good morning, everybody, and welcome to "squawk box" right here on cnbc. we are live from the nasdaq market site in time square. i'm becky quick along with mike santoli and robert frank. joe and an true are off today. you guys have been putzing in long hours. you were on "closing bell." >> and i put in last call. >> we've got long-working felg lows here. i thought what you said at the closing belg wassing are interesting how this with was a bit of a turnaround. it was apple who dragged down some of the stocks. >> it was sell the winners first day of the new tax year. we talked about that yesterday morning and against that is the sense that most people feel like they want to raise exposure to the rest of the market and so

the equalweighted s&p did better. treasury also sold off. remember, there was a real buying panic in the end of last year. you have the 10-year yields mike grating up to 4%. everything that was working in a one-way fashion in the fourth quarter had a little bit of an unwind yesterday. but, yeah, it wasn't as simple as we sold it all to book the profit. we'll see how it shakes out now because it seems as if you might have another effort at that type oftive ts this morning with the premarket. >> we do have some pressure on the market this morning. dow futures off by 80 points, the nasdaq down by 620. we've got breaking news on an activist investor and disney. our very own andrew ross sorkin joins us right now on the squawk newsline. what's happening? an early win for disney this morning getting the valueact hedge fund and investor that's been in this fight that's been

taking place brought by nelson against disney, disny saying valueact plans to support bob iger and others in the proxy fight. it ooh goes doing be a long contest over the next several months. two are trying to get themselves on the board with disney collectively with perimutter who formerly owned marvel who sold to disney. they control 3,200 shares. that's a small number in total. 2% of the outstanding. the number of shares valueact has is about 5 million. but in terms of a signaling perspective in terms of where this is going to go knowing that disney has the support of early and a smart investor that's a big investor in the world, this is going to give them a lot of support when it comes to some of the big institutional investors,

of course, disney adding two new board members. we'll see how this plays out, but starting the new year off with a little bit of a bag to quote jimmy stewart in his book. >> it's important to get the backing. last time peltz came around with this move to change the board, shake things up, he walked away himself. he announced it on "squawk on the street" and said he was walking away from that proxy battle because bob iger was returning and he had faith in him. since then his complaint has been primarily that disney's down $70 billion or something in market cap on this. he hasn't really laid out his plans as to what he would do differently, and i guess that's a big part of the question too. the problems that disney is facing are problems that the

medial landscape at large are facing too. >> i think we should be expecting to see a white paper from nelson peltz in the next month if not sooner. historic will i they've put together the white papers to try to explain to the public and the shareholders what they plan to do. as you said, the answers in the media landscape right now are not obvious at all. what he would say relgtive to what the options currently could be would be a surprise if there was something really shocking out there about what they might do. but, again, i think you just said, this is an early win, again sim bombic more than anything else. the other thing worth noting. they always try to be a friends of management. it's made its way on a number of boards. but they've tried to do it without battles.

>> andrew, it's mike. in the company's announce management, they point out that the valueact has and extensive history with other companies which clearly is meant to highlight what disney has said about nelson peltz, that he doesn't have any particular understanding of the media industry based on his track record. >> well, look, i think, you know, nelson peltz' track record when it comes in particular to media and the like has pointed out it's unclear what it is that he's specifically bringing to this person. obviously like perimutter, you know, he's been in the business for quite a long time. delay they're trying to build their side of the battle. but everyone thinks right now

there's no obvious answer. if it was, it would have been pursued. this is a busyiness in transitin and a challenging business at that. >> we will continue to watch this and see how it plays out. but obviously, this is going to be a battle that people are watching very closely. andrew bringing us this news, by the way, from a well-deserved vacation, andrew. we miss you, but we're glad to hear from you and glad to see you're keeping track no matter where you are in the world. >> always on the phone and i will see you all next week. >> andrew, thank you. look forward to seeing you back here again. enjoy that rest of that well-deserved vacation. see you soon. we're watching crude prices this morning. crude wasn't able to keep "i" morning bid yesterday and is also backing off a little bit this morning right around $70 per balance of the wti. this coming after danish shipping jiejt maersk is pausing transit in the red sea and the

gulf of aiden until further notice. kepler told cnbc a number of ships avoided the red sea around the southern tip of africa rose to 124 this week. >> this was big news yesterday. harvard university president claudine gay resigned amid new allegations of plagiarism. she held the top post at harvard for just six months. a new complaint had been filed with the university accusing gay of six additional incidences of plagiarism. that included a 2001 article in which she allegedly lifted four sentences from university of wisconsin poly sci professor without using quotation marks. this is huge. a lot of discussion about what

type of precedent this will set for the evolvement of wealthy donors. there's a congressional event ujds way. this sun tenable after what came out monday. but i think this is part of this broader cultural war. it's a political story, a business story, a cultural story, and it's one that's really jut starting, i think, given the whole clash between the culture of campuses today and many of the donors in the outside business world especially. >> look, i think this is a situation where there was so much brought to bear. the performance of these events in front of congress was pretty dismal and they looked at that and said no way. they listened to the lawyers instead of reacting in a human way instead of trying to quell the situation that had been building on these university

campuses. the pressure came from not only the media and certain areas of the media that came from this, bill ackman brought this to bear on x and then you saw, i think, the fallout. what happened yesterday was the result of the fallout. you look at admissions, the number of people trying to apply to these universities dropped dramatically at harvard. you look at donors. the number of donors dropped dramatically. and the third thing is harvard mba grads. i don't know if you saw that. there was a 10 percentage points drop since 2021 in job offers for harvard mbas. there were only a few who have been offered jobs at this point, down 11 percentage point osser 10 percentage points which is pretty phenomenal. >> some of it is -- >> you have people saying we're not going to take anybody from here until you actually change

the university and that was a very pointed campaign and that's the entire flywheel that these universities are paud on. you don't feel like paying something unless you're getting something with it. >> i struggle to see any hares on any side of this. you keep pointing out the performance. it was a stunt of a hearing, a trap of a question. >> but they -- >> and they worked. >> it passed the trap. it was elise stefanik who posted it. >> you go through someone's entire life to post hypocrisy to see they committed plagiarism in the past, which is fine. but these wealthy donors are used to basically having their wealth treated as virtue and they're kind of using these universities and donations fwolster and launder their reputations that they made the money on wall street. it's also fair game but unseemly. >> i think some of the practices

that comes after this, nobody thinks can you withstand the pressure from this? but i think if you look at what's happened on university campuses, the hypocrisy you were seeing, you didn't have to go deep. >> you didn't have to go far to see people who have been extolling unfettered free speech for a year and then clamping down on speech for campuses. >> both of these sides got flipped. >> exactly. >> it has been something to watch, but i do think it was hard to defend her once you started seeing the plagiarism that came up because, totally, if you were a student and had that planch richl, there would be no second chances or third chances. >> it's a harvard business case. coming out to the "new york post," absolutely there's no basis to this allegation of plagiarism and then say, well, we investigated it, there's no basis for it. gradually they didn't do a great job in the process of handling a

crisis. >> i will also say if you're a jewish student on campus, you have not felt safe and that's an unbelievable turn of events with what's happened since october 7th. i think you're right. there's hypocrisy on both sides and everybody flipped the switch in terms of f what they were saying. i don't condone a lot of it. >> also for our audience it's important to note this with us a classic activist campaign, bill ackman using the power of his money, using the power of press, using the power of his connections in washington, d.c., to basically -- >> he didn't use the press as much as he used his own being on twig e. he's got a lot of followers. >> the classic thing, you write letters. >> yo dow research. >> absolutely. but it was really taking that wall street playbook of rather than saying i don't like this company, i'm not going to invest in it, i don't like this university, i'm not going to give them money, it's saying i'm going to give them money and exercise my control and my money

on what this company or university should be and that's what generally has changed about university donors. we'll talk about it more later in the show, but that's really this whole playbook being applied to higher education is going to be fascinating. >> i will say when you look at higher education and some of the things coming out of it, i've been shocked too. you've got to be kidding. i didn't realize some of the things happening on campuses. >> you look at republican versus democratic professors, at harvard, 84% dem crack. >> it's never a good idea. >> it's not representing the world in which these students are going to come out in the job market. >> we complain about the silo'd effect of getting to choose your own media, only listening to people you want to hear. >> it's self-selection all the way. it's not like it's some conspiracy. >> number but same thing. you listen to who you want to listen to. coming up, minutes from the latest fed meeting coming up.

we'll get you ready for the day ahead. check out yesterday let's move in cruise stocks. norwegian, royal caribbean, and carnival tumbled after record gains in 2023. "squawk box" will be right back.

♪ ♪ ♪ ♪

♪ ♪ the minutes from the fed meeting due today. joining us on the markets, emily

ro rowan, co-chief strategist and jay woods, chief global strategist at freedom capital markets. emily and jay, great to see you both. jay, you looked at the charts, kujd of what happened last year and how it's set up to this year. was there anything you could divine about small caps, large caps? is it too early to say what the mood is like starting out in 2024? >> we were given the runup and we're pulling back. the most obvious thing people said is this market was overbought. it was. now we have to see if we digest those gains. this was a normal pullback, which i believe it was, and set our sights to what are the next legs of this bull market that are going to lead. i like a lot of the setups that we're seeing. the s&p 500 hitting very close to that all-time high. ironically it was on january

3rd, 2022. it will be interesting to see if we can go full round about later and we'll look at what the financials start up with next week. >> what do you think the leads will be? what doey u think will be the leaders? obviously the magnificent seven last year, people saying shy away from those and look toward small caps. what do you think will be the catalyst or stocks that will lead at least in the beginning of the year? >> i think technologies are going to lead. some of them that pulled back are basing nicely and are poised to go higher. of the seven, i think amazon looks the best. it still hasn't made that all-time high. trading at 52-week-highs now and it has a lot to reverse. as far as the next group of leadership, we look at the fan chals, when jpmorgan looks at it, i remember when alcoa used to kick things off.

they're trading within a dollar of an all-time high. i'm watching bank of america closely. and citi. citi is trading at 45. do you know where it traded in may of 2011 when they did a reverse split? 45. it's done nothing for years and all of a sudden it stopped going drown. it broke its near year down trend. over the long term citi may be poised to come back and i think the conditions are starting to be favorable. you u have a fed tail wind, mortgage rates that are dipping and people looking to get into the mortgage market and when you have jpmorgan, goldman sachs trading near all-time highs, that's good leadership. they break out. we could see a nice bunch of the leaders -- the followers follow the leaders. >> that call for tripling citigroup got a lot of people's

attention. emily, it was such a huge run-up november to december. there's a lot priced in in terms of f earnings expectations growth for this year. we're looking at analysts expecting about 12% earnings growth. there wasn't a lot of earnings growth behind that run-up last year. do you think we're going to make that 12 the% based on what we're seeing right now? >> you know , the bar's pretty high, which is the opposite of last year. investors had a lot going for them coming into 2023. which sentiment was very depressed. we had earnings sentiments essentially flat, and we started the year at 16 1/2 times forward earnings on the s&p 500 and now we sort of got the split side of that. we've got optimistic sentiment, earnings estimates being pencilled in at 12% and multiples at about 19.5. i think in order to meet those 12% earnings expectations, it's going to take a lot, and now we have less fiscal support. we have a much higher cost of

capital and we still need to contend with the lag impact of fed tightening, which i think a lot of investors have certainly been ignoring, especially over the last couple of months as we've gotten this fed pivot party, which has caused this massive risk-on rally. i think we should temper expectations into next year. perhaps we'll see a rotation into parts of the market that have been left behind, which haven't seen that multiple expansion, namely in areas like health care and utilities could potentially see a bit. >> emily, i wonder what specifically you'd be looking for in identifying those lagged impacts of fed tightening, because if you look at market interest rates, they've been in the zone for a while. some of it's going to roll over. it's going to be higher costs, but it seems like there's an equilibrium in the labor market. i'm curious what we're waiting for. >> yeah, mike, it certainly seems like we've been waiting

and waiting and waiting for the lagged impact of the fed tightening. you look at things like leading economic indicators now negative for a year and a half. you look at pmi data, and we're going to get some ism survey data today. investors have largely ignored the fact that pmis have been sub50 which suggests traction in economic growth. it's been about multiple expansion, but we're watching for signs that we will see some cracks in the labor market. what typically happens is the cost of capital goes up. we saw record demand because of explosive fiscal spending in the height of the pandemic, and now revenues are coming off those record levels, costs are going higher. if you're a company that wants to maintain your profit margins, you have to cut costs. and, of course, we know most businesses' biggest cost is labor. we expect to see the cracks forming over the course of the year. it doesn't need to be careful.

but how are you going to get double digit growth after we saw incredible revenue growth over the last couple of years? >> jay, real quick, one sign of strength would be ipos. you would think after the run-up we would see a lot of them start to line up for the first quarter. we don't really see that yet. how do you see the ipo market shaping out. when could we see big ipos hit the market? >> february, early march, you'll see it. people are waiting for conditions to get better. this is a good time to go to the market and exceed the bar for the last two years. it won't take too much. the one i'm interested in because of the buzz it can create is skims. kim kardashian has done wonders in the business world and there's a lot of rumblings that could go public in the first half of the year. and shein has already applied.

we can easily top the last two years as far as the ipo market goes. >> that would get attention. we appreciate it. >> thank you. >> thank you. coming up, montana appealing a key ruling on its tiktok ban. details on that next. plus, several water cooler stories in the business world including a mickey mouse horror film and a big fine for david tepper by the nfl. "squawk box" will be right back. you know what's interesting these days? bitcoin. look for bitwise, my friends. at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

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montana eastern general is considering appealing the tiktok

decision. the ban had been set to take effect on january 1st, but a u.s. judge ruled in december it violates the constitution. >> we knew this was coming. there's been talk of it being banned in different states saying you can't use it on any of the state-provided communication forums. montana knew there was a problem with the law when they created it. it was too late for them to go back and change it, but they knew by signaling out tiktok, it wasn't going to be okay. it had to be broader. >> there has to be some kind of federal regulation. there's been talk of that since the trump administration. >> this is how rules get defined over time. >> meanwhile it's good business for lobbyists. meanwhile the nfl has fined

carolina owner david tepper $300,000 over his actions on sunday. a video shows tepper throws a drink in the stands from his open air suite at the everbank stadium. he said, i'm deeply passionate about this team and i regret my behavior. i should have let the security handle any issues that arose. i respect the nfl's code of conduct and i accept the league's discipline for my behavior. >> i like these owners, steve ballmer, mark cuban, they love the game, they're in it, passionate about it, but you have to be a model of good behavior. >> and we were in the visiting team stadium as well. >> i don't know if you saw what happened. he got mad and threw it. there's no window there, but it

hit fans outside. they got up. i don't know if you watched i. the fans get up and say what the heck just happened or something to that effect and stand up. there's the guy getting up right at the end. so they're saying, look, they're worried about the fans. i'm hearing reports he didn't apologize. it looks like he regrets his behavior. he didn't say i'm sorry. >> lesson learned there should be glass protection to protect the crazy oligarchs at the top. also check this out. disney's 1928 short cartoon steamboat willy ten tered the public domain on monday and the horror film dropped. it features mickey mouse as the killer. steamboat willie can now be used in movies, videos, games, and more. it following last year's horror film that stars winnie the pooh after it entered the public

domain. was it 100 years? >> it was initially '75 and disney got it extended to protect minnie mouse. >> and here we are. >> steamboat willie doesn't look like him. >> it's only two years until the current version. steamboat willie looks like you've got the creepy looking ears and nose. >> he's definitely recognizable. >> it is. when we come back, it's job week in america. we're going to get an update on hiring checks. we ee look at small businesses and what 2022 look like and what they're anticipating for 2024. let's take a look at yesterday's s&p 500's winners and losers.

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good morning and welcome back to "squawk box" live at time sqs square. looking at yiesterday, nasdaq ws the downside leader. had its worst opening day in decades. recapping the breaking news from earlier this hour, activist valueact is expected to support the slate of nominees, siding with disney's nelson peltz. 2023 saw continued resilience for small business hiring following consistent job growth. joining us now for the growing trends of the year and this morning's data is john. good morning and happy new year. >> happy new year. great to be back with you.

you look at 2023. it was a really amazing year for small bausinesses. you think about the start of the year. wage inflation, 5% plus. the fed was in a very aggressive stance as they raised rates four times during the course of the year. i think they've been very ee sill yenlt. our december numbers rack up the 32nd consecutive year and now it appears the fed has paused. we see jobs and wages being stable and that fact probably surprises many. >> john, you bring up a lot of the headwinds we saw in 2023 for small businesses, but the one that never materialized was the one people were anticipating a year ago, and that would be

recession. what happens this year? i know small business is looking pretty rosy. if a recession does actually hit, what does that mean? how would it show up? what does it mean for the small businesses? >> i tell you, becky, we have pretty good internal accounters, and when we look at all of our accounters, we don't see signs of small businesses. what we see moving into 2024 is a stable job market. high labor market but a stable job market. a macro economic environmental where consumer spending remains strong. i think we're seeing workers and supply and demand coming back in balance. we talked a lot about the difference between large employers, mid-sized employers, and small employers. we continue to see small employers needing more jobs to

full. companies with less than ten employers represent 22% of all the openings in the last j.o.l.t.s. report. that's the highest since 2000. >> that's a big deal. we've been looking at wage inflation. i know that's been coming down. that's the good news. it still is historically fairly high, though, correct? >> well, yes. we're now under 3.5% in our index. and what i would say is that's still a little bit higher. we talked a little bit about it. it drives down to participation. while we've seen improved participation, we're still not back to prepandemic levels. at the rate the baby boomers are retiring, we're strongling to keep enough supply into the labor math. i think it will be challenged if

government regulators don't focus on driving up participation and improving, i would say, the quality of the work force. >> doing that how? >> well, i think there's a lot of things they could be doing. one is we need a lot of retraining. ai in the advent of what's going on is going to require a lot of retraining. there's things and programs the government should be doing in retraining and helping to train workers. i think we've got an education gap that occurred during covid. i think what we hear from our clients that we do our hr outsourcing for is they're finding it difficult to find qualified workers. therefore, in some cases, they're actually going without filling those jobs because they can't find qualified people. >> hey, john, we've got a jobs report coming from the government for the december jobs report on friday. what do you think we'll be seeing? >> well, look, i think what we've continued to see really since the course of this year, if you remember last year, the

first quarter, we saw elevating job growth in small businesses. really since april we've seen continued moderation. job growth continues to be above prepandemic levels. what we're seeing in our data, what we reported in december is continued growth. i think you're going to continue to see small but stable growth in the job market. >> john gibson. thanks for joining us. >> thank you, becky. coming up, speaker mike johnson leading a delegation to the southern border today. details straight ahead. and a reminder, get the best of "squawk box" in our daily podcast. follow "uaoxsqwk b" on your favored podcast any time. we'll be right back. ( ♪♪ ) ( ♪♪ ) -awww. -awww. -awww. -nope. ( ♪♪ )

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house speaker mike johnson with a delegation meeting at the southern border. emily wilson joins us. >> lawmakers are already picking up a fierce debate over border security. speaker mike johnson is in texas now with more than 60 republicans to send a message to the senate and white house as they negotiate this bipartisan border deal. now, rerk congress needs to reach some sort of agreement in order to get enough republican support to pass that larger

package requested by the white house. that's the package that includes billions of funding for ukraine, for israel, for the indo-pacific region. now, biden initially did request $13.6 billion for the border but the republicans have said they would only accept policy changes. they met last night to meet with sec securit security's alejandro mallorca. they include policies like releasing migrate grajtss without a court date, restricting parole, and to work with canada and mexico to take those seeking asylum with the u.s. he spoke with land owners from eagle pass. they're going to be holding a

presser this afternoon where they're expecting to put more pressure on biden, calling him out for refusing to implement additional restrictions for migrate grants. robert? >> emily, we saw images of the caravans on the border, the migrant crisis here in new york city seems to be getting worse and worse every day both from a cost perspective, humanitarian perspective. has biden said anything recently about the border or what his solutions might be? >> well, biden and the white house, they've been a part of these negotiations with the senate trying to finding a path forward. i think they realize this is a difficult position for them politically especially now that you have folks in new york, colorado, chicago, these tradition ally democratic areas saying, hey, we are really under pressure here with all of these migrants that are being bussed from texas up to us. biden was asked very briefly about it last night. he said that congress needs to pass funding so he can deal with border issues.

it seemed like that was a reference both to the supplemental as well as, of course, the bigger fujt mental funding package that congress is trying to get done, that first group, that first potential shutdown coming up on january 19th. and the next is following soon after on february 2nd. all of this is on their to-do list when they get back. >> when they get back. emily, thanks so much. we appreciate it. coming up, we'll dig into apple let's move lower. and later the creator economy, we'll talk to the holderness family whose videos you may have seen on social media about the path to monetizing their content and forging a career on viral videos. "squawk box" will be right back.

shares of apple tumbling to start the new year after barclays downgraded the stock to underweight, citing concerns about iphone demand. joining us now, neuberger berman's dan flax to give his perspective as an investor in apple. good to see you. good morning. >> good to see you. good morning. >> so, obviously we did get this downgrade. it was really relatively muted call, just kind of restraining some enthusiasm and reducing the price target a little bit, but a lot of the big winners in megacap tech from 2023 came in for profit taking yesterday. where does it leave you with regard to, i guess, apple's valuation and what is already priced in as the company tries to restart growth? >> i think the risks are around the consumer demand. weakness in the smartphone market and, of course, china remain factors. but if we step back and think about this story, this has been one of continual reinvention,

thinking back to the ipod over two decades ago, iphone, ipad, wearables now has become an increasingly important driver, and, of course, services. and this broadening of the revenue drivers translated into very, very strong free cash flow generation. and i think the durability of that cash flow will matter most to the stock over the next year as the market looks to better growth later this year and really into 2025. so we continue to like the name here. even with those concerns in the near term. >> you know, i guess those factors, one could argue, are already responsible for having the pe multiple on or free cash flow multiple for apple to actually have become elevated to historic highs. has a great predictability premium, amazing balance sheet, it seems like the install base of iphones are, you know, just keeps growing and therefore you have this ongoing demand. i wonder if that's going to be enough to have the stock perform

in the next year or two. >> i think it is going to come down to whether the company can continue to innovate and execute on these product cycles. the iphone install base as you mentioned is continuing to grow. what i think the market is looking for in this period for apple, google, amazon, many of these companies is what do they look like next year and really in the second half of the decade, because all these companies, including apple, need to play offense in terms of product introductions and defense in terms of navigating the environment. so i think the market, as we think about 2024, it is going to look inkrcreasingly at what thi company looks like. i think the earnings and the free cash flow generation will be quite a bit higher over the next two to three years. and that is what the market will focus on, even as we move through this calendar year. >> it seems like you're not too concerned about some of the things around the edges of, you know, apple's competitive moat

that have been sort of giving way to some degree, right? the app store challenges, things like that, the smartphone competition out of china and just an idea in general that the urgency to upgrade to the next model of iphone seems like it might have waned versus prior product pscycles. >> i think the risks are around the app store. the regulatory environment remain factors. i think the app store changes that we could see which provide alternative payment mechanisms is a manageable impact to apple's earnings. the most important thing from the app store perspective is that it remains a vibrant platform for developers, who ultimately set the prices to innovate and create their own businesses. the smartphone market has been very competitive for many years, including out of china, huawei, we're going to see how they do as they try to come back. what we're seeing with apple is that more and more customers are

migrating to the pro and the pro max. they want the better capabilities in areas like the camera. so when you put that together with the size of the install base, over a billion devices, even with extended replacement cycles you can -- you have a business that generates over 200 million iphone unit sales per year. and so as long as that growth engine continues, even in this tougher period, and, of course, quarters remain volatile, i think the company will emerge stronger on the other side and will get more insight into newer areas like spatial computing is one example with vision pro, which will take time, but that gives you some sense of the innovation in my view that lies ahead. >> on some level the performance of apple over the last five years, even just last year, very strong, and not really earning its status as a pure a.i. play. seems like that was the whole equation if you wanted to actually be a good performer last year in megacap tech.

is it an a.i. company in any identifiable way? >> apple has been infusing artificial intelligence and machine learning into products, the iphone wearables, think about some of the health and fitness benefits like the ecg or ele electrocardiogram app. in terms of having a better experience with the device in terms of generating images, a richer experience with siri, the infusion of generative a.i. into more parts of the apple devices and the services will lead to a better, more valuable experience. apple is in my view going to put those into the device and i think that will make the device more valuable and you'll see, i suspect, more customers continue to reach for the better or the very best device they can afford, because the capabilities are so foundational to their every day. >> that goes to the notion, i feel like we should keep in mind, which is software always

gets faster and better, we call it a.i., but this is something that the companies have more or less been involved in for a very long time. dan, good to catch up with you. thanks so much. >> thank you. still to come this morning, we have more on the breaking news we have already seen this morning. disney's board winning the backing of activist valueact. we got the details on this next. you see the stock right now up by about 7 cents. and then later, the social media content creator, the holderness family, they're going to join us to talk about making a living from viral videos. they have been doing it for over ten years. rk're going to talk about how it wos. "squawk box" will be right back.

good morning, everybody. breaking news the last hour on disney and its looming proxy battle. the details straight ahead. the tense situation in the red sea and the pressure on commodities. we'll find out what's moving the sector and how much worse it would have to get to see a big move in oil. and the creator economy. meet the family who makes their living monetizing a brand on

social media platforms as the second hour of "squawk box" begins right now in our christmas jammies. good morning and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm mike santoli with becky quick and robert frank. joe and andrew are off today. >> christmas jammies. we're not in our jammies, but -- >> no, no. it would be appropriate but we're not. it is still dark outside. equity futures at this hour showing a little bit of weakness after yesterday's decline to start the year. the dow indicated lower by about 120 points. s&p 500 was off almost .6% yesterday. it is down about a third of a percent right now.

the nasdaq was the downside leader after the profit taking deferred into a new tax year from the big nasdaq stock semis week yesterday. nasdaq indicated lower by 75. treasuries, those yields lifting a bit as the year has gotten started. the ten-year yield is now 3.97. we got down to 3.8, maybe 4.25 you wonder whether this downtrend that we have seen since late last year is in question. for now, still in a range we traveled in the last couple of months. oil, actually was weaker yesterday after getting an early pop on some of the red sea tensions and you see wti flat, above the $70 a barrel level. crypto had been on quite a run. bitcoin getting above -- well above 45,000. now pulling back to 42.9. >> like an hour ago. >> exactly. really the one 2023 winner asset

class that had actually not gotten sold off yesterday. so maybe deferred. >> could be. a day later. breaking news in the last hour brought to us by andrew ross sorkin. valueact capital agreed to support disney's slate of board nominees. the entertainment giant entered into an agreement that allows the company to provide information to the investment firm and consult with valueact on strategic matters. this is a win for disney, after peltz launched a new proxy fight against the media company a little more than a month ago. valueact has been building a position on the stock since the screenwriters and actors guild strikes. and in the press release, valueact's co-ceo and cio mason morphet says we could not be more excited to partner with bob and the board to create long-term sustainable shareholder value. they talk about valueact's experience with a lot of

investments they had in media and technology. and you were right to say this is kind of setting it up against nelson peltz who has much more experience when it comes to consumer products. >> and disney has been clear about that in the past in opposing peltz's slate or candidacy for the board, essentially saying we don't really hear anything specific to our business that we feel as if we should necessarily be listening to in an official way. >> also interesting, all that morgan stanley experience, the experience of how the street is thinking, how to communicate to the street, i'm sure, you know, that's going to be an important part of his campaign against peltz to really understand and relate. he's been very good at that over his career. having gorman on board will help that as well. >> this is peltz's second run at disney. the first time he called it off and said never mind, i'm happy -- he announced that on cnbc. >> with cramer. >> he said i'm calling it off right now because he was happy about bob iger's return.

since then, the stock is down $70 billion, seeing a big tumble. so have so many of the traditional media companies. >> more of a read on what cards do you to play and arguably and ubs is out today with a note saying we love netflix, but among the rest, disney has really the best opportunity in terms of the multiple streaming platforms, the theme parks, the franchises, things that, you know, the exposure linear is not great, but less than some of the companies like warner bros. >> when they have hulu, they can start this megabundle. >> exactly. >> the latest read on the mortgage market is out. diana olick joins us now with the data. diana? >> robert, the weekly mortgage application numbers are in and we get two weeks worth since the mba was closed last week. these are the two weeks when mortgage rates sat below 7% for first term since september. the average rate on the 30-year fixed ended the year at 6.76%, lower than two weeks ago, higher

than it was a week ago. so still well below the 8% high we saw in mid-october. but the sharp drop we saw at the start of december got a little bit choppier toward the end of the month. as a result, total mortgage application volume ended the year 9.4% lower than it was two weeks ago. that is seasonally adjusted because the numbers are for two weeks and kind of messy. i'm going to give you year over year comparisons on the breakdown instead of week to week. applications to refinance the home loan ended the year 15% higher than a year ago. applications for a mortgage to buy a home ended the year 12% lower. those who can benefit from a refi are clearly trying to get in when they can. home buyers, however, are still contending with very little supply in the market and very high and still rising home prices. so the question now is with rates in the 6% range, will they stay there and if they do, will that be enough to get potential sellers off the fence and get some more supply on to this market. that's what we really need. the builders are a bright spot,

especially because they can buy down mortgage rates, but new homes do come at a price premium. mortgage rates started this week a little bit higher after also edging up on friday, so we're now at the highest level in two weeks, still in the 6% range, and, robert, we'll be watching data today from the fed minutes as well as the friday jobs report to see where rates go going forward. >> you hit really on the most interesting question to me this year when you look at real estate, just how far the rates have to come down before those sellers think that it is worth it to get out of that 30-year fixed they got at 3% or 4%. and obviously it is going to be a gradual process. do you hear anything about now that those rates are sort of under 7%, whether that's starting to free up some inventory, at least discussions by sellers? is there any loosening or signs of loosening in inventory? what do you think that level will have to be before we start to see that? >> so we saw a little bit more

inventory come on to the market in the fall, but that wasn't about mortgage rates. it was just some people who wanted to move or wanted to get in before the year end. the question is, is 6% enough? i'm not really hearing it, actually. when you look at the vast majority of current homeowners today, they're in the 3% and 4% range. not even 5%. if we were to get into the 5%, that might push people over. i think where we are now, 6.5, 6.75%, that's not enough to do it. they have to trade up that 3% up to the 6% range. now, a lot of people have to move, remember. there is divorce, job changes, death in the family. people do have to move. so we will see some more inventory come on and because prices are still so high, there may be some sellers who say, look, i'm not buying another home, maybe i'm going to the rental market, so they might want to sell just to take advantage of those higher prices. but, again, if we start edging up toward 7 again, it is going to be a tough sell.

>> yeah. all right, an exciting year for real estate, we appreciate your reporting. thanks so much. great to see you. our next guest expects to see a broadening out of market participation this year as well as divergence in returns among big tech firms. for more on the markets, let's bring in michael landsburg. good to see you. >> good to be here. >> yesterday must have been a welcome little opening for the year if you're expecting a broadening out of the market. the equal weighted s&p was about flat. nasdaq 100 down 1.7%. healthcare was up after lagging last year. is this the kind of activity that we can count on continuing or is it just a little bit of a brief catch-up move? >> i think a little bit of both. i think actually given what we had yesterday, you know, reports of a downgrade on apple, some concerns about apple in particular, but i think it makes sense to broaden out the tech exposure, utilities were good yesterday, healthcare and some of your areas that have been

really big performers last year are broadening out. >> that's fair. though since october it hasn't really been that way, right? equal weighted s&p finished up 12% last year. half of the s&p was up 15% last year. so i guess the question is, how do you have to read the broader economy to feel as if most stocks can participate or cyclical groups or laggard groups can catch up? >> a lot of that s&p, there is a group of stocks down 20%, 30% this year. there has been a more narrow breadth than there should be. it is a slowing economy, oil prices are starting to go down. i think you're going to see almost negative gdp in the first quarter, very close to zero here. but there is going to be areas that have growth. slow growing economy, stocks that grow do really, really well. it is hard to find those when you can find them, you want to hold on to those. that's where apple may run into

some problems. negative earnings growth in the last year. stock was still up 15%. i don't think that can continue in '24. >> where is there reliable, predictable growth that the market hasn't already priced in a rich way? >> that's kind of a trick. a few names that i like that haven't had these huge run-ups. united healthcare would be one of them. it does well, almost in all seasons. a stock that when we look back over the last four or five, six, seven years, has done well over a period of time. one out of five people in the united states is covered by united health. have solid dividend and solid management and we think that continues. did well in '22, did pretty well in '23 given the fact that everything was moving high. a lot of people are now -- they got a lot of beta in the portfolio because of what happened in the last year. made sense to have that, made sense to broaden that out a bit. >> is there any blowback potential because it is an election year. we know big pharma companies are

going to come under pressure. they're pointing to other places for the reason for high pharmaceutical prices, including the insurers and including the pharmacy benefits managers a lot of them own. is there any concern that all of that comes back and puts pressure on the stocks this year? >> absolutely. that's a good point. it has happened historically. we have seen politicians run and say, healthcare is the problem, rising drug costs, and what are we going to do about it? my bigger issue is how they handle the glps what is happening with the businesses with lily and novo, with ozempic and mounjaro, how do they handle that? that is a bigger concern longer term. >> do you mean do they wind up paying for -- >> we know politicians are going to tell you what they want to hear. may put some short-term pressure on it, but how much do they have to pay? that may be some longer term pressure. that is weighing a little bit on the stock, i think. >> other than the fed, what you to see as the biggest risk this year? >> i i see a slowing growth

environment. i think we'll see them -- i think powell is a student of history. so if you look back and say what do they do in the '70s and '80s, they didn't raise -- didn't keep rates high enough. we in the summer, everyone was clamoring for -- we didn't have to raise rates but markets did it for us. we're not in a serious environment where you have to lower rates right away. i think they're going to let it play out and it is going to be six months, maybe before you see the first one. and, again, an election year, i don't think they'll want to do too much. i think there is -- the surrounding -- the controversy, you're helping one candidate out and not another one. they're between a rock and a hard place. for me that's a concern. >> 2020 was an election year. they did everything possible to -- we'll have to revisit that. michael, good to see you. thanks a lot. when we come back, the holderness family is known for their viral videos like the one

that is called christmas jammies right here. they have millions of followers across multiple platforms. we're going to speak to kim and penn holderness about the creator economy and how they have pivoted over the years and how they made money over all of this. and later, harvard president claudine gay resigning after testimony backlash and plagiarism accusations. more on the college controversy and the role of big wealthy donors. "squawk box" will be rhtac ig bk.

thanks to avalara, we can calculate sales tax automatically. avalarahhhhhh what if tax rates change? ahhhhhh filing sales tax returns? ahhhhhh business license guidance? ahhhhhh -cross-border sales? -ahhhhhh -item classification? -ahhhhhh does it connect with acc...? ahhhhhh ahhhhhh ahhhhhh

the creator economy continues to grow with more people starting businesses by posting content on the internet. goldman sachs estimates the creator economy will reach nearly $500 billion in value by the year 2027. our next guests have accumulated over 300 million views on youtube, posting music videos, sketches and, by the way, they won the amazing race too, so you might recognize them from that. the holderness family accumulated millions of followers over multiple platforms over the last ten years when they realized they could turn their online videos into full time jobs. joining us to talk about the creator economy is kim and penn holderness from the holderness family. and, wow, is this, like, meeting celebrities having you on today, thank you for joining us.

>> right back at you, yeah. thank you for having us. >> yeah. we were watching even more of your stuff in the breaks leading up to this, but we have all been talking on set about what it is you guys do and i think it is because you're normal people but funnier and more fun than we are, that we connect with all of you. it has been a long time, i think ten years since christmas jammies first came out. and i can't believe you guys have been doing this and for such a long time. i think the key is figuring out what you do and then pivoting along the way. but maybe you guys can tell us a little bit about how you first figured out that this was a viable job option. >> first of all, we're very slow learners. we didn't know it was a viable job option. we posted that video as he was leaving his job in the news business to announce the -- our marketing company we were starting. we had no idea that people made money doing this. so it actually took us several years after that first video for us to realize, oh, people pay -- you can earn, you know, off of

ad revenue, all of those things. we didn't understand how the platform worked. it took us a while. >> there was not a manual of any sort. there were other people who were doing it, but a lot of times they're in other states or other countries. the one thing that we did figure out quickly enough to turn this into a business is that you can't just make one video and then bask in your success. there has to be some volume. you have to do it over and over and over again and not all of them are going to be big hits but there has to be consistency on the digital platforms. >> that's a lot of pressure. >> i think our sort of goal has always been do the videos that make us laugh, and so it removes the pressure. because not all of them are amazing. not all of them go viral. but if we like the video and we post the video, and it doesn't do well, doesn't matter, it removes the pressure. >> yes and -- yes and you wake up every morning and you think, what am i going to do today, even if yesterday was a great

day, you know, you got to keep going. >> if we have a shoot day today, we're supposed to shoot today, we don't really know what we're going to shoot today. but we're going to come up with something and you'll see it later this week. >> that's great. one of the things i think you all have done that has been so impressive is you have continued to pivot because the way you make money on these platforms and the platforms themselves keep changing. you want to talk a little bit about your journey? i think a lot of people don't understand -- i think a lot of us feel like you guys did ten years ago when you were starting out on this, not quite understanding how things work. >> we're still learning. when we started our first video went on youtube, we shared it on facebook. that was the simple formula. then facebook started offering native videos and instagram started offering native videos. there are all these platforms that will offer things and incentivize creators and amplify your videos. so you got to know where that

wave is being written to. >> i think our superpower is being able to pivot. we not -- not everything is profitable, not everything has worked out, but we have a very short memory with those things. and we just keep going. so i think that has been our superpower. but, yeah, in the beginning, long form videos on youtube were being rewarded. now it's short form on tiktok and instagram, that's brands. and it used to be shot horizontally, now everything is shot vertically. we have teenagers in our house and we're sort of watching and observing what they're doing a lot of times. and where we enjoy being -- where we enjoy hanging out online. i'm loving instagram reels and tiktok now, that's where i'm watching a lot of content so we're create lighing a lost con for those platforms. >> what are the most profitable and which get you the most likes or views and are those different? >> yes. >> it varies. >> it varies.

i think the profitable, so there is different ways to make money. we joke that we wanted, like seven revenue streams. seven profitable revenue streams. so we wanted to be on many platforms doing many different things at once. so, where facebook is our biggest audience is, and we will make money there for ad revenue f you see an ad pop up, we do an ad share with whatever facebook makes. but if you look at instagram, statistically we have a smaller audience there, we have a million something followers there, but brands, we have brand engagement, so brands we love and adore we will work with them. so technically that's more profitable on the brand side, but we don't make hardly any money there on ad shares and ad revenue. >> is it safe to say this is a really profitable line of work for you guys at this point? >> it is very scary sometimes. there have been lean years, but

then the pandemic, everybody was home, and had nothing do but watch online videos, that worked out for us. but we're not idiots. we're paying themortgage and we have three full time employees and we offer benefits and 401(k)s and so knock on wood it is going well. >> do you guys miss the news business? >> no. no. i mean, you guys are very important. you're doing more important things than us. you're talking to the president of harvard in a couple of minutes. >> i think they're talking about her. >> you're talking about the president of harvard. >> your hair is amazing. look at that. your hair. >> you guys are very impressive. and so glad you're -- >> i do think one of the most touching things i saw was when your daughter said she was so happy that you all had done this. i think it was maybe ten years

later in the 2023 christmas jammies one, she said, because you were home, penn, you weren't gone all the time, like you were when you were in the news business and she was grateful she got to grow up with you being involved. >> yeah. it was very sweet. the reason we started this job and the reason we made that first video, the christmas jammies video, my kids were at the age now, my daughter, she was going to school and when you work in news, you either work from 3:00 to 12:00 or 3:00 to 12:00. and both of those are pretty tough when you have a kid at school. and, you know, like, we went down this journey and it has been successful for the most part. there have been some tough times. we had days we woke up wondering what we were going to do but the one thing we knew is we were going to see our family more. i hope that that made it worth it and to hear that she felt that way was, yes, that it got a little misty when i -- >> well, we really appreciate everything you guys are doing.

if i can ask very quickly, they're playing us out, but your favorite place, the biggest trend you've seen, the first place to post things would be what? >> i would say tie between instagram and tiktok. >> i, yeah, sure. >> sure. >> for me, here's my tip, when you post something on these social media pages for the most part, make sure that women like it because when women like it, they will press the share button, they will like and they will comment. if your guy buddies like it, they text you. that doesn't help with the video. >> we get a lot of texts from his friends, this video is going to bomb. >> you got to say something on the platform. women are just -- yeah, that's my tip. >> that's a perfect tip. kim, penn, appreciate your time today. the holdernesses, thank you. >> thank you. "squawk box" will be back after a quick break. >> announcer: time now for today's aflac trivia question.

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what was the coldest temperature ever recorded in the u.s.? the answer, 80 degrees below zero. the record was set in prospect creek, alaska, in 1971. welcome back to "squawk box." i'm dominic chu. we have a whole lot of analyst calls out this morning. i'll try to get through them as quickly as possible in the time allotted. media side of things, with a check on shares of both netflix and disney. ubs tagged them as top picks in 2024. netflix the beneficiary of shifting trends and focusing on streaming profitability. disney, good risk/reward story given strategic developments and better operating income trends. netflix down fractionally. disney up fractionally. on the industrial side of things, rockwell automation, the target price goes up to 360 bucks from 305 at ubs. they like what looks to be a bottoming out of products in that order cycle.

thinly traded now premarket. on the oil and gas side of things, analysts have downgraded exxonmobil and occidental petroleum among other names. both go to neutral from a prior buy. exxonmobil partly due to being cautious around realizing potential synergies in the pioneer natural resources acquisition and for occidental, a premium valuation compared to some of its peers. we'll cap it off with financials, analysts are downgrading brokerage and bank charles schwab to neutral from buy, based on other things lower interest rates, putting forth more risk to earnings and that story in 2024. schwab down 1.5% premarket. becky, back to you. >> dom, thank you. we have got some interesting news here. there is another wrink toll to wrinkle to today's disney news. valueact saying it is siding with disney against nelson peltz's company that is going after disney. they announced last year. here is the new wrinkle, the

part you need to know. blackwell capital is going to be nominate league candidates for disney's board to rival the board candidates that are proposed by nelson peltz. tha that's according to a reuters report. blackwells has a history of opposing moves by tryon including its proxy battle with wendy's. blackwells candidates include former warner bros. executive, the founder of taskrabbit and the co-founder of the tribeca film festival. blackwells owns a disney stake worth $5 million. that's right. m, not billion. that's compared to tryon stake of $3 billion and all of that compares to disney's market cap of $166 billion. so you're talking about very

small already with the tryon piece, but we have seen activist investors with smaller than $3 billion or smaller percentages that have been able to make waves like you saw with exxonmobil. this is a crazy small stake though, $5 million. i don't think i've ever heard anybody -- >> it says a lot about how disney is one of those companies that everyone feels like they have a personal stake in it, an ability to have an opinion about what might work and what might not. >> we all grew up with it. >> also heavily retailed on stock. that's interesting. >> you wonder how that would play. >> okay. when we come back, elite universities under fire. harvard's claudine gay resigning after criticism of her response over the protest over the israel-hamas war and ongoing plagiarism scandal. we'll discuss the challenges facing universities and the influence of big donors next. "squawk box" will be right back. . let's check it out. says here it gets plenty of light. and this must be the ocean view?

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the plagiarism charges kept multiplying and coming out were untenable, the congressional testimony was unacceptable to many. but i do think this really is speaking and perhaps sparking a larger debate about the role of donors given all of the major donors that had led up to this, refusing to give more money to harvard. this also started upenn with their president resigning. i want to read a quote from upenn, wall street saying, quote, universities need to be very careful of the influence of money, especially one like penn that has a business school larger than that of the university itself. donors should not be able to decide campus policies or determine what is taught. do you think there is a risk here of donors feeling like they're emboldened to play more of a role, not just obviously this plagiarism accusation is one thing, but in what universities do and in academic

freedom? >> well, i think there is a couple of things at work here. first of all, active alumni is not exactly a new issue. i think that what we have that is new here is to quote a certain movie, a particular set of skills. you have alumni who are specializing in proxy fights for a living. this is a very specific area of endeavor. having dealt with people of this cohort, they are among the sharpest people you would ever encounter. they know how to work with the news media, they know how to mobilize third parties and i think this is what you see happening here. what is interesting is if you talk to some of the people interested in this area, they don't feel like they are masters of the universe pulling strings. the way they feel is that they have been asleep at the switch for 40 years, allowing a certain

movement, the dei movement to get deeper into campus culture than they ever imagined. and a lot of the conversations they're having is what have we been funding for 40 years? even if we personally weren't funding it, we're not responsible for it. so, i don't think what you're hearing now is how do we further rule the world. i think it is why haven't we been doing something like this sooner? the other thing to keep in mind is one of the more important catalysts in the harvard situation was a student, was a student who i believe was anonymous, who came forward and said how can you hold us to certain standards if there are several dozen plagiarism allegations against the president of the university. and so it really was a student that tipped the scales in the 11th hour. >> yeah, i mean, there has been this implied agreement for over

100 years where wealthy donors say, look, i'm going to give you, the university money so my less than academically stellar grandkids can get into your university and i get a tax write-off and i'll stay out of your hair. there have been a couple of instances where they tried to interfere and they were told no, and they got their money back. but to your point, is perhaps -- are the donors the only ones who are brave enough, strong enough, able to stand up to these universities and so therefore will they be an important corrective to -- my eyes have been open to some of the disparities and universities where 90%, 80% of faculty are democrats versus republican at harvard, i think only 1% identified as conservative. will they play an important role in what some see as correcting university life and culture right now? >> they are. look, october 7th and the subsequent haeearings with the university presidents were --

were a waking up sleeping lions. i think you have people who didn't really understand what they had been funding and you as a chronicler of the wealthy understand that a lot of what you have here is wealthy donors who feel that they are being magnanimous, they want to show the kind of money they have, they wouldn't to give back to the universities, but they're not necessarily involved in the granular details. and what you've been hearing in recent weeks is, my god, we have been funding people who want to kill us. and that comes from people who are capitalists, it comes from the jewish community where you have seen situations on campus, where people have lost their jobs and have gotten in trouble for very vague kind of -- but when asked about what is happening, whether supporting genocide is a violation of campus free speech, it is, well,

let's wait and see. you're seeing the same thing with feminist groups who said all lives matter, but now some of them are saying all lives matter, but not so much the women who are mass raped on october 7th. >> very quickly, bill ackman tweeted yesterday, referring to the president of m.i.t., do you think she's going to stay? >> i don't know the internal dynamics, but certainly they're drawing a bead on people who are considered violators in this dei area and make no mistake, that's what this is really about. it is not just about free speech. >> yeah. all right, eric dezenhall, thank you for joining us. we appreciate your time. >> thank you. coming up, markets weighing concerns about the u.s. economy and potential crude supply disruptions from ongoing tension at the red sea. we'll talk prices and the tense quk x"ilbeig br the break. "sawbo wl rhtack.

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what are you seeing right now in terms of freight rates, how much traffic is being diverted and how this might continue to be a disruption to transport? >> well, right now some container companies are going through -- some oil companies are going through if they need to and others are diverting. it does seem to be a decision. but the heightened tensions in the area are definitely in my view an attempt to disrupt global trade in a greater way by a lot of different forces and panama canal is constricted as well. if ships have to go around a lot, or if the suez canal is closed or the red sea is closed, you do have an upward pressure on ship fuel demand and prices and therefore it will help freight rates also because it constricts supply of ships going around, adding ten plus days from asia to europe. so, it is meaningful, but at

this point in time in terms of impact on oil prices it has been minimal. >> oil prices for sure, i wonder how it is filtering in to just the overall sort of cargo economy and how much those freight rates have been up. and perhaps maybe relevant to look back at, you know, the supply chain disruption period around the pandemic to say just exactly how extreme they are now or not. >> so, that's an interesting because during this supply chain issues that we had during the pandemic, container shipping, which is -- it is vital to go through the red sea to the suez to europe from asia, container shipping was -- had constricted supply and they also had logistics problems at either end of the ports. it has been largely solved and during the high freight rates of 2020, 2021, a lot of ships were ordered. those ships are now delivered. so there is an oversupply of container ships coming up. if they have to go around, it

constricts supply, freight rates will go up. there is also surcharges that certain lines are being permitted to pass on to customers. and we're not exactly sure how big those are, depends on the customer. and that's going to end up in the consumer in some way in terms of some price inflation. but, so far it has been manageable. should it get worse, it is a real disruption. >> are most customers sort of in wait and see mode? they're not necessarily making a call on how long the potential disruptions in the red sea are going to last. >> if you need to get your cargo on a container ship in particular, if you need to get that cargo in a container, you have to pick which ones are operating the ship, not the route the ship is on. if you know that, for instance, costco, the chinese container line, they are transitting and

you know it will be on a costco ship, you know when it is going to arrive. if you're on maersk, you're not sure. this takes time to pan out. in terms of oil, the saudis have the terminal in the red sea, not being affected and the middle east oil that is exported to the west already goes around the cape. it is real. but it is not -- it is not damaging things dramatically yet. but it could get very, very serious and i think the iranians know exactly what they're doing. >> it would seem. maybe it is part of the explanation for why crude market hasn't been too stressed just yet. urs, appreciate the time. thank you. >> cool. thank you very much. thank you for having me on. >> cool. i like it. when we return, robert talks to one of -- talks one of his favorite topics, the luxury housing market. he's going to share some statistics on the state of the industry and expectations for 2024. let's check on the futures before we head to a break.

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have risen first time in more than a year as sales of high-end apartments moved in the market. sold average $1.6 million in the

fourth quarter up 5% from the previous year. nationwide, ultrahigh doctor ended fared well last year. 34 homes sold in the u.s. for more than $50 million. 5-0. most expensive deal of the year we all heard about, jayee and beyonce's purchase of a $190 million home in malibu made of all concrete and for that, i'm not jay-z and beyonce. and 2023 and 2024, ceo, queen of new york real estate overseeing more than 50 offices in new york, connecticut, new jersey and florida. thank you for joining us. happy new year. >> to you too. nice to be here with you this morning. >> you have a great look at pipe line. not just what's reported fourth quarter but what brokers are talking about. what contracts are in the works. what is the first quarter look like in manhattan right now? >> i think slow and steady. as we know, no surprise.

2023 was a really challenging year in real estate, because of high mortgage rates, tight inventory and pricing staying high. because the fed indicated they're not grog to raise rates and maybe cutting them we're a little hopeful about the first quarter, but not dramatic. i think slow and steady sort of more inventory, more sellers in and more buyers in. >> we saw a record number of cash deals in the fourth quarter. i think more than two-thirds, maybe even three-quarters of all were cash. look at the 5 million-plus, 85%, 90%. folks very wealthy don't care about mortgages and want good deals. what do you see versus high-end and middle, under $1 million how do you see the three come out? >> maybe more challenging. wall street bonuses not great,

we've heard. always having impact on people buying homes over $5 million. >> and job cuts. >> all of that. job cuts. i do think it's going to take a little time. we looked at 2022 versus 2023 for luxury and our numbers were down in the double digits in '23. i think '24 will the better. every economist telling us '24 should be better than '23. housing market cycles and rates van impact, even luxury. >> diana olick said it woen moves things much. so many locked in under 4% jncht jnc. >> that's it. when should i get into the market? when's a good time? creating tightness in inventory and the market hasn't been at fluid as it formally would be and it's frustrating. but people have to buy and sell. get married, get divorced.

people pass away. they continue to do those things. just people are trying to wait and see what's going to happen, but the economy's been really resilient. haven't entered a recession. an election year always creating uncertainty. geopolitical crisis is in the world, second year with the ukraine war and this terrorist attack against israel on october 7th. i mean, stress in the world, but -- >> quickly what would be more important to getting the real estate market moving again? a recession bad news. meaning people wouldn't have money but rates would come down? >> exactly -- yeah. that's the challenge. sort of like what would be better? our economist said maybe recession would be good, because then would start to get things moving. a little bit to that story. >> yes. >> finally, you have a good look in florida as well. have we seen that whole migration play out? high-end market florida, do you think fairly subdued 2024 or still strong? >> i think fairly subdued from

what we hear and see in the pipeline all of that. i think it will take a little time before we get back to a better place. but we're in good shape. it's not horrible. just recovering. it's recalibrating, so to speak. >> all right. thanks a lot. >> thanks. happy new year. >> you, too. coming up, talking with fed recession risks and what fun investors can expect in 2024. kelsey berro joins us toalking about the interest rate environment and much more. and later, not doing business in china. metherlands blocking asml from exporting equipment to china. more on the latestus ph that could impact chip stocks. "squawk box" will be right back.

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good morning. the santa claus rally in serious jeopardy after stocks fell first day of the trading year. futures pointing to more losses ahead of today's opening bell. and disney drama. a pair of activist investors throwing support behind the company in a proxy fight. details ahead. and are companies catching on to crypto hackers? thieves unable to score as many

ill-gotten games last year. we'll ask an expert why. the final hour of "squawk box" begins right now. good morning. and welcome back to "squawk box." here on cnbc. we are live from the nasdaq market site in times square. i'm become bg along with mike santoli and robert frank. joe and andrew are both out today. mime becky quick. watching what's happening with the u.s. equity futures for the second day in a row. we could say every day this year futures under pressure as we come in. just two trading sessions so far, dow up a by 135points. s&p futures 21, nasdaq off as

well. treasury yields higher since the new year started. 3.97%. got the two year yielding 4.35%. bitcoin actually a little lower this morning after big gains yesterday. even earlier this morning. right now bitcoin off by about, almost 4.9% trading 42734. 42,000 yesterday and earlier this morning. breaking news di news. planning to support it and its magt in the proxy battle with ty add's nelson pelts. peltz pushing to get on the company's board. but value ad support cot bring others to its side. three candidates for disney's board to rival peltz candidates. saying blackwells would

supportive of ceo bob iger's work. trion including proxy battle with wendy's. including a former warner brothers executive. founder of taskrabbit and co-founder of the tribeca film festival. blackwells owns a disney stake worth only $5 million. that's right. m, million, not billion there. that's compared to trian stake of about $3 billion and disney the overall market cap of $166 billion. this is an interesting move and seeing how things will shape up, you can bet, mike, getting a lot of back and forth. people taking sides on this battle we've been watching so closely. >> no doubt about it. look at what the market context is for all of that, becky. two-year anniversary of all-time high in s&p 500 around 4800. january 3, 2022. here is the two-year chart. kind of this hammock effect right there.

suspended around the 4,800 mark. a little payback for the very, very strong final couple months last year. nine straight up weeks. everybody in every statistical measure saying overbought. crowded stocks mega top of the nasdaq clearly had selling pressure pent up in a new tax year, as it came to impair. pullbacks, back to this range. took off from in december. around 45, 50 to 4600 level totally normal. not a big deal. a few percent down perhaps from the recent highs. look at apple relative to microsoft and the broader s&p 500 overt last two years. remarkable apple and microsoft most part traveled together. not the same business. similar market caps shows viewed by the market as corporate nation states. treat shareholder capital well in the way of a lot of big trends. not getting hurt badly. apple actually diverging to the down side here with downgrade

yesterday. really has not outperformed s&p 500 by much over the past two years. microsoft still flattening out, still favored play in not just corporate i.t. also, of course, a.i. look at corporate credit relative to treasuries. also the last few years. this is the bank loan etf. senior leverage back loans as well as high-yield hedge etfs. gauges of credit spreads. about tight for corporate credit relative to the prices of treasury bonds. what you see here is the macro matches from the market credit looks priced firm, not showing a lot of cracks, at least not yet in the macro outlook. becky? >> mike, thank you. weird, though, watching the apple chart. shows you how quickly sentiment can change. >> yes. >> looking at these things. microsoft holding in there at this point. that's a shocking and quick turn, and there's not a lot changed in the story? >> true, although i argue that this is a company that added

$400 billion in market cap in a couple months also on not very much in the way of anything changes. it is a very flow sentiment dependent name. >> holds true for microsoft and other big names. everything looks great until it doesn't. what so much of the market has run on, sentiment. eer zero in on the bond market. joining us, jpmorgan asset management, kelsey berro. eight basis points moved basically yesterday. that's a pretty decent move, but not relative to the downside move we saw late last year? >> yeah. i mean, we need to take a step back i think. new year basically came early for the fixed income market. if you're resolution was to lock in high yields before the fed pivoted, were you not waiting until december 31st to adjust your portfolio. you've been doing it the last two months. i think back last time here, a

few days after the fed. the question was, could this rally continue? we said, yeah, we think actually it can continue. now we've seen not just a rally that ran into the new year. it sprinted into the new year. so i think what year seeing now is just a little bit of a breather. a re-evaluation. the markets are pricing at 160 basis points of rate cuts for next year. we don't think that's unreasonable but a lot has to go right to get that to really happen. >> speaking of sentiment moves in markets getting an idea in their head and running with it. what it really felt like after jay powell's last press conference where he spoke. market said, okay. rate cuts coming eminently, running, heading towards the end final point. we're going to get -- later today, foc minutes. is there a risk people look at that saying, gosh, completely

misinterpreted what they were thinking and saying. fed speakers came out right after yards, austan goolsbee, hang on before you're off to the races? >> i think the fed will push back somewhat. attended to do that already. the toothpaste is out of the tube on this one. the market is anticipating rate cuts and it's really hard for the fed to push back on those rate cuts when they're own projections show 75 basis points of rate cut for this year. a little hard for them to be nuanced. they want to reflect back that inflation came down a lot. the six-month run rate on core pce, 1.9%. never this close to 2% since the fed started hiking. we've made a lot of progress. it's very hard for them to reflect that progress, reflect the fact they do expect 75 basis points in rate cuts based on their own projections and at the

same time push back on markets. something i don't think they're going to be too successful in. ultimately what's going to drive the pricing of rate cuts in 2024 is going to be the data. so you look at manufacturing. that's coming up soon. jolts, and then jobs report later this week. >> when you said, interesting, clearly from bond investor's perspective, a lot has to go right to get four to six rate cuts. arguably, things have to go not so right for the economy or stocks. what's your thought on the precision of fed fund futures pricing if we go out six months? right? it's kind of a directionally correct but we can't really pretend it's too exact? >> yeah. no. that's great. one of the things we've done is looked back at what the market was pricing at the start of a rate cutting cycle. tw then what ends up actually happening. not just in the u.s. but other developed markets as well.

we found the market actually underestimates the amount of cutting ultimately central banks deliver. that's interesting, because, wow. 160 basis points seems like a lot. if you look back from 1980 to today at all rate-cutting cycles on average the fed cuts over 200 basis points first year. now, sometimes in many of those cases the economy is not doing well and that's what is driving cuts, but in an environment where inflation is coming down and growth cooling, that's where you get the kind of goldilocks scenario where you get a little bit of rate cuts to keep the real fed funds rate steady but not enough to reaccelerate inflation or reinvigorate growth. that's that very, very difficult line that stock goldilocks they're trying to balance. >> senator march or more likely june, july? >> i think more likely may or june than march.

and that's because we spend a lot of time looking at each month of inflation data, and as i mentioned, had six months of really good inflation data. all pointing in the right direction. goods coming down, core services coming down, food and energy coming down. i think you could see a little bit less good news there in some upcoming trends. trend of disinflation we think is very much intact. i mentioned, data zigs and zags. market pricing of rate cuts is going to zig and zag. right now the market is fully convinced of a rate cut in march. it's going to come. it may not be march. >> what happens if we get a really strong jobs report friday? does that undermine that entire thesis? one of those good news is bad news setups? >> i think it's more about inflation trajectory right now for the fed. that's what's allowing them to do these, what you could describe as insurance cuts. cutting rates to keep the real fed funds rate steady. to keep the appropriate level of

restriction in the economy. so just one strong jobs report i think would surprise the market. push back on the march pricing as we just discussed but i don't think that it undermines the fed's credibility in terms of easing cycles. >> even average hourly wages up more than anticipated? >> wages a good point. goes back to inflation. i think if wages are showing signs of reacceleration, that's something that's going to put the fed on notice. we don't see that as the case right now. we see job growth as moderating. wages as moderating especially if you take out government hiring. job growth only about 130,000 over the last six months which is fine, but it's not blockbuster. what i would be really focused on, watch interest rate sensitive sectors. if they rebound, then the fed may have to consider that their path for rate cuts is too aggressive. >> mm. >> in the ways like now.

existing home sales lowest level since 2010, we're not in a situation to worry about that. >> real estate prices going up again? especially sales side. rents coming down maybe. not gettinghelp on the shelter cost side, which is a big contributor to the latest print. >> true. so what you're seeing there is a little bit of a mismatch between supply and demand. in reality the fed can only influence cost of funding. >> right. supply chain issues all over again. >> right. still reaping benefits of decline in shelter costs as measured? by cpi, pce a while? it's a lag? >> kind of the nuances that we focused on when thinking about inflation. the market is looking at cpi, cpi uses a number of different measures to try to figure out what inflation is. it's not really based on home prices. it's actually primarily based on rents. rents are coming down in the multifamily space which is very different from that single

family house that everybody wants right now. multifamily space, actually a lot of supply coming online. >> yeah. >> that's driving the decline in rental prices and improvement in shelter inflation within the cpi. >> thanks for coming in, kelsey. >> thanks for having me. why 2023 was a bad year for crypto seeking cyber criminals. talk about that and potential etf apovs pralthe street is hoping to get. stay tuned. you're watching "squawk box" on cnbc.

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welcome back to "squawk box," everybody. futures this morning are under pressure once again in pre-market. down by about 114 points. s&p futures down by 20. nasdaq off by triple digits now down by 107. today is the last day of the santa claus rally period, the tendency of the s&p 500 to rise during the final five trading days of one year and first two days of the next year, but things aren't looking especially grand after yesterday's losses. in fact, if we can't sustain the santa claus rallies first time that's happened since the transition between 2015 and into the year 2016 but of course, we saw an early santa claus rally.

maybe just came early this time around. >> could be that, yeah. also, we have a santa claus rally before the market peaked in 2022. not exactly determinative of this. crypto hacking wasn't at profitable last year. our next guest says $1.7 billion stolen from january through november, but in 2022, the yearly total was more than double that, at about $4 billion. talk about why? welcome head of legal and government affairs at krm labs and want to ask about crypto regulations in 2024, but start with the hacking news. interested in you monitored this activity. why was there a decline, at least in successful hacks? >> first of all, thank you so much for having me and happy new year. yeah. really, really interesting data on hacks this year. 2022 you mentioned a record-setting year for hacks. we saw about 4 billion in hacks from the crypto ecosystem. much of that perpetrated by north korea cyber actors

including largest-ever hack. $625 million on the ronan bridge. but 2023 very different. saw half that volume hacked about 1.7 billion. a number of potential reasons for that. first, we've seen better cybersecurity from decentralized finance protocols and other types of services. we've seen aggressive law enforcement action to go after the laundering services used by cyber criminals, such as mixers. you know, sinbad was a mixer recently sanctioned by the u.s. treasury department. that was a go-to mixer for north korea hackers. finally seen in many respects the crypto industry coming together to build out cybersecurity to take action. remember, one of the keys for hackers in laundering the funds is taking those funds and off-ramping them into the real

world. moving them into usable currencies. better cybersecurity and compliance controls on the on and off ramps at the exchanges has been critical stopping the laundering piece of these crypto hacks. good news in 2023. see what happens moving into 2024. >> just to get into exactly how those numbers shake out, prices were also down last year. right? so i mean, is it the dollar value partly a result of the fact they're just, you know, each coin was less valuable or actually fewer thefts in general? >> so sure, yeah. the cryptos, value of different cryptocurrency obviously play as role here. honestly, cyber criminals are still ay gresi iaggressively at the crypto system. seeing the same number of hacks perpetrated but not the huge numbers like in 2022. seeing a series of what we called 10 mega hacks.

those in the hundreds of millions, and while some of that obviously is driven by the price of the different currencies including bitcoin, you're still seeing cyber actors, north korea, attack crypto ecosystem. price play as role but a smaller role in this type data. >> whats your view where crypto regulation lies? talking about a vigil under way a long time for approval finally of bitcoin etfs from large providers. excitement in the market about that. whether that will change how people really engage to what degree with crypto remains to be seen, but where are we trending towards? there really are factions even if u.s. regulatory authorities, that are somewhat, just hostile in general to the buildout of this infrastructure? >> there's a lot going on in the space now. one thing we forget, look, 2023 began in the wake of the fallout from ftx. we forget that was only about a

year or so ago, just given how much that case and the ecosystem and everything that's gone on played out. 2023 started in the wake of ftx. really we started to see at least globally consistent standards develop across the world. finally saw passage of the mika retch lation in the european union providing clarity toy crypto businesses looking to engage with member states there. seen activity in singapore, australia, in the uk. more focus on enforcement obviously is in the united states and will like ly see tha in 2024. it's important to note even in the u.s. where we've been i think slower in terms of regulatory speece, we've seen every branch of government in 2023 engage in the crypto ecosystem. whether legislative body first time-ever crypto legislation voted out of committee in house

of representatives, on stablecoins and market structure. seen the courts obviously engage in the space. that obviously, the executive branch has taken action, freshry, fcc, and we'll continue to see that. etf level, important on a couple levels. first take frikction out of the investing process for consumers looking to engage in the space, looking to buy bitcoin but don't want to do it on an exchange, and will have that opportunity. most importantly it will really be a recognition by regulators and institutions that this space is here to stay, and it's something worth regulating, worth engaging with, and ultimately would be a part of a broader economic ecosystem. >> and a big scandal in bitcoin, or crypto last year, of course, finance and the settlement cz

struck with justice treasury, the cftc, as part of thattance sounds like treasury and justice maybe cftc will be i guess have access to finances, internal plumbing to monitor laundering. do you think that will be significant? do you think that will also help sort of bring down the amount of hacks and money that goes to hackers in 2024? >> yeah. no. it's an interesting question. i mentioned the year began with ftx and how really different that case was than the finance case. right? finance now is in a world where there's a resolution. there's a settlement with the justice department and the treasury department and others that allows the company to build out its con plins controls and essentially move forward. compliance controls. that data plays, will play a role in it. i think one thing i mention in the hacks context, we've seen over the last few years is really centralized exchanges. particularly the large exchanges out there, coinbase, finance and

others, they've built out compliance controls. and that has been a large part of keeping those hack installment funds on the blockchain. already seeing, you know, crypto businesses, financial institutions, use compliance tools like trm to ensure that bad actors are not able to use their platforms to off ramp funds. we'll continue to see more of that, and the finance settlement will be a part of that, another piece of that puzzle. >> all right. appreciate your time. thank you. >> thank you for having me. coming up, speaker of it's house heads to the south today to highlight inflow of migrants to the u.s. hear how that's tied up with a fight over funding for ukraine and israel. reminder heading to break, get the best of "squawk box" in ourtily podcast. all squawk pod on your favorite podcast app and live any time. be right back.

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coming up, all the issues law merrickors face as they return to congress with yet another government funding ledline, one of the first things to take care of. dot awhe.n'gonyer "squawk box" will be right back. you know what's interesting these days? bitcoin. look for bitwise, my friends.

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potential for rate hikes remains on the table. talked about at the meeting and by jay powell in the news conferences. this depends whether or not there are eases. making progress on inflation, he said. risk to soft landing lagged effects of policy that could make the economy weaker along with unforeseen shocks. also to the other side inflation remaining higher than 2%. he notes that businesses are not going to stop raising prices until they're forced to, and that comes from one of two places. weaker demand or more fed rate hikes could be needed to bring down inflation. the recent decline in yields he points to goes the wrong way along the rise in the stock market saying it could stimulate demand. any downturn he says, though, not likely to be severe, because you have late demand to keep consumer spending along with

businesses prepare fooing for dt turn. officials had spoken about rate cuts. investors xruntscrutinize the minutes. crews when the first rate cut might come. expect the minutes to so fomc is not entertains rate cuts just yet and preparing for more hawkish minutes. market trading with 72% probability of a rates cut and a quarter percent meetings after that. january '25 contract full look of '24 shows six full rate cuts baked in with current yield 384. like barkin, most fed officials since the meeting leaned against the market cuts. leaving it up to data to bring the market in-line with the fed or maybe, mike, the fed in line with the market. >> yeah. i guess, steve, there's time for

that to develop at this point. barkin, like most fed officials doesn't want the market to get too comfortable and certain about any single scenario when the fed itself sits there entertaining a relatively wide set of options. >> good point, mike. sitting here given this report in early march and the fed talking the way they've been talking and market priced the way it's priced now, we'd have a problem. disappointment and a lack of the market and the fed being in line. then, of course, seeing the data dramatically different ways. there's a bunch of inflation reports to come. a bunch of gdp reports to come. a very important jobs report friday that should show the job market continuing to ease back from its high rangses of earlie last year. when all that data comes in, if the market and fed are on different pages we have a problem. i do not expect that to be the case. >> yeah. even in the fed meeting between now and then, and january, four

weeks from today i guess, the decision. steve, thank you. >> and fomc minutes don't matter today. not saying what the fed officials all said. >> a starting point. >> i disagree a little bit. only because -- i think the market's gone very far based on comments made by fed chair powell and extrapolated off of that and really interested to see how the market reacts to what is ostensibly a more thorough account of that meeting with all the different signs. >> i was thinking the same thing half an hour ago. i thought about it. already heard from williams, heard from goolsbee trying to talk it down. markets didn't listen to their actual, them saying those things. read too much into fomc minutes ignoring what they were telling you -- it's possible. >> i don't disagree. may be that the market ignores it today. a guy who watches the fed closely, i want to see what they talked about. >> and you will.

we'll hear you talk about it later. steve, thanks a lot. >> sure. house speaker mike johnson heading to texas today to highlight what he sees as failures in the white house border policy. this is tied up with billions of dollars in potential funding for ukraine and israel. emily wilkins joins us with the latest. emily? >> reporter: hey, robert. that's right. speaker mike johnson is leading a group of more than 60 republicans to the southern border near eagle pass, texas. happening as a group of senate negotiators returned early to d.c. trying to hash out a bipartisan plan to try to get to some sort of deal on border security and immigration. remember, that is key to getting enough republican support to pass a wider spending package, include billions for ukraine, israel, for the indo pacific region. biden requested more than $13 billion for the border but the republicans made it clear only accepting policy changing in

return to support for ukraine funding. though mike johnson hasn't been the main player in talks he's making it clear what he wants to see from any sort of agreement. he called on biden to use his executive order powers to implement broader changes that include ending a policy that allows immigrants to be released without a court date, restricts parole and wants to see biden work with mexico and canada for, to take those seeking asylum in the u.s. johnson is also dealing with pressure from hard-line conservatives for threatening not to support funding the government unless stricter border security measures are implemented. texas congressman saying republicans much make -- sorry. funding the federal government operations contingent on the president's signing hr 2. a wide-ranging security border house republicans passed without democratic support meaning little chance to get on biden's desk.

meanwhile, white house spokesman andrew bates chriticize the republicans for not allowing more for judges and everyone working now trying to get the bills passed before the two upcoming deadlines of january 19th and february 2nd. becky? >> emily, thank you very much. joining us now to talk more about the funding fights in congress and the possible market impact is dan clifton. head of policy research and, dan what do you think? shut down going to happen? how likely? >> well, good morning and happy new year. i hope everybody got rest over the holiday season because january's going to be action-packed. funding cliffs, republican primary starting, the taiwan election. you're going to see a much more outsized role of geopolitics and politics in 2024 than you saw in 2023. that's going to start right away with how these negotiations are

going over the next couple of days on the border and ukraine. in fact, the republicans are unlikely going to be ale to do a deal, it's not going to meaningfully reduce immigration at the border. democrats not able to do a deal without getting their priorities through as well. very hard decisions to make. we've been fighting over immigration 20 years. we're going to try to get agreement on that in a week from now. then have it, pass the senate and go to work on the house, very narrow margins between the two chambers. this will be a very delicate process. i assume noise and if we get that, maybe, possibly, could have government funding. again, becky, be clear here. this san election year and there is going to be a lot of volatility over these funding colleges. the end of the day, congress has no choice. they will have to get something done even if we do have a shutdown. what we've been talking about with our clients in election

years, re-election years for presidents, s&p 500 increase 16 times in the last 16 presidential, election years. some of those years have happened even when we had recession. at some point, 435 members of congress and a president of the united states are all going to come together and be able to get this done, but we expect it to be a volatile first quarter and funding cliffs at the center. >> real messy but not matter in the end? market's going up anyway? >> right. ebbs and flows but the president has enormous tools to impact fiscal policy outside the funding cliffs. year already see tlag. talking to steve liesman about the fed cutting rates. see qt slowing down. tools that could be employed to help the economy even if the funding cliffs start to impose on -- >> back to that. saying that's the president's tool. it's not. how do you expect the fed to react? they sayre they independent nap

they don't care about these things. how do you anticipate the fed's going to react in the an election year? >> absolutely. i didn't mean to imply jay spoul t powell is trying to pep the president. inflation rate 3%. real fed funds rate is going up and fed will likely cut interest rates in 2024. the treasury is providing significant liquidity by funding the deficit on short end of the curve. getting a student loan cut in july that is already put into place. all of the president's infrastructure financing comesing into effect in 2024 and doesn't require any act of congress. talking about these tools talking about as a collective group. i didn't mean to misspeak and imply that the fed was trying to -- >> no, no. >> in addition to the border issue also a lot of discussion over what the top-line funding numbers should be. part of that, there's this continued fight over the irs

funding. republicans got $20 billion of that $80 billion taken back. i guess i hear maybe want to skellerate that. supposed to start in 2025. they want to start this year. how important is the irs now as a pawn in all of these budget discussions and why is it so important to the republicans? >> yeah. just as context, republicans regularlily get $20 billion of the $80 billion removed part of the debt ceiling deal but democrats insisted out years. very unlikely democrats will sign another bill with more irs funding accelerated. that's outside the normal appropriations process. that will start, see some negotiations over what the norm's budget's going to be as part of the appropriations process. what you're talking about is very, very difficult to achieve. spending levels? doing all appropriations? if we do, we avoid sequestration. avoid partial shutdown or shutdown even continuing

resolution, you then start to set up for an april 30th seques sequestration, a 1% spending cut off the 2023 levels. it's not going to be end of the world if you get it, much smaller than we saw in 2011. other factors are coming in to place, but you can see what we're setting up here. budget trench warfare. immigration. irs. ukraine funding. all of those are very, very difficult decisions for members of congress to make that could upset their base and that's why these are going to be protracted fights in the first quarter of this year. interestingly, you'll start to see the presidential election mix with this. i think that's the key. it's the confluence of these factors. you usually get a pretty significant sell-off in the equity market right around super tuesday as the new candidate begins to emerge and the market begins to say, okay. which policies will it be? whoever the republican nominee will be's generally you've seen that historically. >> interesting.

didn't realize that. is april 30th the sequestration, no budget deal getting done, best case or a long-shot idea? >> i assume probably going to not get all the appropriation bills done. if not all done you get a 1% cut across the board. i naught in as a place holder until we see the debates play out, but if we get closer and pressure stafrtrts to ramp up in election year, you could say macroperspective not end of the world. for defense, a 4% swing one way or another. could have a meaningful impact on defense and impact on health care stock. sector basis, going to be much more meaningful that are macrobasis. >> dan, thanks a lot. >> great. >> a lot of things we hadn't considered and we appreciate it. >> thank you. talk to you soon. coming up, investors starting the year paying close allegation to china after a break talk about what to expect in the u.s.-china relationship

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welcome back to "squawk box," everybody. futures this morning. as we've been telling you under pressure. happening allmorning long just like yesterday morning, too. a little less severe this morning. s&p futures down by 18. dow futures off 122. nasdaq down by about 90 points. all right. now to the global fight over technology and trade.

china pushing back after computer machinerymaker asml says it was barred by the dutch government from exporting some of its tools to china. these are highly sought-after systems used in production of semiconductors. china criticized the move saying the netherlands where asml is head 3 waurs t headquarters and should respect laws. gary, thanks for joining us. china called this move by the dutch government bullying by the u.s. this was, i guess, part of the agreement the u.s., japan and netherlands made about semiconductor processes. how serious do you think the chinese government takes this? is this a little saber rattles or something that could escalate? >> good morning. and thanks for having me on. this is serious, but this is

really very predictable, because the united states along with some of our key allies such as japan, korea and like you indicated the netherlands, have already restricted some of the most sophisticated machines used in the manufacturing of these chips. prohibited them from actually being sold to china. so this is an extension of that prohibition. the blanket or the type of machines that cannot be sold, and this is really the continuation of a chip war with china. the united states does not want china to be able to design or manufacture their own chips, highly sophisticated chips. not selling some of our advanced chips made by either nvidia or qualcomm to china. so we're really trying to force china not to have access to some of these advanced chips that they might use in the, for

military purposes or for advanced computing which would rival the united states and pose a threat to our national security. >> a big question for the global economy and the economy, the chinese economy. evidence in the fourth quarter continued slowdown in manufacturing, investment and youth unemployment. interesting, president xi jinping made a speech over the weekend conceded to weakness in the economy saying businesses are struggling, job seekers having trouble finding work. a leader who always liked to project pow around minimize the economic situation in china. what do you read into that? >> a lot of domestic unrest in china right now, because of these very things that you mention. high unemployment. slow growth in the economy. downturn in the property sector and then as a result local governments are not receiving revenues they need and many workers are going unpaid. so there's a lot of unrest

throughout china because of the economy, and if the president of china were to ignore that and simply paint very optimistic picture that i think, that would threaten his own credibility. the notion that he is out of touch with the chinese people. so he needed to acknowledge that. at the same time the chinese th government is trying to prop up the economy, even on the issue of chips, really supporting companies to start designing chips, to be able to make their own machines, to manufacture these chips, knowing that the western powers, the united states and others, are beginning to starve them of the chips that they want. >> yeah, and some of the china bulls say, look, the chinese government has so many more tools that it can use to stimulate growth. it can deploy the central bank more. it can perhaps start to fund local governments more. i'm starting to wonder whether it's just not a policy priority right now, or more importantly, they just can't, they don't have the financial room right now to

stimulate. what do you think the government's ability right now is to help stimulate growth, and can we look for more of that this year? >> you're going to see more measures by the central government to stimulate the growth, but part of the downturn is caused by the world recession and the slowdown of the world economy, because china's still heavily dependent on exporting their manufactured goods all around the world, and when there's less demand in europe or the united states or because of the tariffs, then china produced less, and if they produce less, they don't need as many workers, and that's leading to the high unemployment. nonetheless, china does have some tools within its toolbox, but the problem is that the private sector in china is reacting, being whip sawed by the action of the chinese government, first encouraging the chinese companies to innovate, to go bold, to expand,

and then the chinese government and officials will say, oh, we don't like what you're doing, and they're reining them in, which then causes loss of investor confidence in many of the sectors of china. >> yeah, we saw that 180 with the video games policy, which they imposed and then pulled back and then the official that was in charge of that was fired. so, interesting to watch all that. we'll take a look. thank you so much for joining us. >> my pleasure. coming up, stocks to watch ahead of t oni bhepengell on wall street. "squawk box" will be right back.

let's get over to dominic chu. >> hey, mike. let's start off with a check on some of the stocks that are making a lod of headlines this morning. one of them is disney, is shares fractionally higher, around 400,000 shares of volume. the media giant and dow component has struck a deal with value act that allows both parties to share information with each other and consult on strategic matters. value act says it will support disney's slate of board of directors nominees. also this morning, according to

a reuters report, activist investor blackwell capital will nominate three members to disney's board. that leaves bob iger to compete with investors pushing for change at disney. those shares up. elsewhere in the market, goldman-sachs has upgraded shares of maersk. given higher than expected shipping rates because of the disruptions in the red sea and suez canal region that could last longer than earlier expectations. we'll end with shares of verizon up on some relatively thinner trading volumes by about 1.5%. the wireless communications broadba broadband giant and dow component is getting help from an analyst at keybanc. they like, amongst other things, better trends in postpaid wireless subscriber and

broadband subscriber as well, becky. so, upside. >> dom, thank you very much. joining us for more on the broader markets is carol, family office cio. carol, you've got some pretty interesting thoughts. you think that the market right now is being overly aggressive in terms of how many rate cuts they're going to get from the fed, but you also think this is going to be a pretty good year for equities. you care to explain? most people are in one camp or the other. >> yeah. we do think the market got ahead of itself with the pretty exuberant santa claus rally in the final couple of months of last year. and especially, i mean, the market right now, the futures market, is looking for something like two times the number of rate cuts the last dot plot showed, and initially starting as early as march. we think that's a little overdone, but we do think the fed is done raising. we think it will be a constructive year, and once you

get past this digestion, if you will, of the strong final finish to 2023 we had that you will see a pretty constructive year as things settle in. we still need investors, especially in the fixed income markets, to get used to the fact that we're probably not going back to a zero percent neutral rate for fix the income, that that ten-year rate is probably going to hover at 4 or 4.25% when all is said and done. >> but you're looking for decent gains. you think the market just moved awfully quickly, but it's not necessarily overvalued, just maybe going to take time to digest it? >> exactly. we think you'll get a lot more clarity in the next couple weeks as we start to get into earnings season. we'll get more clarity as we see how the consumer survived the buy now/pay later and all the credit card bills and higher rates that happened at the end of last year as we see how that consumer progresses. we also will get some clarity on

the employment market, not only short-term this week with the j.o.l.t.s. data and the employment data on friday but also in terms of company plans that get revealed as earnings are announced in terms of where they're retaining employees, do we start another round of layoffs. we think there's digestion issues early in thei year, but t moderates later in the year. >> so, you would tell people to buy on dips? >> potentially. sorry for sounding unclear. potential to buy on dips, particularly as it relates to fixed income markets as we see those yields move up a bit, you've got an awful lot of money that's sat in pretty comfy cash in the last year or so that was yielding 5%, but once we do start to get those cuts, those 5% cash yields are going to come down pretty rapidly, and then that will be looking for another place to go, so buying on dips

in the equity markets buying on dips in the fixed income markets and dollar cost averaging in makes a ton of sense. >> okay. carol, thanks a lot. >> thank you. right now, let's take a final check on the markets as we're heading into the new year. here's your chance, guys. they've within waiting behind us. you missed your shot. right now, it looks like the futures are down by about 145 for the dow. i want to thank mike and robert for being here. robert, see you later. >> thank you. right now, it's time for "squawk on the street." good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. da david faber has the morning off. worth day for the nasdaq since october. news flow does heat up today with ism, j.o.l.t.s., and some fed minutes. our road map begins with a tough start to the year for the stocks. great expectations.

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