treasury yields have come down, oil prices have come down a little bit, too. we'll be right back with you tomorrow, yeah. oil is down 1.6%. it's not friday. >> not next week? >> it's thursday, but that's thursday eve on friday right ahead of the holidays. we will be back here tomorrow with us. make shower you do the same and check in with us, and right now we'll hand it over to "squawk on the street." ♪ >> good thursday morning. welcome to "squawk on the street." i'm carl quintanilla and david faber and morgan hq and having an exclusive with ceo james gorman in the next hour. futures bounce from wednesday's spill. worst day for the s&p since september. final q3 gdp, philly fed both mess, seven-year is a new low and futures do point to a

rebound. micron riding the ai wave and, and warner brothers discovery, early talks of a deal with paramount and we'll discuss. let's start with dave ahead of the interview with morgan stanley. there's so many avenues to tread today. >> yeah. listen, it's always an interesting opportunity to sit down with somebody who has been running an institution as mr. norman has at morgan stanley for 15 years and has had a significant track record success over that period of time. the stock certainly outperforming. their chief rival goldman sachs and many others in the group as well. one way that we judge. but, you know, it will be an interesting opportunity to sort of talk to him and have him be reflective in terms of how things have change and how they haven't and what his views are sort of where the industry sits right now and where morgan stanley sits in terms of how he's leaving this institution.

obviously leaving the ceo role but will remain as executive chairman for roughly another year or so, but still a significant exit, so to speak, from the financial services industry, and we're certainly happy to have the industry to talk to mr. gorman about that, as you said, carl, in the next hour of "squawk on the street." >> you know, david, it will be so good to hear about someone in the industry who said we're going to get out of all the controversial things, that they don't work. all the things that -- the highfalutin things, the government doesn't like them, and he had had a vision, david, and that vision really paid off, didn't it? >> yeah. i mean, you know, there were opportunities and he took advantage of them is the way one person who knows gorman well and worked with him for a long time and sort of put it to me, jim. you know, whether it was the opportunity obviously to take in solomon smith barney and/or some of the others and transform really this institution to a certain extent as a result of deals and then execute, right? that's always the key part.

take vac of yo take advantage of your advantages and then execute on them. you believe gorman did both. >> i'm a total believer. used the position in my charitable trust and gorman's leadership understand that he'd be an asset gatherer and really one of the great private money gatherers and it's the vision that everyone once and he understood it was worth leading with. a lot of people really screwed up. this guy did not screw up. sometimes, you know what, david, that's all it takes. >> that's true, particularly, carl, in financial services. it's 15 years ago. that memory of the global financial crisis is still with us. >> yes. >> we do understand that. >> yeah. we've been tracking some of the top picks for 2024. today evercore, b of a, kkr and morgan stanley. >> and stanley. his performance has only

exceeded by his hue m. i mean, this is a person that came from very humble gatherings and real humble. like humble when you're at wall street means you have only three houses. this guy is for real. >> and not one to be overly self-reflective. i hope we'll get him a little bit more today, carl, because these exit interviews are a little bit different. we won't be focused as much on all the parts of the balance sheets. >> although a favorite exit interview is an exit forever as we now know. >> that's a good point. that's a good point. >> let's get to the markets and talk about yesterday's selloff. as we mentioned, worst day for the s&p since september. every dow name down, first time that's happened since march, jim. goldman today says hard to explain. >> well, yeah, zero day options, they can put pressure. they have been taking over the market. about 40% of all the s&p option volume is the one-day thing, and it can put a lot of pressure on the market. you sell a put which means the

dealers have to sell the common stock. here's the thing i don't get. why do we think they are over? i don't want anyone to feel at all at ease now that what happened happened because it -- it could happen again. you said that's the whole problem with daily options, so enjoy the opening and just hope that they don't come back because it was obvious that they could take the market for a loop. >> it does fit with your playbook which has been the pillars are in place for a bull but overbought so as citi said you buy into the dips. >> five-day percent, because there are all parabolic dips and that's what have you to wait for a parabola of a really good stock can go down for a while. every stock was parabolic and people don't want to hear that. if a stock is going 10 to 20 in six weeks, i can't say, hey, listen, that one is one you've got to get in on that one. that's a parabolic move, and

i've never seen a parabolic move ever last so even though i may not catch the top for these people, i know the bottom certainly isn't there, and i just don't want to hurt anybody. parabolic moves must be sold, something i learned very early on about 25 years ago and i'm sticking by it. >> there were geopolitical headlines, david, which we talked about earlier in the day, and -- and i think it's goldman today, the desk looking at that, the options element, but they say the incoming feedback this morning is to buy the difficult. and we do see small caps benefiting the most today. >> yeah. well, we saw it last week as well with the outperformance in terms of the russell, you know, especially obviously with the move down in rates. jim, you know, you've been naming a few names lately where you do want to take profits. you've mentioned this sort of parabolic move the last few days, i think much of this week. anything in particular that you're thinking about when you do advise people to say hey, don't be greedy?

>> i find that almost every single enterprise software need has gone up. these are all straight line, and i find that when you ask people what they do, what these companies do invariably they say here's what they do. they have stocks that go higher. you can't get them to even name what it does. oh, yeah, i know, look i know what data dog does, it goes higher. well, that's just great. how about mongo? it goes higher. oh, samsara goes up. that's not the way stocks should be picked and yet that's the way they are being picked and it's very worrisome when you see that. >> why didn't we benefit from a beneficial yield backdrop yesterday? was that a change? >> yeah. i mean, i think that we're just in this period where as we know 58% of the people are -- are now retail, and they just like

momentum. they don't care about anything else. they look at the momentum, and they say give me momentum, and i think that when you say give me momentum and things reverse they have no idea what they bought, and you can just follow along with the crawl at the bottom, and you can see stocks and if they are up 2 or 3 in the morning they buy those. if you ask them what crisper technology does, they think the crisper is going to merge with toast and ewing going to have crisper toast. >> meanwhile, i'm just thinking about oil adding to this today. oil got close to 75. >> yeah. >> angola is going to leave, opec market share is going to maybe fall below 50, jim, that will help headlines. >> you have to have natural gas go up, and natural gas is very, very low. the fourth firm in a row recommended corbetta which is a natural gas company. it can't get off of $25. i just think that this is a

group that's in limbo whether it's angola or not, and that's because we're pumping 13.5 million barrels. we're not supposed to pump more than 12 and people said we're not going to be the swing and yet we are the swing, and these other countries are all small ball. >> yeah. as "the atlantic" wrote yesterday, pumped more this year in the united states than any country has in the history of the world and that includedor includes countries like russia and saudi arabia. >> i did in the know that, but, jim you say we still have more to go. we could do more. >> yes, absolutely. when you think -- you think when exxon is done with pioneer, pioneer is not going to produce three? they can produce three without a problem. a lot of these -- eog can produce much more. i see that occidental can produce much more.

the paris s the paris permeon is facund. >> we talk about artificial intelligence and all the different ways that we see it emerging, but the advances in technology in this industry, jim, have been just as profound, haven't they? >> well, you can drill down a mile and then drill to the right for two miles. this stuff was never supposed to be able to be done. these aren't straws. it's incredible to me how far and wide they can do so instead of like having to drill every mile they just sent the pipe along the mile. by the way, when you go there, it looks like, david, that they are playing with joysticks and looks like they are playing grand theft auto but they are not. they are playing pipe. >> that's amazing that they can, have, have something run two miles out and then it can meet up like that. >> it's just amazing.

>> unbelievable. >> if anybody went there, by the way, you would have no idea what they are doing, kind of like having a finger on the button and moving a joystick over and you're absolutely certain that it's nvidia and they are playing games. >> kind of looks like that. want to end this block talking a bit about, of course, what became a story late yesterday. we had a conversation about it, jim, you and i as well and that's the future and fate perhaps of paramount. there was an upgrade yesterday. you and i had -- we talked about it. i sort of was dubious certainly when it came to potential buyers for the entire company. obviously our parent company comcast which in the past has been talked about, but regulatory and any number of other reasons is not there. warner brothers discovery, while, again, i made the point yesterday that getting bigger and linear cable networks is not something that you would expect them to want to do. nonetheless through our reporting and many others we do

know that they are mulling it and considering it and as part of that have had at least one conversation, that is david zazlov, the control shareholder there, and, jim, i can give you a number of reasons on both sides as to why you could argue that this is something that they will certainly think about, namely being that it is for sale, and when there's a sale you have to at least consider that, and there are a number of other arguments why warner brothers and discovery shareholders would say please, don't do this. it's not regulatory in terms of the impediment that other buyers might face, our parent company, as much as it is do you want to get bigger in linear cable which obviously is declining at a very rapid rate? do you want to deal with integration, and the risks that that poses? remember at&t with warmer barros's discovery, when discovery took in warner

brothers, they found a lot of things they didn't expect and a lot of them were not good on the cost side of the business and it took them a while to get to work through there. you're going from cash flow to the de-levering story and that's one side and the other side is you can supercharge max and take a competitor out. potential billions of synergies if you put the two studios together in international and so many other areas that maybe you do do it. you gets sports, the nfl, college football. they can be added to your overall. you've got a broadcast network and so, jim, you know, i think -- listen, you and i both have conversations. we do it with decision--mamaker and decision-makers' opinions sometimes seem to change, don't they? >> yes, i think this deal with paramount makes a ton of sense and the reason i say that is max is doing better than people realize. paramount is doing a lot worse

than people realize and if you put them together you do have a sport powerhouse which still matters. sports still works. nhl has a great contract and warner has a ton of sports and a great studio. scale matters more than anything else in the world and this gives them scale. >> it does, but it's not clear that they don't have scale already with max and they are just going to begin it internationally in terms of the distribution. >> true. >> and so there is not an insignificant risk in pursuing something like this despite what might be billions in potential sin. and regulatory-wise, while it might appear as we well know so many other deals appear to be easy to get through, nothing is easy. they may think we may get things done in 11 months and yet they got warner done in 11 months. >> that's true. >> yet there could be another

impediment. if something happens it could happen fairly quickly. it won't be that difficult if they decide to move all in here, but they need to talk to their shareholder base and really get a sense of what those shareholders are seeing. you saw them the warner brothers/discovery stock sold off fairly significantly and perhaps will rebound a little bit. >> one thing that discovery is not getting credit for much what have david zaslov has done. >> they do believe that. you do get a loan multiple to your point. >> right. >> there's a lot of questions about multiple and the ad environment and how quickly the cable networks they own are going to continue to decline, and that still is the bulk of, right, the vast amount of their cash flow, but they are making some money at max, and the real question is can that move much more quickly to a bigger number with paramount as a part of it? >> totally, great point and

defending your life with about, i don't know if you've seen "defending your life." >> it's fantastic. i think max is real good and david is real good and tell james i said hi. >> got it. >> we'll see david before then. meantime, we'll talk some micron riding the ai wave with a quarterly both, guidance above consensus. we'll speak about that later on this morning. futures are hanging in there. car max, tesla, spotify. that's all coming up in a minute.

one of the most exciting conference calls i've been in on in ages, carl, is micron. they didn't have an earnings beat. they had a major infliction moment, and it's so good to hear from the entire industry which you'll see being flying. positive outlook for the quarter. i head boosting the stock rather radically. the ceo joins us now. this was so exciting to hair say the things that you said! >> first of all, jim, thank you for having me on the showers, and, yes, in fiscal first quarter, micron exceeded the revenue, eps, gross margins, versus the guidance that we seen in the september quarter. what we saw versus our expectations in september was that the price trend was even stronger than what we had expected back then, and, of

course, micron has been able to capitalize on this. we expect pricing to continue to incareer, and this is because of the improving demand comply balance, and if we see that micron financial performance will continue to gain momentum through the year as pricing continues to improve, be guided to return to profitability in the may quarter and return to free cash flow in the august quarter so we're excited about the things ahead and technology, products, manufacturing and customer relationships. >> people need to know, because i speak to you after every quarter. this is t.have you told me many times that i'm usually bushel and you told me many times hold back, jim, hold back, jim. not yet. you're not saying that yet and not saying that for pcs. for mobile you're calling the bottom. for ought moist you're calling the bottom and for industrial you're calling the bottom.

how is this going to unfold? >> well, jim, in terms of over the last two years, pcs and smartphones have seen significant declines in terms of units being sold in the market year over year and in 2024 pcs, smartphones and servers will have modest growth, and what's exciting is they will all have increased data center applications in them as well as edge in smartphones and pcs and various industry applications. along with this, customers and mentorees have pc markets have that have been enlarged for us. data centers continue to be somewhat high. we said it will marginalize

boost things to the demand and ai is brings in -- ai is driving for for more information from data centers and ai is also proliferating to edge. will you have smartphones that will have ai capabilities that will be introduced in '24 that will start resulting in increases proportionately and building up in 2025 and pcs same thing. aipcs will be introduced in 2024 and later in '24 they will start being sold in the market and become a force in '25 time frame. think about it. these smartphones, these pcs with large language models in them, they acquire 4 to 8 gigabyte more memory in the

ai-enabled devices. that translates to 40% to 80% growth. it points to -- yes, a sy a strong enabling piece for us from the data center to the edge. >> people have to understand you've said over and over again, glut, glut, glut, took inventory. >> you're talking about how this is so much demand that this isn't a one quarter environment rp. we have said that we expect records in 2025. jim, we talk a lot about the demand drivers and i think the

other side of immigration which is very important is the supplies, and what's been happening in the industry is capx has been reduced. factories have run underutization in order to baruch spy in line with demand. over the last seven quarters there was exit's supply and now it grew. >> and the high bandwidth memory needs to produce the same number of gigabytes as that standard memory. that involves cutbacks in memory and production and it's resulted in more shift to the word of high bewadeth. it's -- so supply is getting

strained so supply imball will continue through july of 24 because we've had seep decline in prices over the last four to five quarters that '24 will be a year of recovery and improving trends and gathering momentum for us and we plan to be extremely disciplined when it comes to supply management, and this will all result in a strong 2025. >> wow. sanjay, it's so great to hear your voice to hear you -- rp people need to know, this is a very important call. thanks for saying with us first on nbc. >> happy holidays. >> thank you so much.

>> get about the pre-markt and we'll take a look at the pre-tech as we look "squawk on the street."

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cramer's maid tash as -- mad dash as we count down to the opening bell. cinta; a medium-sized business, they reported another blowout quarter. what does this say about the economy? small and medium-sized businesses are the backbone of our economy and they are doing incredibly well. 1 million customers doing well will hear from him tonight, and you can not have a recession if cintas is blowing the doors open. certainly can't. >> claims today, 205, down 10k from the previous week. >> i'm always worried someone

will say cintas is doing so well we can't cut rates. no, this is the part of the economy like paychecks. it's just sailed right through. these are the people who actually add employees. >> let's get the opening bell and the cnbc opening bell with the cadillac army of greater new york. the question is what do you do here with it? >> take a look at the stock and if the stock has gone straight up in the seven, eight-week period you must sell something. i'm not saying that you should be selective. i'm saying the opposite. don't be select. just sell something because these stocks will not be able to sustain this at the beginning of next year. when other people are going to come in and say you know what, i

just have a great capital game. i've managed to defer it until 2024 and i've got take it now and people who think that somehow this can continue, they should study history. it has never continued. i'll point blank say this is sell time. >> a lot of desks today point out that tomorrow is going to be the final trading day of the year. >> we do have upgrades of names you like. >> yesterday it was a downgrade. oh, my god. salesforce is doing so well. people are calling it a value stock with no growth. there's a guy by the name of mark benioff and you should go tell him he has a volume stock with no growth because you'll be quite wrong. david, you are familiar with salesforce. why do you think everyone is picking on him after he's taken out 10,000 people and done what the activists want which is grow, grow, grow.

>> in tons of potential marginal movement. when the activists got involved over a year or so ago, there was a lot of focus on what were margins that don't match up. how do they look now? >> oh, my. when you take out 10,000 people. when have you one sales person calling with four products instead of four sales people calling with four products, the elliott method here, what you find is the margins explode and also because of ai, the revenues explode. they are your way to find out what ai means, whether it be for a bank, whether it be insurance company, whether it be retail. they are the guys that they can go to. go to service now and go to salesforce and you say, look, what is this ai, and benioff will walk you through it, ben i have and his top guys who, by the way, are just great soldiers. david, ref niece going up, head count going doubt. i'm calling that nirvana.

>> that said, jim, you've pointed to stocks with incredible runs and i would assume salesforce is among them given their 100% rise. you would never believe there's an opportunity to potentially sell some? >> i do think -- that's a great question. a couple of stocks, salesforce, costco, nvidia and apple that i'm choosing not to sell because i don't know when i can get back in them. that's my principal worry. don't know when i can get back in them and they are so great that there i'm willing to take a hit. most stocks i won't take a hit going into 2024 because i'll put some back. a 20% move on the parabolic, $20 move in two weeks and that's different from salesforce. >> or caterpillar, person strewn negative catalyst watch. stretch valuation, backlogs,

deteriorated earnings. >> he's been negative for the whole parabola that he missed. he thought a cat was a dog. he doesn't knowing. >> i there are parabolas that you'll sell. >> i have a right to be ash traore and capricious and i've earned it. >> there are a bunch of interesting calls that i think about you when i read. dutch pro web pro's top idea. >> they have cleaned it up and met with them and i'm very proud that they have been able to manage to slow down some of their willy-nilly expansion which was really hurting them. i told them to raise capital when it was at 40. they didn't listen to me, but when it got to the mid-20s they did. they had the capital to earnings

and and they have the annihilator, the single best caffein drink in the world. world celsius, you know, sellsus, i looked at it. what's the difference between celsius and dow dem call? no longer dow chemical, just dow but i use it for emphasis. >> new reports on boeing, reports they may deliver their first dreamliner to china since 2021 and pave the way for the max. >> david faber may make fun of me but now is the time. that's a stock that's literally up in a straight line from 180 to 265. the move that i missed, of course, because david told me to sell it, and david this is a definition of a parabola. that's what this is. >> i like the first gram. i want to complete the christmas tree. it's so pretty and it's seasonal. it's perfect. yeah, that gives you a sense as to the move up in bow, and it's

entirely my fault, jim, as we've seen many times for questioning you when you were so negative for so long and yet owned the stock and then obviously you chose to sell it at exactly the wrong time. >> i'm ready about what to do when a person who is incredibly smart, smarter than you, tells you to sell and you believe, and it's called why didn't i listen to david faber? is that a great title for a sfwhook why didn't i listen to david mayber? >> trust your gut. >> oh, i like that. >> trust your gut. >> that will sell tens of dosss. >> yeah. >> i'll tell you something, david. this stock could fold like the eagles. oh, no, i didn't mean that. we're not folding. just a joke. we're not folding. i'll see you in vegas. >> >> guys, you know, we spent -- we spent a lot of time on warner brothers and paramount and i don't want to belabor it. but it's interesting to note that both stocks are down so there's nothing the market likes

here. they don't like the possibility that paramount gets potentially taken out or questioning what price that would be and warner brother/discovery shares are down 3% after a selloff late in the day yesterday as well because, listen, jim, they take on a lot of leverage. even if you do an all-stock deal there it's a lot of debt at paramount, too. it just may be something that they don't want to see. >> that said. >> david, what about -- go ahead. >> no, go ahead. go ahead. >> i was going to ask you up company that doesn't have a lot of debt that could be involved is a company that you top that work for, comkafrkts and i thought you might do a little opining about that because i want to keep my job. >> as i've said before and i believe to be the case, decision-makers do sometimes change their mind that. said it doesn't seem to me that comcast could enter the fray here. from a regulatory perspective it's difficult to do. you've got two broadcast networks. got to figure that out, right? >> right, and on from there, so

it -- it becomes i think difficult for comcast from a regulatory standpoint to potentially pursue it, not to mention it just may not be something that -- that really moves the needle enough in terms of scale, and there's always that issue of how you would structure is t and voting control and things like that, so i think really our parent company if in fact warner brothers/discovery were to do the paramount deal, the question becomes then what? what do you do? what do you do with peacock? can you win. we all know going into this next year, we all know. we've all spec late for quite some time that there needs to be consolidation and/or rationalization amongst the providers of direct to consumer streaming services, right you? can't keep spending this much money with this little return. at some point it's got to stop. and next year will probably be

that year but how that occurs is still very much unclear. >> well, i mean, call, that's a great analysis because what's happened is these are all losing money, these different services, and i don't see an end to the losses unless someone bites the bullet, and everyone has been reluctant to do that. >> the market is definitely getting ahead of certainly management commentary. wells believes that comcast for warner is more likely. doesn't think we need to spin nbc to do it? >> that's interesting because i thought i you would because antitrust is -- leaving comcast out might make it seem like you haven't look at part of the analysis. >> a lot of comments is about sherry basically having cleared the path for people to start talking about this stuff. >> yeah, and listen, let not forget the other alternative which we've discussed which is someone buying the control stake through buying national amusements, the control stake in

paramount that. still remains possibility. there is an interest in that. of course, we're talked about and others have reported on this as well. she's good couple of different places she can go to try to find some value. what i do believe is clear they are certainly listening at paramount to any and all potential offers whether they be for the control stake or for the entire company. >> david, when i was out to see andy jassy who is a sports fan, it is clear if there's sports he's interested, and we talk about all these companies and think lilliputians compared to a.m. son. couldn't amazon say the nfl contract, can i buy this paramount, i get cbs, hey, i'll just go do that. what do you think? >> i mean, regulatory-wise that's a very difficult thing for them to consider doing. i don't see them getting the approval. now, listen, things can change. administrations change. we know that, jim, but that's a tough one. because i think, frankly, if

amazon were a potential buyer you'd have warner brothers/discovery say buy us, you know, pay a big premium and we'll be yours that. -- that would be a possibility in a different world. i don't know how amazon views it, but i -- it's hard to imagine from a regulatory standpoint. >> speaking of giants with cash, jim, a couple of stories on apple today, one is bloomberg saying they will ramp up their produce of the vision pro aiming for a february launch and ai says their research department says they want to catch up with some of their models. >> when he's talking about and sanjay was very, very yegtive for a long, long time. as far as the vision pro i've surveyed all the analysts, they sante tried it, and tony saganegi says its best times have already happened. that's a joke, he's not saying

that, but david having tried it and loved it i can tell you the analysts are looking a new way, it's heavy. not enough writing, not enough sports. it will be legion how much they will hate this thing, and they will be wrong! >> they will be wrong. you forgot the one thing that i always focus on which is that price tag. has it come down at all? what was it originally going to be, over $3,000? >> ever heard of the word fungible? >> yeah. it's fungible. like that's a word. that's what i was putting out there. >> stop laughing at me. i asked mike segal who he ever think of doing a buy now pay later thing with vision and apple? >> not a fireless thing.

you watch the mule. >> thank you, david, paying homage. >> they need a party to get involved because it is too expensive for most people around the world and i don't know what her going to do about that, but they can do a buy now pay later with a firm like everybody else, you know. >> jim, a couple movers on earnings to the degree that we're getting them. carnival, an expected loss, targeting ebitda ahead of estimates. ebitda target, eps loss of 22. a bit light on consensus but for fiscal '24 it's nice. >> people are saying the wave system is going to be good. catching up and being able to

spend time with the people they are used to go make cars and they are using aye to be able to figure out instantaneously what to charge for a car and they are able to be much more uniform almost like a new car company. really smart group of guys. done a lot of things right. car smacks a very inexpensive stock. people should consider owning it because the company's management embraces technology like none others. >> which brings us to morgan stanley. joan as reiterating overweight for gm on this ongoing thought that ev growth is desell rate, good news for i.c.e. and oems? >> i think so. there's two showmen in this business, and i don't mean this, goat good writers and were incredibly insightful. my trust has such a big presence

in ford because they are the ice ma reasons. >> and that would extend to suppliers as well. >> yeah. i think that what people have to recognize withford is they are the hybrid company and that's where -- maybe ford got the zeitgeist with 1950 lightning and they thought they would sell more. the mustang is too expensive but when it comes to the f150 it's the winner, and they can churn them out and small businesses love them. >> david, really quick since you're with at morgan stanley today, in financials the reports that -- it's one more thing amidst their restructuring? >> i'll kind of throw is back to jim. you can see that it has

benefitted, like so many others at least as of late given the decline in rates and the belief that the economy continues to remain strong, but you can see the story there in terms of james fraser making a lot of different move, >> narrator: the question is can you finally generate a return to a level that investors will like. >> it's very -- the stock is so slow that they have toe do something. charlie sharp has put together a consent degrees that is incredible, where we's signed sun after afternoon and that's the place to be, wells fargo. david? >> wells fargo.

>> wells fargo. >> and i always like to look at market cap. remains below 100 billion. wells fargo market cap is twice the city of citi's who is bite-sides. more a major financial institution. >> i think it's -- i hear people same this stock market is going to take a spaking. go buy something. get up or just u.s. the qr code on the screen. as we go to break, data fairly dovish today. we'll get rei coming up in a few minutes. all sectors are green and

yesterday all stocks were up in the likes of names like chef ron. back in a minute.

this morning we mentioned carmax, micron, mentioned cintas. we got to all four of the five. norwegian following carnival's leader as they come in with narrower than expected loss. vix not back to the 12s that we had earlier in the wk.ee 13.5. stop trading with jim is up next. [ "i'll be seeing you" by the five satins ] the mercedes-benz holiday love celebration is here. come in now for the exceptional offers you're bound to love,

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let's get stoptrading with jim. >> micron, you see them all over the semiconductor world. i think if people bothered to read what was said, you would take the read through to nvidia. nvidia is the constant theme behind all of this ai. it's the partnership with nvidia that seems to be most proud of. i know david said look, this stock, is this a parabolic move? it's anything but. the stock has done nothing since our may conference that we had with the ceo council, and yet, i think it's time for it to move

given the fact that it's 25 times earnings and 20 times 2025 earnings. it's the most inexpensive of the magnificent seven. >> no surprise it's leading the s&p right now. >> no. one of the things i want to point out about this, they typically you do not see them in a lot of areas that san jay talked about. pcs is amd. if they're really going to be involved in all these new areas, it would be incredible. they have a software component. my theory for 2024 i'm forgetting about the hardware component of nvidia and talking about software. they will have the giant lead. >> wells said they try to play devil's advocate on the micron call and didn't work. the most important thing they're managing production, playing for asps next year, sanjay kind of got to. >> i would go further and say they're not in play and they didn't see this coming and did not try to restrain. they spent more money than i

wish they had. i was screaming saying why don't you stop building already. why do you keep building? jim, you're a tv person, in the business. but, yeah, they -- just even though he had been bullish about one day there being a bottom, they don't have enough capacity. you have the holy grail of incredible demand and not enough supply. micron is going to 100. >> tonight? >> so i have cintas. we talked about them being great. i have domino's. what a rejuvenation of dom's. it is unbelievable. and then we have the passing of the torch at levi straus. clipberg. chip is -- he like s the niners. what's the stadium they play at? >> it's our last show of the year with you, me, and david. >> david took my guest for the last show. that's a come up. love you guys. this is like -- i don't --

sometimes people say i -- i work for free. you are never supposed to say that. we have people called agents. but i do love working with you, how about that. david v a great one. >> thank you, buddy. you too. >> absolutely. >> yeah. >> we're all -- >> this is it. until the new year. >> and then we'll come in. interesting combinations next week at this time. then we'll be back. >> there you go. >> see you, jim. tonight, "mad money." david still to come with morgan stanley's james gorman in the w 2xtou doup65. ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪

good thursday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla. we are both live from post nine of the new york stock exchange. david faber live with us from morgan stanley's hq in new york city ahead of his interview later this hour. take a look at stocks in the early action. we're rebounding. the dow up 250. s&p 500 up 0.8%. after that intraday slide yesterday which we'll talk about. yesterday, pretty steep one. worse day in three months. treasuries take a look. the trend has been a bond market rally in lower yields and where

we sit again. 10-year note yield 3.8%. 30-year on 4%. the 2-year 4.3%. those lower yields continue to move south. 30 minutes into the trading session, here are movers. shares of micron rallying after delivering an earnings beat, raising guidance to memory chipmaker ceo with us last hour expecting pricing to continue to increase because of the improving demand-supply balance. carmax is rallying. the used car retailer beating profit estimates thanks to cost cuts overshadowing a sales miss as average vehicle prices fell and announcing it will resume some of its stock buyback program. we're keeping a close eye on the media names following news that warner brothers and paramount and discover have held talks about a possible merger and what that means for them and the other titans ahead on the show. meantime lei on deck. let's get to rick santelli.

>> yes. call it number 20. 20 consecutive negative months in leading economic indicators. down 0.5%, so minus 0.5%. as i said, that's 20 in a row. if you consider 21 months ago with 0, it's been 21 months since we've had a positive number on leading economic indicators. we see interests rates have mod up. i'm sure it doesn't have to do with the recent lei. we hit a low of 382, a cycle intraday low on 10s that was six minutes after the 8:30 eastern data. david, back to you. >> thank you, rick. i am here at morgan stanley's headquarters north of times square in midtown, manhattan. about to interview a little bit from now, james gorman. we're going to sit down for what will be his final interview as the company's ceo. he steps down from that role only a few days from now as the year ends. he will remain as executive chairman and said until the end

of next year it seems. we're going to talk about any number of things that have occurred during his roughly 14-year watch over this institution. looking forward to that. and i hope our viewers are as well. >> looking forward to that, david. david faber at morgan stanley. in the meantime let's talk about the markets here because what was that yesterday afternoon? the 1% slide. i think there's a lot being written about it this morning. zero day options, california, secretary of state, exploring every legal option to remove trump from the ballot, declining yields, does that signal a recession? the taiwan-china news. we don't know exactly what that is, but we are coming up against the year end, and that could have something to do with it. we're back to rally mode today, and i would note that bonds are rallying too. there will be this question, if we continue to sees this ferocious bond market rally, about whether the bond market is sniffing out more economic weakness beyond just the rethink

of the powell pivot and how much we're going to see in terms of rate cuts next year and when >> yeah. at the same time, claims 20 5k. continuing claims with a downtick. conference board yesterday. the jump in confidence among all kinds of cohorts, people making less than $15,000 a year, biggest jump since 2021. big jump in people expecting stock prices to be higher in a year. you do have a classic push and pull regarding expectations in possibly inflation. >> it feeds right into the narrative that the market and the fed and the treasury secretary want to see right now, which is a resilient economy with inflation continuing to examine down. glad you mentioned jobless claims. there's a lot to be clearful this holiday season, mainly we're to the seeing stress and a large amount of layoffs. we did get the jobless claims because it happened over the december survey week for the overall jobs, and ticked up 2,000. we continue to see these

historically low numbers, 205,000 jobless laims, continuing claims basically flat. those people who are on unemployment continuing. we got also the insured unemployment rate holding at 1.3%. these are low numbers on top of a gdp and it was another look at the third quarter which, okay, consumers weren't spending as much, but i think what's more important for the fed and for investors and that q3 gdp number, the pce. the core pce prices if that number. 2% quarter over quarter. that is a step down for -- from 2.3%, below consensus, and it raises hopes that tomorrow's pce deflator number will be pretty benign. again, very good for the markets and the fed. i would say. >> david, anything to add? >> oh. i'm sorry, sara. >> that's okay. no. >> just engaging you. >> i have nothing to add. i was just admiring how handsome -- how nice the two of you look.

but, yeah, i've got nothing to add. are we going to barton or not? >> go for it. >> chip says go now. i'm taking a look at warner brothers discovery and paramount, down now. sara mentioned at the top of the show and reported by numerous organizations yesterday, the two sides at least have had a conversation and as i reported earlier call it warner brothers continues to mull or consider whether it wants to actually move here and buy perhaps paramount global. let's bring in barton crockett, rosenblatt security research analyst and get his take on what's all means. barton, they're thinking about it. doesn't mean they're going to do it. when something is for sale in your industry, you do certainly give it at least some thought, and that is the case at warner brothers discovery. what's your take on whether they should or shouldn't pull the trigger on a deal like this? >> we've had caution about the tv media, and we have an excel

rating tied to the secular pressures. certainly, i do think that if paramount were to move ahead with a merger scenario, warner brothers discovery is probably their best fit. you know, part of that is regulatory, right. all the media conglomerates have broadcast networks where they couldn't combine that with paramount and warner brothers discovery doesn't. but that means that warner brothers discovery could make a nice match for many others, and so it's not entirely clear this is their best option. what is clear is that there could be a lot of cost cutting. it is clear that there could be some antitrust questions, but i think the shares would be enough that this would be able to go through. i think the bigger question, does this change the revenue trajectory? i think that's what stocks will trade on. what you will be getting is basically a doubling down of exposure to secular pressures in the pay tv network without a

clear answer for how you turn that around. >> right. i mean, linear cable networks, it's not where you want to be, although it does contribute the bulk, vast majority of warner brothers's cash flow right now. that said, you know, it could super charge max. they're about to take that internationally. and to your point, it could be, what, billions in synergies. that's got to get warner brothers's attention, doesn't it? >> certainly. i think this is zaslav's wheelhouse and they've done well with cost cutting at the combination of warner brothers and discovery. you know, certainly i think all the efforts they've done there and all the efforts that paramount has done to bring its cost structure under control, probably lessen the opportunity for cost cuts and a combination of the two. they would still be meaningful. but this is a market i think that wants to see a growth opportunity, wants to see a horizon that is brighter than today, not just cost cutting.

so i think there needsto be a revenue argument and i don't know that you see that in this kind of combination. >> yeah. you know g into next year, barton, overall, i've made this point and others have, assume you agree, there does need to be some rationization here, right. too many streamers spending too much money for not enough return. what do you think happens? what is the most likely outcome in terms of how that changes? >> i think that media m&a is certainly going to happen. that doesn't mean it delivers the kind of upside that maybe it has in the past to shareholders. you know, maybe some instances it's better return than others. we like a smaller company lion's gate, breaking itself up, a valuable content studio and a starz network which is pretty immaterial to the argument if a market where i think there is still a bit underneath content

libraries unencumbered by cable networks that are albatross at warner brothers and paramount. here and there, special situation, i think the liberty/siriusxm merger should deliver. the atlanta braves are a sports team that could be acquired as a separate stock. there's m&a value. you don't have to go down combining tv networks as the way to go after that. >> yeah. no. and as i said, of course, there's a lot of money being spent and not a lot of money being made. that said i think max will be slightly profitable. so for paramount shares at this point, even with the prospect of consolidation, you don't really think they go higher? >> we're not recommending that you put money in paramount today. clearly a deal could happen, but there's the revenue question. a deal might not happen. there's been a lot of

discussion, you know, it's unclear that any of these things are actionable today. so, you know, we think there's better opportunities. in our coverage, like internet right now, we think that lower interest rates, innovation and growth and new cost cutting, are great for stocks like amazon, great for spotify, great for pinterest, but the story in media we think is a much more difficult value story that we're not really favoring at this point. >> yeah. barton, appreciate you taking time. thank you. >> thank you. just a few more charts to sort of throw up as we look to another market rally day here on wall street. carl, you mentioned better consumer confidence. the misery index. the unemployment rate plus the inflation index supposed to tell you how miserable people are. it's down to 6.8%. that is the lowest it has been in a while. you know, the biden administration is looking for ways to get credit on the

economy for bidenomics. you see spikes before have typically happened around high unemployment rates, but also in the past few years, it's been elevated because of the inflation rate, not necessarily unemployment. what the fed has been able to achieve so far is super low unemployment with inflation coming down. look at where we are. >> fascinating. just fascinated by the spike in covid, which you see at the beginning of 2020. >> right. >> we recover as the vaccine gets discovered and inflation hits us. you can feel the national mood through that chart. >> if you look all the bakck, i speaks to periods of high unemployment and the political guard. the only other chart of the week, which i think shows where some of the pain is being felt in the economy is fedex. i know we talked about this over earnings, but the takeaway for me was the industrial part of the economy is weak and that's why fedex had a revenue

shortfall. their operating results were better in the quarter and yeah, they're going through a transformation when it comes to express so people are picking apart the margins, but it was the revenue shortfall on the macro economic environment. that tells you where you're seeing softness right now, not in the consumer economy. >> general mills did talk about a slower than expected volume recovery. we'll see what nike says. >> after the bell today. >> some of the quarterly printers. >> right. it's different with the consumer staples. they benefit so much from the higher price increases and now when they're finally seeing disinflation and deflation the consumer is more stretched. hard to bring back the volume a. i'm looking forward to what they have to say about china. here's our road map for the rest of the hour. major averages up double digits on the year. the catalyst that could take the market higher in 2024.

>> energy from the best performing sector to one of the worst this year. what's ahead for those stocks as we go into '24. >> and not too many minutes from now, don't miss it, big interview coming with morgan stanley's outgoing ceo james gorman. big show ahead. "squawk on the street" is back right after this. this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.

welcome back to "squawk on the street." the s&p is coming off its worst day since late september. still up more than 20% this

year, less than 2% from all-time highs. dominic chu is looking at some of the catalysts that could take the market higher in 2024. >> good morning. with the dow, the s&p 500, nasdaq all at or getting near all-time highs, there are a list of potential catalysts that could make the market go the next leg up. no guarantees. just as stocks go up they go down as we saw yesterday. here are three areas that could take an already stock market that's high even higher in 2024. the first one is improving data in some categories from china. that could help give the stocks at least an additional boost there. there are still some question marks about the economy over in china, but november data from the national bureau of statistics over there show manufacturing is up 6.7% and high-tech manufacturing was up 6.2% over the same time last year. number two, is that earnings could be another catalyst for a continued run up. earnings season starts just about two weeks after the new year. analysis by tracking firm lseg

shows earnings for the s&p 500 are expected to be up 4.7% in q4 after a stronger q3 from corporate reports than people thought. lots of firms have weighed in with opinions including barclay's. that firm believes big tech will be the driver of earnings growth in 2024. the third one is just the month of january itself. the dow is actually up in january 62% of the time. that's according it data from the stock traders almanac. january is traditionally the best month of the year for the nasdaq which is up 2.7% on average. the s&p is up just north of 1% on average in january. this is over the last 74 years. now the start of a new year is also a big month for mutual fund inflows. americans front load their retirement accounts to get the most. individuals will be able to contribute up to $23,000 for the year to 401(k)s and $7,000 to

iras. with the market there's always another sign of the coin. general mills trimming its sales forecast on slowing demands. fedex seeing significant demand disruption due to falling sales. several strategists say the ra rally's run this far could be set to take a break. . to present a balance here the momentum is for the upside. >> dom, thanks for that set up. joining us with his market view into next year is bob, the crossmark global investment chief officer. great to have you back. i wonder what you think about the momentum that has been built, yesterday notwithstanding, and how long that might carry into january? >> it's been incredible. more than 15% in the last month and a half. that's like a good year and half and a month and a half. all the momentum points to the upside, and, of course, the fundamental belief that the fed is going to lower rates six

times according to the futures curve in 2024, that's got investors excited. the path of least resistance continues to be the upside into the new year. >> i am beginning to see pieces, data track is a good example, not overly bullish, but they are looking at instances in which you can have a repeat of a 20% year. they point to the early 80s when rates were coming down and then they point to periods in the 90s where tech was looking at a new structural story. can you argue that we might have both? >> it's certainly possible. there are arguments out there, the roaring '20s could happen this century again. look, i think a lot of things have to go right, but i'm a little concerned that market already believes some of that, carl. you know, earnings are expected to be up double digit percentage next year. i think that's a bit of a stretch giving the slowing we're seeing in certain parts of the economy. we're putting a 20 p/e roughly on those numbers.

so you got to give me better than double-digit earnings, going to give me a higher than 20 p/e. i need one of them for stocks to have a good year next year. i think it's a stretch. >> yeah. there's questions, bob, about what the bond rally is signaling as far as economic weakness. i get it's a lot of response to the powell pivot and rate expectations, but when we start to get to these levels and continue to break south, does it make you wonder about the bond market sniffing out a recession? >> it sure does, sara. i think we are seeing signs of fraying, can i use that, don't want to be too extreme on the economy. you reported a few minutes ago, 20th month in a row of leading economic indicators down. nobody seems to care about them anymore, but when you look at them they are good leading economic indicatesers for our economy. i'm in your camp being worried about those things. >> i also reported, bob, that unemployment claims continue to

be in the low 200s, continuinging claims flat. the gdp numbers 4.9%. the data overall appears to point in a better direction, even gdp for the fourth quarter is getting revised up. >> no question. the carryover from the third quarter is strong and anyone who says the economy is weak currently has to eat some humble pie. but i think we will see more weakness in those numbers into the first quarter both the series you talked about and i think we'll see -- i don't think it's going to be a horrible economy, but we can't continue, i don't think, at these 4% gdp numbers. >> i wonder what you think powell is thinking about some of the would-be liabilities and why that might feed a dovish

conversation. maturity real estate, corporate tax cuts expiring, the possibility that the labor market strength is getting narrowed into a few specific areas like government and health care. i mean those are the kinds of things you're hearing from doves right now. >> absolutely, carl. remember, he flipped very quickly from we're not thinking about lowering rates, may not be done tightening, et cetera, the next meeting it's yeah, we're talking about lowering rates. he has to be seeing some of the things you just mentioned and some of the things that sara and i are worried about. weakness in the economy, some of those mini cliffs that we have to deal with in 2024. >> so i wonder, growth has a potential to surprise and so does inflation, bob. i wonder which is the bigger surprise risk next year? higher, stickier inflation or lower inflation? deflation? >> yeah. a lot of that will depend on the path of the economy. i don't think you can get it

both ways. the nirvana and what consensus i think is arguing is, the inflation rate continues to fall heading toward that magic 2% number. interest rates continue to fall. earnings grow double digits. the economy is just fine. i think there's some disconnect in there. if the economy is strong enough to produce double-digit earnings growth, does that not raise the question can inflation continue to come down at the pace people are expecting? alternatively, if we're going to have weakness in lower inflation no reason we get to double-digit growth. our peak can't have it both ways, and i'm cautious at some point next year after the momentum stops. >> finally, bob, what are clients saying about what it would take for them to leave the nest of money markets and start to play in stocks if, in fact, fomo was unleashed? that's a big debate right now about how comfortable it is to be collecting what you've locked

in? >> there's no question, some of the 15% rally is, in fact, just that, carl. we've seen equity inflows pick up to some degree here in the last few weeks, so i think some of that is already under way. look, if we could blink and see another 100 basis points come off the short-term interest rates for money market fund that will chase some people out, but back to what the concern about what the fed chair might be seeing, if there's some economic weakness, you get those pretty quickly lower front-end rates. when rates fall, that usually means the economy is struggling too. it will be p/e on the one side. >> bob, that's great view of what we might be talking about in the next few weeks. happy holidays. good to see you again. >> same to you. thank you. up next, energy dethroned by tech as the top sector of the year. what will 2024 bring? what investors need to know as we head into the new year.

david's interview with morgan stanley's outgoing ceo james gorman. coming right up. you don't want to miss it. a couple other big interviews coming in the next hour, including the ceo of carnival, shares are rallying on the back of results this morning. we're going to talk to the ceo of crowdstrike as well in the next hour. "squawk on the street" will be right back. a force to be reckon with. no, not you saquon. hm? you! your business bank account with quickbooks money, now earns 5% apy. 5% apy? that's new! yup, that's how you business differently. in the u.s. we see millions of cyber threats each year. that rate is increasing as more and more businesses move to the cloud. - so, the question is... - cyber attack! as cyber criminals expand their toolkit,

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energy was the best performing sector last year, but has gone from best to one of the worst this year. what will 2024 bring for the sector? pippa stevens drilling down on what investors need to be watching here as far as catalysts? >> sara, energy stocks pressured this year by volatile commodity prices, record production including from the u.s., as well as momentum behind other sectors, namely, of course, tech. so the energy sector's p/e ratio to the s&p, wall street justs are the most bullish on energy stocks with the highest percentage of buy rate heading into 2024. key themes to watch include the upstream becoming more efficient, meaning they're extracting more oil per dollar spent and supply is growing, but spending does remain in check.

exploration and production companies have lagged this year, and so could be poised for a turnaround, especially since twti is above break even levels. offshore growth should support services company like halliburton and the group has outperformed to 66 hitting a record high yesterday. spreads have weakened but they're above historical levels and a soft landing could boost industrial product demand. finally, we'll likely see more m&a even after the more than $180 billion in deal value that we've seen year to date. carl? >> do you think angola is interesting or material given the disagreements about quotas? >> i think it shows that cohesion among opec, and its allies is starting to slip. angola was very vocal going from 1.7 million fwirls barrels to

1.2. as they produce not against their levels what does that mean for saudi arabia? will they decide this is no longer worth it and flood the market with oil? they've done it before and could do it again. interesting developments there. >> we'll watch for that. thanks so much. in a few moments david's exclusive with james gorman in a few minutes. in the meantime dow hanging on to gains here and not quite recovering yesterday but up 240. don't go anywhere. all right, tandy, what's it gonna be, the drink made from whatever was laying around, or the one made with your drizzly haul? drizly! stock up today, sip well, tomorrow. drizly.

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we are live from morgan stanley's headquarters for what is a special interview. james gorman will be retiring as morgan stanley's ceo at the end of the year. that's not too many days from now. he will be staying on as the company's executive chairman. he joins me in a cnbc exclusive. we've done a lot of these through the years. this may be our last. i don't want you to tear up yet. >> i'm not going to be tearing

up. but it's great to have you back to morgan stanley. i'm looking forward to it. >> it's good to be here. you know, so many different ways we could start this, but i am curious, you have to be sort of thinking about the last almost 14 years that you've been running the bank, not to mention you were here for a number of years prior to that. when you think about the totality of your time here, and in particular leading the organization, what do you think and how do you think about it? >> i think to lead anything is a privilege, and to be given the opportunity like this during, you know, in working life if you happen to be in business and happen to be in financial services it's an incredible honor. i guess, you know, the reflective side of me would say how lucky i've been. you try and, you know, one of our core values on the wall when you came in, do the right thing. you make mistakes along the way, you get judged in these jobs like you do in your job, david,

and, you know, that's -- you rise to that. you don't let it get to you. but the main thing i take away is what a privilege to have led such an incredible institution. i'm so proud of the quality of the people, the values, the way we go through covid, i mean there's so many moments through it and we'll talking about some of the business side, but it's more the human side and role of leadership. now, one of the -- a lot of people want to be leaders but they don't want the tough bit that goes with it, which is you get to makes decisions and your decisions prove to be right or wrong over time. so the accountability, something i've always sort of risen to, like being the guy making the call, and if you like that and you're inposition to make calls, it can really move institutions. in our case global bank. you know, incredible privilege of a lifetime. >> yeah. well, you've made plenty of those decisions and the key one

repositioning the business of morgan stanley over these last few years, particularly when it comes to asset management. i mean, is that what people are going to think about when they think about the gorman era? what do you think they should think when they look back on the almost 14 years you've been leading golmorgan stanley? >> we came out of the crisis as the last institution that was about to fail. it's like planes landing at newark airport and if you look out over the hudson river from manhattan, and you can see them on a clear day like today at 2,000 feet, 5,000, 15,000, 30,000 then all the way back, you know, up the river, and, you know, bear stearns landed and crash landed and got scooped up by jpmorgan, lehman landed and crashed and they sweep the stuff off of the runway. merrill landed and got scooped

up by bank of america. ge -- >> aig. >> aig. we were coming in at 3,000 feet and there was still debris on the runway. we were leaking oil. and, you know, that was the moment. so the ship or the plane in that analogy that we took over, was a really damaged vehicle, but we managed to land. with the help of t.a.r.p. and our large investor, we brought ourselves out of that immediate crisis zone, but just when we had come out of it we went into another crisis moody's were going to downgrade us 3 notches. over the next two years we fought this incredibly tough battle to convince them that they were looking at us from a historical perspective, not from a current or forward looking perspective. so it was as an institution as i look back, more of how do you go

from survival, fragility, healing, you know, balanced and then strong. and each of those have almost been different jobs along the journey. right now we're strong. wherever the stock is trading, i think it was up this morning. unambiguously we're strong. but there were several different jobs, if you will, along the way that required different skills and different team efforts. >> well, that crisis, of course, did create opportunity as well. one of the key ones being the opportunity to buy sol lom smith barney, transformed this company, right. s you chose to take advantage of it. was that sort of the transforming deal to a certain extent of your tenure? >> well, you know, firstly just the context, we talked a little bit ago about poker. i've played poker my whole life and love it. you have to avoid catastrophic risk. you can't go all-in when you don't have the cards. it's fine to bluff but very

dangerous to bluff. on the other hand when you have the cards you get aggressive. i felt we had, even though we were weak and fragile as an institution, the fact we could work a deal with citigroup to get that smith barney business, was an extraordinary moment. these things happen. this is once in 20 year, something like this comes along and you cannot hesitate. it doesn't matter what environment cycle is, what the naysayers say, it doesn't matter about the whole history, whether it worked or didn't work, there was a moment and you walk through the door. to me it was all about be very aggressive when you have advantages and we had an advantage and had to move. that transformed the institution. >> it did. and continues to. you know, culturally i remember there was a lot of questions at the time and there was a lot of tension, when you think about how you melded the cultures, or what ultimately proved successful in serterms of

execution, what were the keys along the way? >> you have to start with -- >> they were different. morgan stanley -- >> completely different. first ofall, dean witter was another thing. >> sure. >> very different organizations. >> institutional and retail. the combination. merrill lynch had a retail business and built through smith newcorp and various others built the institutional side. i started with a simple premise, david, which is the pure investment bank under the new capital rules that govern trading businesses and the costs of running global trading businesses was not a sustainable business model on its own for usp i'm not judging others. but for us. by the way, we kind of proved that in the financial crisis. and the market rewarded those businesses with multiples of good years, nine, ten times, bad years of six, seven times. that's not so good. so the logic, if you're in the

business of helping move capital between issue and investors, between people who have it and don't, sovereign wealth funds and so on, why wouldn't you do that for affluent individuals. it's the same process. you read the same research. you transact through the same systems. why wouldn't you do it for the same. logically, apart from sort of the emotional bias of we're institutional, we're retail, put that aside and get back to the fundamentals of what the business actually does. it was obvious to me. i just said to the team, listen, my promise to you is, we will make this a wealth management business that you're proud of, fit for purpose for morgan stanley and one of the first things i did when i took over the wealth management business back in '06, we let go 2,000 financial advisors. that had never been done before. margin revenues. they're on commission. the answer was, when we removed

them and gave their accounts to better financial advisors the clients were better served and lifted the standard to the morgan stanley standard. i said to the institutional team, we can build stability and get a better multiple on the stock, but i want to make you proud of your partners on the wealth management side. i think that over several years bled through because the performance backed it up. >> yeah. you know, you mentioned smith barney and that opportunity which with you took advantage of which doesn't come along that often and there was e-trade and eaton vance, smaller, not insignificance can't deals you did. i wonder as you look forward is there still another one out there that ted is going to need to make a decision on that's sort of been there for some time, or is morgan stanley, in your opinion, kind of complete? >> well, you know, just tell you a fun little fact. we spent much more on e-trade than we did on smith barney an spent nearly as month on eaton vance as smith barney. that was the reality.

no. there are always opportunities. i think ted has a whole plate full of things to do. one of the things, if i stayed another, i don't know, five years -- >> did you think about staying another five years? >> no. i come back to how i think about succession in a minute, but i think that we are more likely to do more non-u.s. we've been long the u.s. all the deals we've done have been u.s. based. that served us well. want to be long one market in the world i'm usa, team number one. but, you have to be aware that the world changes. there are opportunities opening up. india is fascinating. reincarnation in japan. for the first time in 40 years is fascinating. you have to be mindful of global opportunities. we'll certainly do deals as we consolidate wealth asset management around the world. there will be more of them i suspect i would predict internationally than u.s. >> xu think about challenge --

when you think about challenges your successor will face, anything come to mind in particular? >> it's not idiosyncratic in that we don't have -- i mean, there are some things i'm trying to clean up before i formally hand over. >> you don't have a lot of days left, you know that? >> yeah. well, i'm working hard. i tell you, i wasworking until 10:00 or something last night. i want to run through the finish line here. it's like, when kobe bryant said when two up in the playoffs and said you must be feeling pretty good he said job is not done. job is not done. job's done when you're finished. and, you know, so i'm -- no. i think the -- what ted has is an incredible institution with a great culture, but you can't take it for granted. wall street is littered with great firms that didn't do well over time. he's got a phenomenal team. he's a tremendous leader. wicked smart.

he has a markets background which i didn't have. i came from a different kind of background. but he has the intrinsic qualities of what it will take to lead this institution. idiosyncratic problems he has to deal with, no, there's usual run-of-the-mill stuff, but not that it's more in this world over the next decade, how do we take the strength of a strong institution and capitalize on that. >> you know, so many things have, obviously, changed during your tenure, but in recent years, i've talked about this a good amount, the growth of these alternative asset managers, what used to be the private equity guys, now just asset gatherers in all strategy, i'm curious, do you see them as a competitor? i know they're important clients. but their growth has been so dramatic, you know. blackstone has a trillion dollars in assets. what do they represent in terms of the changes in the financial services industry and challenges? >> well, one is the democratization of alternative

investments. leading distributor in the world. we manage over $4 trillion and many years ago, remember, i won't mention the name, meeting with the head of one of the firms and several of their partners in our office, and explaining the opportunity to provide their product to the affluent investor for whom a part of their portfolio should have credit infrastructure, p/e, real estate, you name it. and i think what -- i wrote a -- one of the only papers i've written in my life when i was a consultant in the '90s on i felt we were moving to where distributors, places like the morgan stanley, wealth management business, would become very large and consolidate and that's what's happened. we own ag edwards, i'm sorry, wells fargo owns ag edwards, prudential, week first, first union. we own smith barney, sheerson, you know, dean witter, reynolds and company, et cetera. huge consolidation.

on the asset management side you're seeing huge consolidation. the franklin leg transaction as an example. what marty flanagan did rolling out as an example and in the old space the big are getting bigger. there will always be pure players in real estate and p/e in particular, but then there will be mass players across multiple platforms which blackstone and others have successfully done. i'm not surprised at all. >> how do you -- you continue to see that trend? >> unquestionably be consolidation in the asset management space for the next decade. it is one of the last nonconsolidated parts of the whole financial service spectrum and it is inevitable because scale matters. >> right. >> and now, there will always be boutiques like boutique investment banks who are successful, right. there will always be boutiques but the middle market, middle size is not going to sustain. you will be large and get scale or be boutique and get

specialized. it's inet evidentble. >> let's talk about you. you mentioned poker. what are you going to be able to do that you haven't been able to do? >> when i was a kid in australia, early high school, we had a group of guys and we played texas hold em in vegas, 200 played in the world series. now, i don't know, 10, 15,000 players. we played all night and somebody had to buy the piz ask and beer. we must have been 18. >> before you came to the states -- >> you know, so, yeah, i'll play world series of poker when i'm out of these jobs. never play in a casino cash game, running a bank, but no, fun stuff like that. you know, i'm getting more involved at columbia university, chair of the business school, i would like to teach a little

bit, just joined the board of disney which you know which will bring me a little bit to the west coast and change up my life a bit, and for the next year i'll spend helping ted and helping morgan stanley climb. i mean, i want to be -- it's going to be fun. i used to be -- that was my thing. and i'm looking forward to getting back to that. post that, i don't know. it's -- and it's nice to not know for a while what you're going to do. >> why did you decide to remain executive chairman? you could have just cut all ties? >> i think it depends on how you play the role. it's a title. some people, you know, play the role where they split responsibilities. i'll deal with regulators and investors and strategy and you deal with operations. my answer to that is no, that's called being coo, not ceo, and ceo not chairman. so what i want to do is just in short for a period of time, it won't be longer than 12 months,

i've been absolutely rock solid on that, might be shorter, but doesn't matter, most if not all the year, just be here to insure that i can give whatever support i can give to ted as he deals with a completely new environment. these are very complex jobs now. we're regulated. we operate in all parts of the world. we're dealing with a change in the capital regime now. there's so much going on. i want to help him with that, and then i'm out of there. it's to be a resource, not the person running -- i had my last operating -- >> you're changing offices? do you keep your same office? >> we're changing offices. we're moving floors in about eight weeks. absolutely. i'm all about a complete handoff. i had my last operating committee meeting this morning. my last risk committee meeting, my last -- i told him, i will never appear in one of these meetings ever. it's not my job anymore. >> you mentioned disney.

i have followed that company for years. they haven't done a great job at succession at that company. i don't know if you knew that. hasn't gone particularly well. you're just coming off a succession process. what, to the extent, is going to inform you trying to help succession at disney, which is going to become an important component of your board work there that you've learned from this process? >> they're forming a succession committee which i'll be joining. this has been -- the sorts of things i've done in this job is strategic transformation. obviously dealt with shareholders at many levels, including activists. succession talent building. so, some of the challenges they have, i hope, i can lend some of my experience on. i don't want to prejudge the succession process. that wouldn't be fair to the team. i don't start as a director until february. >> right. right in the middle of a potential proxy fight, by the way. >> that's all right. we've had a lot of battles in my life. that doesn't bother me one little bit. i think the -- you know, the challenge is to set up the

conditions where the board has choices with talented candidates, who are properly vetted for all the stresses these jobs have. you know, i don't -- i'm not on the board, so i have no wisdom or insight into it, but i have an enormous amount of experience having run succession here with our board. i think we landed the plane well with three great candidates. one who became ceo and two-state president. >> i think that's the surprise, two-state. >> we set it up for people. this is something i worked on for five years with dennis nally. my first board meeting, january 2010, i told the then lead director, bob kidder, we talked about succession right then. this is something i've regarded as a key part of the job from the get go. >> you made that decision last spring. you just said, i'm done. roughly 14 years. why? why was it time?

>> firstly, a necessary condition of succession is, you have to want to leave the job. you don't decide to go because you're 65, i happen to be, or you've been ceo more than ten years, which i happen to be, or the stock is doing well or i want to play more golf, i do, but not five days a week. you have to do it because you actually don't want to do the job anymore and you want to do other things in your life. if you can make that decision, i had no problem being public about it. some people said you're going to set up a horse race. the old ge thing that happened. i said, that's ridiculous. you can't analogize and say that's going to happen here. i was happy with the quality of the individuals. 14 years running a global bank, i'm not judging others, but me -- >> others being jamie dimon? >> he's a phenomenal bank executive. i think he's the best in the world, and i've seen them all. you know, but i care about

morgan stanley. and my role at morgan stanley. and it was my decision that i'd had enough and it's healthy for an organization to innovate a move on. >> real quick, let's go through a couple here as we wrap up. what are you going to miss the most? you can't say the people. something other than the people, which i'm sure you'll miss the most. what will you miss most about the job? >> making big calls. i loved it. i loved walking in and saying to john, the day ameritrade and 12 merged, i said you know what we're going 20 do today? i said, we're buying e-trade? he said, what do you mean? commission going to zero? i said, you're missing the point. the two that should have bought e-trade didn't. >> what are you going to miss the least? >> the relentlessness of it. i described it once as like standing, watching the ocean from the beach. i remember asking my dad why the waves never stop. this job, the waves never stop.

it can be 3:00 in the morning, something's going on somewhere in the world. i always have an email box. i always have people bringing me bad news. i'm okay with it. that's part of the job. but it would be nice every now for it to just stop for a while. so, this is a particularly intense -- i just flew back last night from europe. it's a very intense job. you know, there's a lot of ways to lead your life. you don't always have to lead them in a state of incredible intensity. >> we wish you the best of luck not being in a state of incredible intensity in the future and appreciate you taking the time. thank you. >> thanks for coming by. >> very welcome. >> we're going to keep talking over time. i don't know that we'll ever do another interview like this. james gorman, chairman and ceo of morgan stanley. >> thank you, david faber, a lot of great reflection from james gorman about the way his business has changed and also, carl, i think a unique way to step down for a banking ceo. doesn't always happen when the

bank is sort of firing on all cylinders. he made a lot of good moves when it comes to acquisitions. he can't control things like the investment bank right now, but clearly he feels good about where the firm is, has been and where it's going. >> yeah. sounds like as succession goes, a pretty clean break. when he was done, he was done. don't worry about horse races, so to speak. >> now he has to oversee that on the committee. that was an interesting window to what he's going to be doing on the board, leadership committee at disney, which is an important succession story as well. meantime, looking at stocks, it looks like we're regaining the positive momentum, up 0.70% on the s&p 500. every sector is positive except for energy. health care is up 1%. hasn't been one of the best performing sectors of the year. if you look at what's worked best, it's tech, communication services. industrial is having a 14% up year, materials and the banks. just talking about -- just

hearing from gorman, the banks -- the financials as a sector as a whole, which includes insurance and financial services, but up 7% in a year where hard to believe we had a regional bank crisis a few months ago. meantime, tech is definitely benefiting from the commentary from micron. last hour talking about supply versus demand. that equation seems to have flipped from the era when we had an inventory overhang. one reason the nvidia has been leading the s&p all morning long. >> live market coverage will continue after a quick break. we'll talk to larry lindsey and the ceos of carnival and crowdstrike coming up in the next hour.

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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 leave without you. ok. good thursday morning. women come to "money movers." i'm sara eisen with carl quintanilla. today, the ceo of carnival cruise line, stock