridently as they could. this has not been long.

i looked up long in the dictionary. this has not been long when we had austan goolsbee on, i actually said, it was posited we wanted to normalize rates from the financial crisis and from the pandemic. so, we want to get back to normal, where maybe this is where rates were in -- before we had these major shocks to the system. so, we finally get back there. there is no indication that the economy is weakening, so, what is the rational for moving off being normalized again? that's what i -- but, i'll tell you, someone said, if you use the taylor rule and do pce, you are -- it does look like we're tighter than we need to be right now. so, maybe some rates would make sense. but, i don't know, it is confounding. >> yeah, i think your last word is the right word.

this is very puzzling kind of stuff. they're giving transparency a very bad name. i think they don't know and i'm sympathetic to their humility about where the economy should be, but to promise, which is effectively what they're doing, that they're going to be cutting rates next year, when they don't know the state of the economy, is forcing them to tie their own hands behind their back, recent experience suggests that's a very bad idea. if i had to come up with a single theory to justify what we have witnessed over the last week or so, joe, it is that they believe what paul krugman seems to believe, it really was transitory in which case rates can go back to zero. this is what markets are so enthused about. qe can come back on. there are no costs to this. listen, at the end of the day, it sure looks to me like washington's doing everything it can to put foam on the runway. we put foam on the runway in the crisis in '08 when things are

coming off the rails, the economy is in pretty good shape, and they're putting foam on the runway to goose the economy in 2024. >> you said washington, you think fed or -- >> purely a consequence. purely a coincidence. >> well, i think the answer is that the fed or someone else in washington, my answer is yes. the treasury is now issuing t bills that they did not say they would be issuing before to take duration out of the market. if i didn't know better, that sounds like qe while the fed is doing the opposite in qt. spending a bunch of money that we don't have and borrowing it from overseas, to strengthen the economy next year, i think they're going to end up with a hotter economy than if they had been running more prudent policy at a time of full employment, and there are no free lunches. we learned that the hard way. wall street is no doubt benefiting from this. but i fear that main street, once again, is taking the risks

and all you're doing is living on income instead of assets, they're making a bet with your paycheck next year. >> some people think one of the jobs of the fed or the fed chair is to -- i don't know -- show some fiscal restraint or at least imply they would like to see that from fiscal authorities. and this would be a chance for that. we went up 500 basis points. the economy is still doing pretty well. but we're at 33 trillion. he could nod to that number and say, look, we're not out -- we aren't declaring mission accomplished. we got this huge looming problem right here ahead of us. now is the time for fiscal authorities, along with us to start being more responsible. >> well, i'd say it is okay if the central bank wants to stay out of fiscal policy. but if they're going to weigh into fiscal policy when it is a time that they're encouraging congress to spend money, then when it is a time for some fiscal restraint, they at least

have to be balanced on that. i'm sympathetic in the following respect, joe. the goods economy, the economy that is around widgets, that economy is in recession. the services economy is in an expansion and the government economy is in a boom. so, corresponding to that, it is a complicated picture. if i look overseas, the global economy is in bad shape. global trade is in bad shape. but in the u.s., we do have services that are doing well. i take it seriously. and the government, of course, is contributing to gdp here. so i don't mean to show up and say, boy, they got easy answers. i mean to show up and suggest somehow they better not try to predict the future and thereby lock themselves in. >> kevin we had don broughton on speaking about fedex. in fedex's numbers, they said air freight numbers really picked up in november. around the globe. that this is something that is a little bit of a surprise. i asked him if that matches up with what everybody else is thinking that the economy is going to slow, he said

absolute not >> so there is a lot of interesting things happening in global trade. global trade tells me something about where the economy is going to be in three and six months. the number of units that are crossing borders, china to the u.s., europe to china, borders inside europe, they're indicative of a material global slowdown, that's part of the reason why we say we're in a goods recession in the u.s. around the world already. is it possiblehere has been a permanent shift to services that people are trading eope like a permanent vacation spot? and that the boom that is happening in new york city is indicative of a stctural fix? maybe. but i wouldn't bet on that. and so i think the fedex numbers are telling us something, the onomy might not be as -- in the smooth waters that the fed seed to suggest the other day. >> that's weird. we can't read it the same way either. >> andrew? >> kevin, i wanted to ask on a sort of relative basis, to even

when you go back and think about your time at the federal reserve, how you actually think broadly just about the u.s. economy on a historical relative basis. because as i have been listening to you, the truth is i think people listening to you would think the economy is in terrible shape and we can have that debate obviously, but to me on a relative basis, life is relative, there is sort of like an alice in wonderland situation going on, to say that actually by the numbers it is actually oddly shockingly good. we can argue why it may be that way, in terms of sugar highs and the like, but in terms of just where we are today, what do you think? >> so, where we are today is a function of where policy was 6, 9 and 12 months ago. what the fed should be talking about, is talking about, is where policy is going to be six or nine or 12 months from now. so, listen, the state of the economy today, i think, as i mentioned, has a goods

recession. i take that seriously. i think that's a risk. the world, the u.s. is in a more fragile place geopolitically than at any moment since the late 1970s. the security and economic commons that created global trade, that created prosperity and peace for most of the post war era, i don't think you have to be henry kissinger to know that is all under great threat. so, as the central bank sits down to make policy, they need to be aware of those risks. the risks that becky talked about, about oil. risks of a new front in these wars. risks associated with the u.s.' deterrence policy not working. and so if that means anything, sure sounds to me like the central bank and the u.s. around the world should be doing a little less talking, a lot more thinking about risks around their central forecast, rather than saying everything is swell. >> you work closely with stan drkenmiller. from an investor's perspective,

trying to figure out what to do in the markets, it sounds like you're thinking the same thing that we heard from a lot of fed officials this week, which is the markets reaction does not make sense, is it not add up and is not maybe that is sound footing. >> the markets reaction is the markets reaction. i've been with stan now for 11 or 12 years. we take signals from markets. when the central bank says the party is going to get started, we need to take that seriously. huge amounts of liquidity are flowing into the market in the last week. bigger flows into the s&p in the last week than we have seen in a very long time. so for people that are listening at home, it is hard to sit on your hands. the fed is tempting the party to get started. financial markets can run for a long time. and i think to the point that andrew raised before, the financial markets and the real economy, they can diverge for long periods. it has been a heck of a year for the financial markets. it might have been a prudent time for the fed to sit on their hands.

instead what they said to the financial markets, let's keep this party going. >> what is your gut feeling for 2024? it is hard to make predictions, but how you feeling about things? >> having just spent the last five or ten minutes telling the fed not to be in the forecasting business, i hesitate to say, oh, let me give you my crystal ball. what i would say is when i look broadly at markets, i look at the vix, the measure of volatility in the equity ma markets, as low as it has been in at least half a dozen years, and i think about what are the risks in the world, there is a real die vvergence in those. we're entering a risky territory geopolitically, a risky territory in terms of what is going to win, will the goods economy, recession, pervade the rest? will the services economy, expansion pervade the rest. i think it is very uncertain. my own judgment about the economy is the economy, in spite of the fed, deciding that they're going to be cutting

rates next year and almost redoing qe, i think the real economy is going to feel tougher a year from now than it does now and if i look overseas, there is a harbinger of that. >> kevin, it is tough medicine, the message to swallow at this point. we always appreciate seeing you, having you in here and getting your insights to this stuff. so, thank you for joining us. >> thank you, becky. look forward to being back. >> thank you. coming up, a look at this morning's premarket movers, individual names. and the cornerstone of the holiday season with a twist. the ceo of food delivery service gold belly joins us to talk about the state, in my belly, the state of the rtaurant trends. "squawk box" will be right back.

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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. this morning's premarket movers. >> let's kick things off with a stock that many called a bellwether of the global economy, that's shipping logistics company fedex. those shares have taken a big hit, losing around 11% of their value so far today. 140,000 shares of premarket trading volume. so profits and revenues both came in below consensus estimates and the company lowered its revenue forecast as weaker demand hit sales. it now expects a low single digit decline for revenue for

the fiscal year, down from a previous forecast of relatively flat sales. fedex also saying its express unit had a partilarly tough quarter with lower demand as customers shifted toward lower cost services, so watch shares of fedex down about 11.5%. new in the last few moments, shares of general mills are kind of moving between gains and losses. north of 50,000 shares of trading volume. now down about 3%. the package food company behind big cereal bras like cheerios and chex, bisquick, pancake mix and blue buffalo pet foods reported earnings that came above estimates, but revenues missed the mark. it also cut its full year outlook for a key measure of sales growth that strips out the effects of acquisitions due to what it calls slower volume recovery in fiscal 2024. those shares down big, 3%. we'll cap things off overseas with a check on alibaba, which is up fractionally right now. the company is called the amazon of china is trading around 200,000 shares of volume.

ali grbaba is shaking up its executive ranks with direct oversight of the overall e-commerce business at alibaba, replacing trudie dye. dye will move on to a role to help manage the big investment portfolios. it comes as competitions with rivals like tdd and bytedance and others starts to heat up. alibaba sharesa big focus on c suite moves. back over to you. >> and not sending it very far. >> no i'm actually going to come and see you during a commercial break. becky was there earlier this week. i didn't get a chance to see her in person. i'll walk right over that way, maybe 75 yards, like half sand wedge. >> do you deliver? >> i can deliver. >> chicken wings or something or -- >> i'll tell you what, i think wednesdays in our cafeteria here is chicken wing day. >> is it open? >> it opens at 6:30 a.m. i'll find chicken wings and bring them on set for you over

there. >> we're in kind of the calm before the storm, sports-wise, aren't we? looking, it is like -- this is like xavier plays, but it is coming, isn't it? it is coming. >> the whole thing. there is so much going on in college -- >> so many bowls, the toilet bowl, the -- there is a bowl for everything. there must be 40 bowls. >> there are. >> where rutgers is going. >> exactly. >> at yankee stadium. >> that's going to be a fun one too. listen, there is a chance for a lot of sports fans to get what they want around the holidays. but, i mean, joe, becky, andrew, you all know that the main event for me, right? it is christmas day, it is going to be monday night football, it is going to be baltimore at san francisco. >> and those pastries you were eating. >> those are the two. those might be the two. and they got the two mvp most likely possible mvps. some people even talking about that little running back.

what is -- does very big legs or something? that guy is unbelievable. >> i think most of the rushing attack on that side is from lamar jackson himself. but i will also -- becky, i want to say, you will probably be disappointed in me because i think i've already had some kind of a moose munch chocolate bar for breakfast. >> today? yeah? >> 'tis the season, all over the newsroom. >> breakfast sandwiches, stuff like that. >> i'll get you some chicken wings and bring them over in ten minutes. >> you better tip your doordash delivery guy. >> yes. >> i got some tips for him. i got a word of the day for him. >> i'll take it all. i'll see you guys later. >> speaking of food, when we come back, goldbelly's world of food, 're going to talk customer buying patterns and food trends with the ceo. and then we will talk funding in d.c. and the chances of a government shutdown with financial services vice chair congressman french hill. "squawk box" will be right back. >> announcer: time now for

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now the answer to today's aflac trivia qstion. according to the latest cnbc all america survey, what percentage of participants say they plan on spending more this holiday season? the answer, 18%. welcome back to "squawk box." our next guest has a unique view of consumers and buying patterns. food trends this holid season. want to welcome goldbelly founder and ceo joe ariel to the prram. good morning to you. i think maybe folks in the audience know, i was a goldbelly crazy us, i was a power user, joe. but it was during the pandemic that i was a power user. that's when i found you. we were ordering all sorts of food constantly to the house and the like. you pua lot of restaurants -- you supported a lot of restaurants during that period and put them on your platform. i'm so curioushat the business looks li today. >> yeah. i was going to say, i don't like the word was. i think i heard a little past tense there.

we got to change that. >> i need to get back on the -- get back in the saddle, yes. >> yeah. business -- business is going great. post pandemic last year was certainly challenging as we found the new normal after the craze of the pandemic. as you guys probably remember, we were up 300% that year. that growth unsustainable every year. so last year we had some challenges to bring back. and this year we're seeing growth across all key metrics again. our q4 has been kind of outrageous again. and so, yeah, we're super excited, we're seeing consumers spending more, our aobs are up across the board. some interesting trends including december is generally gifting month for us. but what we're seeing this year is gifting is up, but self-gifting is up even more. so a lot of people, i guess, based on everything going on in

the world, seeking comfort and so all of our classic comfort food categories are up through the roof this year. >> so, how big a business is the gifting piece, for holidays, versus, i know you're talking about self-gifting, but folks who are -- when i say gifts, chocolates, cakes, things that seem gifty, versus pizza or pasta or some of the stuff we're watching on the screen now, that arpeople are going to be consuming almost immediately. >> yeah, so i think part of what we have changed in the world is that we made everything gifty. so, a philly cheesesteak box from pat's steaks from somebody who is from philadelphia, or somebody who lives in gift with meaning to people, it is all gifty at this point. but i will say, you know, the classic gift category is t sweets, the cakes, the chocolates, the brownies, the cookies, those are the ones that we're seeing the biggest growth

in, in december. especially the cakes category, and obviously part of that is some othe celebrity chefs, like ina garten and martha stewart and jose andres and daniel balud who are offering things in those categoes this year. >> what is the average price point of an order for you right now? and withrice point and shipping. because shipping, oftentimes you have to ship with dry ice and other things, so it is heavy. it is pricey. >> yeah. so most of the products are shipping inclusive. and so what we're seeing the average cart, which could include multiple orders in one cart, it is somewhere north of $140 so far in december. which is about 20% higher than what we see over the course of the first 10, 11 months of the year. >> and how much have the restaurants that are on the platform raise their own prices

given the price of input costs, food and the like to begin wit >> yeah, so that's been a gradual process over the last few years and we work collaboratively with our staurant partners. so, yoknow, somewhere in the neighborhood of 4% to 5% i would say average wholesale price increases on the site in the last 12 months. >> okay. joe, i got to get gifty and now that i'm not going to just think about it as chocolates and cake and the like, i'm going to -- i'm going to try to get a little more creative about it. >> you got to get back in the game. you got to download the new app. and you have to explore food with us. >> i'm on the case. joe, thank you. appreciate it very, very much. happy holidays. >> happy holidays. thanks so much. >> joe, what can -- what do you want? want some ribs? >> i don't need anything. dom chu. look at this. >> oh, my goodness. >> can you believe that? mr. golden belly himself.

look at this. i got stuff. i am -- not bad out here. >> you're good to go. >> it is not bad out here where i am right now. >> yeah. >> not bad. what do we have -- >> you're a simple man. you are a simple man as long as your needs are fulfilled, you're good. >> a simple man. >> i saw you in the newspaper this morning too. >> three newspapers. sprung for myself. ten bucks. i did. i got three newspapers. what a concept, newspapers for someone who does the news. can you imagine actually knowing what's happening? incredible. congressman french hill of the financial services comttmiee coming up. we'll be right back.

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the senate is preparing to leave town without a deal on additional funding for ukraine, just as the pentagon is sending a warning to congress. let's check in with emily wilkinson. emily? >> senators took their final votes of theear last night. they're now heading home for the holidays without that agreement a bipartisan immigration proposal that would then unlock the votes needed to pass that aid for ukraine. senate majity leader chuck schumer told reporrs yesterday that while negotiations on the border security and immigration prisions are difficult, it is critical to get that $61.4

billion in funding for ukraine. >> negotiators are going to be working very, very diligently over the december and january break period. and ougoal is to get something done as soon as we get back. we'rgoing to figure out the best way to get something done. >> time is already running out. the pentagon warned lawmakers in a recent letter that by the end of the year, thewill have exhausted funding for security assistance to ukraine. the uncertainty aroundhether the funding will pass is hitting u.s. defense contrtors who received billions in the pas year to supply ukraine with weapons systems and replace u.s. stockpiles. the ceo of aerospace industries association told me if companies aren't getting clear and consistent singles from the pentagon on how much they will spend, it is going to be hard to produce what is needed when it is needed. >> you can't build a surge just for a year and then go back to where you were before.

these companies will be left with excess capacity, express workforce, excess supplies, and it has taken years to get here. so it is going to take a while sustained effort and investment and a signal that that investment is going to be the for a long time. >> half the additional funding congress is debating would ultimately go to u.s. companies, if the funding ever gets passed. that is going to be one of many, many things that congress is going to have grapple with when they come back in january. >> emily, we had brigadier general mark kimmitt, the form assistant secretary of state on this morning and i asked him what the real deadlines are for when they will have problems if they haven't passed fuing. he said it was actually june if they don't get funding passed by then. then it ll be something that actually causes problems on the front in ukraine, that's when things would run dry. i guess this is look at it from the supply end of that. are there going to be supplies ready to go if ty don't get a

clear signal? >> i think that's part of what eric was mentioning. when these defense contractors, they need to know what is coming down the pipeline, they need to be able to plan, they need to be able to scale up. if they're going back and forth on this funding will come, maybe it won't, then it might get to the point where they're not ready when the funding does come, or they are supposed to be sending supplies to ukraine. i think that's kind of one of the big concerns that a lot of lawmakers have. >> it is weird, congress only acts on deadlines. we don't know what the real deadlines are and who is paying attention to those deadlines. that's something we hadn't really thought through before. >> it has been a bit of a theme this year, that feels like. not knowing when the deadline is, trying to figure out when things need to get done by. i have aeeling we're not going to see much of ahange in that next year. >> emily, thank you. our next guest co-wrote an op-ed in the "wall street journal" sharing ways to make russia pay for the war in ukrae by utilizing fzen

russian soreign assets. joining us now, congressman french hill. good idea, good piece. reminds me of how we were pay for a wall and things like that. maybe we can do it. but just start, congressman, i n't know if you heard that report, everybody looks at the world differently depending on which side of the aisle you're . i understand that. but so- chuck schumer, majori leader, the -- ouown border is very complicated, ry complicated issue. we have got -- it is absolutely essential that we get $60 billion for ukraine. that's just -- depending where you -- this is -- i brought some newspapers today. th is the new york post today. that's just the picture of what was going on down south in the last coue of days. so, can you see how someone might think absolutely critical could be applied to both

situations and isn't that going to start -- i think the dialue might start changing even with the demoats on this. because, you know, all around, it is not just the texas border anymore. it is cities all across the country. >> i agree with you, joe. good to be with you. look, i think this -- we made this clear, very clear, back in september, even with speaker kevin mccarthy, that we needed to get the border policies working and secure our border. this is something people in the house want and now you see in the senate, so we have been talking about this for three months, but we have not had concrete action from senator schumer and democratic leadership and the senate and the biden administration getting serious about changing border policies to secure the border while we at the same time meet our obligations to provide armaments to our allies in ukraine. they are both urgent. we have 400,000 people at the border, you know that it is urgent. it is an absolute crisis and has

been for two years under the biden administration and supporting ukraine is a crisis because under no circumstances can we allow putin to win in ukraine. and the ukrainians have accomplished a lot in 2023. they got 50% of their land back from the original invasion, in ukraine, from putin, and most importantly, in my view, they cleared the black sea of russian naval activities, which is going to allow the ukrainian agricultural industry to open back up and ship grain. and that's all because of western weapons in the hands of ukrainians pushing russians back. >> wring a check to ukraine is -- it is easy, i guess, congressman. and the two sides doeed to figure something out with immigration. they're still not on the same page, obviously. >> no. and we need to get theon the same page. i had hope during december that

senator schumer would see the light on this, and come up with a proposal that could get 60 votes. i think the measure that i wrote about in "the wall street journal" this week about using russian assets will add votes in the house, because if we passed th bill in the house, and the senate, the repo act i worked on with congressman mike mccall of tes, we'll use russian sovereign assets to close that budget -- that gap in ukraine as well as use it for long-term ukrainian refinancing and renstruction and this law not only needs to pass in the u.s., but each of the european countries, wch is why i co-wrote the article with a albania who is working on this precise issue. >> what is the overall environment now in the -in the republican caucus in the house? i saa piece the other day that called it the republican party of matt gaetz and that's the way things were going to be done.

is speaker johnson, if he talks to -- even looks across the aisle for some support on any this stuff, is he going to be history as well? is tt the -- is that still the way it is? or has it changed? >> look, speaker johnson knows that we need to support ukraine. he knows we need to secure the border. knows that we need to make sure that have our intelligence survelance process outside the u.s. on terrorists functning that we have to provide for the defense. so he's a leader. he's got it. and he knows that the tail can't wag the dog. we have to work together as a republican conference, lead as republicans in the hou, work with our colleagues in the senate to have the ways and taiwan, israel, ukraine, secure our border, complete 2024 spending goals. so i thinkike johnson understands the importance of th and he's demonstrating that leadership and he's just got to continue

make sure that he can keep all the republicans on track and i'm not saying that's an easy task after you've seen 2023, but as we start 2024, i know at he knows that's his mission. >> how do you -- only in arica could one of the deadlines be groundhog day as we do these things again and again and again. >> yeah. >> b it is. so how is that going to play out? what is going on behind the scenes? is it going to be -- >> this is -- we got 2024 spending deadlines as you say, january 19th and groundhog day. the two piles of appropriations bills, we passed som ed seven o2 bills in the house. the senate passed a couple. the levels are known. the house agreed to support fiscal responsibility act spending levels for fiscal '24. this was the level in the debt ceiling deal negotiated by kevin mccarthy and joe biden. but the senate has not agreed to that number.

so, again, i view december wasted from the standpoint of getting ready for january 19th because the senate's not agreed to something in the debt ceiling deal, which they talked about all year, insisting the house agree to. so, i'm not sure we're going to have a very good january if the senate can't get its act together on the border and supplemental appropriation and agree to the fiscal responsibility act numbers and let's move on for '24. >> congressman, french hill, we appreciate having you on. merry christmas, happy -- >> hap hidays, merry christs to you. >> thanks. >> "squawk box" will be right back.

who is the most loved business billionaire? that's the question lots of names on this year's cnbc all america survey. there is only one who stands out with a perfect grade. we're going to bring you the details on that after the break. and then later, attacks on two shipping routes in the red sea causing cargo ships to change course. we'll bring you a look at what

could be a logistical nightmare, what it means to the economy writ large. "squawk box" coming right back. you know what's interesting these days? bitcoin. look for bitwise, my friends. ♪ upbeat music ♪ upbeat music

krn nx -- cnbc's mega, one stands out with shining stars. most lov business billionaire. steve, should have teased this all morning long so all viewers could find out if they were a

top of this list? >> yeah, well, we didn't ask about all viewers, but did ask some of them. we drive their cars use their software, social media sites and invest in their stocks. amera's riest biion nas k of the l-amera ecomic surve okere. only o othe ading appral and warren buett. 205, seading acros degraphi sharand disive flingdown to jeff bezos, min 1 zuerberg min 3 no one seems like. arly every demraphic belod. ocle, buftt inmes of 30,000 justinus 3 nothatad stdouts clude e a der. mocrat re tha50,000nvestein the

stk mark and iomes ave 5,000. on musomen minus 17. n pl 17. vo vo voters, and musk a little better among x user coming in at plus nine. zuckerberg, deite this stock up most this year of any of disled across the board. moretionho dlikes him repuicanminus 49. men, 18 to 49,hey ha a more negati view than women who still have a native vi. 18f mus3% noheast n't li him and midwest don't like him more. a report republicans 50 and older for zuckerberg. hey, we thought maybe the financial elite. those with high-incomes, more than $50,0 in the market would be kinder to this group.

after all, ty've made this group a lot of mon. not true. didn't happen. on small differences with this group in broader public views. zuckerberg still min 340. wors and bez do a lile gates bit boater from minus 3 to plus 15. gates and buffett both a little better. even returns, more than 100% this year on tesla stock for musk. more than 190% for zuckerberg. could nobuy liove. back to you. >> like a q rating. figured out the same way. >> yeah. pretty much a q rating. i guess zuckerberg suffers from -- i don't know. another story we'll do later today showing a lot of people use facebook and use it every day. many, many more people using facebook than usa x, otwitter. analso the -- guesth feing for zuckbergidn't

i'm not sure what. thespele, buthose the rangs. >>ouldn'mattero meif d that much moy. joe wants to play. i can see him wanting to jump in. >> plus 15, don't like any of them! plus 15 is not great for warren. >> no. >> what i mean. 30-15. >> large percentages, joe -- go ahead. >> no. it's not, that's not, people don't, do not like billionaires. r musk to be at zero with zuckerberg, bezos and all the others at arply negative, that's saying something in and of itself right there. has a lot of fans. whereas the others, you know, very, very strange. very weird. >> steve, the thing that surprised me was, amazon do the surveys around amazon, it's one of the most beloved companies in america. >> right. >> oddly enough. so how do you -- you see disassociated with that, do you think? on jeff bezos part of this?

>> hold on. andrew. i have numbers here. bezos is still -- he's worse when we ask, we asked about shopping this year, and when he oui look at people who shop on amazon, actuallialities better. minus 11, versus minus 18, people who do most holiday shopping on am sann. andrew.ting point you make, disassociated. always had a ltheory. two of three. loved, rich or famous. you can't be all three, unless maybe you're, i don't know, taylor swift, the only person who could make be loved, rich and famous. >> she's had to deal with haters too. written stongs about it. >> that's true. >> thank you. futures down. steve, see you later. "squawk box" will be right back.

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at&t business. good morning. nine in the row now. dow and nasdaq running nine session winning streaks. futures pointing lower at the moment. meantime, ned fed ex is shares slammed. take you through the rough numbs. and the global economy started to feel a pinch from tensions in the red a where militants are

harassing container ships that drive worldwide commerce. talk about the impact of shippers, energy mkets. global economy and so much more. the final hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc. i'm joe kernen along with becky quick. and andrew ross sorkin. chicken wing today it was hot. real -- spicy. >> staying there tomorrow? like the wings? >> hanging here tomorrow. although, i don't think tomorrow's a chicken wings day, but i'm open to whatever it is. kind of nice having actual food at a place where you work. u.s. equities futures this hour you can see are down after what we just heard. nine straight winning session.

we'll see by end of the day what happens. treasury yields, which have been something to behold over the past six weeks or so. you can see the ten year now 388. today's big number -- 9. what do we mean by that? we said in the intro to this hour, the dow and nasdaq currently on nine-day winning streaks. the dow, since 1990, the index has only had streaks this long nine other times. only once has one come end of the year as is happening currently. over the past nine sessions walmart, wondering, top dow performer rising close to 20% just in that short period of time. >> all right. among today's top business stories, shares of fedex hit hard in the pre-market. actually very hard. shipping giant missed fiscal second quarter profit estimates and lowered full year revenue forecast for the second consecutive quarter. express segment, a hit from lower demand from the u.s. postal service. check it out.

the stock down more than 11% today. the federal trade commission is looking to bar drug store rite aid from using facial recognition for five years settle allegations they improperly used it to identify shop shoplifter. fdc said rite aid's system generated thousands of false positives that sometimes led to customers being banned from stores, they were followed around stores and the police called on them at times. looked like some pretty significant issues. another a.i. headline. britain's supreme court r50u8ing against a man who trying to register patents for creations created by his artificial intelligence system. refewed by the property aft saying invent hear to be a human or company, not a machine. supreme court unanimously rejected the man's appeal say under that law an inventor must be a natural person. though the court said it wasn't actively weighing the question

whether the term "inventor" shld be expanded. >> used to make jokes about -- talking aboumark zuckerberg, and remember, jim said he, cramer said tough to pass a te to prove you're a human. it's happening. i mean, zuckerbe got patents. doesn't make sen. over to senior markets correspondent mike santoli. what are you watching? >> talking about a win streain the index. remarkably persistent and steep brought us basically back to the all-time highs. about a percent short where e we were also two years ago, beginning january 2022. just above 4800, intradahi. make this? go dn 25%. then up 33%. where we are right now. you can say we fell right off the cliff in january of 2022 fr that 4800 level. i argue the u.s. company is 15%

bigger since. earnings traing 10 to 12% higher than back then anstock market has gone nowhere in two years. usually means yot quite yet over our skis at least in marketing positioning beyond the short term. riskier stocks starting to overtake quality so-called stocked year-to-date data. fastish moving stocks in the s 500 now outperforming this quality etf. basilly whe lot of peormanchas been this year, because a lot of those big, highly predictivelhighly profitable tech stocks are in that type of a factor basket, as they call it. you can see noa big comeback. also at those highs at the july highs. keep that in mind, too, trying to break through perceived ceilings in trading ranges out there. now, a lot of commenta lower quality more speculative more

leveraged stocks have done really well, and they have. look at solar stocks. look at -- cloud stocks. look at fintech. baskets that peaked almost three years ago. this is early 2021. february of 2021 is really when all of the speculative stuff had its peak. all of them down at least, let's say, 60%, 70%, high to low, over that period. at you see back end of that, 25% or 35% gain off the october low, but still shows you this long kinof basing period out there. so if you start to see people say, it's kind of the junkie stuff that's rallying? yes, but look where it's coming from. >> you -- at this point, figure s&p catches up. don't you think,ike? doesn't have far to go. >> getting to the old mys? >> yeah. >> absolutely. seems a little bit too close not to at least touch it here before too long. >> yeah. what i would think. very good. so, becky, it just reminded me

of something. and that is, do you remember how smart watson was? how does that differ from a.i.? but then, you remember, it was ing win final "jeopardy!" >> it lost. because of the -- >> wasn't that smart. but very smartbut they said -- but the toing test. what u.s. city has an airport named after a world war ii hero. it came up wittoronto. >> was it torrenonto or ontario >> glaringly wrong. >> he can beat everybody else. >> at chess. >> this on would it get it right? >> a.i. would get that right for sure. >> well, depends on what a.i. was trained on. if it's garabage in, garbage ou. a.i. would have gotten it right, would have known to look for something more. a. can be fooled, too, if traing it on information

that's incorrect. >> right. exactly. everything's ego, i guess. >> wattsing a grand if then, program. it wasn't genuine. it wasn't genuine a.i. >> good at chess. >> in the context what we talked about. >> more of a massive catalog with big compute are power behind it. a.i., suosed to figure out things you haven't beetaught directly. should be able to then assume, make assumptions, to go to the next level. >> amazing. on the first with a.i., it is a little scary. >> iis. >> yeah. >> where we're headed. >> but also a lot of promise. especially looking at medical discoveries and things. a lot of hope. >> yep. uh-huh. >> all rht. talk more about the markets now. ining you joe ato. esidenand chief investment officer at neuberger. looking at comments ahead of time. your point, it's not when these

rate cuts happen. it's the fact they are coming? almost like rate cuts are coming, the rate kurtz com cutsg like the british? >> sure. really important changing direction of travel. because we've been essentially fighting higher rates and tightening financial conditions for now a long period of time. had signals shifts i think the market realizes s we're off to e races and not a tailwind to fed rate policy. whether first comes in march or in june, we can debate that. >> even later. kevin warsh here and said, look, the fed may be saying this thing and predicting these things, but they don't know for certain, and things could change? it's an uncertain economy right now. if the fed stays higher longer and cuts don't come until later next year or even not at all next year, how does that change your perspective on the markets?

>> i think, i saw kevin's piece with you guys. made a lot of great points. but i think our outlook on inflation is by midyear '24, in the 3s, 3.25-type. year-end, 2.5-type range. policy rates today, that's reasonably tight. might we be one bad data point away from change in the narrative? something to keep in mind. one bad labor department, em plo employment report, it changes. >> when you say that, you mean a stronger report? normally -- >> yeah. >> economy, look for a report that's bad for the economy that would actually be good for the markets? >> i think it -- if just a narrative on what rates are going to do, i think right now the market is like, we're off to the races, because rates will be lower, and risk on, if you will. i think a big part of the story, i think, in markets in '24, in

terms what clients should think about is putting that cash to work. right? you've had cash balances at significant high levels over the course of the last couple years. appropriately so. right? you could earn decent levels of return on your cash. right? you weren't -- being paid not to take risk. >> kind of is, because markets, just playing indexes up sharp. >> a lesson to be learned. right? okay, if rates are coming down at some point whether spring, fall, or what have you, starting to move that money into whether it's longer duration fixed income or moving it into the equities markets will be an important story for '24. >> mike santoli made an interesting point. just that stock rket has gone nowhere two years and we feel we've had a huge run and in reality just a return of the levels we'd seen a couple years ago? >> a lot of euphoria two years ago. late '21 in terms what markets level were and valuation was. important point. back to the levels we were before. the question in '24 i think for

equities markets is certainly earnings outlook. also how do markets broaden out? we know the story in ' was about dispersion between market cap stocks, the rest up 12, whatever it is. then the question is does that broaden out? start to getmall caps into play? en them rally hardn november catching up valuation discount over the course of the last two years. >> my point, the idea at anybody who thinks things ar too expense iran, we've come too far, too fast. we're in a much better position in terms earnings from company, made a lot of progress. things shouldn't look at -- as highly valued as they were a couple years ago? >> not necessarily concerned about valuations. segment out -- >> i guess i have been. >> change mega caps in terms of rest of the market, valuation is

average. look at 493 stocks in s&p 500. the issue is more, i think, we envision the economy slowing in '24. the question is, what is the impact on earnings? because if you're nominal 6 or 7 plus, real growth, 2% inflation in the 2-3 range, nominal growth relphs are low. expecting as the market is today 12% earnings growth you need an aggressive view on margin expansion to hit 10 to 12 earningrowth. we don't think earnings will fall off the cliff but come down over time given the slowness or the softness we sein the economy. not recession, but just slowdown from the levels at in '23. >> you do like small cs, though, as a result? they haven'tun quite as fast? >> yea huge valuaon discount in small caps. carve out the non-earners in the russell 2,000, represents a third or plus of the russell

level two, low double digits, 10, 11, 12 range. cheap. underperformance versus large cap, you talked abou quite significant. there is a catch-up trade there for sure. >> thank you for coming in today. >> nice to be here. >> joe amata. >> my pleasure. nd andre >> thanks. a lot coming up in a moment. bring you the latest on tensions in the red sea and threat to shippers. how that can ripple out to the local economy. and a different kind of threat this morning. this one in the digital realm over top government security, an official. joining us and weighing in on the high-profile hacks and emerging threats to the financial system. the question whether the government should ban ransomware? that and more as "squawk box" returns. 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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welcome back to "squawk box." futures what do we got? a little over an hour before the market is set to open. show where you things stand. dow off about 58 points. nasdaq opening down 44 points. s&p 500 looking to open off 10 points. and talking about tense of

billions of dollars facing a threat from militants in yemen. reports say u.s. is weighing military sikes on the rebels. joining us more on the principal add a global maritime shipping consulting firm and we've talked about it almost as if we can sort of assume that there will be some non- -- there will be material changes to global trade. do we know that yet? >> yh. we do. you know, with maersk invoiding the suez canal. exports down about 18% this month. so there's a real impact 3 nobody wants involved in

violence. an effort lie houthis, my opinion, disrupt global trade. not out the tragedy occurring in israel. >> it is really fundamentally -- >> it's changing things for the suez canal for the near-term and don't forget the pan maul canal has drought. that's running at ss than 60% of cacity. so -- global trade is srupted there, too >> cane assume it's inflationary? or is it, if it was the, to cause some type of slowdown in certain economies because of supply chain disruption, deflationary? or is it both? >> it's going to raise costs for transportation. a trillion dollars worth of goods go through the suez canal annually. panama canal also disrupted. ships need to take longer routes to get there. coming from asia to europe with

containers to go around adds 30%, 40% to your journey. burn 30 to 40 tons per day of fuel. it costs more money. it extends timewise, ships and, therefore there's less ships that are out. ship rates go up. inevitably some of that is passed on to the consumer, but this is a disruption. shipping often benefits from disruption. even though it's not a nice thing to think about. >> right. insurance companies sometimes benefit over rates after a catastrophe. >> right. >> and, maersk is that stock more or less attractive? what would you codo? >> it's a very big company. i don't necessarily pick stocks. it will improve if there's a longer disruption, but in terms

of maersk, it's a very large company with a lot of different interests. more interesting, not naming names, order books for tankers and dry boat ships is very low. on top of it you have this disruption, and 30% of the fleet is over 50 years of age, less efficient and facing more and more emissions restrictions. you're going to have demand exceeding supply for tankers and dry boat for the next couple of years. so it looks -- very interesting from that perspective. >> i wonder whether we come around to that overall view? that instead of this being a one-off due to what happened on october 7th, maybe things, despite what's happening in ukraine and whether the entire middle east, you know, when you think of iran and some of the things that, you know, the

troublemaking they're involved with over 100 attacks on u.s. troops. this could be a permanent state of affairs, like you said. maybe a couple years. maybe it's not just something that quiets down in a matter of weeks? >> without these disruptions, supply would exceed demand for dry boat and tankers for some period of time coming forward. at least, i would say, 24 months. with the disruptions, exacerbates that. then emissions control on older ships, which constricts supply further, because those ships had to go slower to meet emissions restrictions. all of these things coming together for cargo shipping. container shipping, there are a lot of ships on order, back due to the disruptions that we had from covid. so there are a lot of ships that are going to deliver on that side, but still they're going to have to go farther. again, i agree with you, well, not agree with you. as you mentioned, this is a broader attempt to disruption

global trade. this is not simply about a horrible tragedy and war in one region. ukraine has a big impact on grain exports. that grain now may not be able to go through the suez canal to get to asia. has to go around. u.s. grain isn't going through the panama canal as much so it's going around and wanted to use the suez and now it has to go around, or -- maybe. see what happens. this broader attempt bisy, i ca it nefarious actor who want to disrupt global trade. not simply one region. >> do you think this means higher oil prices down the road, no matter what? or just depends on other supply areas? >> yh. i think it depends on other supply are, but i think higher freight costs and that does trickle down to the consumer. in terms of consumption of oil,

consume oil toll go around. see how it impacts in the future. >> appreciate it. thank you. >> thank you. >> okay. when we come back, disney's latest bet on china. live at opening of utopia resort in shanghai and will tell us about it right after this break. eunice, a preview? >> reporter: sure, becky. i'm at disney's only zootopia themed attraction in the world. specific for china. how the public is responding, when we come back.

welcome ba to "squawk box." big day for china and disney. straight to eunice yu who joins us from anghai. what's going on? >> reporter: andrew i'm at zootopialand here at shanghai disinnland. thsecond expansion. disney told me the originaplan waan expsion bas on mickey and miie and otherharacters. because zoo popia was widely popular beming highest grossing of an animated feature for china, the company decided to change course. now, this land is also, exclusive to china. going over quite well with visitors here. a lot of people saying this is big draw for them.

just to highlight the importance to disney, a lot of top executives were here including ceo bob iger for the grand ceremony. josh demauro, the parks chief, also her he said that this pa is now on course to hit a record, already far this year.ion visitors so he also said that based on it's plan that they have of $60 billion invested overt next ten years into the parks, they're hoping to expa this particular park with a third resort hotel. now, i was speaking with demauro, asking him about the u.s.-china relations and ming why open this new land at this time, given the sort of souring mood generally for american business, and he said they're just going to focus on their business. i have to say, guys, that a lot of the visitors he, they are

really excited about the details of this land. the fact that they're, like, multiple doors. huge fornimals and tiny for little animals. disappointments, only one de here. in terms of spending, a t of people say spending as much as $430 just today. i think it really shows that despite geopolitics and tensions between the u.s. and china, a lot of average chinese do appreciate and like a lot of the operatings that america companies have. the offerings that american companies have. >> when you talk to folks coming through the parks, does the geopolitics of this or feelings around disney being an american company even viewed that way? >> reporter: not really. talking to people already at the park, and who obviously are

superfans. some came in -- i mean, fully dressed at characters. i was actually talking to somebody who was dressed as nick wilds, who's the fox. wearing not only furry ears but furry hands and furry feet. these are superfans. they are kind of biased but they're loving all of this american culture, and i think that's something that i think is worth thinking about in terms of american companies looking to china. >> what did you hear about their expansion plans or additional investment in china? because when i asked bob iger about this a couple weeks ago at the dealbook summit in terms of big expansion, create a new park, for example, in china or make significant investments, he was very reticent saying given where things were he did not see major new investments made in china. that maybe investments already sort of approved that you're talking about. where does that stand? >> reporter: right.

didn't really talk about that in any detail. so iger didn't, and then also when i talked with demauro, asking about that, and he was just talking about how they're looking at things for the long term but didn't go into any detail beyond the third resort hotel they're planning for this park, because obviously there is a lot of geopolitics to consider. >> right. unis yune in shanghai. looks like a lot of fun. appreciate it. thanks. coming up -- thanks, andrew -- certain apple watches about to become unavailable in the u.s., unless the company can resolve a patton dispute. asking a top analyst about the impact it can haven investors or apple stock. stayuned. you're watching "squawk x" on cnbc.

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rick santelli standing by at cme in ccago with new economic data that's out. ri, good morning. >> good mornin yes, becky. current account balance, larger cousin to the traddeficit or trade balance. both of deficits. in this case, a third quarte

noub. it's exciting because we hoped der 200,000. narrowly missed that. 200 billion, excuse me. nus 2.3 billion. expecting, as i said, a little under that level. the actual number, though, is the smallest current account deficit gog back to the second quarter 2021. and what does this really tell us? it's not going to be a market mover so much right now, but what it tells us is twthings. first of all, pre-covid, becky, these numbers were half. 100 billion. but they've gotten much larger four quarters ago and getting small perp to me, simple answe the world getting a bit more normal and this speaks towards demondays outside the company economy. other economies. than ourself. obviously one of the best over the last two years. quickly. 6.5 month low yeelz. look overseas everything is moving about the same.

a boon is about to have its first close under 2% in one year. if you look at ten year guilts n the uk. 8.5 month yield close and 20-year auction today at 1:00 eastern. 13 billion. auctions of a biggy. one final point, newest isper on the street wouldn't flooez pl please jay powell or purists that flow the federal reserve. most think class to service debt and an election year in 2024 or both having an impact on future fed policy. becky, back to you. >> rick, thank you very much. meantime ijust a little more than 24 hours, apple says it will stop selling thepple watch series 9 and ultra2 on its website in the u.s. at is the government, unless the government steps in how to

handle a patent dispute from an october order fr u.s. international trade dmags could prevent apple from importing the watches. the commission found apple violated massimo the patent rights surrounding the measurement of blood oxygen levels. should it choose, the biden administration has until christmas to veto the trade mission's order. joining us to talk about implications for apple stock, walter piecyk. how big is deal is this in the grand scheme of things for apple and maybe even more broadly in that sort of patent war? >> i don't think it's a huge deal, but quantity taughttively or qualitatively, meaning that apple, the watch, really represents what? less than 5% of revenue. you're still able to buy the product at walmart, amazon. the wireless operators sell these things when you want them

connected to lpe. the quantitative impact is not large. ipical typically they're resolved quickly. these things happen from time to time. i don't think the typical consumer will read the headlines and say it's something apple is doing something improperly or you mentioned biden.. aside from the fact that the company that is alleging these thefts is a u.s. company. right? you also have, you know, a regulatory group that den that is really not full, large companies. an issue, something that negatively is impacting a small company. i'd be super surprised if the biden administration would do anything in this case. not only that it's an american company but it's apple.

>> yeah. what happens next?t handicap you're betting that eventually apple settles with this company? are you betting they come up way different company for future versns of the watch and effectively try to bypass this compan fake the -- take the feature out of the watches? >> i fortten. a friend of mine got covid and i oeb remember this because of suit going on. this is not a necessarily element of sales swings one way or t another, if they had to pull the thing out. it hurts their brand being a health-focused company. in terms of the company, apple is big in your heels company. they fight things rather than take the easier route and i think they've already demonstrated that. i think buy the company wh the large company -- i can't remember when they bought beats.

i don't think you'll see an acquisition. i think they'ldrag out long as possible to reduce their iact. we'll see. see how that progresses. >> tn you say if they can't distribute them online and -- they can distribute themhrough stores. still manufacte them under this provision? >> you can sell them at -- a lot of other sdishgs channels. i don't knowhat the mix is for watches but cell phones. most of the phones still get so through the carrier stores and the carrier online. not rough an apple store or online. you're still able to sell the product. it's not -- yesterday thinking, , this will impact sales. last time i checked your gift hs be under the tree december 25th. i think a t of sales for the quarter already occurred. now we're talking about those few sales and how long this might impact. not as much pressure on apple

agency you might think. certaiy they want to resolve this. these are products people want. don't know enough about the details, but seems like more hardware changes at apple far more complex than changing some software. worst case i think thejust disable the, that service in watches they sell going forward, and if they did that, is that really going to impact sales? probably not thamuch. >> walter, thank you. there's a larger segment perhaps to be done about patents and the way we do them in the united states, and big tech companies. some cases taking advantage of smaller companies. some cases smaller compani controlling the big companies, we'll save that for another day. becky? >> thank you. cybersecurity experts cribs krebbs joins us for a wide-ranging issue stemming from

artifici intelligence. we'll be right back.

here we go. can we land? you're old enough to do it in the sky now. but it's gross. there is no way we're landing. are you sure no one is watching? gwen mallard! do it now, or we leavok.ithout you. welcome back, everybody. the first time an influential government panel is pflagging ue

of a.i. oversight council saying although a.ioffers benefits, it could lead to cyber and other risks. joining us, chris krebs. a former direcr of the federal cybersecurity and infrastructure security agency, and chris, thanks for coming in. >> good morning. thanks. >> the warning treasury issued said what exactly? >> two parts to it. first is that a.i. as just another form of technology introducing additional risks into the actual enterprise of a business. we're already dealing with cloud risks which is basic technology risks from computing. now we're putting a.i. on top of it. we don't fully know the scope of the potential risks and abuses. so these are cybersecurity risks associated with a.i. again, seeing outbreaks of ransomware, state threats and one moreisk put on top of it. >> trying to figure out what a.i. would do when you think

about the deep -- >> more on the computing side, the first. productivity side. may have a, a paralegal, for instance, draft up a letter to a client using a public a.i. model. introducing potential information into a public model. >> whether gdpr and privacy risks here. the second pieceou're getting is the deep fake, synthetic mea. >> they know it's me nowhen i call because of my voice? and other ways to identify these things? >> sure. seeing an exploding risk on the privacy side. and the sensitive information voice printing to your point.s. also can be flip around. earlier in t year, there was an image that went viral on social media of the pentag. an image pro purper puorting to

the capitol. could have been gained, pivotal chaos from synthetic media and those seeking to have some sort of finanal gain and some sort of fraud using a.i. >> what do we dough about it? how do we protect ourselves? >> this gets to, on the technical risks of organizations, it's just one more aspect of interprice risk management. you need solid policy for a.i. use. myself going through a.i. generative a.i. use training. it's in the one and i think every company needs to think through what potential risks are putting good programs for discovery how these things are used, monitoring on the regular basis in the control room. to the deep fakes and synthetic media, this is where the platforms come in and the recent executive order by the biden administration is starting to move us down this path of what

are marking legitimate content looking like. where users and creators it water mark their contents so it can't be abused, but where platforms have to scan, meta, facebook, whomever, generate for scam content. this is fake. think about that. >> what you've said from the idea of a paralegal generating, using a.i. to generate a letter they stoendend to a customer. i ven't thought about that. i don't think there are a lot of companies put down a clamp saying youan't yew a.i., period, and if they are, how wellhey're overseeing it? >> a range of approaches and policies. furthest out i see mainly big banks do. lockdown approach generative

a.i. in the workplace only using private models. using big, common, you know -- the once you hear about every day between op a.i., microsoft and others. there's a middle ground. there is a restrictive policy and you try to put in force some tools to monitor outbound calls to a.i. that'shat i've seen most companies do. but on the far side, also kind of a yolo approach. this is innovation have to use it or we'll be left behind. on that side the spectrum we'll see a lot of the unknown our down-range risk for data leaks and regulatory measures. >> what are the legal ramifications for a company take this yolo approach? go ahead, play. figure it out? >> it's almost, starting to parallel ransomware where most companies now are not necessarily paying to unlock. because they've gotten good restoration and recovery mechanisms in place. what most companies are paying for right now to ransomware groups is to prevent them from

leaking data. because they know that, again, in europe gdpr, here with the new emerging regulations filing with a material incident. the same sort of thing you see on an a.i. data leak. companies have to make companie would have to make public disclosures saying we combined sensitive customer information with a model that got leaked or we didn't secure properly and it spilled out to the public. now again we have this data breach issue. >> it sounds like it's a land that's still well in need of regulation because what you're talking about is companying reacting really only to the regulatory requirements that are there. banks are protecting themselves, other companies are doing it, for the most part the action is where you see federal governments requing you to do it. >> there's a couple things there. the u.s. congress is taking a deliberative process to understanding what the risks of

ai might be. senate majority leader schumer is having a series of ai insights forums, what are the national security risks, risks to elections and democracy. think they'll take their time to get to a legislative intervention. i mentned the executive order earlier. theadministration is aware of how ai could be used for potentially bad outcomes, including credit decisions tha may have some sort of underlying bias. you don't know how you got there, so explainibility is important. >> on the one hand i appreciate taking the time to figure it out and understand it before you start regulating it. on the other hand, we're still waiting for them to decide if cryptocurrencies should be overseen by the fcc or the ctfc. that's been years in the making. >> we still don't have a federal privacy law. we go state by state. when it comes to technology, i think policymakers, particularly

in congress,re still struggling with what the right vel of intervention is as opposed to europe where it regulate first and ask questions later approach. >> chris, thank you very much for coming in. i love your tie. >> thank you. >> merry christmas, happy holidays. >> thank you. coming up, we'll talk markets. look at futures, we have more than a half hour to go before the markets open, but it would open down right now, about 50 points off on the dow. nasdaq, 36, 37 points. the s&p 500 off 8 points. get the best of "squawk box"n our daily podcast, follow squawk pod and listen any time. of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization. and track market trends with up-to-the-minute news and insights.

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. in just over a half hour we'll have the opening bell on wall street. seema, looking for a different 2024 than we saw in 2023. i think one thing you're pointing out is investors all year long, 2023 surprised by global growth. a lot of that had to do with the united states and how resilient we were, but a lot of that was

due to pandemic stimulus and what we still had remaining om that extraordinary fiscal help that we saw. >> that's right.y. we areot expecting a recession or anything, but it's a slower economic outlook. the pandemic stimulus is fading. a lot of help that consumers and businesses have been receiving, many people thinabout the fed lending program in 2020, that enabled companies to refinance, lock in really low rates. they have not had to deal with higher rates. so we see that maturity coming through in about q2 of 2024, and thatpells a slightly weaker economic backdrop. that is the difference. that doesn't mean markets will struggle too much, though. >> china bottoms a bit? 2023 was characterized by not a lot of help coming from china. that comes back a bit, and you point out the fed was able to

raise ras quite a bit wiout seeing the deleterious effects in the u.s. economy. that has us at relately high levels, where when things are refinanced, and they will not come down that quickly in your viewecause the landing won't be that hard, so it's a different rate environment with less stimulus left. >> exactly. downturn postponed.e seen the i don't think it's been entirely canceled. we don't seeery aggressive fed cuts next ye, certainly not as much as what the market is pricing in. the key message we've been getting from inflation data, we've seen it from the uk this morning, global disinflation is under way. there wi be a pivot. there will be cuts next year. it's not as much as the marks are pricing in. i think that adds potential for volatility in the firshalf of the year. once you get the cuts coming through from the ecb, bank of england, all of these central banks, i think risk assets can

be on more of a sustained rally after wobble in q1 of next year. >> maybe we had -- obviously we had three good months since -- we had october lows two years in a row. you think maybthe first half of the career is more of a backing and filling? >> i do. i think there's two risks out there. one is that the market starts to realize their expectation for rate cuts is too optimistic. you could see a pullback. on the other hand, if they're correct and you will see rate cu, that suggests you're looking at a deeper or worse economic outlook than what is expected. in whichase, the earnings expectation, which is just a bit opmistic starts to come into question. i dot exaggerate it, it's more of a wobble in volatility. at the end of the dacome the end of q2 of next year, you'll still see the rate cuts and any economic slowdown mes through.

at least that inuncertainty behind you, you just go through a couple months of difficulty before that suained rally in risk assets begins. >> will inflation still be front and center in the fed's -- in terms of theolicy directives that they answer to, they're still very mindful of -- that 's not over completely. >> i think that inflation will be the only thing that we'll be talking about going into next year. what we heard fr the fed is that economic growth doesn't need to slow to see inflation coming down further. from here on, the market has t be entirely focused on what the various inflation numbers will do. it's about what feeds into inflation. as you start to see inflation heading into that 2.5% level, then just from a real rate

perspective it doesn't mean that the fed should cut rates or that they're easing, just that they're less restrictive and to a more normalized state. >> seema shah, thank you. almost out of time. just take a quick look where we're indicated this morning. off on the session after nine straight up days. i'll see you, becky. join us tomorrow. >> see you guys tomorrow. >> we'll see you from sowhere, anew. "squawk on the street" is next. good wednesday morning. welcome to "squawk on the street i'm carl quintanilla with jim cramer and david faber. futures are soft here despite more signs op cf crumbling inflatn. german bond yielbelo2, our n 30-y