all right, set for a quiet open. the s&p 500, the numbers we're looking for, 4,797 would be a new closing high. 4,818 would be a new intraday high set almost exactly two years ago. of course, markets closed on monday. >> last call, 7:00 p.m. >> we could do that. >> see how things went. why not? first, stay here for "squawk on the street." ♪ good friday morning, and welcome to "squawk on the street," i'm sara eisen with bob pisani. today live from post nine of the new york stock exchange. carl, jim, and david have the morning off. last trading day of the year, taking a look at futures. will we get a record close for the s&p? i don't know. looks like another quiet day, futures pointing up, dow futures up 12 points. dow, by the way, at a record high. nasdaq 100 at a record high.

nasdaq composite down. having a banner year. our road map begins with the final trading day of 2023. best year for stocks since 2019. s&p 500 still on the cusp of a record as the stock melt-up continues. plus 12 stocks in the s&p 500 gaining more than 100% on the year. we're going to break down the big winners. and oil prices heading for their first losing year since 2020. wti crude down more than 20% in the fourth quarter alone. we begin with the markets, though, and there's a lot to say, bob, about the performance this year, especially in the last month because we're closing out the month of december and the fourth quarter. it's been a surprisingly eventful and bullish one. i'll give you one stat. we're now going to close out our nine weeks of gains for the s&p and for the nasdaq, something we haven't seen in unison, according to bespoke, since 1985. >> it's almost two different years. there's everything up until the end of october, and then there's november. and it's very important not to

confuse causes and effects. the cause of what has happened in the last two months is the market has come to believe the federal reserve is done with its interest rate hikes and that there will be significant amount of rate cuts occurring next year. the effect of that has been interest rates have declined dramatically since the end of october. that has caused the stock market overall to rise but particularly a broadening out in the markets as we talked about so much. we talked yesterday, small cap stocks moving up. value stocks, moving up. consumer staples stocks, moving up. underperforming names moving up. one of the only groups that hasn't moved up dramatically, energy stocks, primarily because oil is being held down right now because of great supply in the markets. one of the last pieces of suspense, sara, we're going to close at a historic high for the s&p 500. we're just 12, 13, 14 points away from that. it is a fairly rare event. i talked to standard & poor's yesterday about this, for the markets to close on a historic high on the last trading day of

the year, doesn't happen very often. eight times, actually. there's the numbers. thank you, s&p, for providing this tos us. 2020, 2013, 1999'1999, '91, '63 '58, '54, and 1928, that's when they started keeping the records. >> it's happened. >> it's happened eight times, and do the math here. we're talking about 95 years. that doesn't happen very often. we'll see if that happens. we have the santa claus rally. the last five trading days of the old year, the first two of the new year, that is on track as well here, so we've got four days the s&p is up 0.9% or so in the last four days. we got three days to go, and that's about on average right now. the average gain on the santa claus rally is about 1.3%, so the seasonal factors are coming in here really strong. and just quick review of the global markets, which you watch so carefully, sara. it's been generally good year,

ex-china. china is the outlier. we saw japan having a terrific year, up 28%. the nikkei's best yearly gain in a decade, big winner in asia. we saw nice gainsin europe, the sox 600. india is up 17%. look at these numbers. there's the outlier, china, down about 4%. we'll be talking with brendan ahern, who runs a big china etf a little bit later in the hour, and we'll figure out where china's going to be going. but other than that, brazil was up nicely as well this year. this has been a global stock rally, although the united states has tended, and japan tended to lead. >> although last few days here, china's seeing some dip buying, so potentially a sign of things to come after, as you say, a pretty rough market. i guess the question, bob, is let's separate the fundamentals where there's a total rethink of what's going to happen at the fed. now, six rate cuts are priced

in. the fed itself has three rate cuts priced in. the market has pivoted faster and in a bigger way and just the seasonal factors you mentioned. so, there are things that happened here in the final trading days of the year that make it typically positive for the markets. the fact that people sell the losers or they wait, right, to sell the losers for tax reasons, the low volatility. i think the question is, what does all this mean for 2024? >> so, the -- first of all, we had a better than 20% year. next week, i'll talk about what typically happens after an up 20% year, but you will typically see january flutter a bit. it's a bit of a crapshoot what happens in january overall if they're a big up month. i think the important thing here is what could do wrong? we talked about this yesterday. number one is we don't get the kind of rate cuts that the market is expecting. and remember, that is now priced in, roughly six rate cuts is now priced into the market. if we get into march and all of a sudden, the fed says, you know, we're not doing anything right now, the market's going to

flutter on that, because it's anticipating that. number two, we could have signs of a much slower-than-expected economy out there, maybe not a recession, but slowing a lot more. that will get the financial journalists, all of us, excited, talking about a potential real recession. and finally, i talked yesterday about the earnings and revenue expectations. they're very high. earnings, up 11%. revenues, 5, 6, 7%, and i see some early signs that revenues are going to be a little bit of a problem in the next year, so there's three potential issues. the market's positioned very bullish, anticipation of rate cuts, anticipation of the soft landing, anticipation of strong earnings gains. any one of those going wrong, the market is going to flutter. >> i think we should zoom in on the last two months for rates for the ten-year treasury, let's say. what we have seen in terms of the rally and the reversal, as you say, has underpinned this entire equity rally. we saw the yield drop 46 basis points in november. another 53 basis points in the month of december.

so, put it together, and you have a more than percentage point fall. it's the biggest two-month fall we've seen since 2008 when the fed was cutting rates, remember, during the financial crisis. i think a lot depends on whether we can fall further or whether we see some type of rebound, and to your point, the economic data will be the tell. the inflation data will be the tell. market's convinced on the disinflation story, that it will keep going lower, back all the way to the target of the federal reserve, which is 2% inflation, by maybe the end of next year, and that's what's going to buy the fed ability to start cutting rates. i do think in the background, though, bob, you have seen tightening this year. >> yeah. >> if you look at the fed's balance sheet, for instance, it's still doing qt. it's still shrinking its balance sheet. that's set to proceed, basically, on autopilot, and with inflation falling, if the fed doesn't start cutting rates, the real rate is rising, and all of that can hurt the economy. >> how low can the balance sheet go? we were $9 trillion. what are we, $7 trillion right now? >> we've lost a few trillion on

the balance sheet. i think they want to see it come lower, as low as they can, before they have to stop. >> just final point before we get to john. just look at what those lower interest rates have done to small caps. those are the companies that would benefit most. they get hurt the most when rates go up, because they can't borrow very well when the rates get higher. small cap has outperformed since the end of october. small cap value, which we have waited for for years to outperform, has outperformed virtually everything since then, and there's the response. again, this is the cause and effect. the cause being that the federal -- belief that the federal reserve will be cutting rates next year, the effect, lower interest rates, the second order effect. small caps rally. >> also with a soft landing, without seeing recession, without seeing mass job losses, without seeing a destruction of demand in a major way. >> and you see high-yield stocks moving. those are companies that are very much at risk to an economic slowdown. >> let's stick with the markets because our next guest believes the market will broaden further

in 2024, and he has a 5,200 target for the s&p. what did you have this time last year for the s&p, out of curiosity, john? >> this time last year, it was 4,400. people thought we were overly optimistic, and we were fortunate it was a good target. i think it was in june when the market closed above that level. >> well, yeah, turns out you weren't optimistic enough, i guess, is the bottom line. how do we replicate this performance? bob and i were just talking about just how much good news is already baked in at this point. >> you know, sara, i've got to say that indeed, we think if we provide just analytics of this rally that we've seen, we would have expected that the rally that has occurred over the last eight weeks or so would have been about half of what it has been, but what really affected it, as you both mentioned, was

the drop in the ten-year yield, which brought back the -- which created a lot of capitulation by bears, and that process brought a lot of money into the market. we can't help but think that should interest rates rise somewhat, you're going to get a questioning and maybe some takeback some time in that first quarter of this coming year, just a few days away, but sometime in the first quarter. but that said, we think the fundamentals are getting better. the federal reserve continues to show the ben bernanke legacy of high transparency, communicative stance, and great sensitivity to the effects of practicing its mandate on the economy. so,maintain the resilience in the economy, provide for a market that -- provide for interest rates thatdon't kill employment, we could very well skirt a recession or maybe even

do a soft landing, and that should be good for stocks, and we think underlying all this robust nature of the rally that we have seen is the resilience that has been identified by investors in terms of corporates, labor, and the consumer throughout this fed funds hike cycle, particularly recognized this year. >> john, it's bob. happy new year. good to see you. you're the top dog. you and tom lee have the highest estimates on the street. both of you are at 5,200 for the year-end, 2024, and i notice you have an earnings projections of $240. so, i do 5,200 into 240, i get a multiple of 21.7. is that right? that's a very, very high multiple, right? what would justify such a high multiple? >> the thing is, you know, we're close to that now or having for a good part of this year. and we have seen a multiple

above 23, which was the peak of multiple that we have seen, the average five-year multiple for the s&p 500. so, we're still down significantly from that. one thing you mentioned a little earlier in the program today at cnbc was that more people today are invested in the stock market than ever before. now, we divide that into two populations, just at the broadest level, traders, day traders, players, and then the intermediate to long-term investors, and intermediate to long-term investors have really come into this market. some of it is just because two generations, both boomers as well as millennials and everything in between, then after that, are beginning to recognize that social security is not going to be able to provide the security that is provided for further generations. and so, people in retirement and planning for retirement are investing more in equities, which over the course of the

last century, have shown to be a very good way to invest for intermediate to longer term goals. biggest risk for the baby boomer generation is that we, and i'm a b boomer, live longer than expected, and if we want to maintain our current standard of living, it would appear to us that equities are likely a good place to be. that's great support for equities. >> i feel like the elephant in the room is the election next year, john. already, we can tell that it's not going to be smooth sailing. maine, just yesterday, joining colorado in banning trump from the 2024 primary ballot. how do investors look at this volatility in terms of a political year? usually, election years are good for stocks. >> you know, sara, one thing is that politically, there's always the capability of things like fiscal policy, depending upon the administration's outlook or

conditions, and what an administration would do, because we've seen fiscal policy from two prior -- from the current and the prior administration having happened, and that was significant and likely contributed to the inflation that caused the fed to get rather aggressive at one point in terms of dealing with inflation. we would have to say here that when we look at the landscape, politics, ultimately, once that election happens, the market asks itself, what do republicans want to buy, or what do democrats want to buy? what's the level the market goes for? i wouldn't say the market is cynical, but it is practical. it's driven by revenues, projections of revenues, and earnings, and thus, it will look to see whoever the victor is, that's where likely the spoils within the market will be found. >> so, tune out the noise, like this drama that we're already getting? >> you got to tune out -- focus on the signal, on the cyclical

and secular basis look remarkably good with technology likely to drive all sectors in terms of businesses that adapt to modern technology, and they've already done that, but the technology that is in development right now and forthcoming. those are the companies that will be the winners, and it will be across 11 sectors. you'll have to pick them, and you'll have to be particularly selective if you're an index investor, like alpha beta the best where you go for alpha and some beta, just so you hedge your beta with alpha, hedge your alpha with beta, so to speak. >> all right, john, thank you for joining us with your outlook. when we return, the best-performing tech stock of 2023 has something in common with a number of its peers. we are not talking about nvidia. stick around for the name. taking a look at futures on the this final trading day of 2023, they're pointed up again. this has been the trend all week long. will the s&p set a record closing high? we're watching for that 4,796

level. aqasis already at a record. nasd h had quite a string of gains as well. we'll be right back. ♪ the biggest ideas inspire new ones. 30 years ago, state street created an etf that inspired the world to invest differently. it still does. what can you do with spy? ♪ with powerful, easy-to-use tools, power e*trade makes complex trading easier. react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley.

this year's best-performing tech stock is also among the most highly shorted. an unprofitable name staging a comeback in 2023. kate rooney joins us with the details. >> affirm. that is the big winner. it's the best performing tech name, at least among those with a market cap above $5 billion. it's up 430% for the year and

this has been an epic turnaround story. affirm had lost about 90% of its value. part of the story is tech. unprofitable tech names had been some of the most shunned stocks as the fed started hiking rates. now the fed cuts are on the rise and investors are turning back to some of the riskier, money-losing growth stories like affirm. it's also waiting for investors to play that buy now, pay later surge. adobe estimates that these types of installment payments were up about 15% for the year and 40% or so on black friday weekend. there's the short interest factor. affirm is one of the most highly shorted names out there, about 18% of the float still short, adding to some of the volatility. short covering this year has sparked some of affirm's latest rallies. it has also become a favorite among retail investors. about a quarter of its volume came from individual investors. that's according to vanatrack.

this is giving top investors some reasons to celebrate. one of those is shopify, which owns 4% of affirm. that stake now worth over half a billion dollars, according to facts, and you've got peter thiel's founders fund, and the company's founder and ceo, max levchin, ringing in the new year with a company stake worth $1.4 billion, up from about $250 million just a year ago. while the lending picture is looking a bit better and delinquencies have stayed in che check, the stock has seen a series of downgrades, including morgan stanley saying valuation is now unsustainable for affirm. it's not the only money-losing, highly shorted name on the list. coinbase is the second best performer. that name is up 426%. neck and neck there for those two guys. back to you. >> kate, i was just going to say, bob and kate, that you used the word, unprofitable, but what changed is a lot of these unprofitable tech companies have

found a little bit of religion on profitability, right? they went through 2021 and then 2022 on the higher rate story, got punished brutally, and their finances have improved a lot, haven't they? >> there's been a lot of belt-tightening. you've seen things like layoffs in terms of bringing the costs down when it comes to stock-based compensation. that's been echoing through silicon valley. tech companies. i mentioned shopify. that's another name that's reined in cost. you've heard it on all these earnings calls that they've talked about the cost discipline and really tried to echo that for investors and say, going forward, we're going to make sure we're cutting costs. you've seen it. margins have gotten better. they have been able to keep that in line. it's a story that investors like and that also you've got the tailwind of lower interest rates, but that's absolutely part of it here. they've found some religion and said, enough with the growth at all costs. we're going to try to tighten our belts here. >> and yet, kate, i can't help but think morgan stanley is on

to something with a downgrade here. the company loses money. it's going to lose $2.60 this year. analysts are expecting it to lose $2 in the next year, and it's gone from $22 to $51. i mean, that's kind of remarkable. i know there's anticipation here, but you know that old joke, discounting the hereafter at this point. >> those seem to be completely out of cynic. you've seen the fomo. lot of investors out there and individual investors who had been in money market funds who are now saying, wait a minute, i think it's time to get back into some of the risk chasing you're seeing with affirm, short interest absolutely plays into that, but the valuation, based on what the majority of wall street investors are saying, they have said, yes, the picture has gotten marginally better. affirm has not seen the type of delinquencies that people have talked about with the worst case

scenario of recession here, and investors not being able to pay some of those loans back. they haven't seen that. it's better than feared, but still not quite in line with what analysts had expected. the other thing to mention just on the economic side of things, there's a lot of talk about what that actually means for the individual borrower here and things like fanphantom debt, de stacking, so it's too soon to tell what it means for the borrower. >> true. kate, thank you. something to watch. when we come back, fund strategy's tom lee accurately called the year's rally and he's making another bullish call for 2024 with some ceaavts. tom lee will join us in the next hour. oh, i have a shellfish allergy. one prawn. very good. did i say chicken wrong? tired of people not listening to what you want? it's truffle season! ah that's okay... never enough truffles. how much are they? it's a lot. oh okay - i'm good, that - it's like a priceless piece of art. enjoy. or when they sell you what they want? yeah.

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well the dow jones industrial average is up about 14% year to date. here are the top performers on the dow. they're all technology-related. salesforce, intel, microsoft, and apple. some pretty giant gains for the dow. the biggest loser, by the way, is walgreens, along with chevron and j&j. and the last final days here of 2023, the dow has set seven record closes. will today be number eight? opening bell just minutes away.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. oil prices down more than 9% in 2023, actually marking the first negative year in three for oil. the drop coming as opec cuts, along with its allies, supply, but also amid worries about supply disruptions and geopolitical tensions. demand concerns and increase in u.s. crude production all helping to lower prices here. i think the question for 2024, bob, is the geopolitical risk factor priced in as all roads increasingly lead to iran? >> the surprise here is what happened at all. if i would have told you six

months ago, the russia-ukraine war would continue to grind on with no immediate end in sight and then this shocking war between hamas and israel, you would have thought oil would be much, much higher. oil was over $90 in september. in october, moved down. u.s. is now the biggest producers in the world, i believe, 13 million barrels a day. there is a testimony to the united states's tremendous reserves of oil and natural gas right there. so, this is a little bit of a counterintuitive idea here. >> yeah, energy stocks get hit as well. just want to pause for the opening bell. at the cnbc realtime exchange. here at the big board, the professional women's hockey league. at the nasdaq, the times square alliance getting ready for the big ball drop, the new year's eve celebration as they always do in times square. we're here with extra security, of course, this year. a number of places to start. let's start with one of the stocks of the year, which has to

be nvidia. it is the best-performing stock in the s&p 500, up a whopping 242% year-to-date. i'm looking at nvidia at $499.85 because miller tabeck says $500 is a key level for nvidia. the bulk of nvidia's gains came in the first time few months of the year. it's underperformed in the last few months. >> what i keep remarking on these companies is you think a 240% gain would result in a stupid multiple, nobody can do that, and yet the earnings expectations are so great that the multiples are not expanding that dramatically. in fact, most of the other major tech names, i talked about this yesterday, microsoft, nvidia, apple, even meta, their multiples are within the normal five-year historic range for them, so this is part of the great story here that the expectations are so high for the impact of headquarters that we're not dealing with stupid. this is not anywhere near 1999.

th these companies' valuations are very reasonable. i want to see an expansion of the a.i. ecosphere next year. i want to see small ipos, like databricks, in the datacenter area that are going to benefit from the a.i. revolution come public next year. i'm hopeful we're going to end this two-year terrible ipo drought. i'm hopeful we'll see a lot of small billion to $10 billion small cap tech companies in the data space, in the a.i. space, coming next year. the overall market conditions are terrific. new highs. interest rates moving down. volatility, low. those are the three best global market conditions you can ask for for the ipo market. so, let's hope that a.i. powers the ipo market. >> but so do lower interest rates and stabilization of rates, which we're getting. so, nvidia's at that key level, $500 if we get above it. he says that could be very bullish. apple is at a key level. i just want to point out what apple has done. it's had a minor selloff,

actually, or underperformance in the last few trading days and weeks of 2023. it's still up 50% year to date but $200 is the level to watch on apple. it's been a point of resistance before. could be a bullish tell for arguably one of the most important stocks in the market. >> again, apple, '25, 26 times forward earnings. that the within the normal range. you're right. we topped out, essentially, back in august, and we topped out again a month ago, early december, but i don't know what else you expect from this name. it's the one that everybody owns at this point, and despite the concerns about iphone deliveries, i think you're going too see tremendous things. what i'm waiting for, i'm very excited about, for years, i have waited for personal digital assistant that is essentially attached to me and can answer everything i really want to know. we're getting there. it's getting much better, but i anticipate apple will be one of the first ones out with a true

personal digital assistant, and here's the key. the data will stay resident on your phone. it's not an app where you're sharing your data with somebody else who's going to sell it to you who knows everything about you. apple will create a personal digital assistant where the data is resident exclusively on the iphone. of course, you'll be backing it up in icloud, but it's going to be there. i think it's going to be tremendous. i've been waiting for this for ten years. >> i can barely handle bob 1.0. bob 2.0? no, it's going to be great. >> sara 2.0. >> information technology, no surprise, is the best sector in the s&p 500, and that is thanks in part to nvidia but also all the other semiconductors. it's been a great year for intel, which would have been a good loser to buy last year because it's the second best outperformer. >> after years of underperformance. >> years. >> years and years and years. this goes to the point about the a.i. ecosphere expanding. i see people complain about the magnificent seven. i see most of semiconductors universe expanding, and we'll

talk about software with a guest coming up, and i also see most of the data and cloud business expanding dramatically. we talked about a whole bunch of other companies yesterday that are out there in the data business that are expanding dramatically, and i think, again, you're going to see much smaller companies come in. 2024 is going to be the year the a.i. ecosystem is going to expand dramatically, and that's what makes me very hopeful. we're going to have tom lee on, who is directionally correct this year, kudos to him. >> bullish. one of the few. >> he's bullish again, 5,200. i want to just point out about this gain that we all play about forecasting. it's a terrible game, and most of these people aren't very good at it. you saw we just had john on, he had 4,400 here for the end of the year. that was off by a good -- >> but he was closer to right, because everyone else was more bearish. >> and even the federal reserve, and i pointed this out many

times, has a terrible forecasting record. their gdp forecast this time last year was 0.5% for 2023. and the actual numbers, we had 2.2% for the first quarter, 2.1%, 4.9%, 2.7%. they were off by orders of magnitude. >> everyone was wrong. >> they were off on the unemployment rate too. they had 4.6%. we're at 3.7%. here's the forecast for the federal reserve for this year's gdp. it was 0.5%. that was their prediction this time and this is actually what happened. and they were wrong also on the unemployment rate. >> even they didn't think they could pull it off. >> my point is, people tend to be tdismissive. these are the smartest people. they have the best economists anywhere, and even they find out they were terribly wrong on their inflation forecast a couple years ago by magnitudes of order, and my point is it's not that these people are dumb or we should disregard them. here's their projections for 2024. this is what the fed thinks is going to happen. we'll see.

write these down, folks, and see how close they get. it doesn't mean we shouldn't pay attention. it means that forecasting is a si very difficult game. it's difficult because there are biases that infect the way people think, and it's difficult because there are so many variables that the future is ultimately unnoknowable. often, what happens is unknown events come in. they always say, well, if we didn't have covid, our projections would be more accurate. well, that's true, but we had covid, so this is the problem with these projections. the future is ultimately unknowable. >> as far as the fed, bob, i think the only tradeable piece of information there is where they expect the fed funds rate to go, and that might be wrong too, but it's a signal, and that's the signal that they gave that got the market so bulled up that we expect to be cutting rates three times next year from the -- than from the current level where we are now. >> i'm very excited about next year, because i think the federal reserve is going to be cutting interest rates here. i wonder if we could talk about

some stocks at new highs. did you see the credit card companies? mastercard's new high, amex is at a newhigh, capital one. credit card balances, record highs. this is another sign to me that the consumer is still doing well. if you want to flip this around, you say, they're charging a lot of money on credit cards, that's a problem. you see these new highs? there's the credit cards. put up the industrials. >> just on the credit cards, they're charging up a lot and taking on a lot of credit card debt at a time where delinquencies are rising. it's something we want to watch. that sort of combination could not spell good things for the consumer, although i will say that delinquency levels are around pre-pandemic highs at this point. >> i know you flipped this around, but my point is, if consumers were truly fearful, truly, truly fearful, they would be pulling back on their spending. put the industrials back up, because we have been talking about this all year. there's a group of industrials that consistently hit new highs.

caterpillar, ingersoll rand, there's some a.i. plays around this. ingersoll rand is a big industrial compressor manufacturer, and they're big on global reshoring trends. they're big on increased investing in automation, for example. eton does power management. they do big industrial facilities. they manage the power systems. automation is really important. more smart devices is going to require very fsophisticated powr management systems and a.i. will enhance the sophistication of the power management systems. my point here is -- >> they would be great stocks. >> there's a slight a.i. play in some of these names as well, and i mean, ingersoll rand and parker-hannifin, almost every day this quarter, they have been hitting new highs, and ge, our old parent company, is finally getting more focused as well. >> even with the questions about strength of the industrial economy. >> it's just having been an investor in general electric for 30 years, it was the owner of

nbc back a while ago, and having lived through jack welch's years and everybody else's years, it's nice to see them get more focused. it's hard to describe what a conglomerate was, general electric, 30 years ago in 1993. it owned everything. and it got more and more focused, many, many difficult years, and i'm just pleased to see it sort of figure out what it wants to be. it doesn't necessarily have to be in everything. it doesn't have to be in financial services or light bulbs or even health care. maybe it should be just an industrial company overall. >> a double in 2023. >> yeah. >> just want to hit boeing as well, because there's some news on that stock. boeing urging airlines now to inspect the 737 max planes to look for what they're calling a possible loose bolt in the rudder control system that i guess came from an international carrier that was flagged. also, they found one in production. it's about a two-hour inspection process, we're told, at boeing. boeing's been a winner as well.

just watch this story. cnbc.com reached out to some of the customers, alaska airlines, united, american, they all said they're going to complete the inspections. it shouldn't interfere with operations. but just something to watch, bob, as we're always on sort of quality control watch, especially heighten ed alert whn it comes to boeing because of some of the missteps in recent years. >> despite this incident here, you, again, seeing the effect of lowering interest rates. boeing, along with the rest of the industrials, took off at the end of the october. t i did a story on the floor, it was $190 on november 1. today, we're $260. we're at a new almost two-year high here, i think, going back to 2021. so, obviously, there's been concerns about their most -- their biggest jet, their most popular jet, but it hasn't stopped the rally in the stock itself. >> i think we should hit the home builders, because boy, what

a surprisingly strong year it has been. talk about surprises. >> every day, new highs. >> even when mortgage rates were going up to 8%, to historic highs, we continued to see names like pulty group and dr horton, why? because of the inventory problem. we have 30% less inventory than we did before covid. that has kept prices elevated. it's kept demand relatively strong in the face of these high mortgage rates, and now, they're getting a blessing at the end of the year, which is mortgage rates have come down, and they have come down pretty sharply. we saw yesterday the level on the 30-year fixed, 6.61% down from 6.67% the week before and down from almost 8% in late october. >> what you want to look at is the percentage of new homes sold to existing homes. when i was the real estate correspondent, this was 30 years ago, i was the real estate correspondent from 1990 to '96. no jokes, please. and at that time, typically, new

homes were 10, 15% of the total home universe. most of the universe was existing homes. and now, we have seen, suddenly, new homes become a larger percentage. i don't know what the number is. it's in the 20% range, i believe. 20 to 30%. and it's amazing to see that, because that takes a lot. new homes are typically more expensive. they cost more for people to buy, but it's happening because the inventory is so difficult right now. as you mentioned. this is going to change, by the way. look, even at 6.6%, people may complain that they want to hold on to the 3% mortgage, but the world doesn't operate in a static position. people get new jobs. people move around. people are forced to do things, so i think once you get more accustomed to a mortgage rate in the mid 6s, you're going to see the existing home sales. >> deaths, divorce, diapers, all the life cycles. at the same time, whether it spurs a burst of buying

activity, we don't know, because it's still the -- the mortgage rates are double where they were in 2022. and i think that's a question. it's also a question of what commercial real estate does. i know you say it's been well telegraphed and we've been waiting for the ticking time bomb, but we will start to get some of the refinancing next year, and they will be at much higher rates than where some of these buildings locked it in, and the market's been particularly worried about office, although in the last few weeks, the rebound in reits, the real estate investment trust, look at that sector, especially some of the office names, has been strong. >> there's your interest rate rebound. again, cause and effect. you see that in the market. one thing you can confidently predict, not a lot of new office buildings are going to be built for a long, long time. i would be surprised to see -- the pipeline is essentially going to stop at this point. so, that's a pretty confident prediction. the only issue is, can we get more people back into the office? i'd play against this trend of a lot of people coming back. i think there may -- i like to play against prevailing tropes,

and the prevailing trope is we're going to have a slowdown, and they're going to force more people back into the office, because you're going to see headlines that say people who come to the office more often are more likely to be promoted. there's going to be surveys out. the financial press will do that this. that's us, and we'll sow that. i tend to think the mixed thing is a very strong trend, and it's going to take a lot to sort of break that. i think a lot of people are going to resist that, and i would bet you a year from now, it's not going to be that much different. >> i do think it is a question of what happens when the labor market loosens, because it's been tight lately, to your point. >> you're going to -- you'll see that headline. people who come in more get promoted more. >> time now for a final key economic report of the year. we're getting chicago pmi. let's get to rick santelli. >> yes, sara, we're expecting a number of spot on at 50, a disappointment, 46.9. 46.9.

that would be the weakest level going back to just october when it was 44.0. but in between, and this is the issue, last month's 55.8 was a 1.5-year high, so big reversal there, and of course, we want to pay very close attention to how other pmis and how some of the data points start to show up next year in january. this is a point. here's something unusual. we're at 3.86% in the ten. why is that unusual? we settled at 3.88% last year. about five minutes ago, that's exactly where the market was. unchanged on the year. just to put a face on it, right now, a two-year note is at 4.28%. last year, it closed at a price of 4.43%. 30-year bond is the only maturity that is slightly, and i only mean slightly, higher on the year. it settled at 3.97%. it's currently at 4%. the settlements i'm referencing

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here are the biggest s&p 500 gainers of the week as we get ready to wrap up the week, the quarter and the year. you've got a mix of semiconductor like amd, losers like moderna making a comeback and winners like intel. s&p up almost 0.7% for the week adding to year to date gains of 25%. we'll be right back. ( ♪ ♪ ) ♪ (when the day that) ♪ ♪ (lies ahead of me) ♪

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♪ ♪ that can provide critica♪ ♪nsight. ♪ ♪ hoping for an ipo market rebound in the new year after what has been a rough 2023 for startups. julia boorstin joins us with more. >> sara, that's right. in 2024 vcs and start-up hoping for a rebound in investments and ipos after this year's tight ipo market and major decline in

investments. in addition to the implosion of silicon valley bank startups were hit by higher borrowing costs and thousands went out of business. crunch base said vc investments will slow the lowest year for venture funding since 2018, 39% decline through december 21st to $462 billion invested worldwide this year. cutbacks across all stages of venture funding. no surprise, ai did buck the trend with a 9% increase in investment. bolstered by big tech's written to openai, an thrownic and inflection ai, insure tech, and battery companies marked gains while web 3, fin tech and e-commerce saw drops. next year vc fundraising is expected to increase to a level comparable with 2020 according to pitch book. part of that is because investors have plenty of dry powder. more than 4,000 funds were raised since the beginning of

2020 and lower valuations may look to investors like a good opportunity. this according to pitch book, which projects the number of firms will wane over the next few years. both forecast a return for some ipos next year but as investors are focused on profitability rather than growth startups that can afford to delay an ipo until 2025 may do so. close to 1500 companies with valuations of $1 billion or more. there is a big backlog of big mature startups ready to go public. so right now, we here at cnbc are looking for the fast-growing private companies driving change and for our next annual disrupter 50 list we're accepting nominations now. go to cnbc.com/disrupters or scan the qr code on your screen to learn more and apply for your company. >> julia, the question is, can the ipo market open up next

year? we have $20 billion raised this year. that's terrible number. normally $50. $7 billion in 2022. you were mentioning 1500 unicorns out there. what's going to happen to all of them? some can ipo but a lot will have to take haircuts. some of them may not get more funding, merge or go out of business. can you handicap this, it's a big number, 1500, caught my attention there. >> not all 1500 of those companies are in the pipeline ready to go public. by one estimate there are about 75 companies ready to go public that are just standing by ready to go public. i think that is a number that's sort of the more near term number for ipos. you'll probably have better insight into this than i will. i'm hearing there will be some uptick in ipos this year but the real flood will come in 2025. you're right some companies may not be quite ready to go public, will likely sell. we might see m&a activity, buying disrupters that have

valuable technology to accelerate their technological growth. you probably have a sense of when that ipo will fully open up. >> in theory it's the perfect moment. >> next week. >> new highs, interest rates declining, low volatility. on a macro level that's the perfect market. that funding is going to be a problem. >> missed their window and should have worked with us this week. >> good point. >> when we come back, fundstrat's tom lee who predicted the stock market rally, hear what he has to say about 2024 when "squawk on the street" comes back. students are inspired and engaged. that's because school districts consulted with cdw to design modern classroom solutions with preconfigured hp devices making education immersive, accessible and secure. now, when researchers study elephants, kids learn from 9000 miles away. make amazing happen. hp and cdw.

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good friday morning. welcome to the last hour of "squawk on the street" in 2023. i'm sara eisen with bob pisani live from post nine of the new york stock exchange. carl and david have the morning off. take a look at stocks looking to end 2023 on a high note. really putting an exclamation point to the rally we've had in the last two months, quarter to date all higher, year to date 25% up. we're little changed right now and watching the level because 4786 is 10 points away from what would be a new record closing

high. we have not gotten there yet or seen a record close for the s&p since january 2022. we're at a record on the dow and nasdaq 100. nasdaq composite up 44% this year. take a look at treasuries. that's been the story. the two-month rally in bonds that have brought yields sharply lower on the 10-year from 5% over there to now 3.879%. got as low as below 3.8% this week. two-year yield below 4.3%. 30 minutes into the trading session, here are three movers we're watching starting with nvidia. launching a slower version of its gaming chip in china to comply with u.s. export controls. the stock is set to end the year as the top gainer on the s&p 500 for 2023. plus, watching uber, downgrading the name from neutral to buy, playing catch up there, saying most of the positive catalysts are priced in. uber is one of the 12 stocks in the s&p 500 that have doubled this year. boeing urging airlines to

inspect the 737 max planes to look for a loose bolt in the aircraft's rudder control system. several major customers don't expect any operational impact due to those checks. not having a big impact on boeing which is higher today and sharply higher for the year. bob, this is the time where i get to prepare all the great charts here. >> oh, boy. >> my top charts. >> sara coming at you, folks. >> get your yellow legal pad out. >> playing the role of david faber there. so one of my top charts for 2023 is food inflation. everybody was worried and feeling the impact of that super high food inflation, right. the war in ukraine making a lot of the commodities hard to get. it got as high as 14% year over year. here's food at home. that's the grocery in the orange. blue is at the restaurants. you saw where it peaked. it shot up in 2022. it's part of the reason the fed was so aggressive with the rate hikes. it has come mostly all the way down, especially on the orange

line. that is relief for people at the grocery store. it's helpful. is it higher than where we were prepandemic, yes? but it is coming down, and that's a very good thing. overall the story of 2023 has been the disinflation we have been seeing as a result of all the fed hikes and the supply chain catching up and everything else. it's why food stocks have been under performing this year. >> what i find remarkable about this, very clear evidence, as you showed there, food at home, is dramatically decreasing in price. >> yep. >> and yet people don't seem to believe it. i sill have people who think that price of eggs are too high but the price has come down dramatically. there's a mental lag in the public's mind. i don't smell the restaurant prices coming down, but you showed evidence it is. >> they're coming down but elevated because there's so much demand. people are still wanting to get out, wanting to have experiences and prioritizing that. that's been one of the stronger parts of spending right now and perhaps why it hasn't come down all the way.

my next chart of the year, two-year yield most sensitive to interest rate sensitivity and what fed is going to do. we saw some pretty sharp run ups this year, and there were some fake outs really going into the end of the fall -- >> march. >> right. when the fed was raising rates. remember we got four 75 basis point increases in rates. we had historically high and fast and aggressive tightening cycle cycle, and it has come down sharply for where we are now as the fed and the market is now looking to cutting rates. >> my mother was -- the story of the year in the middle of march, she was a head bank teller many years called me from her bank, saying robert, i -- my bank is going to give me 4.7% for a one-year cd. i was getting 0.3%. the tellers are telling me to wait another week and get 4.8. i said mom don't become a bond

arbitrage desk. this is amazing. my mother was ahead of the curve left side top there. >> it's why we saw so much money rushing into money market funds. people getting paid to be in cash. $6 trillion. the question is -- there were inflows last week which reversed two weeks of outflows. what happens to that money? >> first of all we've talked about this. a lot of it is sticky money. my mother, for example, pulling money out of her bank account putting it into a cd is not going to suddenly turnaround and invest in high yield and say robert, i hear theeconomy is turning around. >> ai maybe. >> what do you think of nvidia? she's not going to say that. she's going to be sticky there until the evidence it comes down rather dramatically. i think a lot of money is sticky but let's just say a trillion. $2 trillion of that $6 trillion is getting fomo now. that's money on the sidelines potentially. don't kid yourself. not all $6 trillion will move, but i think a substantial part

could. >> my next chart is the nikkei. the japanese stock market. it has boomed this year. best year for japanese stocks in about a decade, and why? they finally got inflation and they didn't do anything about it. they kept policy super ease. negative rates. stimulating. the yen was weak most of the year. they're finally starting to hint they'll maybe come out and the next year. >> till have aal to no adjustments to the super easy policy. i go back tor wada telling me in portugal this year,there's a 30-year lag over there for their policy when it comes to inflation. >> 30-year lag. >> he was joking. they're getting the inflation and it's unleashed some animal spirits in japan making it one of the best markets in the world. attracting investors like warren buffet this year. >> why wouldn't they be exstassic to hear what you're saying, and yet they still have

this idea somehow that they need to keep rates super, super low. >> i think they really are kind of enjoying the inflation which is still lower than most of the developed world and enjoying the benefits of easy policy as well. one more chart of the year, ubs. we talk a lot about the failure of svb and forget that the shock on, remember the weekend of ubs having to acquire credit suisse the two biggest banking giants in switzerland and look what it's done to ubs' market value. it's become $100 billion bank which puts it right behind goldman sachs, one of the biggest banks in the world, a wealth management behemoth and it's a huge i think cultural integration challenge for sergio ramadi that will take years, but it is reflective of what happened. it wasn't just in the u.s. we had bank failures, a bank more than 100 years old in europe wobble on the back of what happened here. >> the market telling you this was a merger that needed to happen. it's introduced more

efficiencies of scale. number three, we're assuming management will be able to execute on this. that's an additional part of this. you can screw up. the execution of this. so far the market has voted yes. >> yeah. also historic change just in the banking system. stick with the markets our next guest nailed the 2023 rally, one of the few, setting a year-end s&p target of 4750, now going into 2024, he says watch the small caps which he believes could rally 50% in the future. joining us fundstrat global adviser co-founder and head of research tom lee. welcome. >> happy new year, everybody. >> so everybody was negative this time last year, but you were not. >> yes. >> why? >> well, really two things. one, we thought inflation would fall like a rock, whereas many were bracing for a decade of sticky fed fighting inflation, and the second was, if that was true, that we would avoid a hard landing and soft landing was the most probable outcome. so that's pretty stock friendly,

right, inflation falls like a rock, you avoid a hard landing and markets are down 20% the year before. >> in 2024, will inflation keep falling like a rock and will we still have a soft landing? >> yeah. i think your food chart is spot on. i think consumers will realize that the rate of price increases is slowing. we saw it in the umich surveys that will give fed leeway to cut rates next year to keep real rates constant. housing and autos is really 70% of inflation, so both are going to normalize and that means 2% is going to be very visible next year and i think it's a huge relief for equity markets. >> congratulations on your calls this year. you've been directionally correct, that's hard to do. kudos to you. you're top dog, 5200, high estimate for the s&p 500 for 2024. john we just had him on, he had 5200. you're top one. i wonder if you can explain what

goes into making that up. it's always a little bit of a mystery what you macro guys do. an analyst who covers caterpillar studies caterpillar earnings estimates and makes a projection, but you have to do this estimate from the top down. so what goes into this? do you guys get together in a retreat on the weekends and drink a lot and figure out what's going to come up with a number? how do you come up -- >> like writing a hit song. it's really sort of three parts. the first part is, what is probable based on market history where are we in the business cycle, what did the markets do the year before? that gives you a pretty wide highway to think about what markets could do. next year, double digits is more than 50% probability. even though we were up 25% this year. we look at the earnings, and we think, can you grow 10%? which i think is easy base case because there's pent up demand for capex and the pmis are going to turn and the guidance has been decent.

then it's what multiple do you apply? this is where i think people get -- make mistakes. when the 10-year is between 3 and 4%, 65% of the time the p/e is over 18 times. 50% of the time it's over 20. that's since 1900. well, the s&p equal weight is 15 times forward or ex-faung. if that 15 goes to 18 or 20, the stock market is going to be up 30%. we figure you hold the multiple, earnings grow 10. you get 5200. that means there's upside to that number. >> a lot of assumptions built in there. >> yeah. >> so the -- you slide the -- you move the slider either way on a lot of these assumptions easily. your multiple is a little high at this point? i don't like to do ex-f.a.a.n.g. in those things. the street is at almost 20 times forward earnings right now. i don't know what your multiple

is. >> yeah. >> this is where people mess up. what's a dollar of future earnings worth? that's the multiple. >> investors can buy any stock, so if they buy the s&p, the index, then they're buying the f.a.a.n.g. 40% weight at 30 times. but if someone is buying like you said jpmorgan at 11 times or, you know, they're buying 20 stocks in the s&p and paying 13 or 14 or 15 times, actually the 10-year tells you that could be 20 times. >> we're not. we're buying the s&p. you have a 5200. you want to x out and move out. >> the best way to do that, should the f.a.a.n.g. multiple come down next year? why should it decrease when they grow earnings 25%? i mean in a way you would actually argue the market has more upside if f.a.a.n.g. holds its multiple because of the earnings growth they're going to have. people trick themselves into thinking the market is expensive. same as someone saying because

the s&p is expensive japan is expensive. they're not. you think about each component you're paying for. >> your small cap call that's a big one, 50% next year. we've certainly if that happens have had a preview in the last few weeks about the comeback in the small cap. why do you think there's so much room left to run here? >> i think people need to put a long-term lens on small caps. on a price to book basis for russell, which is the highest correlation to forward returns, relative to the s&p, it's at the 1999 lows. you've never seen them cheaper. 1999 was -- >> that's always the case for small caps, is that they're cheap. >> the first time they've touched these levels in almost 40 years. in 1999, that was the launch point for 12 years of gains. if you look at the earners of the small caps which is like the s&p 600, they're at 11 times forward earnings. can the multiple expand in small caps if we have weaker dollar pmis turn up?

yeah. i would say easily. can the earnings go up a lot? yes. and, you know, small caps this year have proved it. we turned bullish on small caps around november and people thought maybe it's just a base -- it's up 25%. i think small caps could add 50 percentage points next year can small caps rally when other -- when large caps are not rallying? when tech is not rallying? >> there's a lot of precedent for that. 99 to 2003, you had a pretty viciou vicious bear market. those were the best returns for small caps. >> small caps long term tend to outperform big caps. it doesn't happen in our recent memory that much. wouldn't that be something in that happened. >> yes. many are skeptical small caps could work. most think it's a tourist trade. like they want to own it a couple months. so the more or less likely outcome they do well the entire year. >> and i know you expect a little turbulence in february, march? >> yes. i would say if history was sort of your guide, january,

february, s&p gets to, you know, 5,000. i mean, i think new highs is just a matter of days. but then the march late february, march, april, 5% draw down. >> and then up from there? >> yeah. up interest there. that's growth scare, so everyone will panic and that's probably the time to be buying again. >> no doubt we will be speaking to you many more times before then. >> thank you very much. >> happy new year, tom. as we head to break here's our road map for the rest of the hour. it was a rough year if you invested in china this year, but is it right for a rebound in 2024. >> 2024 set to kick off a major battle between apple and meta, why and what's at stake. >> software stocks to watch in '24. more "squawk on the street" straight ahead. dow has gone negative, down 1 point. s&p 500 is barely positive. the nasdaq also negative for a send bcout again unchanged levels. we'll be right back.

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but lagging developed markets because of china. >> china was the big under performer. is china right for a rebound in 2024? 12% of the respondents of our delivering alpha survey said it will be the best place for returns next year. joining us is brendon ahearn, the crane share's cio. happy new year we talked about this, sara and i earlier, generally global markets perform well, s&p up 4%, europe, brazil, mexico up, uk had a great year, china down on the year. can you encapsulate what happened in china for us this year and your view on 2024? >> policy removal rebound has been tepid, incremental rebound. the chinese government doesn't want to create inflation or go further in debt so they

supported the economy but incrementally and you're seeing consumer confidence come back quite slowly through the proverbial scar tissue related to zero covid but also the pullback in property prices where chinese households, almost two-thirds of their wealth is tied up in real estate. the combination of zero covid scar tissue, decline in property prices, has weighed on the consumer and a very slow rebound, missing investor expectations. >> and yet, i can't help but notice the global investing community seems to be worried about what's going on in china. there have been outflows in terms of investing even taiwan investors have had outflows recently from china. most of these concerns seem to be centered on political issues, on the fact that xi jinping seems to be moving the country more and more in sort of an anti-capitalist direction and more state control. is that a fair characterization? what accounts for all of these outflows we're seeing from

global investors? >> well, i mean, stepping back, bob, big picture, the s&p 500 from the global financial crisis up 844%, and msci, exu.s., is up 276%. basically non-u.s. equities are up not even a third versus u.s., so the u.s., s&p 500 has beaten non-u.s. equities in 12 of the last 14 years. 14 years is 56 quarterly client calls, board meetings, trustee meetings. harry markowitz passed away this yearrs but i would argue diversification and asset allocation has died for many investors. i think, a, you have an exodus out of non-u.s. equities and that includes china, unfortunately. but i think you're starting to see change, particularly on the geopolitical front where president xi's speech at the apec to u.s. executives was very

clear, an attempt to rebound consumer confidence. >> i don't know. i think investors think he could have gone further in terms of promising higher growth or more stimulus, but there's one other factor that you didn't mention besides covid and geopolitics which i think weighed on investors in china this year, country garden missed a bond payment in august, and i think that helped reveal the sort of severity of the liquidity problems in the real estate market there, which i'm not sure have been taken care of. isn't that a big headwind? >> yeah. sara, there's going to be an ongoing issue with property because of these distressed players. earlier this month i was in china and in meeting with a number of investors, institutional investors, they spoke about the awareness of the chinese government and policymakers not to create the l lehman moment in china. the greatest error by a central banker globally was the u.s.

federal reserve allowing lehman brothers to go bankrupt, which created a financial crisis. they're very much on top of trying to prevent a disorderly bankruptcy, whether it's country garden or evergrande. the problem is going to go away, but you're seeing a lot of policy attention which lessens the probability of a crisis. >> thank you very much. appreciate it. i'm sure we'll be talking to you in the new year. hay new year to you. >> likewise, bob. still ahead, a tough 2023 for clean energy stocks but some are saying there's hope on the horizon. check out the biggest gainers on the s&p 500. surprise, surprise, nvidia number one, up 240%. meta, a close second up 200%. the cruise liners roared back this year. royal caribbean, carnival doing well. uber is also on that list. we're back after a quick break.

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here we go. dry,can we land?kin. you're old enough to do it in the sky now. but it's gross. there is no way we're landing. are you sure no one is watching? gwen mallard! do it now, or we leave without you. ok. what a year it has turned into for stock markets in brazil and india.

take a look. brazil up 22% in 2023 on pace for the seventh positive year in eight, and india ending the year up almost 19%. that's up for the eighth straight year. india's stock market topping $4 trillion in value for the first time. this is what you get, a 6% gdp in india and you had very big inflows into the indian stock market from international investors. a lot of that money i think that was coming out of china was going into india. we did some discussions on that, some very big inflows in some of the india etfs. >> anti-china trade. >> that's what it is. >> and brazil, interestingly, has been cutting rates going against the grain since august. one trend to watch heading into 2024, the rise of live sports, in particular liberty media's infeformula 1, a story covered big time. nevada gaming control board releasing numbers for gaming revenues at casinos in november

when formula 1 had its huge vegas grand prix. the gaming revenues jumped 23% from last year in november with casinos on the strip bringing in $1.3 billion. a november record. bob, the secondest highest month of revenue stateside ever. >> that was a big risk. i was there. you were there for that whole thing. she did an amazing job on her special. i was there to see you the week before. it was absolutely a mess. the city was torn up. everyone saying how are we -- the uber drivers furious. it looks like it's a success. the gaming hall is amazing. >> financially a success. the locals hated it because it was a disruption, but ultimately, look, i mean, if vegas is -- vegas is diversified away from just casinos. casinos are still a multibillion dollar business but bringing in f1 on a 10-year deal like this and making a permanent building that liberty media has in vegas for f1 makes it the sports and

entertainment capital the world as well. it is a financial boom. >> there's sara with -- >> toto wolf. if you missed the documentary "inside track" it's on peacock. check it out. it's about 45 minutes. >> it's terrific. >> talks about the business and how f1 works and how it's becoming a huge focus for companies that we cover every day. >> what's remarkable in vegas now, sports teams coming there. the rock concerts in the stadiums in downtown. >> that's what i mean. >> it's a cleat -- it's a multievent city at this point. >> one sector closing out a dismal year is renewable energy, but there may be hope on the horizon. pippa stevens joins us with more. we're sorting through the winners and losers and this ends up on the losers list. >> and solar stocks a little bit of a rebound on expectations of a fed pivot but still posting a third year of losses hit hard by higher rates.

the tan fund and ishares global clean energy fund down 20% and seeing their largest outflows since launching 15 years ago. but 2023 also saw record solar installations. how can both of those be true? well, residential consumers are more price sensitive, so higher interest rates have put a damper on demand. utilities are still building out the green grid and investing in solar. looking ahead analysts say to stick with the larger players. bowman and cowen like first solar and shoals technology. jpmorgan highlighting tracker companies array and next tracker. when we think about the renewables, solar and wind come to mind, but there's a lot of other ways to gain exposure, including electrical equipment companies that bernstein calls the picks and shovels of the energy transition. that's names like qantas services and acom which are hovering around record levels and jacobs solutions and eaton.

bob, back to you. >> pippa, thanks very much. happy new year to you. still to come, ubs' chief economist on where rates could go from here and why mild recession risks still remain. as we head to break, check out the biggest laggards on the s&p 500 to close out the year. fmc, enphase, dollar general, moderna, pfizer. all on the bottom of the list. we're back right after this. to duckduckgo on all your devie

duckduckgo comes with a built-n engine like google, but it's pi and doesn't spy on your searchs and duckduckgo lets you browse like chrome, but it blocks cooi and creepy ads that follow youa from google and other companie. and there's no catch. it's fre. we make money from ads, but they don't follow you aroud join the millions of people taking back their privacy by downloading duckduckgo on all your devices today. welcome back to "squawk on the street." i'm silvana henao with your cnbc news update. russia pounded ukraine with rockets and drones this morning in what kyiv said was one of the largest ariel barrages since the start of the war. the strike damaged schools, hospitals, and homes across the country, killing at least 18 people and injuring more than

130. prosecutors have launched a war crimes investigation into the attacks. maine's secretary of state ruled that donald trump is constitutionally inelble to appear on the state's primary ballot in 2024. the ruling follows a similar decision made by colorado's supreme court last week. both states found that former president should be disqualified due to his attempts to overturn the 2020 election, including his role in the january 6th attack on the capitol. and large waves are hitting the california coastline with some swells reaching 15 to 20 feet. waves flooded over the walls that separate the beach from properties damaging the homes. officials warn that conditions will likely continue through the weekend and could damage piers and jetties. scary pictures. >> look at that car. thank you, silvana henao. it has been a bit of the year monitoring the fed in 2023 and the fed has been in the driver's seat. our next guest believes the july

rate hike was the last, given falling inflation. chief economist jonathan kingle joins us now. the bigger question, jonathan, when do you think the first cut will come and how many there will be? what do you think? >> yeah. thanks, sara. we think the first cut comes at the march meeting. it's really just a story about inflation. inflation is falling faster than the fomc participants have been projecting. we think that's going to continue to be true for the next few months. and, you know, in our forecast, inflation is going to be, you know, below 3% core inflation on the 12-month basis is what i mean. as they walk into the march meeting it begs the question why they need the funds rate in the target range of 5.25 to 5.5%. we think they are going to try to make some adjustments to nominal rates in the first half of the year, basically to prevent, you know, the funds rate from getting increasingly restrictive or unnecessarily restrictive in real terms.

we -- >> how many after that? >> yeah. we've got in this in two phases. sorry to over complicate this. we have the first cut in march, 25 basis points, 25 basis points in may, and 25 basis points in june, to address inflation. we see the economy slowing, and then the fed picking up the pace in the second half of the year, taking rates below 3% at the decision meeting. >> oh, wow. below. so you're well below consudensu on where you expect rates to go. >> we see inflation falling rapidly. in our forecast that continues to be the case through the first half of the year. it gives the fed, you know, a lot of room to address any slow down in growth, and since, you know, we think there's still reasons to be concerned about the economic outlook in 2024, you know, we have a slow down in the middle of the year and we think with flation getting so close to 2% that the fed is

going to have the ability to try to lower rates more rapidly and prevent worse case economic scenarios from unfolding. >> bob pisani here. happy new year. you -- the market's position right now for six rate cuts, no recession, and 10, 11, 12% increase in earnings. it's perfectly positioned. i guess, what could go wrong with this scenario? you mentioned the slowdown in the economy. what does that mean? is there recession? no recession? game this out for us. >> thanks, bob. happy new year to you both too. we have a mild recession in our baseline economic forecast and broadly see slowing. largely as a result of really consumer spending finally, you know, sort of running out of steam. the last year or so, you know, the consumer has held up well, but the gains we think have been due to, you know, wealth

effects, spending down savings, with the ability of households to, you know, releverage with -- and really deploy their strong balance sheets and we think the fiscal thrust has been, you know, quite supportive for growth. we expect those positive forces to weigh as we roll through or at least wane and provide less support as we roll through 2024, and if consumer spending slows, less fiscal support, we look at the industrial side of the economy, it doesn't look strong enough to really drive a lot of growth without that help from consumer spending. we think we're going to end up with a relatively soggy 2024 when we look back at the end of next year. >> well, jonathan, we appreciate you coming on and talking through the whole outlook with us. >> thank you. coming up next, the metaverse is back. meta and apple set to duke it

out next year. who is best positioned? we'll discuss that next. as we head to break, check out the biggest gainers on the nasdaq 100 to close out the year. nvidia, meta, crowdstrike, advanced micro. we're back in a few minutes. ive. ♪ it's raising capital to help companies change the world. ♪ opportunity is making the dream of home ownership a reality. ♪ ...and driving the world forward to a greener energy future. [applause] sometimes the only thing standing between you and opportunity is someone who can make the connection. at ice, we connect people to opportunity. the first time you made a sale online with godaddy was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

major european markets set to wrap up their last trading day of the year in the next hour. germany's dax an outperformer on pace to end up more than 23%. the frcac for the second positi three and the ftse under performing the rest but on track of the third gain of the year, pretty nice returns for european markets. you wouldn't have anticipated this going into the start of the year. look what happens. same situation end of october, interest rates decline. >> all things turn dovish together. the ecb hasn't been as dovish as the fed and the euro has outperformed the dollar. they've been talking and don't expect too many cuts, but the market is expecting a lot of

cuts. >> the ecb is next week. january 5th they come out with commentary lot. >> eurozone inflation next week, those numbers. remember the meta verse as soon as apple enters the fray and takes on meta. we'll get to steve covac with that story. what do we expect? >> happy new year. yeah, it's ai kind of took a lot of juice out of the metaers have this year, but it's going to be in the conversation because apple expected to launch its vision pro headset in the new year perhaps as soon as late january or early february and start a new platform war like we saw back in the days of pc versus mac or iphone versus android. meta right now has a big head start. it's been selling headsets for the last several years including the one that launched this fall and appears to be a hot holiday gift this year. let's look at what the best apple analyst out there in the apple side is saying 500,000

vision pro units are expected for 2024. that's a really limited debut. it's going to be u.s. only at first and only in apple retail locations. and also, price. going to be a huge factor here distinguishing the two platforms. meta's quest 3 costs $500 and they have the quest 2 which is cheaper than that. and then the vision pro, 3 grand more than that, $3500. i've used both headsets and meta has improved a lot, especially the visual quality but the vision pro is next level. super clear visuals, hand tracking, eye tracking. it does a lot of what the meta ah headsets are trying to do. they have an app ecosystem ready to go. the vision pro will run off any ipad and meta they have a smaller app library but partnerships with big names including microsoft. mixed reality headsets we know they haven't taken off. millions have been sold, but

nowhere near what we see with smartphones and pcs. apple entering the space could really change it and if so, it's shaping up to be a platform war between apple and meta. >> 500 versus 3500? that is quite a price difference. i guess the question is, how far are we from the ultimate goal, i'm sitting in singapore, you're sitting in new jersey, and it feels -- looks like we're both sitting together. how close are we to that? after that you get into tactile sensations, but just the visuals. >> visually it's pretty close. when i tried the vision pro, they have a version of face time for it, and it creates an avatar that looks similar to you. meta has been made fun of because their avatars look cartoony and bad graphics. it looks almost realistic. when face timing with an apple employee using the vision pro, i thought it was a real person

that popped up in the window in front of me. apple is close to what you just described. meta has more work to do. >> we're getting close. isn't that -- mine that's really -- you mentioned ready player one, but we're getting close. people laughed at it for years. it's happening like a personal dij ath assistant. it's going to be great in the next few years. you will bring all that to us. thanks very much. tech, check out shares of the igv the top software stocks in the year ahead. all the big names like crm. our next guest is upgrading salesforce, crm, top software picks are smart chic and cyberarc. a wolf research analyst joins us now. thanks very much. i'll tell you what i see here. snowflake and data dog, they recently issued some guidance. the ip spending picture seems to be stabilizing a little bit. how would you characterize 2024 for software? >>yeah. i mean, first of all, happy new year to you and your listeners

and thanks for having me on. we characterize 2024 as the year that software is secular again and to your point, definitely stabilizing. i would almost say improving. i think it's been improving for the last couple of months, ever since the regional bank crisis passed, ever since the market looked through geopolitical issues and rates have started -- the rate picture has flipped. we've seen a greater confidence coming out of many of the buyers that we've talked to for a number of months now, and add to that ai, and you have the makings, you know, of a really secular growth story for the next few years, what we're calling for in our big picture year outlook. >> sara and i were talking about ai stocks and how even though the prices are up, the valuations are not getting extreme because the earnings estimates are going up to match it. the multiples are not insane. i'm wondering how you feel about the multiples in the software

space. i look at salesforce, one i watch every day, somewhere around 28 times forward numbers. that doesn't seem terribly excessive. adobe 30 times forward. how would you characterize multiples in the software space? do they have room to expand at all? give us a sense of where you're at? >> absolutely. it's super interesting actually. this last month you've seen really a big move up and we think -- if you look at the year, the index we track, it's back to its highs for the year, but it's well below its highs over the last few years, and we do think there's room to go and we think to your point, salesforce is a really compelling opportunity. we took the chance to upgrade it in the piece we put out. we have greater confidence in the top line growth. we have greater confidence in their commitment to expand margins. we don't see the appetite for large highly diluted m&a. we think to your point, mid 20s on earnings or cash flow for 20%

growth around those metrics is actually very reasonable and it's one of the reasons we took that opportunity to do the upgrade. i would say, however, that multiples are very healthy again. the highest growth companies in our coverage are trading well north of double digits. you know, in 2025 our revenue basis, that is definitely approaching some of those, you know, let's call it local maximums that i allouded to. we went up the risk curve and down cap for names that looked good on growth, upside looked good on mean reversion, looked like they could benefit from a number of factors like m&a, but they were still, you know, very relatively cheap by comparison. >>thank you very much. anything else? did you have a question? >> all good. >> thank you, alex, happy new year, pleasure talking with you. >> still ahead, a look at why

the new bear could be a boon for fitness stocks and more on how to trade that. as we head to break, check out the biggest laggards on the nasdaq 100 to close out the year keeping in mind that nasdaq 100 had its best year since 1999. some of the losers include health care names like moderna and moderna and alumina on that list after a rough year, losing its ceo this year. the stock down 30%. moderna down 44%. we'll be right back.

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welcome back to "squawk on the street." setting a fitness goal for the new year, of course you're not alone withnearly 50% of respondents citing improved fitness as a top resolution. brandon gomez joins us with more on what it could mean for the fitness stocks that have not been so impressive. >> summer bodies are built in the winter. q1 traditionally the best quarter for the fitness names. those revolutioners you're talking about driving growth. 2023 has been a mixed bag for fitness. shares of planet fitness, peloton in the red. lifetime up double digits for the year.

how will the brands attract new members? pricing will, of course, be a factor. it starts with knowing what they want. lifetime fitness published its surp va. in short, cardio is out. weightlifting is in. building muscle is the number one goal in 2024 for over 1,000 people surveyed, 3% more than last year with weight loss and moving more in general top motivators. they're making the move away from the expensive to maintain cardio machines. planet fitness said they would be freeing up capital spending by extending the replacement cycle for some of those treads and bikes. we can't talk trends without mentioning the glp1 weight loss drugs. as they are more accessible, people looking to build muscle to replace the fat they're losing, weight watchers working with them in their member programs, lifetime announcing a pilot program.

36% of people said they would give up social media forever if they could just lose that ten pounds. the top celebrity people would want to play pickle ball with. any guesses? >> play pickle ball with? >> i guess serena williams. >> that's not a bad one. >> dwayne the rock johnson. >> personality. >> i would have said -- >> i would not have chosen either of those. >> lebron james would have been my guess. my personal choice, stephen colbert. >> good conversation in between. >> can you do conversation while you're playing pickle ball? >> it's low impact. that's why it's popular. you can talk and still play. >> is it trend based like peloton? >> you have to look at the recalls, it was a pandemic darling.

then you have names like lifetime fitness. you have a more premium consumer at lifetime. you have planet fitness that will be a pick for the glp-1 drugs. people transitioning looking for a place to work out. >> you think this is happening not because the cardio machines are more expensive but the weighs loss drugs create weight loss and a little bit of muscle loss, and that's why there's a trend? what's the reason for the weight loss -- the weight -- >> muscle gain. >> as you lose weight on the drugs, in order to be on these drugs, technically the fda requires you have some sort of physical activity. who is monitoring that? who is maintaining that? that's left unanswered. that's why folks will be turning to gyms to work out more.

cardio is not dead in my life. >> i'm very into pilates, there's no public stock. >> and boutique fitness is another place people are turning to. >> i get up a half hour early, i lie on the floor and inhale carpet remnants for 30 minutes and i feel fantastic. the dow has gone negative. that was a terrific report. i have to think about cardio. >> you have to think about muscle building. >> what? i have plenty of muscle. i don't know, protein shakes and -- protein shakes and bourbon. >> now there's a diet. >> 30 years for me. look at me. art cashin will be here at 1:30. we'll see my old friend on the floor of the new york stock exchange. i've had so much fun being with you. bob, always a pleasure, a blast. our live market coverage continues after the break with, yes, the dow negative, down 30 points. we'll be right back.

all right. 60 seconds to draw the perfect gift. what's it gonna be? a bottle of don julio, 1942, delivered. delivered with drizly. gifting without the guessing. drizly. good friday morning again. welcome to "money movers." i'm sara eisen live from post 9 of the new york stock exchange.