perhaps for deceptive or unfair practices. apparently santa is and a half d navigating his way here as we speak. we will talk about that flight. it's friday, december 22nd, 2023. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with kejoe kernen and andrew ross sorkin. we're set to go for the holidays. lovely tie. >> thank you. lovely dress. >> it's a shirt. >> shirt. okay. >> definitely red.

>> a lot going on. let's look at the u.s. equities. >> i have to advertise this. i only wear it once a year. >> it is the day to wear it. let's look right now at the u.s. equities. they are indicated a little bit lower this morning. dow off 87. s&p futures are flat. nasdaq is indicated off by 25. this comes after a big rebound in yesterday's session after wednesday's selloff. we have been up and we have been down. the dow was up 322 points. s&p and nasdaq up 1%. the averages are on track for gains for the week. how many weeks in a row for the nasdaq and dow? ten positive sessions out of 11. the s&p on pace for the longest we weekly streak since 2017. let's check out the treasury yields. the ten-year yield is 3.67%.

two-year yield at 4.03%. thank you, becky. nike shares sharply lower. earnings of 1.03 d$1.03. nike cut guidance. expecting full-year revenue to grow 1%. nike will cut $2 billion in layoffs and product assortment. this is a challenging environment, particularly in china, europe and middle east and africa. there are indications of more cautious consumer behavior around presidethe world. shareslocker down 7%. we will talk more about nike's report with the analyst at the bottom of the hour. clearly creating a bit of a scare about that whole space.

joe. let's talk with china. andrew, china hawks and those that believe that everything china does have a purpose and you think about tiktok. i couldn't help thinking of the irony of this as china works to protect its youth from online addictions like gaming. some people say they heare totay trying to destroy our young people. shares of chinese gaming companies plunged overnight. china surprised the markets with new rules aimed at curbing excessive gaming and spending online games. t t tencent wiped out $43 billion of market value.

netease fell 24%. the draft rules would prohibit online companies from condoning high value transactions in the virtual games. ban daily log-in rewards, which incentivizes more play and there are limits placed on how often users can reload money into the accounts. they are triggered to have pop-up warnings for users who display irrational consumption behavior. their words. xi jinping is blaming online gaming for adverse effects of the spsychology of the youth. if you believe what they say about tiktok, it is interesting. with us, it is like subvert our ways. >> it is something they have done before. i don't know why this is a huge

surprise for the markets. a couple of years ago they wanted to limit the amount of gaming time that any kids were allowed to do and all of the stocks fell at that point. you are right. we don't want it for our kids, let's outsource this to the american kids. >> limit the gaming for the one child you are allowed to have. >> it looks esened a bit. >> you are allowed 1.5 now. >> which side are you on? are you on the freedom side which is what we are doing? i'm not sure that is the perfect answer or that side? >> stop the gaming. >> it is one thing for adults. it is another for kids. there was just a story that reminded me this week where we were talking about some controls for social media for kids. i've been in favor of that, too. it should be easier to control these things and make sure that the gamification of it all.

same with the robinhood thing when people were home gamblgamb. making it too easy. >> are we putting it on regulators or parents? that is the fundamental question that is difficult to grapple with. >> i think kids are smarter with the technology than we are. >> there are worse things than a community of kids that are playing games and you meet other kids. >> when you meter people you think are kids and they turn out to be a person preying on kids. >> that's another thing. >> anything in moderation. >> think of other things that teenagers are not doing when they are playing games. you know, there could be worse things. >> sports are good for kids. >> shrinkage at retailers.

we have breaking news. emily wilkins is joining us. do you have a new alarm clock? >> reporter: of course. anytime i get coffee, i can do this. breaking news from d.c. president biden is going to be signing an executive order threatening sanctions for those helping russia. a senior administration official said yesterday that they are seeing signs previous sanctions have had impact, russia has been able to circumvent barriers with third parties. the executive order is meant as a warning to the companies over goods sold to russia do not bolster its military or cut off the u.s. financial system. it bans russian diamonds sent to other countries for processing before coming to the u.s. the agreement earlier this month

from the g7 leaders vowing to curtail the international financial systems while they continue fighting ukraine. the white house says sanctions will help, but congress needs to approve the 6$61.4 billion of ad to ukraine. that is difficult as more americans feel they should not sent more assistance. the president is looking for the border provision, but congress was unable to do so before the end of the year. >> thank you, emily. we will talk more about this with deputy treasury secretary wally adeamo who will join us in the 8:00 hour. i guess bobby kodek is on, too. >> different. >> different andy murray and

kevin mccaccarthy. >> he is bill murray's brother. we will talk to him about that. that new book of his. >> you think of christmas time. >> you do. he's in a lot of other movies. he's in "groundhog day." he is in so many different movies. >> we have talked about "christmas vacation" because we have the norad tracking the santa sleigh. >> we are not allowed to play. i was going to hold up my iphone. i can't run a clip? >> i don't think so. >> it was so classic randy quaid. he goes, are you serious, clark? >> i heard santa's sleigh. >> what do you think, kids? we can't run it. >> we are ready for santa's sleigh. president biden is supporting the investigation of the nippon steel purchase of u.s. steel.

the proposed $1 billion acquisition by the japanese company sparked bipartisan backlash in washington. brainard says the deal deserves scrutiny over the impacts on the national security and supply chain liability. she says the deal is the type of transaction of cifius. >> u.s. steel. u.s. steel. >> if it were china, andrew, it would immediately raise brows. this was something where the u.s. senator who lives there, raised questions about it. he lives across the street from the plant. quickly, that got picked up in washington. we'll see. >> that's what we talked about with pat toomey yesterday about. the department of transportation is reviewing the frequent flyer programs of

airlines for deceptive practices. it has been meeting in recent weeks to discuss transparency practices with award tickets and transfer of miles. the big issue is the devaluation or inflation or deflation of the value of all of these things. i don't know -- it's in the fine print. >> you can pay your wifi with it. >> or pay $8. >> you have to go to the points guy. you should never been using it for wifi. never buy presents on the web site. the worst use case. >> yeah. the terrible case. $8 or 80,000 miles. maybe it is 8,000. >> the best way to do it is take the credit cards and transfer them over. never use credit cards through the program.

that's the lesson. >> too much work. the credit card miles. >> i want to hoard enough miles to get on the plane early and potentially get an upgrade. that's it. >> good luck with that. that doesn't happen any more. >> there are 30 seats up there. one is available for an upgrade. the other 29 are ticketed. they sell them. >> that game's over. >> that's good news for airline investors. the idea they have people paying for these seats instead of upgrading. terrible news for customers. good news for investors. when we come back, a big lineup over the next three hours. bobby kotick will join us on set as he prepares to leave the company he headed for decades. and tom freedman will weigh in on the israel-hamas war and

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welcome back, everybody. the major indexes are on pace for the eighth pace positive week. joining us is chris verrone. chris, areyou are taking a broa

look. this is the time when people are sitting back and reflecting. when you step back, what do you see? >> there are two or three things going on. number one, embrace the momentum surge we have seen the last six or seven weeks. we are talking about things you see rarely. surge in new highs. percentage of stocks above the 200-day surge here. those are all of the makings or conditions of a broader advance than the first ten months of the year. i think we certainly have to embrace that. >> this is real? >> we have to ask the question what does it mean for wall street? as prices change, so does attitudies on wall street. there say bullishness that has not been there. i want to be mindful in the first week or two in the year. the longer-term set up for 202

2023 is good. it broadened. the bigger question is are there hints of change? are there signs of leadership change? that's where i want to spend time. >> is that the case? people have been talking about the small caps as the potential new leadership. >> one of the most important changes is happening at the small-cap level with value is exerting itself. it has been out performing since june. i don't think you realize the value factor has exhibited on the cap scale. you look the value names and it is a comment from banks. it is a lot of the financial stocks which have healed down the cap scale. >> we talked about how this has been the year of the magnificent

seven. does the rest of the market catch up? not just small cap, but the 493 other names in the sa&p 500? >> there is evidence of that. our suspicion is it does. the macro shift that is underpinning this is we are starting to lose the dollar. strong dollar is one of the big tailwinds for the very large magnificent seven stocks for the better part of the last year. strong dollar flows into the u.s. supports the big names. if that is beginning to shift, the catalyzes the value trade. >> if the market is moving on the idea the fed is cutting rates, the expectation is the dollar will get weaker is not a real stretch. >> i would say let's be careful with dollar and rate difference. growth will determine where dollars are strongest. the growth picture in other parts of the world seems weaker.

despite the dollar weakening, that is an important indicator. look at the change you see in cnh. look at the commodity with the aussie dollar. what do you want to own? freeport and southern copper and metals? >> chommodities. >> that is impressive. we woken up. >> chris, you said something at the top of the idea that we rarely see this set up with the move in the market and number of names trading higher. what does that compare to and what is the next level or phase? >> the irony is it is actually what we would have expected to see this time last year. that was what was so unusual about coming off the 2022 low. the first eight or nine months looked nothing like the typical bull market.

it wasn't broad. it was narrow. it is the last five or six weeks where the game shifted. what do we know about it i am per imperically? 4,600 on s&p. when you get the momentum surges, the longer-term picture is in good shape. we talk about it every day. >> do you have a china wall? he says i disagree with you? how did he get it so wrong with getting all of the input from you? >> i think when you look at the course of the year and i was guilty of this as anybody, the first nine months looked different than the last six weeks. >> you didn't believe the move off the october 2022 lows? >> i thought it was one of the most unique moves. >> now that is gobble-de-gook.

>> you see it. you have to respect that signal. i think the bigger question as we look at 2024, at what level of ten-year yield is no longer easing financial conditions or something may be wrong with the economy? i will trust the market intu intuition. look at cyclical relationships to gauge when the market gets uncomfortable about the state of the economy. consumer discretionary over staple. there is still to date no life coming from the defensive groups. that is the feature of the market. the one spot you are beginning to see a turn here and keep this in mind for next year is rates. rates have started to improve. it is a difficult place for people to get. there is so much emotional overhang of commercial real estate. these charts are getting better. >> you, obviously, will learn.

it wasn't conforming to your viewpoint of view the stock market should act if it is in a bull phase. in hindsight, you are saying we are listening to what the market is telling us it is doing instead of us seeing what the market should be doing and if we believe the rally? >> it is a reminder, what is the most important thing? the trend. the trend was largely up all year. >> it was. >> what was unusual, joe, just how remarkably narrow it was for ten months. >> seven stocks. >> let's say 30 or 40 storcks. i think that is changing in the last five or six weeks. >> you can go back to whoever it was. jesse livermore.

he killed himself because he was broke. he said the market's diabolical intention was to go forward or backward with as few people getting on board as possible. it finds a different way of doing it every time. i don't understand this. >> probably the only thing that worked this year. bucking the trend. it is a reminder the market's intuition above our own is what matters. >> chris, thank you. >> we want a batting title o of .350 or less. how many times did babe ruth strikeout? >> i don't know. >> a lot. a lot. coming up, the final trading day before christmas. up next, the check-in with norad. the command center that monitors north american air space and santa. consider what goes into this. weather and protected air space

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it's the friday before christmas. consumers are trekking to stores for the last-minute gifts, our next guest is focused on santa's journey around the globe. joining us is the deputy commander with the continental u.s. norad region. it is the command center that

monitors north american air space. it provides updates on santa's location on christmas eve. th it is their 68th year tracking santa. >> good morning, joe. >> i'm thinking how we did this before satellites. we have a good idea of what is happening because we are able to track it. how many satellites are we using? they are on the same part of the earth and they are able to pick up enough from rudolph's nose to know where santa is at any given time. >> that is correct. they are orbiting 22,000 miles above the earth. as you point out, that intensity of the infrared signal coming from rudolph's nose to pick him up. we use north warning system

radars which is across alaska and northern canada and then we have fighters in canada and the united states that intercept norad's sleigh to track his path on christmas eve. >> you think about how many things go into it, major general. whether systems. a couple of systems that will not be great for part of the trip. you think about protected air space. this year, we had the spy balloon. you know, suddenly we all think we're going to go outside and see a ufo. there are so many variables and things to worry about to make sure that, you know, you don't mistake santa for something else and the job has gotten more important. >> yeah. i have an alarm going off back here. sorry about that. >> really? >> he's one of the most impressive aviators we have

seen. we deal with aviation in norad. he is able to work through the weather. we tracked historically santa back to the 5th century a.d. he manages to fly through all weather conditions. >> every year. it is pretty surprising every year. you know what else's is cool? you have a bunch of corporate partners. you are not really spending government funds to do this. can you name some of them? don't they fund most of the operation for you? >> yeah. that's important to let everyone know. there is no cost to the taxpayer here. we have over 1,100 volunteers. unformed military and canadian military service members. d.o.d. civilians. it is over 70. i don't have the list in front of me. they are providing the corporate sponsorship to host the web site

and fund extra phone lines so we can run this operation every year now for our 68th year. >> when did he start or when did they start? it is a team effort, obviously. do you know the location right now? can you pinpoint it? can you give me coordinates? actually, don't do that. shining a laser in santa's eyes. what's going on right now? >> we don't really get energized in the track santa organization until when we expect santa to launch. that is at 6:00 a.m. eastern time on december 24th. that is when the call center activates. >> they are prepping and probably running tests and stuff to make sure everything's working. we appreciate what you do. it is important work.

you know, god speed. don't let anything go wrong, please. >> thank you very much, joe. nice talking to you. happy holidays to the "squawk box" team. >> thanks, major general boyle. >> that is cool. i love that segment every year. i just do. coming up, holiday travel season in full swing for santa and for the rest of us as well. coming up, we will talk to the ceo of kayak about ticket prices and consumer demand. we will talk about miles as well. we were talking about transparency and disclosure. as we head to break, a look at the s&p winners and losers from yesterday. we're back after this. what was my ambition when i was starting out?

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good morning. welcome back to "squawk box" live from the nasdaq market site in times square. futures are pulling back a little this morning.

nike has -- that's a dow come point. >> it is. >> amgen is a dow. >> yes. >> boots alliance. walgreens. >> you got to be on your toes, andrew. >> i am on my toes. you have to be on your toes if you are trying to get airfare these days. we want to talk travel. a lot of people are headed to do that according to kayak. flights and hotels and car rentals are cooling off for the new year. joining us is the co-founder of kayak owned by booking holdings. steve, i think you know this. when i travel, i'm a kayak guy. it is an interface for me. thank you for that. >> love it. love it. thanks, andrew. >> it is always the case. obviously, once you get into one of these things, you stick with it. let me ask about pricing.

the good news for the customer, things are cooling down. when is the cooldown happening? are people trying to make last-minute plans where you get good fares? what are you looking at here? >> you are asking these questions on the second busiest travel day of the year. >> that is why i thought there would be no good prices. >> prices have come down. they came down from the elevated level. if you are traveling there's part domestically, you are paying 14% less than last year. the average american would think that is a deal. international travel discount is not as much. 7%. it is still less than last year. both numbers, by the way, are pr pricier than 2019. if you are traveling, today, by the way, and 3 million of us americans who are traveling, which is one-third more than normal, it will be a great day to travel. the airlines are staffed.

airports are staffed. i checked the faa operations center. there is no weather which is the wild card. it will be a good day. smooth day. >> steve, tell me how you do it. news you can use for those going to the airport today. are you a flight aware guy? if they rebook you or you get canceled, do you know a special phone number to call? tell us everything. >> you are talking to a guy who is on the road three days a week. flight aware is a great product. kayak is plugged into the same thing. i'll plug kayak. have the airline apps on the phone. most of the changes you need to put through, you cacan do throu the app. that is faster than the agent counter or calling a priority number if you are fortunate to be in the premier level loyalty program. use the airlines app for

rebookings. >> there is no way to sweet talk your way up front? meaning, it doesn't seem like the whole upgrade game we were talking about earlier on the broadcast seems like it is over. the idea you buy a coach seat and find your way to the front of the plane is a long shot? >> i think those days are pretty much over, andrew. if you have been on a plane recently, if you can get out of a middle seat and window or aisle, you are ahead. that's a win. >> there's nothing? you are in the business. you know, there is no special something somewhere? >> if you travel a lot and concentrate spending with one airline, you have a better shot. as i think anyone following the news, the airlines are tinkering around with the loyalty programs

which people hate. the government is taking a look at it. if you travel a lot, you will still be in the front of the plane. if you don't, hat's off to you. if space is important to you, look for a premium economy seat. >> two more for you quickly. one is around the miles. do you use them? how do you use them? we were talking about the things you are not supposed to use them on. a terrible deal. why is kayak or somebody not created some fabulous web site that actually can do all of this for you? i want to go from here to here and figure out the way to actually make this all happen using my credit card miles and this. nobody is doing it. i'll go into business with you right now if you do it with me. >> andrew, a lot of companies have tried and failed on that one. the reason is the airlines don't make it easy for you on purpose. most of the time we use kayak or similar anonymous.

we don't know your status level or the credit card to help you. we focus on showing you the lowest price. for the average traveler using kayak and being supplier agnostic and not caring who you fly, you will save more money. to answer your question of where should you use miles? use them on booking flights on the airline end of month. >> 30 seconds. they're playing the music. we had tim wu on recently. the anti-trust expert arguing that airlines are less competitive than they have been in decades and that is actually to the detriment of the customer. you live in this world. do you agree or disagree? >> disagree. i think it is easier than ever to fly. there are fewer misplaced bags. if you look at the pricing, airfares are not keeping up with inflation at all. i think bigger is better in the

airline environment as long as one airline doesn't dominate a single airport. you need to have at least two carriers in each airport. that tends to be enough competitive pressure to keep the fares where they need to be. >> steve, happy holidays. safe travels and easy travels however you make it happen. thanks. >> thank you, andrew. take care. i appreciate it. >> becky. >> all 1% problems. we're in a steel tube eight miles above the earth pre pressurized. how do we get across the mississippi? we go down south san gand go wht is narrow. we will lose half of the wagons. >> the argument for that is there is a lot of competition and it is working. being on an airplane today is not a 1% problem.

>> that's it. >> even try driving with your kids when they're young and think, i'm in an aisle seat. it is good to get to california in five hours. >> amazing. >> you have chernobyl farms chicken. that's pretty gross. >> we'll be right back. stick around.

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breaking news. wall street journal reports that bristol myers is buying karuna therapeutics. they will pay $35 a share for karuna. it will get access or ownership of the experimental schizophrenia drug which is now up for u.s. government approval. that is according to the wall street journal report. i was trying to figure out how this drug works. >> it sounds like it is promising because they are looking at it not only for treatment of schizophrenia, but related to alzheimer's and bipolar disorder. it goes after the understanding of the nervous system diseases.

that is why you see the big price tag. $330 a share. it does include $1.3 billion of cash that karuna has on hand. that may bring down the total value of the deal to $13 billion. the drug could surpass $6 billion in annual sales if it is approved for the various uses. that is the hefty price tag comes with that. schizophrenia, but that is the first experimental use for this. they see it expanding and moving forward. >> anti-psychotic drugs are tough. side effect profile and weight gain. >> for alzheimer's, too? >> i don't know how that exactly will work into it. i was going to look into it more. some of the drugs where people would feel like they're really drugged up a lot of times. you know, there's a lot of

strides that need to be made. >> bristol has a background of being a psychiatric drug player. it keeps it in the same springboard. coming up, we're going to dig into the drop for nike shares and what the company said in the quarterly report yesterday report, sparking concern about consumers globally. that's next. later, wally adeyemo will join us to talk about president biden's new executive order, targeting russia and companies that somehow are benefiting in the war effort with russia. "squawk box" will be right back. - so, the question is... - cyber attack! as cyber criminals expand their toolkit, we must expand as well. we need to rethink... next level moments, need the next level network. [speaker continues in the background] the network with 24/7 built-in security.

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nike shares tumbling after

the company cut its sales outlook and announced plans for $2 billion in cost cuts. joining us nauownow, i can't rer everything obviously, kevin, but was it a week ago, week and a half ago, there was some positive news that had nike helping the dow, up multiple percentage points on that day. do you remember what was the -- >> generally speaking i think you -- >> yeah, go ahead. >> they had some benefits, they discussed some cost savings, they were leaking -- and as a result of that, you started to see that kind of come through into the narrative, if you will. >> okay, so we only picked up part of that. you're breaking up. so they were leaking about some cost savings. so this is on the other side of the equation, i guess, income statement, and this is just in terms of whether consumers are showing signs of weakness.

so, exactly what does this indicate for the company and maybe -- >> look, the -- yeah, you know, i think the results themselves, can you hear me okay, joe? >> yeah. for now. >> so, you know, the results and the margin -- okay. so the results and quite frankly the cost savings were in line with what we expected. the margin flow through -- >> i think you must be getting feedback in your ear. >> -- they're a little conservative -- okay. do you want me to reconnect? >> no, you're good. whatever you're getting in your ear, ignore it. this is the hint for the guys in audio. >> okay. understood. so, you know, i think the good news for nike here, you know, they definitely signaled that

the macro has obfuscated all the good news that has been going on in terms of innovation leadership, in terms of turning the corner on the margin side. we have to be real about the fact that in this industry, you know, even when the weaker players get heard, that can hurt nike as well. that's what we're seeing right now. unfortunately for nike they're doing enough right that the earnings impact is only going to be a nickel or so for fiscal 24 and 25. but, you know, that is a scenario, we can't -- >> okay. all right. kevin, we gave it our best shot, it is not you. it is not that you're stopping because you're getting feedback, you said the audio just is breaking up and not working. we're only hearing every once in a while -- we picked up a few words. but we'll try and do this again sometime. nike is down $14.

so, that may -- we have some other effects, obviously affecting the dow. but maybe just affecting some other consumer product companies. >> dick's sporting goods and some other sales -- >> foot locker, the question is does it bleed over to all the consumer products in a much broader way. hard to know. whether we come back, two big hours ahead as we get you ready for the holidays. the fed's favorite inflation gauge due today. we'll get you ready for the core pce reading. an exit interview with activision ceo bobby kotick. he prepas reto part the company. "squawk box" returning in just a moment. of dedication to get to this milestone. the new york stock exchange is a symbol of what america is all about the potential of an american dream. it is day one. a lot of work has happened to lead to this historic moment. the only way you can move a society forward

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[speaker continues in the background] the network with 24/7 built-in security. chip? at&t business. futures pointing lower in the premarket. the major averages trying to hold on to seven-week winning streaks. theycould make it eight today, as the santa rally period gets under way. news of a major pharma deal. bristol-myers squibb reportedly buying karuna therapeutics for this billion. and nike, the big loser this morning, the street digesting mixed second quarter results, but particularly grumpy about the lowered revenue guidance for the company. we'll get you up to speed as the second hour of "squawk box" begins right now.

good morning and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin with becky quick and joe kernen ahead of the big holidays. christmas is coming. we got a lot going on in the next two hours. i want to show you the futures, where things stand right now. not really to match the holiday season, but some red, marginal green on the screen, the dow looks like it would open down 75 points. we'll talk about nike in a moment. that's dragging things a little bit this morning. nasdaq off about 20 points. s&p 500, that's the marginal green on the screen for now. it seems to be holding on by a thread. take a look at treasuries, though. the ten-year note, and talk about the two-year note for a second. the ten-year at 3.863. oil, we have been talking about what is going on with the houthi rebels and shipping containers and what not, what that means for everything, wti crude $74.51

this morning. things continue to put some pressure there. and then crypto, bitcoin, joe, i don't know if people are -- is bitcoin going to be the -- are people going to -- wouldn't put bitcoin in a -- under a tree or, you know, can't really do that. it could be a conversation around the dinner table. >> yeah. >> it is. it still is. that's part of the problem. there is not a little shiny pretty little thing that you can hold on to and put somewhere. i think that -- there never will be. you can do some interesting calculations as you know, andrew. we had -- we saw the other day, gold is 12 trillion, bitcoin is 1 trillion. if it just gets any more, you know, usage as a store of value, not hard to imagine higher prices for it. unless it is, you know, unless

it is -- if it is rat poison or beanie babies or greater fool theory, all bets are off. and i don't know when -- i don't know when we actually put that to bed and just say, just definitive, there is people that say it now, the hard core michael sailors of the world and others. maybe we'll know in 2024. spot etf would probably go a long way towards that. we have been looking into this, this bristol-myers squibb. trying to deal with neurologic diseases, in this case schizophrenia. bristol-myers squibb is buying karuna therapeutics for $14 billion. bristol will pay $330 a share for karuna. the company has a potential blockbuster drug for the treatment schizophrenia, positive results under review by the fda. the standard treatment now as we

were talking, becky, it involves -- you probably heard some of the words, dopamine, and serotonin. and those receptors. neurotransmitters, and if you think about it, the learning how the brain works, that's almost the last frontier. we can understand a lot of other things, but human thought, and consciousness, and what mediates it, mediated through -- from chemicals, which is unbelievable. the existing therapies, something either with dopamine receptors or dopamine and serotonin, this works on acetacolin. >> i still don't understand it. we were talking about it a little bit. that means what? it goes after your muscular skeletal -- >> acetocolin is at the miusculr

junction. if you -- if you break it down where your nerves can't stimulate your muscles, you stop breathing and you die. it is used for a lot of things. you think of higher brain centers using dopamine or serotonin. it is interesting this is a novel mechanism because there is a lot of problems with existing antipsychotic drugs, a lot of side effects and people don't like being on them really. you need them. if you have -- if you have one of these horrific diseases, hallucinations and -- >> this is an experimental drug for schizophrenia, but also -- >> works on some other things. potential. >> they think it would work on and also alzheimer's, which i don't quite understand. >> all mediated by -- everything it goes on your brain is transmitted by neurotransmitters. >> that's why their thinking this drug could surpass $6 billion in sales if it is approved for all the various

uses, which is why you see the big price tag that they're willing to pay. >> alzheimer's, you know what that does to families. think about someone in their 20s with schizophrenia or bipolar disease, it is devastating, you know. >> andrew? >> okay. let's talk about nike. it is the big stock moving this morning. shares of the company plunging in the premarket. and potentially wreaking havoc on other companies as well. company beat second quarter profit estimates, revenue a little bit light. but here is the thing really impacting the stock. nike reduced revenue guidance, the company now expects full year reported revenue to grow about 1%. that would be down from a prior outlook of midsingle digit growth. on the earnings call, nike's cfo says the risks of things like stronger u.s. dollar and holiday demand becoming clear to the company, also said the company's new outlook reflects increased macro headwinds, particularly overseas in places like china. nike also announcing a goal to cut costs by $2 billion over the

next three years. that's by things like streamlining its product assortment and cutting jobs. check out two big nike retailers though this morning. not looking at what is happening in nike stock, foot locker and dick's sporting goods, both down in a big way, this morning, you can see dick's down a little over 3%. foot locker down about 1.5%. that's on a one-week basis. you can see if we showed it on a daily, it is much higher than that, joe. >> all right, let's get to liesman about 90 minutes to the number of the morning, november pce, steve liesman joins us now with a preview and the implications for the fed. and this is -- what do you do? you get the pce and you -- what do you add to it to find out where fed funds should be, for the tail rule? >> okay. that's a good question, joe. you would -- you take the pce, you subtract the nominal funds rate and get to a real fund rate. i can do that calculation for

you. let me explain, if people don't know, i think they do, i'll reiterate, this is the fed's preferred inflation indicator, not the cpi, the pce, and watches the numbers so carefully that fed chair powell in his last press conference offered his fed's own estimate for today's number, which is lower than the market and said the expectations for a lower number was among the reasons the fed was shifting into neutral. that's how important the number is. here's what we're looking for. just 01 on the core after 02 last month. year on year comes down to 3.3. several forecasters expect that three-month annualized core rate to come in close to 2%. while raising the optimism for that even lower number was yesterday's third quarter pce data. it plunged from 3.6 to 2% for the first time since 2020. down from 6% on first quarter, of 2022. on the one and, powell said a single reading, not enough to convince the fed to cut. on the other, he said explicitly

the fed needed to start cutting before hitting its target. >> the reason you wouldn't wait to get to 2% to cut rates is that policy would be -- it would be too late. you would want to be reducing restriction on the economy well before 2%. before you get to 2%, so you don't overshoot. if we think of restrictive policy and weighing on economic activity. you know, it takes a while for policy to get into the economy, economic activity can affect inflation. >> so, that comment and forecast rate cuts by the fed officials have the futures market looking for cuts at almost every meeting beginning in march for the full year nearly seven rate cuts built in, that would bring the funds rate down to that number there, 3.73%. more than double what the average fed official is looking for. so, all of this raises the

thorny question did the market go too far relative to where the fed is, and go too fast. but today, i think the timer can start ticking on when the fed can -- thinks that glazed honey ham is done, can take it out of the oven and start cutting. you can call hormel on the day before christmas and ask them about when that ham is done. >> the -- we don't use the hormel. there is a honey baked ham chain. i don't know if you get those, they're amazing. i get -- >> it is a honey -- it is called a honey baked ham. and it is down on route 22, route 10 or something. i will be there, steve. but, so, okay, i think -- you know, there is so much nuance and what this really -- that discussion yesterday showed how even this is, you know there is people in two different corners of -- trying to explain what is happening. but all i come away with is the

economy is either going to be resilient and we get cuts or the cuts are implying that we have no idea just how weak we could be six months from now. i don't know. that would be the lag effect that we just don't know. >> right. look, i can't really add to that, joe. except for that, you know, the resilience has been something that has been a feature of this economy. by now, most forecasters would have thought we would be in the dumps right now. those recession forecasts have not been accurate. at least to this point. we're still doing, joe, i don't know if you saw the atlanta fed gdp, runninning about 2.5%. that's not a bad number. considering this was going to be when we're going to get the slowdown. and i think you make another great point, which is that along with this pce number, we're going to get income and spending and that should show a still resilient consumer.

but one of the other big things powell did on -- in that press conference was kind of give up the ghost on the idea that we needed to run below potential in order to bring down inflation. that has not been the case and i think powell is less insistent he's going to be confident in inflation is going to target without an economy running substantially below potential. >> i don't know why it would. when we talk about cable, we talk about the last mile and how important it is, and so now we use that phrase for inflation. and maybe, you know, if there is any wage pressure there, you would think that all -- what we have seen with people asking for raises and getting them, you would think that maybe that -- the last couple of points would be much harder than the easy lift -- wasn't easy, but the easier lifting that the fed has done getting inflation where it is, it may get much tougher from here. why would you cut, if it doesn't get that -- unless the economy got weak?

>> that's a great question, joe. the economy is doing just fine with the funds rate at this level. powell, i think, addressed that in that quote that we ran there, joe, which is that over time a funds rate that runs restrictive relative to where it should be in the neutral rate or as you said at the beginning of the segment, the tailor rule would suggest, would tend to drag down the economy and would be one that would be too restrictive for economic growth. i think there is scope for it to come down and there is going to be a bigger question as they begin to cut rates, which is where does the fed see that neutral level. i think what you're suggesting is probably accurate. it is a neutral level that is higher than it was before. which means you're not clicking your heels and going back to the kansas of zero rates. >> this is where you get all the conspiracy theories. there is no reason to cut, so it must be to try and get the guy that might reappoint you re-elected. >> joe, can i just address one

very quick thing, i know they want to move on in the back. if you do something for political -- if you do something for political reasons right now, the thing you would do is work harder to bring down nflation. that's the thing that people are angry about. that's the reason for the bad numbers on the economy. you would not loosen up more quickly for political -- for positive political reasons because if you had a resurgence of inflation right now, that would be the politically most disastrous thing. >> that's one way to look at it. you definitely don't want a slowing economy, though. and if you -- you know, i think someone was saying yesterday, what would be the first thing trump would do. he would get rid of jay powell. >> the bigger thing is you want to make sure you take care of your legacy and you don't want to be arthur burns i think would be the -- >> or montgomery burns. >> yeah. him too. >> retail investors up. joining us now for what he sees

ahead in 2024, j&j kennehan. should we be scared of the vix at this point? >> as youreport every day, the vix has been in quite a slump here. we have seen a little bit of it come back and right near 14 on the vix right now. but, you know, you get below 15, you don't really get too afraid, shall we say, overall. but when you talk about the single names to start the segment, i think what is really interesting is one of the measures i've always looked at on our brokerage side is when we see the mixed change, what i mean by that is in a normal environment, joe, about 35% of the trades will be in indexes or index etfs,spider qqq, iwm, et cetera, representing the major indices. what we have seen over the last two weeks is only about 30% and a little below that, being in

the indices. the rest being on individual names. when we see clients start to buy individual names is when you really start to see things rally. i contrast that to what we saw at -- near the end of october and in march, and at that time, more than 50% of our trades were in indices or index space etfs. so it really has been amazing how quickly over the last few weeks clients have changed into more single names overall. as they look for some good things going forward. although there are some hiccups if you because i also look at the openings positions, they have been very short-term. that is over the next week, right to the end of the year. some of the names i look out into january, particularly among the retailers, such as target, costco, you're having people buy longer term bearish positions for those names as we head into

the new year, so that does concern me. and the other name on the back of what you saw there this week, fedex, it is really been bearish, has been u.p.s. so, again, those are two names that i think are a good derivative for what we see in terms of retailers. and so those two names have seen a lot of bearish activity and that continuing into the new year. >> the individual names start getting a lot of interest as the market gets frothier? can you take that away from this? but you're doing individual names that would be affected by -- benefit from a slowing economy. so it is kind of cross currents, isn't it? >> a little bit. but the individual names we're seeing buying have been primarily technology. the name that really stands out, you know -- normally retail flow is about 52% bullish, 48% bearish. it is much more mixed, i think, than people believe that it is. and microsoft really stands out and i think it is the way people

are playing a.i. this is not only in short-termer t but longer term. the guys who pulled the data for me are, like, we have never seen anything like this before. it has been amazing. and as you would suspect, behind that some of the magnificent seven names, amazon global, you talk about tesla. tesla is 50/50. little bit to the bullish side. one of the most popular names traded. >> merry christmas, happy holidays, joe. >> merry christmas, joe. >> see you. >> coming up, on the other side of this, will the new military coalition aimed at protecting shipping in the red sea veigh chan have a chance of working? we'll talk about that with michael o'hanlon after the break. "squawk box" returns in just a moment. ...before you even step inside? ♪ discover the magnolia home james hardie collection. available now in siding colors,

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what do you think, is this effort going to be enough to protect things and allow shipping to continue? >> good morning, becky. happy holidays. i think there is a good chance that it can do quite well. the houthis are supplied by iran with a lot of weaponry. and they fired many hundreds of missiles and drones into saudi arabia over the years, various times. so they have more of a cache of these kinds of weapons than you might expect for a group that is, you know, not otherwise well resourced. and i think that the geography may wind up giving some advantages for the u.s.-led coalition, there is going to be at least the distance of dozens of miles between a launch point and a target. and that gives numerous opportunities for intercept, whether electronic janelmming, so we'll have to see how it plays out and how regular the presence can be for these battleships and how good their missile defense systems are, because not all are going to be equally up to the state of the art with the united states best systems. but i think there is a decent

chance that this could offer pretty good protection and my guess is that over time shipping really can resume normally. but, you know, you never want to sound too off the mystic in these kinds of situations. we'll have to see how it plays out. >> those were some of my questions with it too. right now, even though these forces are promising to come in, you got ships that are being diverted because the shipping companies, to send not only your cargo and your ships into these areas, but employees, i mean, that's a huge risk that i think most of them would not want to take. i don't know how long you think it would take to actually make things feel secure to the point where people would say, okay, i'll send my employees into the situation. >> yeah, it is a good question, becky. i think that it could be a matter of weeks. if i'm right, there is a decent chance of offering pretty good protection here and that that will become apparent as some ships start to go through and make it through safely, which would be my prediction. but the other side of this, of course, and i realize that for those who are experts in just in

time shipping and supply chains this may sound wrong, but it is not that hard to go around the southern tip of africa. it takes another ten days or two weeks depending on the speed of the ship. but as we know, moving across oceans is not that expensive compared to making products and loading them up and taking them off ships. in a way the fact that people are rerouting is an indication of the alternative they have which is not that bad. again, that ten days to two weeks can be crucial under certain circumstances. the shipping costs itself is not going to grow astronomically. >> the bigger issue is something like 30% of the world's shipping goods that go through that area and if you're rerouting them and adding ten days to two weeks to every one of them, there is never enough ships to get through. you feel the crunch in the supply chain again and prices go up pretty astronomically too. i guess the other question, just from the geopolitical concerns on all of this is yesterday we had admiral stavridis on and he said he agrees with you, he

thinks we can get this under control. he was there in the red sea and was responsible for going after those somali pirates, about ten years ago, when they were taking over things. but even to stop the small soma pirates, they had to eventually go to the ground in somalia to take out some of the launch areas. and that's how they were eventually effective in shutting down the pirates. if you have the same situation where we have to put boots on the ground or go after things on the ground in yemen, how does that potentially enflame the situation in the middle east since these are being backed by iran? >> right, first of all, i do think with the somali pirates part of the success was smart improved practice at sea. i remember interviewing general petraeus once on this and he had been at central command and he pointed out that some of the things people had to learn to do were just to go faster when they

were being approached by pirate ships and pull up their ladders so they were not easily boardable. and so he and admiral stavridis and others did solve the problem and they're right that the strike against territorial home bases for the pirates was part of it. but i don't think it was the inclusive or necessarily even a principle thing. pivoting to this issue, i think if we strike some targets within yemen out of necessity, i don't think that's going to enflame the broader middle east and anything close to the same scale of what we're seeing now, you know, in the broader palestinian gaza region. my guess is that most countries in the region actually want the shipping to work. and don't really agree with what the houthi rebels are doing. again, iran is the obvious exception to that. but i'm not that concerned about an escalation if we do a couple of strikes against land targets. >> that's good to hear. michael, thank you very much. michael o'hao'hanlon. happy holidays.

coming up, a look at the top stocks on the move ahead of the morning opening bell on this friday. and eat, drink and be merry. ahead of christmas, author and restaurateur andy murray will join us to talk family and food, including a peanut butter mayo and lettuce sandwich. stay tuned. you and the stomach ache you're currently getting are watching "squawk box" on cnbc. >> announcer: time now for today's aflac trivia question. according to aaa, how many people are expected to fly between december 23rd and new year's day? tus.awbo r when "squk x" rern ( ♪ ♪ ) who do you think taps out first? i think the duck goes the distance! alright, you about ready to get out? what's this? a hospital bill?! for a thousand bucks?! gaaaap! did this goat just say 'gap'? he's talking about expenses health insurance doesn't cover. but with aflac, you can get money to help close that gap. aflac, huh? -aflac! -ahhhh!

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bristol-myers and oil we're seeing this premarket. keeping a close eye on the big technology stocks across the pacific and china with a specific focus on the gaming side of things. if you tech out tencent in hong kong, down 12.5%. translating into roughly $43 billion erasing of market value there. chinese regulators released some draft guidelines aimed to curb excessive gaming and spending on those platforms. shares of other china-based video game operators, bilibili, n netease seeing shares tank as well. keep an eye on those. on the analyst front, atoppenhe favorites. there could be multiple expansions in the coming years.

we're watching some names in the premarket trade. bank of america just about flat on the session. we'll cap it off with a check on semiconductors. analysts at ubs are naming micron given the tailwinds by art official intelligence and others. they see a broadening out of things happening. micron right now up fractionally. so is advanced micro in the premarket trade and analog devices, keep an eye on the chip stocks. by the way, just wanted to take some time to wish everyone out there a merry christmas, happy holidays to anyone who celebrates around this time of year and to give you a little bit of a mood setting theme, we put the yule log up for you. keep it right here. "squk x"ilbeacrit awbo wl bk gh after this break.

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welcome back to "squawk box." our next guest says he sees the holiday commodities bull run continuing through at least january, joining us right now is citi global head marcus layton. we'll ask him about the impact of angola leaving opec and we can talk about what is going on with oil as well if you want to get into that. max, we have been on quite a wild ride. why do you think it continues? >> sure, yeah, i think the fed

in combination with our expectation of china easing, we're expecting details on the china side. they talked about three major stimulus paths and one of them is affordable house, the other is urban development and third one is infrastructure. so we're expecting some real details on urban development over the next month or so. that, together with the positioning across risk assets and the refreshing of people's budgets, the start of next year, setting us up for this whole run at the start to continue over next month or so. >> are you gold plug as you say? >> for the next few months, yes. we're trying to get it right in terms of price and direction. yeah. i think it is pretty exciting,

actually. certainly going to be highly leveraged to a u.s. growth slowdown and u.s. recession in the middle of next year. something of a headwind for gold, where we're not, you know, for example, we have 21.50 at the moment. that's not exactly massive upside and the headwind that we see is we think european uk growth is going to deteriorate more quickly, and more deeply, relative to the u.s. which maybe not in the next month or so, but we think it will support a restrengthening of the dollar. and that will be a headwind. >> you know, we talk about bitcoin all the time as a digital goal. i'm curious how correlated you think the two things are. >> sure. yeah. i mean, there is some

correlation, clearly, but quite different assets in my opinion. both on the supply. so i don't think those correlations are, you know, where they exist. you have -- >> all right. max, walk us through how you're seeing the energy complex right now and oil in particular, wti. we have been talking about what is happening with opec and angola, we have been talking about just the shipping situation in the red sea. what kind of pressures that might put on things. >> yeah, sure. so, it has been a pretty exciting and interesting market, big moves over the last three months or so. and initially they moved lower. we were bearish over the last -- during the move, we were bearish on crude. and we had a big decision to

make when prices got down to around 75, $77 on brent. and we decided that the dynamics around opec were such that it was highly likely that we would extend the cuts and they would try to protect $70 to $80 brent and they would be, you know, base case would be that they would be successful doing that. and that's how it is panning out. so we didn't double down on the $75 and stay bearish. mutual to bullish, we have an average price forecast of $80 in the first quarter. a balanced market with the extension of those cuts. and in fact, you know, if opec can push full compliance, then actually you can see a small deficit in the quarter. that's how finely balanced it is. the red sea development have meant there is going to be a little bit more oil on the water, which kind of tightens

things up at the margin. the angola news -- bearish headline. but most likely to be relatively small and relatively immaterial impact on the balances. overall, finely balanced market well within opec's power to balance the market in the base case finance scenario for next year. >> max, nice to see you. happy holidays. thank you. >> thank you. when we come back, how payments changed in 2023 from the explosion of buy now, pay later, to increasing mobile spending. we'll talk about that and what to watch when the calendar flips to 2024. reminder for you as we head to break, don't miss a very special interview next hour coming up with bobby kotick. next friday is his last day as the ceo of activision blizzard. we'll talk to him about that and some decisions coming out of california and the civil rights department there. stay tuned. you're watching "squawk box."

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welcome back to "squawk

box," everybody. okay, let's check out the futures this morning. yesterday was a big day of gains, once again for the markets. today, you see a pullback, especially when you're looking at the dow futures. that's because of nike. big declines in that stock last we looked. i think it was down by about 10%, 11%. s&p 500 futures are unchanged right now. the nasdaq is indicated off by 11. among our top business stories today, president biden will sign an executive order threatening sanctions against financial firms found assisting russia's military. a senior administration official said though the government sees signs that previous sanctions have worked since russia invaded ukraine, russia has been able to get around some of those barriers. we're going to speak about this and a lot more next hour with deputy treasury secretary wally adeyemo. china is banning the export of technology used to make rare earth magnets. these are critical in things

like electric cars, wind turbines and other electronics and it echoes u.s. attempts to ban china from obtaining technology that can be used to make the most advanced semiconductors. china's already had bans in place on exporting technology for extracting and separating rare earth metals. and tesla is recalling more than 120,000 cars in the united states over risks that the doors could be unlocked during a crash. that's according to the national highway traffic safety administration, which says tesla has released an over the air software update to address that issue. this comes just days after tesla announced a different recall, but, again, these are ones where they can upgrade the software over the air, that you don't have to take in and as somebody who dealt with ones you do have to take in, in the past, that seems look a better alternative. when we come back, chef and author andy murray on the holidays, family and years of his stories from his caddyshack-themed restaurant. stayun ted. you're watching "squawk box" and this is cnbc.

you know what's interesting these days? bitcoin. look for bitwise, my friends.

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. while it is almost time to get cooking for christmas, either way eat, drink and be murray is the cookbook from andy murray. he's the co-owner of the murray brothers caddyshack restaurant. it offers tips for food and entertaining family and friends and joining us right now is the chef of the murray family, andy murray. andy, first of all, happy holidays. thanks for being with us this morning. >> good morning, becky. thank you for having me. i just love being here with you.

>> all right, let's talk a little bit about this cookbook. we call it a cookbook. it is really far more than a cookbook. if you read through this, there is family stories, the history of the family, how you became a cook, making -- baking with your mom when you were 4 years old, and stories to go along with all of these recipes too. you've been a chef for a long time, but how did the idea of the cookbook actually come around? >> it started at our thanksgiving dinner at my brother billy's house in charleston, and a woman by the name of carrie came to dinner and said you ought to write a cookbook. and then the pandemic hit and it just, you know, right after that, i called her back and i said, you know, maybe i should do this cookbook. she goes, oh, yeah, i talked to the agent. let's do it. so it got done. >> what i love about this, there is some great recipes in here, things that i definitely want to try, like short ribs and

polenta. some i definitely don't want to t try, the peanut butter and mayonnaise and lettuce sandwich. how did that one come about? >> that is, you know, my family, we have nine children in the family. and we got home from school at 3:00, my dad get home until 5:30-6:00. my mother had to figure out a way to feed us in there. always like seven, eight loaves of bread in the house. peanut butter mayonnaise and lettuce, it started and everybody in the family eats it. i mean, if i'm making it, one of my brothers come, move me over and take it from me. so it's -- the flavors all work. the crunch works, mayonnaise and pee peanut butter, and soft bread is key, too. >> i'm not entirely sold but i'll take your word for it. >> i'll make you one and you'll change your mind. >> extra chunky, super chunky or -- >> yeah. chunky as you can get, joe. >> and the lettuce helps with

the crispiness, too, i would think? >> it's a combination. all the crunches, you know, from the peanuts and the lettuce and mayonnaise and the soft bread, it just -- it works. it's a winning recipe. i have friends who can't even be in the room with mayonnaise, so -- >> what i love about the book, really, andy, the family stories, and the way it just evokes memories. i think we all have that sort of a feeling. there are certain tastes and smells and certain foods that bring you immediately back to your childhood, to your family, and we call it "comfort food." how did you we've these stories into the book? >> a lot of comfort food. cooking is just another form of love, and if this makes you think of the past and people you love and you know, that's great. but there's nothing real difficult. everybody -- i made this book so everybody could make this stuff. >> andy, do you, probably haven't done it, i would say,

21, 23, and i think there's 23, but i think, i've had some, you know, we know bill a little bit, and watch john, i think, in a movie. you and brian. is -- >> and joel. >> joel. yeah. >> and everybody's so funny. is it -- was it learned? i mean, it's a nature, nurture thing, but i think there might be, might be a gene. i do. i really do. >> definitely a gene. my parents were funny people. my father had a very dry sense of humor, and -- at the dinner table, if you could make my dad laugh you knew you were doing well. my mom, just, she was -- she laughed. had a great laugh, and we laughed a lot at our house. still do. >> no doubt. you watch your brother. like, i don't know you well or your other brother, but just knowing what i know. bill, you can just see it. you talk about anything, and somehow he arrives at some

bizarre twist in his mind, i think he's amusing himself constantly. >> oh, you can see him. he'll sit there and all of a sudden starts smiling about something he's thinking. yeah. he does that. >> it's a good family trait to have. hey, andy, while we have you, talk about the food business a little bit, through the restaurants, what you see. we have seen the consumers start to trade down in some places, where they're not -- paying for that most expensive bottle of wine or champaign or something. other places that hasn't been the case. what have you seen, because you guys have a restaurant not only in saint augustine, florida, but also in illinois? >> a restaurant in rosemont, illinois right next to o'hare airport and the one in saint augustine was our original one. yeah. business is -- it's coming back. it's -- it's -- like, rosemont, rosemont, really, it could, the conventions really drive that, and they're just really getting back to where they were before

the pandemic. saint augustine is still, it's still a pretty good restaurant. it's a tourist town. you know, we're in the rural golf village in hall of fame, but that really -- you know, that didn't mean a whole lot to us. you know? but it's -- it's -- the business, it's a crazy business. you got to be a little nuts to be in it, but e we are. >> start celebrity dishes. over the years cooked for some well-known people. princess margaret, maybe frank sinatra. was frank sinatra a tough customer? >> frank sinatra was great. there was a dinner party. red buttons was having it after sinatra was playing at the garden and they came in. i was working at mortimer's restaurant in new york, and he had set up the dinner. rack of lamb. our specialty. we were doing it and all of a

sudden barbara sinatra at the door, she goes, my husband and i, we don't eat lamb. is there something else? would you like fish? dover salt, i don't know -- and -- after the meal was done sinatra came in and -- who made that fish? pointed to my friend johnny who was cooking the fish, and he goes, that was a great piece of fish. gave him $100 and then gave $50 to everybody in the room. so he was, like, we all liked frank sinatra. yeah. >> i can imagine why. andy, thank you for coming on with us today. by the way, folks, the book again is called "eat, drink, and be murray." around, happy holidays. >> happy holidays. thanks. thanks, joe. it's a great christmas present. still get on amazon delivered in time for christmas. >> had to write it. such a good title. "eat, drink, and be murray." >> fell into it. an andrew's here, too. >> pllet's play golf.

andrew, too t. i always wanted to be a drew. i tried for years. i wanted to be andy, drew, never got it. >> my son's a drew. >> never happened. >> wish every one a merry christmas. >> to all of you. merry christmas. >> you, too. thanks. coming up on the other side of this, a final big hour of "squawk box." we're going to speak with outgoing activision blizzard ceo bobby kotick. deputy treasury secretary and "new york times" foreign affas,llhat ir a tand more. stay tuned. we're coming right back.

good morning. the white house announcing a new executive order targeting financial institutions that help russia's military. talk to the treasury department official behind the administration's move. and nike shares humbling. set for cut sales guidance announcing $2 billion in cost cuts. weighing down the dow in the pre-market trading this morning. and activision ceo bobby kotick preparing to leave the company after decades at the helm. his exit interview is just moments away as 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 -- drew ross sorkin? no. no. no. >> i'm trying. >> no! >> i've wanted it. >> drew -- it doesn't go with your middle name. it doesn't -- >> drew ross! >> you could drop the sorkin. drew ross. sounds cool. >> got to be on "guiding light" or something. >> sure. >> yeah. really. you're up for that? >> yeah. drew ross. >> drew ross. >> i mean, my father won't be happy with that, but go for it. >> u.s. equity futures -- never knew. you never ever said you wanted to be drew. >> you never asked him. >> i tried -- many years ago i tried to be andy, but it never took. >> no. no. drew i can see.

i don't think of you as an around, but drew i could see. >> i only use andy when you use joseph with me. in the past when we've both resorted to a joseph and an andy. >> rebecca says, "move on." >> yeah. who? >> rebecca. had i get in trouble. what my mother called me. >> oh. okay. >> in your ear. >> oh, no. not that. >> rebecca. scary. u.s. equity futures at this hour down 97 points. s&p actually positive. a little weird. nike hurting specifically hurting the dow. treasuries -- which, you know, once they made the move below 4% we don't talk about it that much more on the ten year. although we certainly will in 2024. it's going to be very interesting to see what actually happens. you see that -- seven cuts? >> yeah. >> that's crazy. less than 30 minutes away from the fed's favorite inflation

gauge. core pce. core pce. bring you the numbers at 8:30 a.m. eastern. >> okay. walk through some of the big stories investors are focused on now. look at shares of nike, because they continue to tumble this morning. the company cutting sales guidance for the full year and announcing $2 billion in cost cuts including layoffs, simplifying its product assortment. stock off 12%. really hitting the whole category, impacting foot locker, dick's sporting goods and you might imagine the dow this morning. shares of chinese game stocks plunging about china surprised the market with new rules into curbing excessive gaming and spending. plunged by 12% in hong kong wiping out $43.5 billion in market value, and erased a net, also say fell by nearly 25%. netease. combined, $58 billion in market value. literally. check your watch.

in 12 hours. >> after 32 years of leading activision blizzard, ceo bobby kotick is officially leaving the gaming company on december 29th, as microsoft's acquisition deal is complete. joining us onset to talk about this and other things is bobby kotick. founder and outgoing ceo of activision blizzard, and bobby, told us this was coming end of the year and here we are at end of the year. >> and very happy to be here. and looking forward to spending the rest of my life focused on more philanthropic efforts. >> your plan after activision? >> for right now the thing most important to me is veterans employment, and as we likely will be in a recession what you find is veterans and two to three times less likely than an ordinary citizen to find a job, and we are, our organizations have found 125,000 jobs for veterans, but we're just

scratching the surface. there's a lot more we need to do. >> something you actively did at activision blizzard but getting lots of different companies to come in and hire veterans. where have you had the most success? >> small and medium-sized businesses. they don't have the same stigmas. they are willing to engage in development, the types of veterans that we place and categories that we're interested in, but then there are very big companies. jpmorgan. home depot. i think what people have found, these are the very best employees. they're loyal. they're disciplined. they're hard-working. they're not looking for a vegan meal in the cafeteria. they are, these are exceptional, exceptional people who you find that once you have them at the workplace, they show up and they deliver and so i think it's our obligation and responsibility as a country to find more opportunities for veterans. >> that's great to hear. >> it is.

>> people who want these jobs. >> it's weird it would be, i would think, the stigma that you'd want people like that. what's the stigma that -- >> ptsd. >> ptsd? >> yeah. why would you serve in iraq and afghanistan? you know, a whole hosts of things that we found are real stigmas at many companies about the risks of hiring veterans, and, you know, historically -- the last 10 or 15 years as people came back from iran and afghanistan, they were at least two times less likely to find a job. in a recession, three times less. >> so troubling. when you hear -- suicide and things, numbers -- i always say, that can't be right, and it is right, and i don't understand it. and it's -- i don't -- you're scratching the surface, as you say, at this point. there are probably a million unemployed veterans who are able and capable, really, really fine

members of the workforce, and so i do this with jim jones, former national security advisor and marine commandant, and a guy named dan goldenberg and we have just -- we've done a good job, and now i'm going to make a full-time focus. >> fantastic. yesterday activision blizzard or microsoft, i guess, put out some commentary about the changes that are taking place at the company. it looks like a lot of changes to reporting structure. how do you feel about the future of activision blizzard within microsoft? >> look, i feel very fortunate. our company is now part of the most admired company in the world. and satya nadella is an extraordinary ceo. brad smith, their president, is unlike any executive i've ever come across. he is an incredible intellect, a great diplomat and i love the story how he got his job. he went in with a single

powerpoint slide that said "time for peace," and when you are a big company like microsoft doing business in every country in the world and the way they do, having somebody like brad smith is exceptionally helpful, and then the person returning the business, phil spencer, i've known for a very long time. the company's in great hands. >> let me talk about something decided by the state of california this week. this came with great fanfare when the california civil rights department moved to take action against activision blizzard and said that there was discriminatory practices that female employees were being subjected to constant sexual harassment. this week they now found no quarter investigation substantiated any of those allegations about that systemic widespread abuse. went from $1 billion they thought the company would be liable for to fines they charged of about $47 million to $55 million but the same time, the

company is not saying that it did anything wrong. what happened? what happened with this suit? >> well, not because andrew's here, but the best reporting that's been done on what happened is andrew's. >> the dealbook. >> i can tell you that, we were very surprised originally when they filed the complaint. because one of the things that actually is loudest, attractive, obtaining employees over the last three decades is having a very welcoming divisive workplace. you can't make games for people in 190 countries that we operate in without actually having really diverse talents, and one of the things we found was that having a really great culture was a tool for recruiting and retention. so we were obviously surprised. couldn't understand how they could make such allegations. obviously, since that time they've fired the person who was responsible for filing the complaint. they brought in a new chief counsel, who is a responsible

citizen, and you know, i think cares deeply about doing the right thing. we were able to resolve it in a way where the bulk of that money is going to our employees, not to the state. and once they were able to acknowledge that there was no widespread misconduct of any kind, we felt like it was time to actually move on. >> hey, bobby, great to see you. and i appreciate what you said. i was as surprised, i think, as anybody when i first saw the settlement agreement, because when you look at it, on its face, it's shocking insofar as to go back two years ago and look what they claimed was the case around widespread sexual harassment and then see acknowledgement, not just acknowledgement, that they couldn't prove anything almost across the board. except there was, at least they said, some point of discrimination. you said that's not the case. obviously payments were made. underneath it all. did you see, elon musk yesterday

tweeted the words exactly next to an op-ed is "wall street journal" in support of your company, but really about what's happening in the state of california. and i was curious if you just would comment more broadly on that that. >> sure. think elon is experiencing something very similar from the same agency. they were accused of des discriminatory practices that st simply are not true, the case with disney, cisco and the state of california if they have any expectation retaining businesses and retaining talent, thirey're going to have to change the way they approach these types of administrative proceedings. this is not the way you actually about tract and obtain businesses. >> what happened? do you feel you were wrongfully accused in every single one of these instances? rnts it started with the state ledge laichers creating a, state

legislator created a diverse -- for this agency. a 10% commission on any settlement. if you create an incentive like that, where those monies go to the general fund of the agency, you're going to see the type of abuses that we saw. now, to the governor's credit he fired the chief counsel, but you can't give this teich of incentive to somebody that's supposed to be responsible for actually protecting the workplace. the thing that's really disturbing is that they had two roles. one was, called department of fair employment and housing. when they were failing and finding affordable housing in the state of california, they changed their name to the civil rights department. because they didn't want to actually acknowledge they were failing in finding affordable housing for people in the state, but i think we need to do a much better job of making sure that the people who are at these agencies are people of high integrity and good character and that the agencies are doing what

they're supposed to be doing. >> andrew? >> well, so, then, this is a gavin newsom question. which is how do you assess gavin newsom in all this? he fired the lawyer who took your case on. maybe you think that's a good thing. at the same time all this has happened under his watch, and i think a lot of people are looking at him potentially as a presidential candidate, if not this round, and i don't think it's this round, but maybe when it comes to 2028? >> well, i've never met the governor personally, but i can tell you that this law was put in place, i think in 2012. so it was before he was actually governor. he did fire the woman who was engaged in the misconduct. and so he was taking steps, but i think there's more that can be done. i think it's a state that, you know, there's nothing but opportunity in the state, and there's an extraordinary amount of talent, but i think we've got

to start reducing regulation, and we've got to start making it easier for companies to do business in the state. >> do you feel like those changes are, are likely to happen? are really happening? only because, the list of companies you just rattled off, from disney to oracle to elon musk companies and beyond. those are some of the biggest employers in the state. >> they are. and the fastest growing companies in the state, and the companies that offer the highest compensation to their employees. you know, there's still some legislation that needs to change. when you look at things like wage-hour calculations in the state of california, most of these companies provide a sig ka significant amount in equity. do the calculations determining fair pay they exclude equity. so until you actually start coming to terms with the changes that have taken place in

society, how to compensate people and laws that actually reflect that, i think the state's going to continue to see migration of people. >> thinking about the last proposal from the governor that you haven't met. sounds interesting, but it was -- off the wall. it was totally off the wall, and i don't know what was going, it was going to cost but try to address the homelessness, which is a total epidemic. not just in san francisco. in l.a. l.a., to me, almost looked like it was dieing, when i was there. all of the storefronts, are still there but facades. there's nothing behind -- they never came back from the pandemic and tent cities everywhere. venice beach, you cannot bring your family to venice beach at this point. i don't know whether gavin newsom's idea, i don't know what he's going to do. remember the proposal?

i think trillions of dollars, which the state doesn't have at this point. but do you have any confidence that california's going to get its act together in any way, shape or form to deal with these problems? >> well, i can only say from my own experiences, but i think that, you know, he seems like a well-intentioned guy. >> yeah. where do those paths usually lead? to presidents. >> no doubt. >> right. >> we know where good intentions lead, bobby. that's why there's an xpexpress. leads to a president. that's good. >> a lot of work still needs to be done in the state, and still a lot of -- >> reparations bandied about? >> not that i've heard. >> they are here in new york. >> many challenges k-12 education, and if you look at the state, i think the cost per pupil in k-12 is higher cost than almost any state in the country, yet i think the last statistics i saw for every grade

in every subject, think about this. every grade, in every subject, we're not higher than 30% grade level. i don't know what the underfunded pension obligations are, but i think if you look at how much opportunity there is for change and ededucation that should be the number one priority. not just california but every state. >> do you feel vindicated? dragged through the mud personally based on the -- >> what i feel great about is that the people who worked at the company come there every single day and know the type of company. on fortune's best lif of place to work for years were surprised, disappointed. had to go back to friends and families and explain why they were working any other a company tainted this way. so i feel great that the employs of our company of vindicated. >> are you keeping an ownership stake in microsoft shares after this? >> i had microsoft shares before

the deal. it was a cash deal. so -- >> oh. that's right, of course. >> didn't get any shares. >> getting a lot of cash. >> shareholders got a lot of cash. >> shareholders, too. >> and take up that, you need a lot of cash, for the lessons. >> and the most expensive hobby i ever will undertake. >> and the golf balls. >> bobby, thank you for coming in today, on an incredible career and run with activision blizzard. very closely watching what you're doing in philanthropy and hope you'll come back. >> thank you very much for having me and andrew, thank you for the great reporting. >> thank you. thank you. congratulations. >> thank you. meantime, we're going to bring breaking news right now. lionsgate spinning off studio business taking it public via spac. television motion group picture sellments in the film library combined with a blank check company screaming eagle

acquisition corp. not including the stars platform. owned wholly by lion'sgate the studio, lionsgate will only 87% of studio spin-off. screaming eagle publish holders and founders expected to own the remainderer. a spac. haven't talked about a spac in a long time. meantime, when we come back a lot more. the white house announcing a new executive order. this one arguing financial institutions that aid russia's military. wally adeyemo here to tuk about talk about it live after the break. tending hives of honeybees, and mentoring a teenager — your life is just as unique. your raymond james financial advisor gets to know you, your passions, and the way you help others. so you can live your life.

that's life well planned.

the white house announcing this morning that the president will sign an executive order targeting financial institutions that do transactions with russia's military. our next guest wrote an op-ed in today's financial times about the treasury's effort to target the kremlin's finances. let's talk to u.s. treasury deputy secretary wally adeyemo, and -- we understand the eo now, the executive order, mr. secretary, but tell us what was going on, or what this

addresses? i don't think -- not everyone is really up to speed on what's been happening with some of these financial institutions. can you give us some background? >> good to be with you here today, and as you mentioned, the executive order will be signed today giving us ability to target foreign financial institutions. the last two years in response to russia's invasion of ukraine we've put in place sanctions and export controls to stop russia from getting access to goods and technology they need to fight their war. what the kremlin did was they charged their intelligence services with forming cutout companies and other things to try and hide their purchases of these goods from selective third countries and not going through big companies in these countries but small firms to get things like microelectronics and machine tools and engine parts, but all of these companies still have to use the financial system. so what we've said today, because the president's executive order, if you're a financial institution in one of these countries you have to

ensure that your customers are not selling goods helping russia's war effort. and you can ensure that, stop allowing that company to sell things into russia. if you don't, we now have a tool allowing us to target you. >> we tried -- our best efforts, with oil and to prevent russia from, you know, from benefiting from exports, and it seems like things flow downhill. seems like -- it goes through the cracks, and it's happening with this, and is this likely to be effective, secretary? >> our view is it is going to be effective. the thing that, you know about sanctions, that you're continuing having to ajust to a country that is also adjusting, and you mentioned what we've done with oil. with regard to our price cap. russia did, because we said you can't use g7 services unless you sell oil under $60 they decided to buy their own ships invested

in tankers, not tanks. today we've seen the price of russian oil come down and making 40% less selling oil than they did a year ago because the actions we've taken and they're paying 75% more for their military budget. any company's balance sheet that's not a good ratio. our goal drive that in the wrong direction so russia's economy gets smaller and less resources to fight their war of choice in ukraine. >> geographically, where are, are these companies that you're targeting -- are they in -- are there concentrations and in certain countries? not cooperating with the united states on trying to stop these things, and how much teeth will the executive order have? where are they mostly concentrated, wally? >> the trade data shows us that much of russian trade today is going through countries like china and other countries, all over the world. what we've found in many of

these countries via china, turkey, uae or any countries in the region near russia, we've found most of their financial institutions have been following our sanctions, because they know doing business with the united states matters more to them doing business with a russian economy getting smaller every day. this executive order gives us ability to target smaller institutions maybe unwittingly, unwilling to get around our sarngds sanctions and making clear they can have a choice. continue to do business with russia or access to the u.s. financial system. one of the most important things to point out is that most financial institutions around the world have stopped doing this type of business with russia for a long time. that's why foreign direct investment in russia is getting smaller and is decreasing every day. where, on the other hand, you've seen growth of our economy, despite the challenges we've had

from russia's invasion in ukraine. >> doesn't really matter whether you get cooperation of the government, the turkish government or uae, you can do this just with a, almost a carrot and stick approach? would you say that you're not getting cooperation from where these, the countries where these firms are domiciled? >> so what we've seen is we've seen a great deal of cooperation from the countries where these firms are domiciled, but what we know is that the russian intelligence services are continuously trying to change their approach in ways that would allow them to be able to try and get around our sanctions. >> does that include crypto, wally? >> it does. it involves every -- i would say these governments worked with us. the tool gives us ability, in cases we can't get cooperation we now have a tool allowing us to act and the truth is that this is not just two or three countries. although the data shows that majority is happening in certain places, it's happening around

the world. what russia has become very good at is trying to evade our sanctions. the tool says if you're a financial institution take steps to make sure that you are not being used by these firms to get around our sanctions. >> okay. i guess data coming up, deputy treasury secretary wally adeyemo. appreciate it and -- some executive orders seem to make a lot of sense. not all of them, but this one does. thanks. >> thank you for having me. >> okay. when we come back, we've got breaking inflation data. this is the core pce numbers, and durable goods orders. important numbers for the fed and we have that for you next. the "new york times" columnist tom friedman joins us on a red sea attack that forced cargo ships to divert and the latest on israel-hamas. wh's hpengatapni with the war there. "squawk box" will be right back.

welcome back to "squawk box." rick santelli here live at cme hq with important breaking news. personal income for november and durable goods november preliminary. on personal income up 0.4. exactly as expected in the rearview mirror, up 0.2. lightest going back to november of last year. up 0.4, best since august. so that's a nice improvement. if you look at the spending

side, up 0.2. a little bit of a miss. up 0.2, back-to-back, although the last 0.2 downgraded to up 0.1 instead of up 0.2. look at real personal spending adjusted for inflation it moves up to 0.3. followed by slightly revised lower up 0.1. up 0.3, best since july of this year. so we'll call that five months, and now the important numbers. pce deflator, month over month. down a minus sign, minus 0.1. not had a minus sign since april of 2020. april of 2020. and that was minus 0.4. that's what we're comping to, and if we look at the deflator from a year over year perspective, it is up 2.6 following a downward revised 2. and 2.6 is the lightest level

going back to february of 2021. now, the most important, core deflator, pce month over month expected to be up 0.2 up 0.1 and last month the 0.2 also becomes up 0.1 and finally year over year core deflator, most important number in the series, in my opinion, up 3.2%. 0.1 lighter than expectations. 0.2 lighter than a 1% from last month. how does 3.2 stack up? 3.2 would equal best level back to march of '21. march of '21. now, you see yields moved up slightly. i think that the biggest issue there happens to be some of those income numbers, a bit on the high side. let's do durable goods. maybe you'll see why. 5.4%. 5.4% on our november preliminary

read. that is a whopper of a number. last month we had minus 5.4, now becomes 5.1. a bit of mean reversion here, but no matter what, if we just look at it on the face, 5.4, you have to go all the way back -- wow -- to may of 2020 to find ay whoer number, but as i says, to some extent it's kind of reversing what we saw last month. ex transportation could move this mub. all about transportation. aircraft. 0.5. however, still multiples better than we were expecting and follows a downward revision from unchanged to down 0.3, which also has a mean reverting factor there. that would be the best month over month change on its own up half a percent going to may of this year. finally, if you look at capital good orders, ex aircraft, proxy

for capital investment. wow. this is a whopper, too. up 0.8%. up 0.8% best since up 0.9 in august. problem, in between there, of course, we had some downward numbers. last month's down 0.3 doubles to down 0.6. even though there's strong numbers in the durable goods a lot of it is reversing revisions that pushed us weaker last time. net-net, ten year removed 385 to 387. pre-opening dow futures down i think, joe, about 100. now down about 135. looking at these number, some progress. seeing month over month knumber deflating. tricky. i don't think inflation is linear but the panel can get into that topic. joe will and the gang, back to

you. >> wow. still thinking about so much that you said, rick. stay with us with more on the new data. bring in betsey stevenson university of michigan economics prof. thomas hogan economic research and our own senior economics reporter steve liesman. steve, go to you first. i ask you about the core pce. what we, you know, use the tailor rule, where should the fed be right now? is it restrictive? is it not restrictive? does this mean we should get all of those cuts next year? >> all right. before i make the calculation, joe, tell me what your deflator is? use the core? three-month annualized core? give me a number. i'll give you the -- >> rick just warned you about -- >> the linear way. pick your favorite. >> i'm going to use three-month annualized core. which is 2.16.

then i'm going to do the calculation here. this is a lot of fun here to do live on national television. we're going to do 5.38 minus 2.16. and we're at 3.22 real rate. versus a fed that thinks the real rate is, i don't know what you want to use. 0.5? 2%? 1%, whatever. maybe three times what would be a kind of long run neutral real rate, if i did my math correctly. i will tell you those numbers, though. three-month annualized core exactly what rick told me not do i'm going to do it it despite i. 2.16, joe. super core, however, remains elevated though come down. 3.5%. then here's the earth shaker right here. which is the headline three-month annualized, if i did my math right. i got it 1.39 and how did we get there? goods deflation minus 0.7%, on

goods. non-durables down minus 0.9 and services up 0.2. before i give you to the fpanel point out push me/pull me going on. income numbers, talked about it last hour. income, spending numbers good. durable numbers investors numbers good. yet what we have is this anomaly of the economy continuing to do well, and inflation coming down, which undermines this notion that we need below potential growth in order to have declining inflation. backto you. >> great if we didn't. this would be -- >> right. >> that would be great. be great! start with you, betsy. so is it possible that we could get rates cuts? can we have everything? eat or cake and eat it too, good economy, low inflation and lower interest rates? >> sure looks like we're getting our cake and eating it, too. it is worth pausing thinking about the fact that 85% of the

congress surveyed a year ago out that we have recession this year. most people thought we would either tank the economy or we wouldn't get inflation under control. very few people thought we'd hit the sweet spot of getting inflation down and keeping the economy growing. so a round of applause for everybody policymaker driving obviously chair powell being a big, a, playing a big role there. i think, end of the day, this comes back to the fact we just really don't know what potential is. it has to be the case that there was just a lot of ability for the economy to expand supply in a way that could help bring prices down without overheating the economy. the typical idea when we're at potential there's just no way to expand. we're just stuck. what we've seen instead is labor supply expanding. immigration coming back. new business formation surging. all of those things that happened, i think, has done a lot to meet the demand of people

without actually, you know, having ongoing, rapid inflation. so there's going to be a lot of lessons to be learned here over the next few years, but if i was the fed this morning i would get up with a big smile on my face thinking maybe we can hang that "mission accomplished" banner real soon. >> oh, my god. thomas, let me ask you and maybe you can figure out why people still feel like things are -- the average person would not say we are in, know, this goldilocks scenario right now. what happened? they just remember to get a couple of 9% increases in inflation. prices don't go back down. is that what people are still feeling agitated about? >> yeah. a couple reasons. definitely one of the big questions now is, why are average americans less excited about the economy than a lot of professional economists are? one of them is like you said. we've had declines.

told over and over this inflation was transitory, which meant prices would come down. that's actually not bhoowhat we seeing at all. they are a lot of times consumer sentiment largely is based on inflation. after high inflation you expect it to be bad no matter what's going on in the job market, but i also think some of the numbers are more mixed than economists read them. for example, powell in his recent fomc press conference talked about job openings and the low quits rate, as though they're to independent data points that look good. quits depend how much job openings, what do wages look like? do people expect recession in the next year. people don't want to quit their job because they think thing, bad. data is more mixed than a lot of economists say. >> i guess steve and rick, we --

mission accomplished banner? i don't know whether we can -- that's always dangerous. isn't it, rick, what do you think? >> yeah. i think it is. and once again, i understand that if we start this movie about a year and a half or two years ago, even start it in the middle of covid, one could argue it really puts a pretty good face on how the fed has done and i wouldn't disagree with that, but i never look at things like that. i like to look at the macro. i like to look at what happened in '06, '07, '08 and how they kept rates near 0 so, so too long. i like to look at how keeping rates at zero really was instrumental in moving debt to $33 trillion. whether it's mission accomplished, i don't think so -- yet. there's still much. you can annualized the rates. here what i see. i see the year over year deflator 3.2, well north of 2%.

we have a multispeaking consumption economy and a lot of participants that aren't feeling this. use bureau labor statistics own inflation tool. go to the website. look for the tool and put in pre-covid. pick a month. january 2020. you'll find inflation's up 20%. because it's compounded. these annualized rates aren't making people feel good. >> you probably would like to say something, steve. i don't know. maybe not. but we'll have more time. this is like, episodic tv. and we're going to do it again. soon. hopefully. thank you to the entire panel. coming up, that guy. "new york times" columnist tom friedman joining u.s. to tuk about talk about attacks in the red sea affecting global shipping and the telast on the israel-hamas war. "squawk box" will be right back.

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coming up in just a moment, "new york times" columnist tom friedman joins us on fighting in gaza an attacks inned red sea that's erupted and disrupted global shipping. talk about that and more when we come right back.

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kwk back to "squawk box." update on attacks by houthi rebels in the red sea avoiding the suez canal. those diversions driving us prices. prices as high as $s 10,000 per 40-foot container. as of yesterday, and just last week rates less than $2,500. joining us now to talk about that conflict and so much more, ahead of the holiday season, tom friedman. "new york times" foreign affairs columnist and author from beirut, jerusalem, of course. about a million other books but trying to, laid back to where, unfortunately where the conflict is right now, tom. nice to see you,you. >> you, too, andrew. >> talk about what's happening in the red sea and contextualize that bring iran into it and then maybe to israel and everything else. but how do you see this playing out and the dominoes falling one way or the other.

>> andrew, start from 30,000 feet and go 10,000 feet and then to sea level if i could. from 30,000 feet i felt from the very start of the war between hamas and israel that basically what was going on in the world was that ukraine was trying to join the west, and israel was trying to join the east through normalization with saudi arabia, and russia and iran and their proxies got together to block both. i think that's what's happening globally. at the next level down, basically iran, if you think about it this way, andrew. the u.s. has two aircraft carrier groups in the region right now. one in the eastern mediterranean and one in the persian gulf. iran has four what i call land craft carriers call the houthis in yemen called hezbollah in lebanon, hamas and iran using land aircraft carriers to

project power in the region and driving america and israel out the way we project power to our aircraft carriers. but theirs are on the ground. they can use them to hide behind, use as proxies. that houthis, who are this group of yemeni tribesmen who in 2014 came down from the north. they're an offshoot of shiites. they triggered a civil war. saudi arabia got involved. we got involved. the war has died down. they have been working off a ceasefire of late. there's a lot of competition because the way the war ended, there's a balance of power now between the different tribes, but the houthis are hoping to steal a march on all the others by showing themselves as the great defenders of palestine and their ability to lob rockets at

israel. that's sort of what's going on. the saudis are very concerned. they told the houthis, whatever you do, don't lob any rockets at israel over saudi arabia, because we don't want to have to shoot them down. we don't want to have to look like we're protecting israel. the houthis act, basically, over the red sea, et cetera. we've now got this u.s.-led ten-nation coalition to try to deal with this, but basically, i think what our arab allies are saying, don't get in a war with these guys. that's what they want, and at the same time, not sure how to stop them. the omanis are trying to work a deal. that's where we are this morning. >> let's go back to the 30,000-foot piece of this, though, because maybe that's the most important piece. where do you see what's happening in israel with the palestinians going? i don't know, directionally, what you think is going to happen in israel proper, but as it relates to iran and this larger piece?

>> well, if you have been following me from the start, you'll know i was very wary about israel going into gaza for two reasons. one, it clearly had no end game. it had no defined end goal. and so, it was launching its army against hamas in retaliation for the murderous and barbaric attack by hamas on israel on october 7th. fully justified by israel in responding to that, of course, but it had no end game. that is, it had no political goal in gaza in mind that would allow israel to either stay there indefinitely in a way that was politically and diplomatically sustainable and have some palestinian partner. why doesn't it have an end game? because members of israel's far-right government under netanyahu refuse to have any talk of palestinian state or palestinian authority in the west bank taking over gaza. i was worried about that. second, all you have to do is follow israeli politics to know that the elite there is not together at all. there's lots of infighting

within the elite, and when you launch a war as important as gaza, without an elite that is aligned, that's very unnerving to me. so, the war has now inflicted terrible damage on hamas infrastructure and on gazan civilians, on thousands of people have been killed. and it's gone, at some level, the israelis have discovered a lot of tunnelled, inflicted a lot of damage, but if you read this morning, their top military correspondent, the war is going very slowly, very costly. israel is a reserve army, so its high-tech economy. lot of those guys work for high-tech companies that you report on are now in the streets of gaza. it's not in a long-term sustainable situation. >> tom, it is a longer conversation to figure out where to go from here. i want to wish you a very happy holidays. i hope you can have you back and continue this conversation in the new year. unfortunately, the story is not

going anywhere. tom friedman, thank you very much. we're going to come back in just a moment right here on "squawk box." [ "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, now, through january 2nd. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills,

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welcome back to "squawk." i want to talk markets right now. our next guest says investors should have cash ready because he's expecting volatility in the next quarter. good morning to you, leo. when people say cash, that means down. so, you think we're moving -- volatility is -- that's a

downward move, you're suspecting, is in the offing here? >> i think cash today means something a little different, andrew, because you're getting a rate of return on cash. if you go back a few years, you're right. there's no return, so the only reason to hold cash was that you think the market's going down, you want to buy back in. we're actually neutral weighted on equity, meaning we are where we should be. we are holding cash in lieu of long bonds, and as i said, the nice part about cash is, you're right. we do expect volatility in the first quarter, and if the markets come back down off of what i think is a bit of a speculative run here, you want to have cash on the sidelines to take advantage of that. i do think we'll see that volatility in the first quarter. >> and you're taking advantage of it how? what are the things you would be looking for? i don't know if you heard bobby kotick, he slipped it in very delicately, he said he thought a recession was going to be here next year. if that's the case, are there certain defensive stocks you would be buying? >> we're in that same camp.

i think a recession is definitely a possibility next year and a reasonable possibility. the consumer has weakened. we have not gotten through all of this commercial real estate challenges, and we're starting to see some signs in the labor market slowing a little bit. i think, andrew, we got to take a step back here and remember, the fed wants to slow the economy down. they're trying to get inflation back in check, and it's an uphill battle for them with all the capital that's been thrown into the system coming off of covid, and the fed will get what they want. they will slow the economy down. the idea that we're going to perfectly teeter on the edge of goldilocks might be a little optimistic. we have had a nice run. it's been seasonal. tr traditionally, we get the santa claus rally at the end of the year. the first quarter tends to tell the tale on what's really happening in the economy. i think you go back to the growth-oriented stocks. i think large cap value looks great. i think this, you know, this

spread between seven stocks and the rest of the market starts to correct. it has this month, and i think it does next year. i think we start to see new leadership next year. we want to invest in that. >> so, here's the question, though, for everybody who's sitting out there watching this, saying, i'm an owner of the magnificent seven and most of our viewers own at least some of them, would you continue to hold? or you're saying you want out? >> what i'm saying is that what happens in times like this where the magnificent seven or back in the 1999, early 2000s, the hot tech stocks, what happens is they run and they run, and people hold on to these securities like, you know, like they're solid gold. you have to trim, andrew. bring your allocations back to neutral. take some profits. it's okay to continue to hold them. they're great companies. they're great stories. but you just can't let them run away and take on larger allocations than they should. you have to be disciplined

always in portfolios. >> leo, we want to thank you. wish you happy holidays and look forward to a big new year ahead. i hope you're a little wrong and maybe there isn't a recession. we will see. thanks. >> happy holidays. final check on the markets. >> just say good-bye to everybody. >> give everybody lots of hugs, your family. >> andrew, thank you. merry christmas. >> happy holidays. happy new year. lots of hugs. hug your family. make sure you join us on tuesday. ♪ a good friday morning, welcome to "squawk on the street," i'm carl quintanilla with scott wapner, leslie picker at post nine of the new york stock exchange. cramer and faber have the morning off. futures a bit mixed here. headline, pce drops month on month, first time in three years. core now below the fed's target. our road map begins with inflation. core pce, prices rose less than expected. what it mean