2024 and "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times area. i'm becky quick with mike santoli and steve leesman. >> good to be here. >> let's look at the u.s. equities at this hour. 6:00 a.m. and you see dow futures indicated up 40 points. that's a new one. green arrows across the board. this is only the third trading day of the year. we will take what we can get at this point. nasdaq indicated up 23. s&p indicated up 3. that was disappointing yesterday, but not a great

start. mike, i was going to talk about the santa claus rally. didn't happen. >> maybe we'll do it now. it is one of the things where it is the seven trading days of the year. there is an association when it is not up, as is indicated this year, is associated with sub par returns. why look back? >> not down, but sub par. >> some why down. '08 was down. i think it is one of the things where it is fine. one of the positive things was not checked off for the year. you can't really extrapolate too much out of it. i'll make another comment. i told steve earlier that i remember when i was doing this years ago, there were five guys in the dusty archive who knew about these things. they talked about it amongst

themselves. they discovered the patterns. you know, i think he would say it means it is a deep correction or maybe it is noise. be on alert. now we talk about it for two months. >> i hate this stuff. i'm sorry joe is not here. >> he loves your economics jokes. >> you see the $20 bill on the floor and the stockbroker picks up the $20 bill and the economist says what are you doing? he said you idiot. if that was a real $20 bill, somebody would have picked it up almost. >> okay. >> these things like santa claus rallies, if they are real, the market should arbitrage it years ago. there are certain things. >> you are saying that the economist in that joke is the one who has it right?

>> exactly. that's a joke on a joke. i get that. in this case, that's the operative idea. there isn't free money hanging around. >> i agree with you, except there are structural even doppler radar we have incentives or just mechanical things in the market that seem to be repeating every season. >> what i heard yesterday on air was for the last 16 election years, you haven't had a down year in the market. which plays out? the sclanta claus rally? >> you haven't had election year with the incumbent president running. >> yes. >> it's a small sample size. >> what about the super bowl? those are the things that make me nuts. >> nonetheless. >> you get up in the morning and believe the world has fundamental things that make it work and people come along and say no, the afc will win the

super bowl this year and the market will be above. >> that well apart years ago. >> that was the thing. >> it was always tongue-in-cheek. >> if i see he $20 on the grou i'm picking it up. let's see where treasuries stand. the ten-year yield at 4%. 3.95. the two-year yield at 4.3%. >> can i get something out of my brain? the thing you read about microsoft wputting a button on the keyboard? the keyboard will survive a.i. the oldest thing out there will hang around. >> it is not -- >> it is not in my brain or siri. to the latest fed meeting. three rate cuts by the end of the year. we knew that. there was a high level of uncertainty over how and if it happens.

i thought the market went into this looking for some evidence to back up the extent to which it rallied. >> agreed. >> either the timing of the rate cut or the depth of the rate cuts. it didn't get eeither. the fed is trying to be neutral. there was affirmation they were at the end of the rate hike cycle. they peaked. if there was a big discussion of rate cuts next year, it didn't show up in the minutes. this goes back to our last conversation, mike. maybe there is a santa claus rally because of the seasonal stuff. this rally was a change on the interest rate expectations more than anything. i don't know if that is part of the sclanta claus rally. there may be a santa claus rally based on the calendar. >> it sis only seven days. it is not the two months where we have been up nine weeks in a

row. it has been the removal of the idea we had yields run to the upside. we don't know what the fed will do and we have the supply. the economy, let's be clear, has held upper thanbetter than most expected. we keepconfirmation. i think all of that is behind it. >> the only thing i keep saying is i like the market to price in risk that it is wrong. they have gone to one side. six rate cuts. 70%. down a little bit, the pro proba probability, of a rate cut in march. a good amount may happen. it may happen in march. >> we do have a lot of data points between now and then. >> i through there's three unemployment reports and inflation reports. >> and a fed meeting at the end

of the month. >> january of last year, i went back to something i was writing in january of last year. same conversation. they were talking about cuts at that moment. we didn't get the cuts. the market was up. >> they had 12 months to figure it out. >> granted. i think march is something that could sway in the other direction. what the market also knows, steve, what does the fed say the neutral rate is here? where are fed funds right now? where is inflation right now? the math of those put together and the market says i don't know. we have downside risk to rates. we know when easing cycles start, maybe they gather pace. >> i try to think of the economic outlook that would require -- >> two more fed inflation reports. >> okay. >> i'm not saying they should or will. the framework is there for it if

it happens. i think march seems aggressive anticipated start. you know, think about how much things have changed in two months since october. >> it was not a big selloff. dow down by less than 1%. >> it should believe this rate cuts this year. it should back off its exuberance. then the question is, mike is better at this than i am, how exc excited should we be with the differences? becky, there are 75 basis points of difference with the market and fed. over two years, it is 0.4 basis points. over time, it comes together. there is a general thing to what you say a convergence to the neutral rate.

i'm working on this story on the side and we can talk about it this morning. at some point, the curve breaks. that creates different financing opportunities in the market if we get back to the normal upward sloping curve. it creates the sloping rate and the fixed decision. there is no reason to go floating. if you get to a normal sloping yield curve, you get back to a bunch of finance questions. >> wall street is thinking through all that. >> they are. the question i get from people out there is it does matter to them when the curve disinverts. that creates opportunities for m&a. the market hasn't ra n't waitede fed. you look at the two-year and the

ten-year. >> the long curve as yields going up. that changes the equation. >> bingo. >> also, everyone says the real recession signifial is when it doesn't curve. >> i want to continue this c conve conversation. >> the two questions out there are the economy it disinverts and how. both of those creates different realities. >> all right. now to the developing story in the red sea. the attacks there and diversion of the ships around the cape of good hope are driving costs up. costs have risen 55%. rates to the west coast are up 50%. the companies have learned a lesson in the supply chain of 2021 and 2022. higher costs are expected to trickle down to impact consumers

as soon as this quarter. you have to look at where we came from with shipping costs. they crashed going into the crisis. >> they did. are we getting back toward normal? does it add to inflation? >> that is the question. how much of what you pay in the store is shipping kocosts? it moody's says office loan dl dr delinquencies are expected to increase in the coming year. tenants with rolling leases extend to refinance at lower rates. the office loans past 60 days climbed to 2.8% in november. >> this made the minutes yesterday. the fed is watching this. this year, there is a wave of

refinancing coming through. >> they might act as a result to offset the potential wave of problems that would weigh on the economy? >> it is never that simple, becky. in the list that you pile on with the cre. this is a negative for the economy. new this morning, microsoft announcing keyboards will feature a co-pilot key for text conver conversations. it taps a.i. models from microsoft back startup openai. it can compose text with a few words. you can create images. the dedicated key on the keyboard is the first addition to the windows keyboard since the 1994 introduction of the windows key to bring up the

start menu. >> it is a marketing thing? you are hitting a button to talk to the a.i. assistant? >> does it have to go to microsoft a.i.? is there anti-trust question? >> it is microsoft pcs. those loaded with windows. >> it will be available on screen. >> the mac will not happen. it is interesting. microsoft is so whetted to the old commands you have to cesend. you have c, colon, slash. when windows 95 launched, the hype around it was amazing for a box of software. it was like a harry potter book.

the day of the launch, apple ran a two-page spread in "the wall street journal" that said congratulations in the context of c, colon, slash. apple was a decade of coming back. it was a good tweak of the competitor. coming up, we dig into the crypto volatility as the next etf approval approaches. and quarterly results from walgreens due at 7:00 a.m. we will bring u e suyothrelts and the reaction from wall street. "squawk box" will be right back. hm you! your business bank account with quickbooks money, now earns 5% apy. 5% apy? that's new! yup, that's how you business differently.

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crypto asset manager grayscale is looking to the bitcoin etf. firms to have the power to create the shares of the fund and ensure the etf price moves with the assets. blackrock will provide the service for its proposed etf. jamie dimon, of course, told congress last month he has been deeply opposed to bitcoin and crypto. if he were the government, he would close it down. traders are on alert as we

get closer to the etf. joining us with more is anthony pampliano. >> thanks for having me. >> i have to dial back. i go back to when it was listed 30 years ago. i covered it then. the uso, the oil etf in '04 and o '06. this is back office stuff. all of which is to say the degree of anticipation of this and how it is made its way into the market is extreme. how is it not just anti-climax when it happens? >> wall sdrtreet is getting inv invited. wall street has been boxed out of it. i think that is what you are seeing in the excitement. one thing i do caution is you

can't trade this like other assets. we saw $1 billion of interest got wiped out. the guys did a fantastic job saying this asset in 2021 went up 800% before the pandemic started. during that time, it was five 30% draws. if you are levered long and it goes to the moon, you are likely to get shaken out. >> that is good advice. be aware of the volatility. >> on the risk basis, it is the most attractive asset. it comes with tons of volatility. along the way, we had two 80% drawdowns. wall street is saying ef, it is c coming. we will have a persistent bid. everyone is talking about the

primary fund flows. retail or institutions buying this etf. others are changing to say they put up to 15% in the etf. you have the best asset, why not put bitcoin in your etf? >> all of this formalizes the greater fool why bitcoin should go up. there are more people who will get in and buy and have an easy way of doing it. it is easier to own bitcoin directly than it was to own a barrel of oil or gold bar or futures are contract. it didn't change the overall price curve. >> there are two points you are making. when you buy etf, you are not buying bitcoin. if you want to take self custody, do that. one thing i say to people is what is the most valuable

commodity? you are buying bitcoin and buying an asset backed by the biggest commodity in the world. it is internet native and for the digital generation. if you don't look at oil or gold, but you look at computing power. that is why bitcoin is powerful. >> if i own bitcoin through an etf, do i have better ownership over the exchanges? >> you have the etf structure. all of the things that wall street likes about the regulated funds. you don't have direct exposexpo. you can go to the atm and take the cash out. with bitcoin, you can own it. you don't have to rely on any exchange or etf. so, people have to ask what is my comfort level? am i comfortable taking self custody or the exposure?

i think that is where you see a lot of people who have been sitting on the sidelines who can't take self custody. >> anthony, coindesk is reporting on the matrix report from the analyst who says the s.e.c. will reject the spot etf proposal. i know you think that is a long shot. what would happen if they did that? if the s.e.c. said no? >> if they approve it, it will be short-term volatility. if they reject it, the same thing. short-term volatility and get right back on track. we saw this. china had over 60% of mining inside of the borders. they banned mining and kicked them out. 50% went off line. by the end of may of 2021, mining hash rate was back to the high time high at the end of the

year of 2021. >> the risk/reward and returns per unit of volatility you cite depends on the starting point. two yeahand a half years ago, y said we would get there on bitcoin. it has been nothing through the inflation spike. >> i thought it was going 100. i was off a little bit. in terms of the directional moves and it goes back to volatility. i think the volatility will dampen as etfs and sticky holders come into the market. we aren't just talking about the etf. we have this coming yu up at q2. we will see a significant move in bitcoin. don't expect 45,000 to 1 million tomorrow. >> thank you, anthony. >> absolutely. when we come back, the white house announcing a deal with

micro chip technology as part of the chips act. it means millions of dollars for the company as plants in colorado and oregon. also, jeff currie will talk about his next gig with goldman icchs. stk around. "squawk box" will be right back. (torstein hagen) in my simple world, there are only three things that matter in human beings. first, they have to be kind. kind. second, they have to be honest.

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[ giggles loudly ] [ tapping ] ♪ you put the boom-boom into my heart ♪ intuitive sit-to-start in the all-electric id.4. it's the little things, it's a vw. welcome back. the white house announcing a preliminary deal with micro chip technology as part of the administration's chips and science act. kristina partsinevelos has more on the story. >> good morning. the biden administration is again choosing to focus on

national security in the li military with the $162 million grant to micro chip. they use chips for specific technologies. not like the nvidia chips we talk about in a.i. systems. these mature chips are critical for america's auto sector and industrial and defense industries. the money is $90 million going to modernize a factory in colorado and another in oregon. this would provide 700 new u.s. jobs. the goal is, of course, to re-shore and be less reliant on foreign companies. the biden administration is choosing to focus on micro chip. the first official chips act award of $35 the$35 po$35 milli allocated to the political

military company. the department of commerce will have their hands full after 570 applications for funding. that means out of the $39 billion, there is still a lot of money left to be disbusrsed to other companies. >> the money is slow to get out. i've heard from companies who complained and gone back and forth. it takes a long time to build up the factories and retool them. how long are we talking before we get an influx of new chips? >> five plus years. to your point, the factories could take three and five years. many have cstarted construction. micro chip is building these factories and modernizing it back in february. they did it before the chips act

funding was announced. this is 10% of the total cost. it is a small portion and the government wants you to know that. it is not a handout. we are trying to inn sendt incen incentivize. the chips act is taking a while. they will say what are you talking about? since february of 2022, we have given two awards. we have over 100 staff members. 500 applications. it is not an easy task. the goal is to stop relying on china. it is interesting where this is focusing on the mature chips. we are all focused on a.i. and cutting off china and china will continue to dominate on the mature side with the auto sector and industrial. that is what the biden administration is showing that we also need to focus on the mature chips.

>> will the chips come in at a price that is competitive with the market? >> i can't answer that right now. i would assume. this is me assuming. no. it's going to be on u.s. soil. how do you compete with american workers against taiwanese workers or chinese workers. even taiwan semiconductors say their factory in arizona is going to cost more than expected. we will see more of that over the next few years. >> kristina partsinevelos, thank you. coming up, more fallout from the fed minutes than we get you ready for the kickoff the earnings season. is it that time again? as we head to break, a look at yesterday's s&p 500 winners and losers.

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good morning. welcome back to "squawk box." we're live at the nasdaq market site in times square. you are looking at the dow futures up 53. s&p up 4. the nasdaq indicated up by 22. markets with the dow and s&p posting the worst day since december of 2020. joining us now is sylvia jablonski. did i get that right? >> you did. good morning, steve. >> let's start with the market which has been very concerned that we haven't had this so-called santa claus rally and all of a sudden, the bottom is dropping out of the rally we had. how are you worried about the last few days of trading? >> i don't love the last few

days of trading. i'm the not too worried about it. we saw the run-up until close to the end of the year. i think some investors did take a little bit of gains off to the end of the year and for tax reasons with the beginning of the year. it could be an overbought pause. i'm not reading too much in it. not much has changed from the fed. the reason we might see a market rally in 2024. the fed is no longer hiking rates and the corporate earnings are strong and gdp held up and consumer held up. i expect this to be a decent year for equities. >> with the last two days of the declines, are we still in an overbought situation ? how do you gauge that? >> it is hard to say if that

completely wiped out what we saw in terms of positive sentiment and the market getting super excited about the talk of the fed going into the end of the year about the potential rate cuts this year. i think the answer is it is hard to say. you know, a little bit of the froth came off the market and it is a good time for investors who are looking at the magnificent seven to consider pebuying on t dips. when i see a pullback on the stocks which has room to move, that is the usual issue for me into it. >> you seem to like some of the well liked stocks. google, amazon, microsoft. tell me why you think these are still places where people want to put their money. >> i think, you know, on the

p basic level, they have the strong balance sheets. these stocks were crushed in 2023. last year, the range of returns was from 25 to 250% on the magnificent seven plus. you know, the nasdaq up 40% for the end of the year. it was a recovery year. it was tapping into what is a.i. and the credative environment. this year is about super computing and the users of a.i. more than the creators of a.i. we have a runway in the stocks. they are the providers of the cloud and making a.i. the reality. the providers of the technology that other companies will use to employ a.i. whether it is healthcare. i do think there is a tangible reason for them to run. you know, i think some of the

names like google with 20 times the multiple. these are companies that are just quality companies. some of them look like value stocks. >> also, you like ibm as well. it is interesting. is it time to play quantum computing or is it too early? >> we are just kind of dipping our toes into it. we talked about with kristina with the chips bill. there are several billions going into quantum computing. companies like ibm are lightning doing something with quantum computing. they work with cleveland clinic to work with research with proteins affecting different cells and drug reactions. they are already being used.

you have ioq. i think you have the government and a lot of large cop rrporati willing to dedicate 5% to r&d into that space. you get that growth there. i think this is a 2024 to 2030 story. i think it is the expansion of a.i. if a.i. was the hot term of last year, this is quantum and super computing. >> interesting, sylvia. thank you. >> thank you. have a great day. coming up, an interest rates drop, will homeowners tap into the home equity? diana olick has that story next when "squawk box" comes right back. >> announcer: currency check is

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as home values continue to rise, homeowners are sitting on a large pool of equity, but not tapping it due to high interest rates. is that about to change? we have diana olick with more. >> reporter: mike, whohomeowner are sitting on $6 trillion of

equity they can access. that's just 3% short of the 2022 peak. they are not tapping it with mortgage rates high. the cost of taking it out is higher. 0.41% of equity available at the beginning of qs 3 was withdrawn during the quarter according to ice mortgage technology. that is less than half the average withdrawal rate from 2010 to 2021 or the years leading up to the fed tightening cycle. what does that mean in real cash? it is equal to $54 billion in so-called missing withdrawals during that quarter that might have otherwise stimulated the broader economy. that is according to ice's andy walden. he calculated $250 billion in the last 18 months. rates are now moving lower, if they move lower, that could change. as it is, cashout refinances

make up 90% of the latest refi activity with the borrowers who do do it with the record $104,000 on average. that is on average from $65,000 just two years ago. there is a lot of opportunity there, mike. >> i guess the question, for one thing, it seems maybe homeowners have a cushion in addition to rates being high. we have the excess savings area. the actual prime rate mortgage rates are low. if you wanted, what is the best way to take cash out of the home given where rates are now? >> it depends on what your current rate is on the first mortgage. if you have an incredibly low rate, which a lot of borrowers do, in the 2% to 3% range, you don't want to cash out with the refinance because you will get up to 6% in the second loan. you could take a home equity

loan with rates higher between 8% or 10% or an wequity line of question. if you take out $100,000, but take out $10,000 to redo the bathroom, you arepaying the interest on that $10,000. you have to do your personal math as to the current rate and what you can afford for the second loan. >> diana, i know you don't do stock recommendations, but is this story here a reason to buy home depot or lowes? >> look, it could fuel them. we have not seen great numbers on the remodelling market. we have not seen the predictions in 2024 which is the remodelling market is soft. that is because home sales are slow. people remodel when they buy their home. if you talk about the equity and people take it out and do projects in the homes they own, because we are a couple of years past the boom during the first

year and second year of the pandemic, you might see that flow into home depot and ceshern williams. >> it is smart to take equity out of the home and put the money back into the home. >> or offset other costs. there are a lot of things to spend it on. >> cap ex. that is what you are saying. diana, thank you. when we p comcome back, we you ready for the kickoff of the earnings season. we look at big banks next. as we head to break, a stock for the eggheads out there. shares of cal-maine foods falling after the largest egg producer in the united states reported slumping les sain the quarter. that stock down more than 6%. "squawk box" will be right back. ♪♪

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welcome back everybody. our next guest joins us with a look at bank stocks, the sector starts reporting quarterly results next week. so here we go. get ready. joining us to talk about it is scott seavers at piper sandler. and, scott, what is your overall take for the banks? what are you thinking? there are so many moving pieces this time around. >> that's right. becky, thank you for having me. to start, we really couldn't be more thankful to close the book on 2023, but it is amazing what a sea change we have seen in the past couple of months as the rate outlook in the macro outlook changed. amazing what lower rates and soft landing or the prospect for them can do to things. it feels like a lot of those 2023 investor concerns in a lot of investors' minds have vanished or reversed.

unquestionably we're in a better place than we were throughout much of last year. in a perfect world, we'll get this goldie locks outlook and the market has embraced and we'll somehow avoid a recession and cut rates aggressively. we're not completely out of the woods. a lot of the outlook for the group is ultimately going to hinge on whether or not we can avoid this slowdown and avoid a more visible recession. but in terms of what we'll be looking for, with earnings next week, i think we're hoping that nii and net interest margins will bottom. we're probably not going to hear anything good on loan growth. the capital markets will be primed for a turn around and i think everybody is watching expenses very closely given the still tough revenue backdrop. >> having said that, i know you got an underweight on bank of america. neutral on citigroup and wells fargo and overweight on jpmorgan. want to explain why? >> jpmorgan, you know, that remains just a best in class name. unquestionably. one of the few names to have

come out of last year's turmoil in a much stronger position. we think as we look into earnings they're very, very conservative overall revenue guidance and as time goes on, either they'll be right and the rest of the industry has been too ambitious or jpmorgan will be wrong and they'll actually have to lift their guidance. in a sense, they end up winning either way. what you have is a name that is really well positionedfor basically all kinds of outlooks and you still have a defensive play in it as well. typically, jpmorgan is the one that kind of sucks all the oxygen out of the room. when we have all these big on the first day of the season, all the eyes are on jpmorgan. feels like based on the investor feedback i'm getting these days, citi is the one everyone has their eyes on. i think what has happened is everybody feels a lot better about the group than they did even call it just two or three months ago. but they're having trouble identifying individual names around which to rally. so they're look for names with specific catalysts and i think a lot of investors' minds citi

fits that bill. they got a big management realignment going on that should help them to, as they say, sort of bend the curb on costs as we get into the end part of this year which would allow them to have down expenses, which is sort of a real differentiator. now, the story is really going to have to execute at this point. but i think that's what a lot of investors rallied around. >> quickly, why underweight on bank of america? >> bank of america is a great company, unquestionably. as i think we talked about in the past, we had, you know, a lot of unrealized losses in their mortgage-backed security. the losses themselves are just not a real investor concern at this point. but they do tie up capital and liquidity, which means in our view, the company has an incremental headwind on nii progression that others lack. a little bit more of a company specific obstacle than others. unquestionably a great company over time. >> you got a particular reason for liking key bank. it has only to do with the bank

itself. >> yeah. >> why is that a play here? >> yeah, thanks, steve. a few different reasons. i think they have got a lot of company specific opportunities. they have gotten sideways with their interest rate risk management over the past couple of years when rates were at zero. and a lot of those headwinds that were very company specific are rolling off now. they had a lot of swaps and low yields that they bought. those are rolling off. they'll have a $1 billion revenue benefit that should come by the early part of 2025. that's an enormous company specific factor. they got a good cost outlook that puts them in position to generate positive operating leverage, which most other banks will not this year. and we like the valuation. we think that's a particularly interesting one as we look into this year and next. >> scott, we got to go, but i got to ask you one question, overreserved, underreserved or neutral on the amount they put

aside for potential dlen delinquencies in the credit portfolio? >> i the >> i think they're fine as far as what we can see. >> scott, thank you. >> thank you, everyone. coming up, walgreens set to report. we'll bring you the numbers and the reaction on wall street straight ahead. "squawk box" coming right back. ameritrade is now part of schwab. bringing you an elevated experience, tailor-made for trader minds. go deeper with thinkorswim: our award-wining trading platforms. unlock support from the schwab trade desk, our team of passionate traders who live and breathe trading. and sharpen your skills with an immersive online education crafted just for traders. all so you can trade brilliantly.

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good morning, everybody. dow component walgreens set to report results. we'll get the numbers and the market reaction. another day, another downgrade for apple. this time piper sandler going from overweight to neutral. can the tech giant hold on to its status as the most valuable stock? and tension in the red sea boiling over to the oil markets in yesterday's trading session. we'll break down the move with energy and commodity follower jeff curry as the second hour of "squawk box" begins right now. 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 steve liesman. here are the equity futures. they're firming up a little bit after about three days of selling. first two days down. s&p now just below the fralat line. no major moves here. the context is up nine weeks in a row coming into this week, up 16% in the s&p, we backed off less than 2% from the high in late december. take a look at treasuries, yields there also kind of just drifting in the same range we traded in yesterday, the ten-year did touch 4% briefly yesterday. we got fed minutes that came out 2:00 yesterday afternoon. no real adverse hawkish surprises, not a lot on either side of it, but the ten-year now at 3.96 and change. >> narrow, isn't it, mike? we were trading like in this 4.75 to 5.5%.

it never really got there. but now it is like 3.90. >> briefly got below 3.80. that's the low. and 4 has been the bound for a while now. >> walgreens out with quarterly results. bertha coombs joins us now with the numbers. miss coombs. >> hey, steve. walgreens first quarter results better than expected with adjusted earnings of 66 cents a share, five cents above consensus on $36.71 billion in revenues. that's about 5% above estimates. the company also announcing an almost 50% cut to its dividend. in terms of the quarter, u.s. retail pharmacy sales of nearly $29 billion, that topped expectations despite the fact they had lower vaccine volumes. higher drug brand prices, offsetting weakness in the same store sales down about 5%. international sales of more than

$5.8 billion also beat on strength at boots uk. the u.s. healthcare unit revenues, which includes village md came up light at $1.9 billion. as for that dividend cut, walgreens ceo in the release, he started back on october 23rd, he hasn't really been there a full quarter, he says that shareholders want them to be really very robust when it comes to their capital outlays and the company right now is really focusing on trying to get growth, but also really be very judicious about cash. they ended the year with a 7% yield, making them the highest yielding stock in the dow. now it will be closer to about 4%, which is still in the top 20% of the dow and, mike, you know, they have not cut their dividend in over 45 years. back to you.

>> remarkable. 7.5% indicated dividend yield at yesterday's close, which is in a way the market's way of expressing doubt that the dividend is going to be maintained when you see the yields. >> the only reason you probably see the stock up on -- cutting the dividend. >> beating lower expectations. >> this wasn't unexpected. >> and cvs for comparison sake has a sub 3% yield. thanks so much. our next guest is described as one of -- he expects the s&p 500 to end the year at a level of 5200. that's more than 10% rise from yesterday's close. and he's among a handful of wall street veterans that also believes the s&p will surge to new highs this year. that would by definition, we're a couple percent away. here with us now is john stoltzfus at oppenheimer. good to see you. it is interesting, on one level you think we can have a pretty good year. on the other hand, when the biggest bull on wall street says we got 10% upside, it suggests

overall sentiment may be is somewhat subdued. how did we come into the year in terms of maybe everybody expecting a soft landing and which direction are the surprises going to come from? >> i think in december whether we put the target in, it indicated 13% upside. but that would still be about half of what the market did last year. we can't help but think a good idea to be conservative in here, moving into this year, in the sense that we do expect things are getting better, we're moving towards a normalization, stabilization in interest rates, and with that, the thought is still we got plenty of volatility out there in terms of uncertainty in geopolitical risks that could actually affect food and energy supply chains in a part of the world that is important. so a lot of thought there. >> you know, we want -- we know that a slowdown should happen of some character. we had a 5% gdp quarter, third quarter. it is a question of how much, right? so yesterday we get the job

openings. and quick rate data, a little bit soft. see labor markets slackening a little bit. manufacturing still not really bouncing back. and i guess the question is, are we going to be able to stay on that path of slower but not stalling? >> we can't help but think that slower but not stalling, we think the fed has been amazingly sensitive to the effects of practicing the mandate on the economy. it is part of the -- what we call the ben bernanke legacy and we think powell is practicing that when you consider what is it, something like 11 hikes and four pauses or something like that in so far and no recession. the resilience that is seen in business and the consumer as well as in labor. all of this looks remarkably good and we think the fed is, you know, we have said for over a year, we might actually skirt a recession and now we're beginning to think perhaps we do get a soft landing. which would be remarkable.

>> john, most reports i see believe earnings have to come down, estimates have to come down. how do we get 10% higher? is it through higher valuations, higher pe multiples or contrarian when it comes to the direction of earnings? >> i think it is a combination of both, steve. and i think if we just look at third quarter earnings, just think of third quarter that we just got through, when you look at earnings there, originally it was expected consensus was looking at for 3% decline going into earnings season, then it kept cutting it maybe .7% decline. and actually recall about a 4% day in earnings. you had only two sectors negative, double digit earnings negativity. energy and materials. you had i think five sectors had double digit earnings growth including consumer discretionary, technology, and a number of others. >> do you think the street is

too bearish on earnings in general? and what is your forecast, how would you manage the overall thesis, we're just about on the cusp of earnings season what is your expectation? >> i think we're looking -- i know what we're looking for is we're expecting some positive surprises as we saw last year in both second quarter and third quarter earnings. we think analysts have been remarkably conservative in anticipating how companies are going to perform and companies have used technology to weather and navigate what would normally be a pretty tough environment with the fed funds rate hike cycle. >> 21.7 times multiple on this year's earnings, why do you think the market should be able to sustain that and i guess what are going to be the components of it? because you can slice the market up and say parts of it are expensive, parts are cheap. >> i think when we look at this, we have to say that, you know,

you look at the generations, leon cooperman's generation, stocks are cheap at 12. boomers think it is between 14 and 16 cheap. x generation, a little bit higher. and when it comes to the millennials and forward, you know, 18, 19, 20 times multiple looks pretty good. i think what is happening, the news items that say 58% of households now have equities. some exposure to equities. we think that really shows people are looking, not just fear and greed, but need in terms of planning, whether for a kid's education, retirement, when social security may not be able to deliver what it once delivered in terms of one's retirement, and where are you going to go? it is fixed income, fairly limited, even at 5%, versus inflation and after tax results. but you look at equities, owning a good business, historically, past performance, no guarantee of future results, is usually a

pretty good idea and equities offers that, with prudent diversification. >> i have to say, there is a lot of s&p 500 stocks trading at ten times earnings no matter what people's long-term retirement neat kneads are. i wonder if it is about huge businesses, winner take most, that got most of the attention last year, that have 30 times multiples like microsoft and other ones like that where it is leading other stuff out there a at different valuation rate. >> yesterday, and the day before, we saw a lot of what used to be -- it used to be called garbage to gold. you saw a lot of jumping of things that had underperformed. but within the other sectors, value, growth year value, there is good opportunity. we feel many companies invest in technology to maintain a good premise for investors to invest

in value companies by virtue of being able to maintain good cash flow and profitability and revenue growth. >> do you think there is going to be some kind of a reckoning? we were talking earlier about what is implied in fed expectations, and i guess you have to ask, is that plausible, that rates get cut a significant amount by the end of the year, and do stocks need that to happen to perform? >> we think the first few days, the first two days there was a thought of, well, maybe that was wrong, looking for four to six cuts. we haven't been part of that camp anyway. we think the fed is likely to maintain the regime that it currently has, probably just pausing for longer with probably fourth quarter of this year seeing a cut one or two cuts and then not for emergency purposes, but rather just realizing there are a heck of a lot closer to 2% target. >> john, good to see you. >> great seeing you, thanks. when we come back, the deadline to fund the government now just a little over two weeks

away. so can congress get a deal done before the first deadline? we'll talk about that next. and then oil jumping in yesterday's session on middle east supply worries. we will hear from energy watcher and chair of the university of chicago's energy policy institute, jeffrey criure. "squawk box" will be right back.

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welcome back to "squawk box." we're just over two weeks away from the first funding deadline on capitol hill as congress pushes to keep the government open or maybe some push to keep it closed. let's look at what's at stake. kevin brady serves as chair of the house ways and means committee and congresswoman gwen moore. i want to talk about issues. i would like to get the math right on this and the implications of it because the republican majority in the house is going down to 219. that makes it slimmer, but doesn't that potentially increase the power of the minority group in the republican party that has been the one that has kind of lived through some of the issues out there in terms of shutting down the government? >> short answer is yes. having a dwindling majority always changes those dynamics. and sometime in january that

number will amount to effectively you can't lose more than two votes on the bill. that will be temporary. but the bottom line to your point is it makes that already slim majority the slimmest in american history. but the bottom line is the house already passed seven republicans passed seven spending bills. the senate has effectively passed three. they got enough work i think done to be able to meet this spending deadline in january. but it is still going to be very difficult. >> congresswoman moore what is your expectation here? do you think we can get to a place where we keep -- i want to get to the issues, but i think in the markets here, people just kind of want the government to not close down. so what -- start from that standpoint there, congresswoman. do you think you'll be able to get the consensus to keep the government open? >> well, from your lips to god's ears, happy new year, good to

see you, mr. brady. >> good to see you, gwenn. >> i agree with mr. brady. this empowers, you know, one person in the majority party. and that, of course, as we have seen has been very disabling for the body. i think it is really time for us to act as an institution. i think -- i hope that the new speaker won't be punished for working with hakeem jeffries, working across the aisle because that's what it will take in order to get -- in order to meet these deadlines. even though we have -- we have done spending bills in the house, mr. brady, i think you would agree that they don't really meet the mark in terms of really taking us on a sustainable path toward being able to have a functioning government.

and so, the work that has been done behind the scenes, while we have been on break, and i'm curious to see how that needle has been thread between chuck schumer and the speaker of the house. i do feel concern, for example, that, you know, you know, we have spending bills that are tied to immigration bills, funding bills for israel, and for ukraine. and that seems to me to be problematic. the politics getting in. >> let's leave it there and give former representative kevin brady a chance to respond to that. i guess the issue is all the ties and the links that makes it unpalatable to the democrats, can you respond to that? >> yeah, so there is really the dynamics heading into this january 19th deadline. it is really an agency shutdown moving to nonessential workers there.

it was crafted to avoid a total government shutdown. and the dynamics are that the cuts in the debt ceiling bill, that president biden and house republicans negotiate, are real. and in his first year, they start to really take out the spending from the covid era pandemic that no longer needs to be in the budget. these are significant, i think, reductions in spending. and so house republicans and senate republicans want to be at or below the caps that were agreed upon, democrats i think want to avoid some $73 billion in overall spending reductions in the nondefense area of that. i think that's what made it difficult for both parties it reach an agreement on the top line numbers. you need those -- what are the overall numbers that appropriators can work to and craft a bill. the clock is ticking. as you know, can they reach agreement on those top line numbers, can you craft a bill that both senate and the house

can agree to? clock is moving pretty quickly, it won't be easy. >> congresswoman moore, we get beyond the immediate issue of january 19th, $33 trillion of debt, the amount of interest we pay becoming one of the largest if not the largest component of total government spending. do you not find this unsustainable? do you not think the democrats need to do more in order to rein in spending and the amount that the american public is paying for interest on the debt? >> of course debt is a concern. and republicans only seem to be concerned about it when, you know, when they're in power. when they are in power, we had the tax cutting jobs act. i know kevin is fond of that piece of legislation. but it added a tremendous amount of debt. we had, you know, the bush tax cuts while we were at war.

and, you know, i know that i don't have enough time to go through the whole history of it, but google it. and you will see that the closest that we have come to ever having a balanced budget is when democrats are in charge. republicans -- >> i get that, but the issue is that -- >> you think these cuts are unsustainable. you know, it is not just that it will be difficult, it will be unsustainable in terms of standing up, you know, the world's power on the planet. and, you know, you got people like kate granger, god bless her, she's retiring, she's the lead appropriator, i think she's leaving because, you know, the next congress, if these cuts go through, we won't be able to stand up -- >> i understand what you're saying. my point would be that you're in power in the presidency. you're in charge of the senate.

whatever the politics are, the politics such as they are, and the spending level ought to meet or somehow be in concert with the revenue levels and congressman brady, i'll give you the last word on this. >> yeah. >> i hope he doesn't get the last word on revenue. >> you guys have shut the door on the revenue side. but most economists i speak with say the only way to solve this, to get off of this runaway train we're on is through the spending and the revenue side. >> yes, so, look, we are at record revenue levels. we have since the tax reform got it was established, created huge economic growth, record levels of revenue. look, we really do not have a revenue problem in washington. it is on the spending side, especially the $6 trillion we

added as a nation over the last three years. and let's fact check a little. my first four years in congress, republicans led congress, balanced the budget four times and the tax reform bill generated major revenues for us. but i think here's the key, at the end of the day, we need a bipartisan framework, longer term for spending, to equalize as you said our economic growth and the size of government, house budget committee proposed bipartisan fiscal commission that would really require both leaders from both parties to -- >> tax cuts added a tremendous amount of debt. >> let the record show that congresswoman moore was shake her head the entire time congressman brady was talking. we should have these two guys back. they can make a deal. >> yeah. >> you can make a deal. thanks so much. >> we would do our best. >> thank you for coming. >> thank you. coming up, a look at

premarket movers. plus, jeff currie and why he's bullish on oil, copper and gold in 2024. and we go to break, check out shares of mobileye plunging. they expect first quarter revenue to drop 50% over the prior year. they see first quarter adjusted operating income in a range down $65 million to down $80 million and the street was looking for around $140 million. "squawk box" will be right back. >> announcer: time now for today's aflac trivia question. which 2023 ncaa bowl game now holds the record for the lowest scoring game in the playoff era? the answer when "squawk box" tus.rern coach saban, this goat done took over our office. and he's using it to send out medical bills. good hands! hospital bill for prime?! gaaaaap! did you just say gap?! he's talking about expenses health insurance doesn't cover. good thing coach prime knows about...say it one time! aflac! because aflac gets you money to help close that gap! now how do we get this goat outta here? (whistles)

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weight in the s&p and nasdaq is lower by three quarters of 1%. today the iphonemaker is getting another downgrade, this time by piper sandler, which cut it to neutral from overweight and cut the target price to $205 from $220. citing weakness in the first half of the year coupled with valuation concerns, this follows the downgrade by barclays earlier this week. apple shares down. on the food and beverage front, shares of pizza hut, yum brands and papa john's, getting some attention after analysts at stifel downgrade both. for yum brands it is a lack of potential catalyst in the coming year with an expectation of moderating u.s. sales growth at existing store locations. for papa john's, it is concerns include some that -- the same expectation of moderating sales growth at u.s. restaurant locations along with headwinds to international expansion.

and we'll check on american express, thinly traded so far, but still showing signs, up one third of 1%. the diversified financial services company is getting upgraded to overweight from neutral at jpmorgan. the target price up to $205, it was $167. they think that american express is more affluent customer base could act as a potential buffer against what they see as deteriorating household balance sheets for lower to middle income consumers. those amex shares up one third of 1%, couple of dow components in the news. back over to you. >> i think that's the big question, right? this idea of whether consumer balance sheets are going to deteriorate or not this year. >> and whether or not the inflation story really starts to change in a way where consumers can actually see some of the benefits to moderating inflation. all of those will be focal points for the fed. the interest rates discussion and everything else. amex right now seeing some of those kinds of perhaps signs of life because of that higher end tilt. we'll see if that comes to

fruition. >> dom, thanks. we'll see you later. when we come back, we will talk commodities and where oil could be headed in 2024. and as dom mentioned, apple getting another downgrade this morning. we'll talk -- will the tech giant lose its status as the most valuable stock? jon fortt will be here to weigh in for the first installment of the year of on the other hand. quk x"ilbeig bk."sawbo wl rhtac hi, my name is joann, and i lost 75 pounds on golo. the other times i've lost weight, i was tired, run down. with golo, you feel great as you lose weight. i have enough energy to exercise every day. (energetic music fades)

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we have some breaking news from eli lilly now. bertha coombs joins us with the details. bertha? >> eli lilly is taking a bold step to get its obesity and diabetes medications directly to consumers. the drugmaker is launching lillydirect, where patients can get the company's obesity, diabetes, migraine meds with a doctor's transcprescription dir from lilly. lilly is using online pharmacies like true pill and others for this direct to consumer push. in an exclusive interview with nbc news' maggie vespa, the ceo

says he thinks consumers are ready for this move. >> high level, it seems like something that should have happened before. we're used to buying consumer goods directly from manufacturers all the time online websites. it hasn't really been an option that has been provided before. but given how complicated healthcare is, particularly for common medications, we thought it was time to create a new way for patients to get access directly from lilly for medicines they want. >> now, through lillydirect patients can get the company's new weight loss drug zepbound which lists for $1,060 for half that price at $550 without insurance and co-pay of $25 with insurance. now, that transparent pricing is really a shot across the bow at the big three pharmacy benefit managers.

drugmakers have long complained that they have to give steep discounts but then patients still pay high out of pocket costs based on a list price and that the pdms they say pocket the difference. david ricks said he wants employers to know that they are working hard to make these weight loss drugs more affordable. by doing this, he's setting a precedent saying, really, the real price of this is $550, not the list price that we have to use to negotiate with the pbms. back over to you. >> bertha, fascinating move here. i guess one of the questions is aside from the price transparency, is this in effect creating a little bit of a premium lane or fast track? are they going to prioritize supplies through the direct channel or how are we going to sort that out? >> yeah, that's one of the interesting things. we know that novo nordisk has trouble with the supply, keeping

up with demand in terms of ozempic and wegovy. however the folks at lilly say they're okay in terms of supply. especially with zepbound, this is new, so, you know, demand is just ramping, they want to put this drug on the map. but this doesn't mean they're going to get rid of their relationships with pbms altogether. one real sort of example of how these guys are frenemies is what happened yesterday. cvs is taking off abbvie's humira, a drug to treat rheumatoid arthritis, plaque psor psoriasis, taking it off their formulary in the second quarter and only going to offer the generics or the biosimilar versions of those. what abbvie is doing is it is going to work with cvs' company that is producing biologics, biosimilars, and they're going to give them a co-branded biosimilar version of that. so that they can still get that

sale. so a much more discounted price from the list price. but still want to be in there. >> bertha, this is not a coincidence that this is happening at a time where the federal government is trying to lower drug costs and is going to be directly negotiating with the drug companies for medicare. that's a big part of the reason everybody has been trying to figure out internally because the drug companies have been saying it is the pharmacy benefits manager's fault, pointing the blame elsewhere. do you think that this is something that is really going to stick? i understand why they would do it with a big popular drug that consumers want, like these weight loss drugs because that gets the attention, the idea they went to the "today" show means they're looking for the broadest possible consumer audience to get some of these things. but is this more than a marketing ploy. is this an attempt to really break the system and say, forget it, we're going to go direct and we're going to try and do that with a lot more drugs? >> you know, i'm not sure that

they really have the ability to necessarily do that altogether because, you know, it is not just, you know, one popular drug in terms of their whole list of what they have. it is kind of difficult. there is a whole infrastructure involved. but certainly it is going to be very interesting experiment, especially with a big popular drug like this. don't forget, again, novo nordisk is sort of number one. they want to make this big splash here to make sure that they are in the game and that they can gain more market share against wegovy with the diet drug, which from the studies that we have seen is very, very effective. now, we also got ushback on these diet drugs because even at $550 a month, that's a lot in terms of employers covering it, so especially if it is something that someone has to be on these drugs for a lifetime, there is still a lot of employers that

are trying to figure out how they can afford this. we have even seen a report this morning that more employers are more insurers are looking at bariatric surgery and make that more accessible because that's just a one-time, $25,000 or $30,000 expense rather than a lifetime of these drugs and these drugs that are new, so they're still on patent. >> bertha, things moving so fast, more news from lilly in this direct area, the company commenced legal action against some importers and distributorses they say fraudulently claiming to sell mo mounjaro or zepbound and in an open letter, it is saying it does not promote or encourage use of mounjaro out of the indication, going after, i guess, some providers out there that are trying to circumvent a normal channels. >> going after people who are using this for cosmetic weight

loss purposes, but the idea of going directly to the consumer with this drug would raise some brows, i would think. if you have a doctor, don't worry, we'll provide one for you. it seems like they're -- >> no, no, no, this has to be -- you still have to have a doctor's prescription and part of the reason why they're doing that is -- they want you to -- they will connect you with a doctor in your own area who can prescribe it and they are recommending that you work with a doctor because for a lot of people, you know, the initial side effects are really tough and you really need to, you know, follow with a doctor on these because at some point, maybe the dosage you have initially is too low or too high. and then you can adjust it later on. >> people trying to lose ten pounds or something, this is for somebody who has a real medical weight problem with this. the reason why there is so much interest on this, they think it is 5% of the population on this,

not 2%. >> but you also have to look at the fact that you have so many americans who are obese, 34% of americans are obese. so that is a huge addressable market if people want to go this route. again, there are other things that they can do. there is bariatric surgery, which is also, you know, really expensive. but for some people that works longer term and there are also a lot of companies that are trying to really work more on the lifestyle change to make it something not just about a pill and not just thinking about food, but changing the way you approach your approach to food. >> back to what you talk about earlier, this being a broad side against the pharmaceuticals. does this overall raise questions about the value added by the pharmacy? if i can go and get the same service or product or whatever directly from the company and that's a change for me as a --

as a consumer, what does that say about the overall utility of the whole pharmaceutical business here? >> well, you talk to the pharmacists, they will tell you often times people have questions about their medications, and you also have to consider that a lot of people are on multiple medications. so if you're taking a statin or heart medication or something else, there can be contraindications. if you're working with a pharmacist, they can keep track of that and say to you, and maybe go back to the doctor and say, hey, they're on this medication, you know, we might want to make a different choice on this. so that's one of the services that the pharmacists say they can offer. and the pharmacists -- >> a challenge limited to these drugs, you don't see it as a

broader thing where this is something, like tesla coming along and undermining the notion of the auto dealership, for example. >> you know, at the moment, i think it is difficult to do that because you have to set up a whole infrastructure. you have seen mark cuban with cost plus drugs. they have done it on a number of drugs, they can't do everything. and then at the end of the day, the plan itself, the insurer, the payer, the large employer, what they choose to have on the plan and these pharmacy benefit managers are in the middle of that, that's what determines what you pay and what you have access to. but, again, the more transparency there is on these high priced drugs, the more pressure it puts on everybody in the process and i think they're all hoping that it also takes pressure off in terms of regulatory pressure. last year we had more than two dozen bills to go after pbms and

transparency because congress didn't get anything passed. none of those made it through. but it certainly is something on the radar in washington. >> bertha, we'll have a lot more reaction to this big news. "squawk box" will be right back. thanks. do you consider climate risk? changing weather patterns are impacting the way we live and the value of businesses large and small. this can mean disruption to supply chains, changing demand for products and shifting regulation. what does this mean for your business, your clients, and your investments? ice offers data and markets that can provide critical insight. manage your climate risk with ice.

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welcome back, everybody. for a check on the energy markets, we want to bring in jeff currie, advisory board chair of the university of chicago's energy policy institute. jeff, good morning. thank you for joining us. and congratulations on the new gig. >> well, it is a board seat, i'm also on board seats and the new gig is to change in the near future, but right now it is board seats. >> let's talk about your outlook for commodities markets. you're bullish on all the commodities this year. you were bullish last year and didn't quite play out that way at least when it came to oil. what happened last year and why you to still believe in the super cycle? >> let's go and look at this quote, unquote immaculate disinflation. i want to point out a kcouple o

facts. one, it happened globally at the exact same time. it is globally synchronous disinflation. second point is commodity demand, oil demand, record level, u.s. economy booming, so what does that tell you? it has to be supply driven, not demand driven. therefore it can't be monitored, it cannot be fiscal policy. it is regulatory easing. politicians turned a blind eye on the sanctions in places like china, that led to a million barrels per day, plus, of additional oil from iran, venezuela, russia. then the secondary sanctions debottlenecked supply chains, more fertilizers, more energy, more food, and this all put downward pressure on oil and commodity prices. so, then the second point is we saw the world last year turn a

blind eye to environmental policy. they turned and did an aboutface. whether record oil consumptcons record coal consumption, deforestation, cutting down palm groves, you got more food out of it. when i think about what happened here, we overestimated the willingness of politics and politicians in the west to pursue their political goals, deglobalization, decarbonization and distribution policies. and because of that we ended up with more supply. >> jeff, let me just say on that front, though, we -- politicians did what they needed to do i think for their ultimate goal, to stay elected, get re-elected. when prices spiked and consumers said we are not paying for this, they turned a blind eye, you don't have consumers so mad that they're paying so much at the pump or the grocery store. they said, okay, whatever is

going to get more food and energy to the table or into your pump more cheaply, they're going to go ahead with. what makes you think they're going to change their minds this year? >> by the way, the view i think is as soon as you have inflation, everybody is happy again. they're going to turn green again. and then look at the implications of inflation impac everybody's happy again they're going to turn green again. and then look at implications of allowing iran to pump an extra, you know, 80,000 barrels per day? there is houthis taking shots at u.s. warships in the red sea. there's a cost to this. soon as inflation settled, more likely than not, you're probably going to see a flip once again. maybe not all the way back, but we're likely to see everybody become more green and more focused on some of these sanction issues, but right now, it bottlenecked the system, created excess upline and put

pressure on commodities. i arg grew, not pointing the finger, but that's at the core why we were so wrong. a lot more supply, political oil, you know. carbon-based commodities. got a lot more of those last year than what we thought you would get and i don't think we were aflown those assumptions over a year ago. >> sure. >> so i think the big question going forward is, okay. what is the outlook looking like going forward? three points to emphasize there. >> can i just ask, before we look for the outlook going forward, i mean, wouldn't that always be the case? that there's always going to be -- what played out last year, politicians saying, there's a limit what we can expect consumers to pay. wouldn't that always put a bit of a sealing on commodities prices? the idea of a real superspike kind of gets out of the way, because politicians everywhere are going to do everything they can to keep that from truly happening? >> let's, you know, go back to, like, '07, '08.

a super spike occurred but it didn't filter into broader inflation. what got policymakers so focused on commodities this time around is it filtered in to the broader inflation mix. >> and i think you're beating yourself up a little too much here, because if 73's bottom of the cycle that's not too bad, for being bullish on oil prices, because i remember 48 and i remember 10! i was a reporter when it was $10 a barrel. if $73 is the bottom. >> i remember zero from 2020. >> forget zero. >> remember, negative back in april of '21. >> i -- sort of on the super cycle train, but the idea that 72 being bottom is not too shabby if you're bullish this commodity? >> no. by the way, it is the most investable space out there in the economy right now. return on capital exceeds 20% in

many parts of the world. back in point if this is the low point, and we're underinvested going forward. so, you know, to answer your question. is this a common occurrence? i think the problem is like the boiling frog. it happened too quick, too fast, went up too high, hit the consumer, and the backlash from governments around the world was significant. i mean, i live here in the uk and they did an about-face on their green policy. i think we'll see the green policy resurface and become an important driver. by the way, we're tall about this in a second. green policy is full steam ahead there, but just did it a little bit at the margin. it wasn't substantial, but it did take some of the sting out of the markets. steve points out. 73 is not a bad price. >> i wonder if the biden administration and other -- i don't know what to call the united states -- essentially user, commodity users, learned a

lesson with use of the spr this time around to actually use it to moderate price changing? and i'm not sure it's the worst thing in the world. i know people are all into free markets, but if one side controlling supply, why wouldn't demand side also use a weapon, if they have it? >> yeah. and i think, you know, if you could say during 2022, the west was the first one to use oil as a weapon for precisely that point. on both sides. but, you know, i think at this point right now, what you really have is many of these countries, whether the ones in the middle east, you know, pursuing their own domestic interests in terms of what prices most feasible for their economies, but i don't think it's a weapon or anything. i do think the reaction of the western economies to the inflation was, they pulled every lever they could possibly hit. here's an important point here. it's, we know has to be a supply-side event that created

that global sink kraness inflation. it wasn't monetary policy or physical policy. fiscal policy. it was that regulatory easing that occurred, which means it's temporary. >> yep. >> so that eventually either demand -- it wasn't created by investment or a slowdown in demand. it's created by a one-off increase in supply that the system could either absorb or that one-off increase of supply goes away. >> jeff, really sorry. talked so long. only about 30 seconds. give your best guess what happens in 204? >> start with china. why do they have to stimulate? you cannot deleverage and deflate at the same time. it'sen con grugous. they have to stimulate if they want to be leveraged. point one. last point i want to leave you with -- lower inflation, the fed cuts. look at commodities every time the fed cuts in late cycle, go back september '07. they cut, oil went straight up.

$10 a barrel. i don't care hour bearish you get on fundamentals this year. if you see the fed cut, you don't want to be short commodities. leave it at that. >> all right. jeff, thank you. it's great to see you, and we will talk again soon. >> great. thanks! >> thanks. when we come back we're getting reaction to this morning's big breaking news. eli lilly launching lily direct, where patients can get the company's obesity, diabetes and mike migraine medication. "squawk box" will be right back.

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home of the xfinity 10g network. new this hour, eli lilly launching lilly direct, patients get company's obesity, diabetes and migraine medicine sent to their home with a doctor's prescription including the new weight-loss dross zepbound lists more than $1,000, half price with $550 without insurance, and a co-pay of $25 with insurance. to join us, michael ye, senior biochemist at lilly. based on fundamentals and efforts in obesity what do you think of today's news as a way of addressing the market? >> yeah. good to be here and good morning. i think on one side it's important to understand this is

the beginning and early cycle for lilly and others to continue to grow the obesity market, and importantly, getting access to the drugs is critical. certainly i know lilly is putting a huge emphasis on this program, of course, it's interesting. i wouldn't say game-changing but inchmental in getting access to people online, if you read details, without necessarily going to specifically see a doctor in the office. >> does it also reflect the fact that insurance companies are slow to adopt these things and approve them? and in as broad a way lilly would like? >> i think it's a process to be clear it doesn't happen overnight. i think today's program and others that are going to follow are related to getting access, getting awareness and getting access to doctors. just to be clear, payer access is opening up, slowly and surely this year. remember, lilly's drug zepbound

just got approved recently. so that is going to open up and it's going to take taime. pointing out to viewers. may not know this. supply is opening up. a critical part that also is in store. >> issue for sure. also we mentioned lilly on a separate front, is going after the cosmetic user, off-label users in their mind fraudulent use through some providers of these medications, just for cosmetic purposes. does that do anything in terms of your estimate of how large this market can get? if it truly just goes to those that have critical health problems related to obesity? >> to be clear, the vast majority of the usage, certainly if you looked at the prescriptional use through a doctor, has to meet certain criterias, with weight, bmi and other criteria. obviously, out of pocket pay, through a physician if it was

administered for, shall we say, cosmetic use or not necessarily meaning a specific high bmi weight, it's a proportion of that as well. long term, again, i think the obesity market is so big. just the penetration of the critically oh beegs population is also very important for it. pricing as women. i thi as well. all of that plays into this. for investors still a relative early cycle. the drug just going approved. great not just nor lilly. emj is also coming around the corner, getting to that. last year the market treated lilly and novo basically the only two names you wanted to have ownership because, because they were playing this strong theme. you think it's going to splinter out from there? move the needle on amgen already? >> yeah. look, i think there's two things. one, play the leaders. play the folks who are obviously growing. lilly being the dominant player.

great stock. at jefferies still recommending that stock. we believe upside. emj, monthly possibly quarterly and big data from amgen later in 2024. super bullish on that. certainly that can move, because there's not much in the consensus numbers. obviously for lilly, huge numbers out there for amgen, not a lot, still see more data. investors need the data, of course, riskier, but huge upside there. >> michael, so many interesting aspects here, and i know that the pharmacy benefit managers aren't your wheelhouse, but if this is really lilly kind of declaring war on the pharmacy benefit managers is that something that goes well for the pharmaceutical companies? is it snaomething that backfire? how do you play it out? this is really a shot across the

bow. >> depends how you look at it. the key, lilly trying to get access. i agree the payer plans are slow to get going. you can imagine, of course, becky that's not going to get turned on overnight. a huge cost to that. and some of these big markets that opened up very quickly, a lot of budget con straights and planning for pbms is out of whack. a plob for earnings. they want to manage that. lilly wants access through out of pocket, or these people who also want to pay out of pocket and it's important, a difference here, and i wouldn't say it's a shot across the bow. i think it's a long-term market and that's why pbms are there. >> great to get your thoughts, michael. thanks. >> thank you, guys. all right. our next guest says the risk/reward in equities isn't as good as year ago. investors expect lower returns and high e volatility. goody! here we go with the new year. bring in burns mckinney.

talk about this. why do you think that this is a riskier year? >> well, basically, one way we're looking at it is the investors had a great 2024 during the fourth quarter of 2023, and you know, really the one primary mover of markets for the last year has been interest rates. so when the fed pivoted, you know, jay powell and company said, maybe might cut rates three times next year. what did the market hear? the market heard six times. analogy i picture, ever seen someone walking their dog? a big dog, pulled along on the leash? well, that big dog is investor expectations. the fellow end of the leash is jay powell getting yanked along by animal spirits. as a result of that big rally, you know, you're looking at u.s. equities trading at about 21, 22 times earnings. more expensive than they've been about 75% of the time. so overall, i think the

risk/reward isn't as good. that said, breadth expanding. stock pickers and those selected, there are definitely opportunities this year. >> stick with that analogy. how does the walk end, most of the time see it happening on the street, owner eventually gets control and maybe gets a choke collar. sometimes pulled over. what happened? >> dog gets run over. >> one of the things to consider is that not so much what are interest rates and what is the f going to do this year how you might want to get it wrong. the fed. one error one expects builds a portfolio expecting six cuts. perhaps you only get three. flip side. maybe expect three and you end up with six. the latter type of error is probably the better error that you want to make for your portfolios whereby we're suggesting clients maybe invest a little bit more conservatively, and build a portfolio of names that have visible earnings and this is a great type of environment to buy

companies that are returning capital to shareholders. via share repurchases. especially in dividend raises. >> you do think, though, that inflation is falling more quickly than data suggests now? wouldn't that lead you to think more cuts are coming more quickly? >> inflation definitely is coming down more rapidly. i think even the market has priced in. we consider that the last three months, core inflation isaround 2.4% and, really, the biggest driver has been shelter costs. that's stale data. look at realtime shelter data and plug that in, inflation may already be at the fed's target. so that said, the fed does have the ability to reduce rates, but there's two reasons the fed would reduce rates. one of which is on economic weakness. the other simply is inflation is coming down. i think, really, the inflation coming down is, you know, probably the good reason. whereas, you know, the economy is showing signs of maybe softening from 2023's growth,

but you don't necessarily, not necessarily seeing signs of recession yet that might necessitate cutting more times. >> you like industrials and health care. why? >> you know, in the case of industrials, it's a sector that really has almost twin secular trend engines. one of which is, you know, the infrastructure spending bills that were passed acouple years ago. that may seem like yesterday's news, but a lot of that money is just going out the door. that infrastructure spending is expected to double even over the next couple of years. not peaking until 2026. you have that. and then in a world of geopolitical uncertainty a lot of industrial names reside in the defense space. so i think that spending is continuing to drive it, and just we're seeing a gradual rebuilding of u.s. manufacturing capacity. all of which said, more important than anything, industrials don't have demanding valuations.

wh whereas in the case of health care, the one sector in which, if you have an uncertainly world, which seems like we do today, thedles best's both worl. great demographics. you do have many of the names in health care provide things that are non-discretionary. that allows investors to be defensive, if we have an economic slowdown. same time, it's the one sector that's actually generated the best earnings growth of any sector eastern including technology over the last 40 or so years. you get compounding effect of that growth. something to also grab. >> burns, thanks a lot. coming up, private payroll da ftarom adp futures up 77. higher numbers of the morning. s&p up just under a point and nasdaq down 30 points. "squawk box" is coming right back.

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coming up december adp employment. "squawk box"'s coming right back.

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it is time now for december's adp payroll report coming in at 164,000. which i believe is a beat on the upside with street looking for 130,000. they revised up the last month, or just a little bit. maybe it was revised down? go up a little bit? want to get to bottom there.

forgot what it was. okay. so 130,000 was the estimate. good sector, up 9,000. service sector up a strong 155,000. payroll estimate for friday for the government report. 170,000. so this would be in line with that. they did revise, sorry, down november number to 101,000 from 103,000. looking at it by business size, good across the board. 74, 53. and 40,000 across the board, small medium large and then pretty good job growth by sector as well. leisure hospitality any strong again. education health services, those are the two sectors really leading with finance activities also doing well. manufacturing down 13,000. a few sector down, and down big. this is, i think, the more important data. that adp provides, a wage data with jobs down 5.3, to 5.4%. two dicks down from november and continuing to slide we saw

beginning in september 2022. job changers up 8% year over year. that's a stronger number obviously but down from what it's been. becky? >> i just realized the weakness with the adp number in terms trying to figure out the most important number from friday. i think friday the number we're going to follow most closely will be average hourly wage increases. because inflation picture at this point. adp has that information but don't put it out. >> i emphasize every month its importance, because they're data set is so much larger and complete than the government's data set. in fact, for more on the numbers and just as fact here, let's bring in chief economist at adp, and i don't want to denigrate the other numbers by praising the wage numbers, but tell us how big the data set is for the wage numbers versus what the government is providing us with? >> well, first of all, happy new year. then happy to do that, because

we're looking at 10 million individual wage earners to calculate our pay insights number from a sample 20 million we star from. why 10 million? we're able to match each individual over time. not talking about cohort effects the fact one sector was stronger one month than the other or a lot of part-time jobs in the second half of the year compared to the first. we're talking about the same individual matched every single month for over a year. that gives us a really robust rating measure of wage growth. what i tell you steve and you already know is that pay deceleration is the story of 2023. after moving sideways in terms of growth for the better part of 2022, we actually did see that deceleration through 2023, and that means any specter of a wage price that pushes up inflation has all but disappeared.

>> yeah. becky, promise you, come back and do another segment on wage data from adp. >> yeah. i think that number's better. >> really important. show what you that does versus the government data. let me use the time i have to talk about the job market. you didn't decelerate as much as some had thought. how do you overall characterize what's happening in the job market? 164,000 still a little bit above trend, but not as much as its been. >> you know what? i was actually a little surprised. we have been seeing about 100,000 job the past two moss and really driven by the slowdown in leisure and hospitality. what we saw in december was consistent with a very strong holiday travel season. a very strong holiday retail season, which people were moving around. they were buying things. they were going places. we saw a return to leisure and hospitality. that fueled that industry, it also fueled small firms, which

are over index in that sector. so if this keeps going, if we're seeing above trend growth into 2024, that's a good sign for the labor market. one note of caution. manufacturing, second note of caution, still didn't see retail hiring as strong as it was before the pandemic. we're still low compared to 2019. >> unfortunately we have to leave it there. pressed for time this morning. thanks for joining us and giving us insight into both the pay and the job growth that's going on in country. thanks. >> thank you. take care. all right. when we come back this morning we do have more on the news that eli lilly will make a breakthrough weight-loss drug available directly to consumers. "squawk box" will be right back. and irregular heartbeat could mean something more serious, called attr-cm

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it's been a rough start to the year for apple. another analyst downgrade this morning on slower iphone sales and cloud growth prospects. will apple lose its status as the most valuable stock? jon fortt is here to weigh in. >> all got jackets on this morning. >> i didn't realize that until you sat down. >> yeah. so i put it out there. apple won't lose the top spot, mike, no. i'm not saying keep the $2.9 trillion market cap. saying not the worst on the tech

block. if apple's value slips the others will too. piper and barclays downgrades make reasonable points. iphone until growing and china and not strong with consumer credit stretch. the downgrade missed apple has strength. vertically integrated products and loyal customers shifts the economy. because apple controls so much of its manufacturing supply change can quickly balance demand when it shifts and stores, nurtures direct relationship with customer, they have affordable link and apple's mac lineup runs on its own chips giving its machines better performance at higher margins than rivals. and they didn't update the ipad, pent-up demand for a 2024 refresh there. biggest threat to apple stock is valuation reset. that will hit a.i.-fueled microsoft just as hard if it comes. might be temporary market fluctuations but apple stays number one.

>> all right. only about $100 billion gap now. >> yep. >> my market nerdry, in the s&p 500 index microsoft is actually the higher weighting by a slight hair, because it takes the free flow of berkshire hathaway shares removed sort of from the market. however -- >> you say here's my market nerdry, leading with that already. >> redundant. you're correct. the other hand, you've laid out -- >> that's my line. why -- >> why -- apple has this valuation in the sense predictability, financial strength, massive install base and customer relationships. what about the innovation piece? did they lose a generation of new product introduction and get left behind? >> well, mike, on the other hand -- apple stock is sure to lose ground to rivals ss in 202. iphone revenues stagnant even as shares stayed strong. apple had a good 2023 even though artificial intelligence story is fuzziest of all mega caps saying if there's a

valuation reset in the market apple will be hit harder because unlike microsoft alphabet and amazon apple doesn't have an a.i. narrative to fall back on. in 2024 moving into a moment in technology cycle that doesn't play to apple's strengths. happens every ten years. early 2000s investors didn't believe in consumer hardware and abandoned apple. early 2010s after the financial crisis investors thought samsung would commoditize smartphones and abandon apple. this time probably abandon apple because the ipod laid ground for suction. tennaysayers wrong. s s $3,500, no. >> what if this becomes the

conduit for the a.i. and what we need it bigger, faster, stronger, hardware, because the software caught up with it. that would really rejuvenate a round of replacement and recycling 69 phone. >> especially apple making its own cpu and a very good point. >> the thing if a.i. goes to the phone rather than the desktop. >> it will. moving to the edge. everybody's talking about, intel talks about that. nvidia already -- >> software for years. maybe i do soon. >> cnbc.com otoh to get the -- >> right. don't have a qr code yet, i don't know. >> get data. >> all right. >> thank you. coming up, more breaking economic data. jobless claims out after the break. "squawk box" will be right back. at morgan stanley,

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welcome back to "squawk box." rick santelli here live in cmehq with breaking news of the morning. initial continuing claims. initial claims expected to be 215 to 217,000. well, they come in light. 202,000, 202,000. this is the lightest level going all the way back to the second week in october. and on continuing claims, call it number five. the fifth consecutive week under 1.9 million.

yes. we have 1.9 million. the third week in november. that was highest level since nov of '21. this is 855,000 definite loin the light side, definitely below last look, 1 million 175,000 and 1 million 855,000 is the lightest level going back to -- the second week in november of last year. not that far ago, but as i said, fifth week under 1.9 is significant. there are revisions coming in. not big ones. subtle revisions to the upside. interest rates moving up on that and adp, highest since august. and maybe even more important across the pond, if you look at inflation in europe, boy. germany's specific inflation which came out at 8:00 eastern, warmer than expected. prior to that all regional areas in germany's inflation numbers came out hotter than expected.

boom yields hovering at 210. should she close there a three-week high-yield close. still more data to come, but the significant aspect of this short year thus far has been interest rates moving higher, and yield curve vibrations that seem to be de -- inverting more on the steepening side. mike, back to you. >> for sure, rick. absolutely. stay with us. steve, a quick note on this? >> just everybody needs to be careful with numbers around this time of year. right? already starting to fire people from christmas. even starts actually week of christmas, right? people get laid off for the -- so -- data's going to be noisy. it's good that it's been down. if it was high i would have said be careful. low, said, i'm saying, be keefe. >> careful. >> opening up the discussion, employee america executive director and economist at the heritage foundation. so gentlemen, these are firm numbers. we can run through the filter of what seasonality means or not,

but you had a setup where we've had labor market resilience. the economy continuing to hang in there, as employments come down faster than the fed thought. the big debate now, what's the correct interest rate structure if we continue on this path? what's your answer there? >> so the reason -- thanks for having me on, by the way -- so the reason we have interest rates, fed funds rates specifically at 5.3% is because inflation seriously played up for multiple years and the fed was trying to play catch-up to where inflation was, but some understanding that we know it's probably not going to stick at the peak but don't know how far it will fall. take it forward now, seeing inflation is falling faster than fed's projecting. at least in 2023. see how much more progress we get from there, but if we see a labor market that looks increasingly normal, especially measures of wage growth and same time signs inflation is

returning to something like normal, then the path to interest rate normalization actually becomes more compelling. fed has time to evaluate this. not as if the labor or financial markets show significant deterioration but we should see that if we get more confirming signs on inflation front and maybe reasons for chop, may be reasons why inflation may not come down as quickly as people anticipate, but if we get that over the next few mossnths, fed should consider interest rates cuts. sounds like they are. look at their pro jekdss a function if inflation can come down, that's an "if," but so far signs look encouraging. especially the last six to seven months. if that materializes i think the fed will entertain that. they probably should entertain something looking closes to neutral. labor side, resilience on job growth cooled pressure of wage

pressures and market turnover. >> neutral by the fed's estimation is significantly lower than where rates are right now, of course. one way of, i guess, explaining how markets have been strong in the latter part of 2023 was that the conclusion was the fed was not going to have to run this economy way below potential or be very restrictive in order to do the job. anything in data today or recently that changes that view? >> no. i don't think so, but also not entirely sure how data-dependent this fed actually is, because we have seen numerous times, for example, when they talk up how inflation expectations are and then as they move one way or another, the fed seemingly does the opposite of what they should do. so i think we still need to be concerned that we have over 700 billion dollars in reverse repos for example. so the fed is still sucking incredible amounts of liquidity out of the market on a daily

basis, in order to keep rates where they are. as that money does leave repos it will work its way into the banking system and multiply and that's going to help fuel inflation going forward. i think we risk repeating the mistakes of the 1970s if we call victory on this too soon. >> i mean, i'm not sure the reverse repo facility and assets there had been really a great guide to exactly where rates are going and what the economy's going to do. has it? >> well, it speaks -- what it does, speaks to just ow oversized the balance sheet has been. the fact that they need to work that hard in order to try to maintain an interest rate floor. >> yeah. i mean, of course, there was in the minutes yesterday, steve, illusion to thinking about slowing the pace of quantitative t tightening and runoff to the balance sheet. >> providing a framework for ending qt. by the way, did in our fed survey leading the pack, people

expect qt to end end of this year. interesting. depending upon where the fed wants to get to, with an important question what e.j. talked about. an idea that they do bring down the reverse repo facility first, and that's, by the way, when qt should start biting a little bit more. >> yeah. >> once that reverse repo facility goes, sort of the froth on the market. rick, i want to ask you about the minutes yesterday. i think people went in to it looking for a little affirmation or confirmation or support for their views of rate cuts, but didn'tget it yesterday. what was your takeaway? >> you know, my takeaway was similar to a friend of cnbc peter boockvar. a little more sanitized than the actual impression left by jay powell when he opened up the press conference. most traders i talked to think that the market's still in control. they see the pushback. they see the walk back by the

fed, but the real issue continues to be in the marketplace that all is positive feeling with regard to inflation and how many interest rate cuts we have. probably it's going to be tapered, but not necessarily because of fed speak. i think look overseas. if you use the same methodologies for example in germany and areas in europe where inflation has been anything but linear, if you annualize some of those better inflation rates as they were moving down you'd end up with the same trap we may end up in. that it is linear and there can be bumps in the road. i'm not saying inflation projections will match entirely with europe's or germany in particular, my guess, they will rhyme and there are significant issues and the other thing -- one other thing, steve. >> yeah. >> i'm glad you brought up the claims distortions. holidays always seem to put claims, push them to the low side. the other issue, we talk all about interest rates and the

fed, the fed, the fed, and they're hugely important, but i think 2024 is going to be the year of the market rate on the long maturities and i continue to say if all we do is try to talk around in circles about what the fed may or may not do in their projections in the past and give a notion we should spend less time doing that, the reality is, the market's starting to focus on other issues. maybe it's $34 trillion in debt. maybe it's servicings debt or the fact that there's been a lot of movement -- go on. >> i want to pick up on that. throw the question to skanda. we aren't yet at a point where the market can set an interest rate the way the market wants to set it kind of irrespective of the heavy hand of the fed, and i guess i say that by pointing out, the fed can stay tighter for longer, but the market may

not want to. where are we at in that process? i know the fed is coming off reducing the heavy hand but it's still pretty important in terms where rates are set. especially on the short end of the curve. >> right. so we have a very high level of fed funds rate in terms of 5.23% but look at long-term treasury yields. all anticipating some path towards cuts. some of that might imply a recessionary scenario, some benign interest rate scenario. now the proof is in terms of fed policy and how it either validates or doesn't validate market pricing. if it doesn't validate pricing in a progressive manner, say higher interest rates longer because interest rates are -- inflation rates stay high, or the fed just proves to be more hawkish, then probably that would have implications for financial conditions. the fed has the task of really, how does it hold serve here? how does it actually -- get to

its policy rates in a way that isn't too dislocating in either direction. so the burden of proof is really on the fed and fed actions over the course of 2024. markets already priced in quite a bit. >> for sure. monitoring it along the way as well. leave it there. thank you all. >> rolling his eyes, thinking of a $17 trillion balance, how can we talk about the markets? have you back to make that comment. >> thanks. coming up, former white house health policy directorr. d kavita patel joins us about a popular weight-loss drug. we're going to come right back.

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eli lilly making a move today to bring obesity and diabetes medications directly to consumers. the company launching what it's calling lillydirect, allowing people to get medications directly from the company and maybe not go through a pharmacy. benefits management plan. they do have to have a doctor's prescription. joining us right now, and the impact of more transparent pricing for these drugs is dr. kavita patel, a primary care physician, former white house health care policy director and nbc news and msnbc contributor. doctor, thank you for being here. we need guidance and advice. we've been trying to make sense of this news and figure out what it all means. a lot of different implications

i can think of. i guess first of all as a doctor, what do you think about going directly to consumers? >> becky, kind of an indication what consumers are seeking. people are tired, don't even know, most doctors don't even know about all the kind of middle men and different entities in between the pharmaceutical manufacturer and the patient actually getting their medication. this is one more sign people are seeking easier solutions. you have here lilly basically still participating with kind of the pharmacy benefit managers. they have to, to make they're their drugs get out there. it's sending a very clear signal looking for alternatives with digital, need prescriptions. none replaced without a prescription, but get people medication in their hands faster. nothing is more frustrating, becky, than a lot of my patients, every single phone call i get is, my pharmacy is out of -- fill in the blank. this is basically another mechanism to make sure that those calls don't have to happen and that people get drugs and,

of course, improves appearance and gives better returns to lilly. >> look, this is a, a shot across the bow for pharmacy benefits managers because they're offering it at half the price. because they say the pbms jack up the price and all of that money never makes its way, the cuts that they give to the pbms never make their way to the consumer. there's that smaspect of it and the aspect, okay, pharmacy says they're out. how do i get it? will there be better managers getting it sdwredirect? is it equivalent to nike doing this and still dealing with foot locker. >> right, skeptical, is it going to translate for people getting all products as sishtly as possible. i'm not a betting woman but say highly unlikely that's going to happen seamlessly as it sounds but, however, it is incredibly likely you'll have a much more

motivated line of service that is partnering with telehealth provider and deliver to the con. this you're not seeing with middle men and add to that we'll see the ftc actually taking action on these pbms. who knows what that will ultimate result in, but all of those are signals that we're sending that, hey, get into the consumer in a more responsible direct manner, it's going to be good. talking about not just a billion dollar drug potentially a trillion dollar drug like mounjaro, that found all the weight-loss category potential, everybody is motivated to get them into onsumers' hands as efficiently as possible. >> do you worry that the going direct to consumer creates this tug on the doctor we've heard about where a patient comes in to see the doctor and isn't satisfied until you write them a prescription before leaving the office? >> yes. i have to be honest.

practices for a long time, and that, we always kind of worried, when i started practice. i thought, oh, that's going to happen. they're going to leave my office and find someone that will give it to them. >> do you give them the pill? >> certainly happens. i don't want to disnewt. happens every time i say you don't need an antibiotic it's a virus or you don't need that drug, try other approaches. it happens but a smaller fraction than you think. the large majority of people they hear from a doctor you're not appropriate for this drug, then then listen. what you are hearing when lilly make as partnership with a teledoctor it's hard to get to a doctor. it's an access problem. literally millions of americans, tried to pick up a phone and get a primary care appointment even a weight-loss appointment with an obesity specialist today you can't get one. it's an access problem. that alone, puts pressure on insurers, quite frankly.

we still have incredible difficulty getting this conkovg. a lot more pressure on insurers in the end. >> i wondered that, too, dr. patel, we have not seen stocks of unh, sigma, cvs trade down today. watching closely. still look like -- cvs down by, you know pshgs 0.4%, 0.04 percent not much. others trading up. seems like a big push towards insurance companies and pharmacy benefits managers, it just seems like you can still say we're all going to be here, but, again, go back to the nike and foot locker kind of comparison with that, down the road -- may not be a big deal now. where we are now and nike and foot locker it is a big deal. >> old enough. i remember going to blockbuster to get my videos. i definitely agree. >> welcome netflix! >> and i think the more that manufacturers embrace -- tllooka

lot of regulation in health care. not everybody can sell anything to a consumer. keep in mind, this isn't easy, but every single drug company, big or small, is thinking about a digital approach. think about gene and cell therapy pip education around that makes sense to do digitally. 100% right. this news industry, be on watch. look for these partnerships to disrupt the very traditional mechanisms. that combined with the ftc, that could amount to short-term d pelthk u ry >>r.at, anyove much. have a great day. a sale online y was also the first time you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

welcome back, everybody. new retail spending data out this morning as we close the book on the holiday shopping season. courtney reagan is here. she's got a round-up of what we can expect. what are you seeing? >> we don't have full numbers, and the retailers have yet to reveal how their holiday sales turn out individually, but some data aggregators point to a relatively happy holiday season. this is according to adobe. it is slightly above its initial forecast of sales between thanksgiving and cyber monday,

much stronger than expected, up 7.8%. ultimately, that five-day stretch made up more than 17% of total online sales. adobe says five categories made up 65% of total online holiday sales. electronics, number one, then apparel, furniture, groceries and toys. adobe says the sales gain was driven by net new demand and not inflation, because it says the online retail prices it tracks are down more than 5% in december from the year prior. customer growth partners also calculates a stronger than expected holiday season with sales up 2.4% compared to its initial 2.1% growth estimate. interestingly, the research group sayssuper saturday sales hit $47 billion, beating black friday's $42.6 billion total. that's always the last saturday before christmas. now, mastercard, however, says preliminary sales between november 1st and december 24th grew 3.1%, which was short of

its 3.7% estimate. that is for both online and in-store spending, and both of those did grow individually too. restaurant spending grew neerm 8%. apparel sales increased 2.4%. mastercard's chief economist says the economic backdrop is favorable, and consumers spent "in a deliberate manner." less than forecast but still sort of more normalized, frankly, than what we had seen with these strange covid surges in different categorys. >> you answered my question when you talked about inflation. this was not just inflation. >> they're saying net new demand. >> goods inflation has been deflation in goods prices. >> it has, particularly these 18 core retail categories that adobe tracks that also mirror what the bls tracks there. >> i was surprised to see electronics as the number one and surprised to see toys as the last. >> very interesting. both of those categories did have decent discounts for the holiday season. we did a story on this care bear in particular and the price of the care bear. >> i love the care bear story.

>> had fallen fairly precipitously over the last couple years. interestingly even just as sort of an anecdote of a toy like that. >> stay tuned. next week we'll have our cnbc nrf retail numbers. just over half an hour left to the opening bell on wall street. joining us now, ross mayfield from baird, which is more than $400 billion in assets under management. ross, good morning. navigate us through these last couple days in context of the huge rally we had at the end of last year. sit all over? is it just a break? >> i think it's much more likely this is just a tidy consolidation correction after a really breathtaking rally across november and december. the market was overbought by almost any metric you could look at. that's bullish over the intermediate term, but in the near term, a little consolidation here and there is not surprising and especially with the context of investors

maybe reassessing whether all those rate cuts they started pricing in are actually going to come to bear. i think there's a reality check on that front as well. >> you know, i've read "the wall street journal's" lead headline this morning. stocks, bad start to 2024 has forecasters on edge, and i thought, there's so little faith in the rally we just had, i want to buy it. is that -- i mean, i just feel like people are so lacking confidence in what's happened. all of a sudden, they're ready to write the whole thing off after two days. i think that's a positive sign for the rally. >> absolutely. i will take any negative sentiment we can get. some of the survey data on retail investors suggests more of an optimism or euphoria after the big rally, but there are still things like what you're talking about, like the big inflows into money market funds that suggest there's just not quite this buy-in yet, that it

feels somehow not real, that the idea that a soft landing could actually happen, there's just still a lot of skepticism out there. as you mentioned, those are the kind of things we want to see. when it's all euphoria all the time, those are the time to hit the doors. >> at the same time, you have to deal with the issue of valuations. what do you expect to happen? earnings season starts next week in earnest. some stocks are trading at relatively high historical multiples. >> yeah, absolutely. we know valuation is not a great time into a short-term, but it matters, and when you have elevated valuations, you need earnings and profitability to come through and help the market grow into those valuations. otherwise, you might face a low return long-term future. the market is expecting pretty good earnings growth, double-digit earnings growth for 2024. i think that number probably has to come down a bit, but if we hear things like the report you all just put out on retail sales and spending and the consumer staying healthy and we got job market data this morning that shows that things are still pretty fine, you know, maybe the earnings don't have to come all

the way down to low single digits and maybe an expansion in profitability and profit margins is in the coffers. i do think the earnings expectations are maybe a little high. valuation is a problem. but it's not something that's flashing red on our radars. >> ross, thanks for joining us this morning. >> thank you. guys, very quickly, i want to weigh in from carrie firestone. she has an idea on lilly's plan to go direct to consumers. she's been watching at home. she says she thinks it's a brilliant move by lilly, that it's a huge market drug that's new. might be there would be a price war eventually, and lilly wants to preempt that phenomenon by taking control of the product now. from a stock picker's perspective, that's what carrie is saying. another quick story for you. or maybe not. just went away. we would tell you a little bit about a tiktok matchup with peloton. they've got some deal that they're going to be doing together where they are powering a channel that, by peloton,

basically, you have a lot of short snippets of things that are out there. i just wonder if that's going to be cannibalizing peloton's own stuff, but it is a good way to get out there and get people watching. >> tomorrow, jobs. big. jobs. huge. come back. i'll be here. or maybe that's a reason not to. >> mike santoli will be here. i'll be here. you'll see us then. >> big jobs. huge. >> dow futures up slightly. nasdaq down by about 80, and the s&p down too. we'll see you back here tomorrow. right now, it's time for "squawk on the street." ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. david faber has the morning off. bulls looking for relief after two 1% declines to start the year on the nasdaq. job claims come in at the lowest level since mid-october. mag seven stocks in the midst of their longest decline in more

than a