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 month, apple shares

tum tum tum tumbling 6%. lilly taking weight loss drugs direct to consumer. rivian downgraded and ford set to announce its latest sales figures. let's begin, though, with stocks, trying to bounce back from another tough session. s&p riding a three-day losing streak, jim. back-to-back 1% declines on the nas, only happened a couple times. 1980 and 2005. >> we trim these stocks at the beginning of the year, and we did it because it felt like this was one of the greatest runs ever. believe it or not, even from when the fed signalled they were probably going to be done tightening, mag seven still was up. you had the s&p nonweighted, not overweighting apple, all 500 equal, that was up a couple percent more, so you could say that had been doing well, but the group's underperformed. the main thing is everybody's picking on apple, concerned

about handset inventories. some people are thinking it goes through the supply chain, and at a certain point, you're going to say, well, i heard that already. but it sounds like that -- these are rigorous pieces, because as i said the other day, i think apple could go to $160 without a problem, just because china and because handsets are in over supply. but carl, apple was up almost 50% last year. and everyone acts like apple was disappointing, and if all of our stocks were up 50s, do you think we'd be sitting here? why talk about it? let's talk about the playoffs. >> jim's referring to this downgrade today out of piper where they do cut apple to neutral. they go to $205. but to your point, they also cut microchip and corvo and skyworks. >> microchip just got the grant from the commerce department. by the way, that is a terrific

grant because it's going to expand what they're doing in colorado springs and talking about oregon, and microship is the dumb chip, so to speak, meaning, what we really lost in the supply chain were these chips that are called large form factor, and they're not the most up to date cutting and that's what we're hostage too. commerce department once again finding a way to do the right thing and make feel feel that your tax dollars are going a long way. >> we'll wait to see if the grants get finalized. >> they're focused on defense and aerospace, and that's good, because talk about critical. when you pick up the front page, they're not talking about what we're doing. they're talking about what's happening in iran and we obviously, if we're going to try to stop the so-called rebels in the red sea, that's dumb chips. that's not high-end chips. >> to that point, micron does get upgraded over at piper. >> interesting, because that's cell phone. >> we had sanjay on a few weeks ago. >> the stock had dropped. i was surprised to see the stock

down 82. that does dove tail with something nobody's talking about which is microsoft putting the new button -- microsoft doesn't do buttons because the stuff is hardware, and the hardware is set to hp, which hp did not tell me about, but that's micron, and that's the a.i. that we have all been waiting for that amd has said, we press the button and get what we want. make our lunch reservations by talking to our pcs. >> first time microsoft's added a button since '94. this would basically activate copilot. >> when you speak to the people at microsoft, copilot's already making a lot of money. it's very hard to find anyone who's making a lot of money, and yet maybe a.i. is not a double. amazon very involved. these new meta products. hey, meta, look out, that activates your ray-bans, but a.i. is coming into the mainstream when you see something like this, and it makes you feel like, how can it

be a bubble if microsoft just put a key on our pc? >> amazon was down 1%. it's hard to fight these macro headwinds. >> look, and obviously, these are sources of funds. nvidia mentioned today possibly. but what i think is interesting is if you're going to put a button for copilot on your pc, the the reverberations for that are basically, throw out your pc, get a new one. this is the greatest refresh cycle inhistory. let's say i come in and mine doesn't have a button, and yours does, do you think i'm going to allow that to happen? hp is probably going to have to do the button. and dell. you need to have -- you have to upgrade your pc. that is micron. it also might be intel, but intel owns a lot of mobile i, and that was one of the fiascos of today. good work by ray jay today, downgrading mobile i. there's a lot to cover. >> mobile i does guide revenue

down. >> that's a slash. >> does the labor data today interest you? we mentioned claims. adp comes in solid. challenger, a little bit lower than the prior month. >> look, if you're a bull, you know, you just want to see data, which continues this idea that things are tepid and doesn't drive the ten-year past four, because then you can still stick with that whole rap that there might be five, six cuts. that's a rap i don't believe in, which is one of the reasons i wanted to trim at the beginning of the year. if everyone's leaning that way, that's going to be wrong. can we take out 4% on something, you know, for the 30-year, already over there and the mortgage rates probably go back over 7%? i just don't understand the six cut thesis. i mean, not when you see numbers like that. >> well, there's a lot of work being done right now on sort of the rethink of the fed pivot. jpmorgan treasury client survey, biggest drop in net long positions in a few years. >> i know. i know. look, i think that a lot of

people -- there's a lot of inputs right now that are strange. unemployment, obviously -- employment is stronger, but oil seems to bottom at $70. you can count that strike against it, and yet coming in, there was just this notion that the fed was being, with three, not being straightforward, that they're going to do more. no. and i see so many people come on air, and they keep saying that the fed is not telegraphing. why don't they look back and see that jay powell said everything and then did everything? i find that jay powell is not hard to figure. he's not inscrutable. he's open. three is three. three is not six. >> right. of course, that does come a day after we got the december meeting minutes where the fed did say, in discussing the outlook, participants view the rate as likely at or near its peak for this tightening cycle, though they noted the actual path will depend on how the economy evolves. kind of a pushback.

>> completely. and there's room for construction. that's gotten -- that's gotten less tight. that's important, because the home builders are making really good gross margins. it's not clear -- i mean, i'll tell you, look, the underground story, and i know this from the business that i was in, the -- immigration has really made it so that there's an underground economy again like we had before trump. no one wants to talk about it, because it's completely third rail, but the underground economy is making it so that the people who were being paid a very high price, above minimum wage, don't have to be. now, again, i don't want to hire anyone who's not a citizen or green card, but that's what -- that economy is not being taken into account by these numbers. >> so, for tomorrow's nfp print, you'll be watching, i imagine, wages and participation. >> yeah, because i just think, look, what do they really do when they pivot? they said, look, it's not higher for longer. that's out.

we're going to have to probably cut. but the time frame of the cuts is completely random to me. in other words, if the data says they should cut, they will. someone was on our air this morning and said the fed's not data dependent, and i wanted to scream. >> you scream at the tv as well? >> i wanted to put on soupy sales. i don't need that. they're not data dependent? the whole thing has been data dependent. i say stuff like that. you are what your record says you are. we have to deal with the reality, which is that they're data dependent and very clear, and what they're saying is that the data's really strong. we're going to take our time cutting. why is that so hard to understand? >> meantime, there's a munch of micro news today, company specific. walgreens, a good example, reporting before the bell this morning. earnings beat, slashing its dividend nearly in half, first time in several decades, and ceo tim went worth did speak exclusively with cnbc about that decision. >> we didn't love having to make that decision.

we actually thought was incredibly important and responsible, and i will tell you the majority of investors with whom i've met since taking this role not only expected it, but they actually are excited about the fact that we're going to have additional capital to invest in the core business in a way that stimulates growth again, because that ultimately is going to be the most shareholder friendly thing we can do. >> you -- >> he's a hitter. >> you tweeted that he's starting to work his magic. >> anyone who knows that at express scripps, he was great. if anyone was surprised about that, they were probably in some sort of musk flight to mars. don't know that for sure. but i just think that wentworth, sometimes you have to take -- you have to take the ceo's credibility. now, i thought roz brewer had done -- previous ceo, the one who quit after three years -- she had come from starbucks, where she was very, very good, but the walgreens challenge -- she went headlong into health,

which i don't think is bad, but that's what tim's strength is. i look forward to talking to him again out at jpmorgan. health care and tech are on the red hot griddle right now, but health care is on the upside, and it can is on the downside. health care is very interesting to people. away from where the treasurys are. >> yes. by the way, you can watch the whole interview on cnbc.com. jim mentions health care because you got the walgreens news. >> right. >> you got cigna news yesterday on this medicare advantage business. you got upgrades of merck today, downgrade of pfizer, and the jpmorgan health conference coming up. >> lisa gill is going to be on my show tonight on "mad money," and she runs the greatest conference of the year, and if you're interested in health care, i think my staff set me up with 27 interviews. 27, 20-minute interviews, and i'm thinking, can the sleep, bring the red-eye back.

one thing is certain. that has been where -- some people break news there. i was there when medtronic announced a shortfall, and it was one of those things where it was like, huh? no. and it was very tough. >> was that coming out of covid? >> no. it was just several years ago. but it was like -- i'm saying this is up to the minute news stuff, and david ricks, who is so great and so clear, if you read the statement today about their weight loss drug, it does sound like he's trying to streamline the process, but carl, an end-to-end direct health care experience, lilly direct, is something that's new, but i don't want to say it's necessarily an enemy of the chain. i want to say that lilly has made it so that you've always been able to get it at all different places but most important is it's $25. >> so, for viewers wondering if there's liability for pbms, your answer is no? >> i just know that when lilly

did its -- when lilly did its migraine drug, they chose to be -- they cut out the middle guy and gave it to cvs. i know because i'm on the drug, and i get it from mckesson, and i remember fighting amgen and saying, can i please get it from cvs? lilly is saying, we're going to make it so it's easy to get. what i'm taking away from what ricks is doing, he's saying, it's easy to get, which could mean maybe you can go to teledoc. it could be that you can go to amazon. when i saw andy jassy, he was saying, listen, we're going to be a major factor in the distribution of drugs this year. but whatever -- the real takeaway is they're going to make it easier, but at the same time, they really want to crack down on people who use it for cosmetic purposes and crack down on counterfeits. >> yeah, the statement there, very clear, that it is not for cosmetic use, and just in a sign as to what a big consumer story is, david ricks of lilly on the

"today" show this morning. here's what he said. >> it's a critical part of how the site works. these drugs need to be used under the supervision of a physician, and we're just offering more choice in that regard. this is about patient success. our sales will be the same either way, whether we sell it to cvs or walgreens or on our website. >> their point is this is for a serious disease. >> yeah. look. the thing that you knew that they had to say that, but -- because the goal is not to make it so people look thinner. it's about blood pressure. it's about statistics, which tell you that you are obese, which therefore you are a candidate to die earlier than people who are not obese. just like -- one of the things that people don't understand about these drugs is the sotto voce is that diet and exercise doesn't work. doesn't work for most people. people try it, and they fail. now, it is true, "wall street journal" had a great piece that said if you exercise five to eight hours a week, then you can have a four-year increase in

life. but for the most part, the -- and this is heresy to the community, but the people who prescribe these drugs just say, look, we know that diet and exercise has not worked for obese, and we got to get obese down, because of blood pressure. these are blood pressure drugs. they're drugs that are meant for a lot of different uses,but for the most part, they're about how to lengthen people's lives. and people are taking it for cosmetic purposes. lilly doesn't want that. lilly wants to lengthen people's lives. no health care provider, no cigna wants to give you a $25 co-pay and say, listen, it's better to look thinner. there are a tremendous number of drugs -- and i'm speaking to bristol myers next week -- there's a tremendous amount of drugs, including a current schizophrenia drug, that puts on a huge amount of weight, and what they're targeting is, what drugs add weight that we can take that weight off by using this drug? what people have not been able to reduce their weight by diet

and exercise? there's just so much -- so many lies and mistakes about what this drug is about. >> yeah. >> it drives me crazy. eli lilly is trying to do the right thing. >> the forcefulness of the statement today makes that pretty clear. got some news in the auto business today. ford monthly sales. let's get to phil lebeau for that. >> good morning, carl. we have q4 sales for ford and much like general motors, not a huge increase, but it was an increase for ford. 0.8% increase in q4 sales. but listen to these numbers, especially when you break out hybrids and evs. hybrid sales, and we've talked about how ford has an underappreciated hybrid business, up 55.5% in the fourth quarter. ev sales up 27.5% as they increase their production, particularly with the f-150 lightning. i.c.e. models, now, this is interesting, guys, this is where you see hybrid and ev sales replacing i.c.e. model sales, down 3.5%. again, ford, overall, for the

fourth quarter, up 0.8%. and guys, we also have the numbers from motor intelligence in terms of overall ev sales and the ev market share. remember, tesla has dominated this market, really, for -- from the beginning. they created the market. and they still own it, but it's down now to 55.1%. look at hyundai kia, underappreciated how their ev sales have grown, and they're doing quite well, actually. then you have gm, ford, and volkswagen. bottom line is this, guys. this will be the year when we see how much the other guys -- and i'm talking about the non-teslas -- can ramp up production and cut into tesla's market share lead. by the way, with tesla, model 3, model y, they are 51% of all ev sales in this country. those are the two goliaths, you know, they're in charge of ev sales right now. >> but phil, great reporting as always, and yesterday was amazing how you talked about the japanese, and i was in awe of them. i do think that maybe you are

right. we bear down on ford and trucks. they seem to be doubling down on what they're great at, which means they're making it so they're going to make a lot more money than we think. >> i agree, jim. and here's the thing. when you talk with ford dealers, it's not like people are saying, i don't want the f-150. f-150 still dominates sales. it is the best-selling vehicle in this country. once again, 47 straight years. what you are seeing, jim, is the discussion with buyers, at least amongst themselves, you know, or with their spouse or whoever, saying, okay, i want an f-150, carl. do i buy the i.c.e. model? do i buy the hybrid? maybe i buy the ev, although for some, that's still a bridge too far. the hybrid is hot right now with the f-150, because people are saying, i want greater fuel economy, carl, but i still want the f-150, and that's what you're seeing here. >> very exciting. phil, let me ask you. i know we have to cut away, but i don't care. it doesn't matter that ford is winning in a country like

australia where they compete against the chinese when it comes to trucks. does that matter? >> well, look, you could make an argument that it's a relatively small market. i would make the counterargument. where were they just 10, 15 years ago in australia? i mean, they used to be the main sponsor of the australian open. they were a big deal there. that faded away. now they're number one. that says something about the strength that they have over there, that they're trying to build in southeast asia. >> fantastic. >> not to mention just the unit sales for last year, which i know phil mentioned last night. third consecutive year the u.s. consumer spent half a trillion bucks on new cars. >> people don't understand. the auto market is gigantic. but i do say that, look, my travel trust owns ford, and it's been tough lately. but ford 150s are tough. >> phil, thanks. let's take a break here. take a look at the premarket. we'll get to a pretty solid batch of upgrades today,

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news flow definitely heating up this morning as we watch futures here. bodata, a bunch of sell-side calls. the dow is hanging in there but more weakness for the s&p and nasdaq. we'll get cramer's "mad dash" and the opening bell.

time for cramer's "mad dash" as we count down to the bell. >> i want to focus on this jpmorgan upgrade of america's best. this stock is steve squeri. this stock has gone from here to here. i think you're late with this upgrade, but they're talking about how it's a more affluent customer base. steve squeri was talking about an affluent consumer base. he's such a good ceo. he was trying to distinguish between how his customers, gen z, gen x, are doing incredibly well. finally, he's getting credit for it. carl, $186? i don't know. i prefer a raymond james downgrade of mobile eye. i don't want to say that america's best shouldn't be

their top pick. i'm saying, where were you? >> yeah. goldman does make it a top pick. the upgrade from jpmorgan. their point is that it's offering you shelter from pressure on consumers for whom savings is dwindling. >> it is true, but one of the things that steve squeri mentioned over and over again is our consumer is not the same as the capital one consumer. all i'm saying is that american express is a premier franchise that is finally getting its due, but this is like a lot of stocks that i have seen. you're buying it after the parabolic, not before. >> lot of charts that kind of look like that. we'll take a break here. get the opening bell in just under four minutes. to duckduckgo on all your devie duckduckgo comes with a built-n engine like google, but it's pi and doesn't spy on your searchs

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. want to get a quick mention of oil prices here continuing to move higher, approaching $73 amid the rising tensions in the middle east. we mentioned this libyan oil field, protest there, that's 300 barrels right there alone. morgan stanley says these opec cuts might be extended for the whole year. >> they might. i think that -- some of the american companies are making decisions, saying, listen, time

to get a little more oil, and the apa, apache, is very smart. these american companies are making some really shrewd moves for if oil stays higher. they're ready. they're ready. >> we will watch to see if $70 was any kind of medium term bottom here. let's get the opening bell. at the big board, the national board of review of motion pictures as the awards season is going to be approaching soon. at the nasdaq, athletech news, covering the fitness and wellness center. we should mention peloton. >> how to do you like that? i thought that was good. i know peloton has been a forlorn stock. anything that makes it so there are more subscriptions is good. the stock is up nicely today, up 5%, but they're not making money, and i have been very adamant that you don't buy any stocks that don't make money on "mad money." you call that in the lightning

round, say, sorry, they don't make money. when they do, i'm all over it. >> planet fitness gets a target upgrade at ray jay. >> planet fitness is one of those companies that at the beginning of the year, they tend to do very well. i think everyone's still mystified about the change in ceos because we never really got an explanation. sometimes that happens. there's like a new ceo, and we kind of say, well, please tell us what happened. we had that other ceo on ten times. they're reluctant to do that. i think that's a shame. i think clarity on those things do matter. >> what did you make of -- we mentioned the burst of upgrades today of names like depot and dollar general and all state. >> i think that the home depot makes so much sense. i was going back and forth with my friend, stephanie link, today, and we just looked at home depot, very hard to beat. i thought the sherwin williams downgrade yesterday was wrong. things are going to get better, and you know, it stabilized, and we get to a more normal demand. you do want to buy home depot.

now, i'm -- i have a harder time with dollar general, why? dollar general's got a new ceo, but i go to my dollar general. it's like i took a picture yesterday for twitter, for x, i'm sorry, and it's like, can i please have aisles filled with things? come on. let's get this filled other than with a lot of haribo. that's a nod to my executive producer, regina, who says you don't say haribo. when i go to dollar general, i would like to see things that are a dollar or general. >> yum gets cut at stifel. that's about china. they go to a sell on pizza as well. >> painful, painful. i think that, look, by the way, i think domino's has got leadership and it's doing incredibly well, but they like that. it's okay. you know, it's funny, because you take a look. russell warner's done a fantastic job at domino's, the new ceo, but if you take a

look -- and wing stop is doing very well. but the one that is just an untold story, chipotle. i mean, yeah, i made a stand on chipotle when -- remember, chipotle had a horrible health issue. >> i do remember that. >> and i might say, when i looked at taco bell, looked to some that had health issues before, jack in the box, and they come back, and people you were just, like, oh, give me a break, chipotle's finished. that was about 1,800 points ago. that's a great company, chipotle, and they offer a superior product, and people feel they have price. brian niccols, really great. jack hartung, one of the best cfos in the country. >> lot of work being done on inflation, food away from home versus at home, the spread now, the widest in about five years. >> i know. >> much more expensive, relatively, to go out and eat, which is why conagra is interesting today. volume is soft, and pricing

flipped negative. >> conagra is -- i don't like the product line-up. i know sean's done a good job, but your stock tells you how you are. i want to flash brinker versus that where kevin hoffman is offering you something that -- kevin hochman went upscale, and that's what he wanted. by the way, largest seller of margaritas in the country. >> what? >> yes. now, that's a good business. when you break down a margarita, that is not -- i happen to know the numbers for margaritas. >> you know the spirits business. >> food, not so good. margarita, whoa. and he's the largest seller. he's also delightful. other people in the restaurant business are just a blast. >> the other piece in that universe is this reuters story that the big uk company -- >> whoa, pushback. >> is going to push back on pepsi pricing where they just don't think they can move those off the shelves. >> and i thought that was incredible, because if you look back, what rich galanti, the incredible ceo of costco, will

tell you that the only thing that kirkland could not knock off, which is their house brand, coke and pepsi. that i have failed. they could not go against those two. best brand names. by the way, frito, great brand name. i don't know. good luck. i think you're going to have a hard time with that. i'm going to the guy that has pepsi. immediately, i said, let me call hugh johnson. oops, disney. moved to disney. everyone should know that there are certain -- i like to talk to cfos. they're just fabulous. and hugh johnson was always, like, tell me what's going on. now he's at disney, and i think there's more of a news blackout at disney right now than there is at pepsi. look, the ceo of pepsi, unsung, really sensational, ready for the onslaught, believe me. >> we'll watch banks today. they are one of the sectors that is in the green. b of a today, jim, says, prepare for an overshoot on some of these names like truist, ubs, key. they think the pe could go back

to pre-pandemic. >> you know, i looked at true. some of these stocks are -- i had huntington bank shares on. i also happen to like, by the way, first horizon, which got a bid for twice where the stock is. i was saying to steve, what the heck is your stock doing yielding five? and he said, could you tell me why me stock is building five? there's a consensus that the regionals are the place to go. we're almost one year from the date they were really crushed. i do like truist. i like huntington bank shares. i like first horizon. those are all that i've got my arms around and just say, you know what? yield safe, really interesting. >> if david were here, we might talk about a second upgrade for verizon and an upgrade for t. mo as wireless is getting some eyes the last couple days. >> the pricing is stable. pricing is stable. now, if your pricing is stable, you can go gsh that means that the verizon yield is final. that's been a real -- that's been a terrific stock to own. it's just quietly going up. i like what mike seifert is

doing at t-mobile. i tried to press him to make it so we could get the vision pro, $3,000 vision pro from apple as part of a deal. i'm going to keep pressuring him. he keeps ignoring me. i don't care. i will say this. everyone's downgrading apple. never talk about the vision pro, as if it doesn't exist. >> this has been a recurring thing with you. >> if they get the right price and you're able to watch a game with vision pro, it's like being on the 50. for the peacock wild card games, and all you're doing is being worried about getting hit by a football. it comes -- i was watching, and i was like, wow, the shots are coming at me all over the place. and i was in vision pro. and then i was going like this, and it was doing what i wanted. when you say, hey, meta, that's really cool, because mark zuckerberg, who takes some of the money that he just sold -- no, he doesn't do that, but i think meta is also very a.i.-oriented, and zuckerberg's got a sense of humor.

people don't get that. it extends beyond the bunker. >> your point on apple reverting back to 160, dollars, we're back to $180. >> yesterday's downgrade was, they lack innovation. how do you do that? he said, siri, please go to chatgpt and give me the complete on -- i mean, she's going to talk to me. but i mean, they -- these are people that you have to pry their cold, dead hands from their apple, and yet, they don't like apple because it's not -- it's not inventive enough? what does tim cook have to do? honestly. you have this device that -- i forgot my wallet, like, four days ago. and i realized, to hell with my wallet. >> why would you need it? >> here's my wallet, and this has ten times what my wallet has. right here. but it's not inventive, and tim cook doesn't know what he's doing. i mean, look, it did sell at 29 times earnings, which is higher than we're used to. there's a possibility the service revenue is capped. i'm not sure about that. china, i mean, no one knows what's going on in china,

including president xi, who i think has very little knowledge. >> there's actually a really thick 50-page report today on apple's reshoring process where they think -- i think it's cowen. they're just getting started in moving the chain out of china. >> i don't want them to move it here. i want them to move it to india, because that is the country of the future, and they're trying. their supply chain is perhaps the most complex supply chain. you always hear these people say, well, we just got the word from the supply chain, it's not doing well. they know much more than that. >> what's interesting is to watch the dow sort of shake off the walgreens effect. >> yes. you've got merck. i mean, is there a day -- bob davis is doing a fantastic job at merck, and we got to hand it to him, and he's getting away from keytruda. i think he's terrific. remarkable. got new drugs. merck is a real driver in -- look, pfizer's an anchor, but merck is a real driver. what i think is so interesting is you've got pat gelsinger with a giant position in mobileye,

and 88%, it's actually down to 85 cents. people are sensing this pc refresh that's coming from microsoft, and some people are -- it's starting to dawn on people, wait a second, if i need -- if there's a button that they're going to put on, i'm going to have to buy that pc. i think that hp ink being up only two cents is ridiculous, given the fact that they're -- if you called enrico right now, that's the principal beneficiary. sells at eight times earnings. interesting. >> dell is not that far from all-time highs. >> dell's got a lot, complex -- really complex, terrific set of order books that includes much more enterprise, and i really, really love dell. look, i'm a big fan of michael, i think he's fantastic >> we've paid a lot of attention to transports. xpo gets an upgrade today at wells. >> it's been the winner. it's been the winner. old dominion has been okay too. >> and i think citi too makes fedex a top pick for the year.

>> fedex, we have to recognize, just missed. let's give it a little breathing room. it did miss. it just shows the love affair, and i think a lot of that might be driven by the adobe numbers this morning about online commerce, which is just showing no end whatsoever. that's amazon. by the way, amazon, how much is it down today? some of these guys -- someone's going to break ground and downgrade amazon, and they will be wrong, but they will downgrade amazon. if i'm going to have to pay $3 not to have commercials, bring it on. i'll pay $3. >> amazon, back to the 50-day for the first time since, say, november, early november. >> this is andy jassy's chance to be able to line up with lilly and get that health care system going where you get a big break with prime. this is his chance. and i'm not sure andy's watching. he's a tremendous guy. but if you want to get back into this game -- well, he's in the game. amazon is the way that you might want to get the lilly drugs. >> there has been some work this week done on what ads may do on prime to revenue. it may be as much as $5 billion

a year. and then there's the piece in jpm this morning on netflix, arguing that paid share is a dynamic that's going to last several quarters. >> well, it turned out they were brilliant again. i mean, netflix, you know, remember when reed hastings -- well, became not the operating guy and people said, well, who are these new guys? these new guys are just as good, and i have to hand it to sarandos. he's amazing. >> you saw "the journal" piece this week on how cancellations and churn are up as the streaming bills mount. as "the journal" puts it. >> there is a problem with streaming bills. they are big. i think that if you aren't in netflix, then you, you know, we're talking about -- you know, netflix is still, hey, guys, did you watch x? and the answer is, no, then you're excluded from all conversations until you get to apple plus, and that's -- oh, tim cook doesn't know what he's doing. forget slow horses. people talk about this stuff. people talk about netflix. >> yes. >> it's very hard to not have

netflix. let's cancel other things. let's not cancel netflix. >> back to 4,700 there, jim. i saw some technicians last night arguing that if you could hold 4,665, maybe this begins to revert back to the upside in the coming days. >> i think that the s&p is okay. i just don't want -- i think the mag zenseven is a bit of a sour of funds for the s&p. the s&p has a lot of tstocks tht are historically -- home depot, if we have a more normal economy, you should be buying home depot. i know this microsoft button has just been thrown out there, but copilot, when i spoke with microsoft, i was like, guys, would you please not make this an enterprise? would you please make this so the consumer is going to have it? now, i'm not saying that's what they did. i am saying they probably had it in the works, and this is the way we will all use a.i., because it's so easy. >> do you think this feeds a big hardware refresh? >> yes. >> that would be news.

>> yes, i do. and i think that people are ignoring it today. microsoft, travel trust name, microsoft has been a huge winner, and that's one of the stocks that has actually held up better, but this is just one more example of microsoft being aggressive. remember, they did get sam altman, who, by the way, when i heard him speak, he's a bit of a visionary. i mean, when he speaks, it's like you're really doing your best to keep up with him. >> nadella did say, we're going to make alphabet dance. >> yes. nadella's a -- you have to love his style. and amy hood, another cfo, who is captivating and understands that if we get this from the enterprise to the individual fast, we will own the generative a.i. for the individual, which there's a lot of people. >> yeah. >> refresh, refresh, refresh. you got to keep thinking. refresh. that's why amd is up. speaking of mag seven, tesla

is up $240. interesting piece on byd where interest is starting to climb, even in klchina, there's some debate about the longevity of the ev curve. >> i think that everybody has to be faced with that. i don't want to be -- you know what's interesting, the piece the other day, the jonas piece, says that tesla could team up with byd. that's jonas. one of the things i love about jonas is, well, hey, let's come up with this idea. but then you read it and you're like, that makes sense. maybe there's -- it could happen. i'm sure henever makes anything idle. he's an incredibly hardworking person. >> meantime, we're not done with the macro. let's get some pmi from rick santelli. good morning, rick. >> good morning, carl. yes. these are the december final reads for sb global service and composite pmis. the mid-month read was 51.3. it improved by 0.1 of 51.4 on the services side. still, remains at the best level since july, and if you look at

the composite, it lost a tenth where the service side gained a tenth, so it moved to 50.95. that remains also the best level since july, and we see that both composite and services have had above 50 readings, carl, for 11 of the 12 months of 2023. the only month both of them were under 50 in contraction territory was in january of last year. we see interest rates have moved up on the data this morning with claims, and they continue to hover right under 4%, which of course we crossed over intraday yesterday. "squawk on the street" will return.

dow holding on to some gains of about 80 points thanks largely to merck. you can see the laggards having impacts. walgreens down 11% after decent bottom line, 66 cents, beat 62. revenue ahead but they did cut the dividend by 48%. first time our bertha coombs told us in 45 years. we'll gest tdi wh m a minute.itji

jaffray, jeff, jeffries, jeffries, jaffray,

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so there is a stock that has come down that you can say, you know what, that's a buy, not going to get a downgrade boeing. many people saying upgrade or that you should buy. versus say apple where you're like coming in every day, hit me, hit me again. you know, you're hitting on a 19 with that one. >> deutsch names both boeing and ge as their top picks. >> ge still a great stock. people don't understand. larry kulpa, he's a miracle worker. he's fixing even the wind segment. i think these are two stocks you should go to in a decline. because they are down a little and the cycles are long, and people are still traveling. there. >> it kind of rimes with what, ed, ed yar againry in says, the first half stalls out on an index level but the broadening of the market will be healthy long term. >> true broadening. when someone welcomes in truist, it's like, are you really going to go there? doesn't truist have a whiskey barrel problem?

people do these cool loans. i find that the financials is terrific because it's not fin tech. it's real banks and real lending, which is really good. >> to that point, roth has a list of potential ipo candidates this year and on it are things like chime and klarna, a lot of fintechs in there. the other the downgrade of paypal which we did mention. >> that's a competitor thing. they don't have it right now. i think that the ceo who is out of intuit could do something. i like him, but the problem is, why not be in affirm which you have the short squeeze and good numbers. i don't recommend stocks with a short squeeze, but i like the ceo and their buy now pay later is a democratizing event does not have increasing bad loans versus what i thought they would have. given the fact that the fed moves quickly. >> while i've got you, these comments from eog on the tape now, that growth in oil and gas this year probably can't match last year's, don't see the need

to increase oil field activity, you think that's a comment about demand? >> i don't know. i think eog marches to the beat of a different drum. very conservative. because they then all say exploration is robust than its ever been. what matters more is the acquisition. exxon buying pioneer. maybe they just decide to go just pedal to the metal. we don't know. i happen to like eog very much. they may not be in the consensus here. >> how about tonight? >> i have lisa gill on tonight, the person that runs the jpmorgan conference. i never have analysts on. the reason i have her on, this conference is the most market moving conference of the year, and let's find out, it's interesting, lilly is not doing well, and i think some of that they spent half the time -- i mean up 10 or something -- telling you listen, if you're counterfeiting or using the stuff for cosmetic, forget about it. it is going to be used by people who can demonstrate that diet

and exercise isn't working. >> right. that's important. two big important stories. >> these are like drugs. when i go over the schizophrenia drug of bristol-myers maybe that works and doesn't put on 100 pounds. the weight gains make it so people stop taking the drugs. that's the key issue in drugs. schizophrenia a horrible disease. >> we chopped this morning. that was good. >> yeah. remember, broadening out is good. okay. don't fret if apple's down. it's okay. you don't have to go to teledoc if apple is down or lilly direct. see what they have to say. >> we'll see you tonight. "mad money," 6:00 p.m. eastern. we'll take a break with the markets holding 400. dow is up 4705. we're back in 2.

good thursday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla. we are live for you as always from post nine of the new york stock exchange. david faber has the morning off. take a look at stocks improved sentiment this morning compared to the last few sessions. the s&p a little changed. dow is up about 133 points and

the nasdaq is lagging. technology not having a great start to 2024. take a look treasuries. this is part of the reason. we see selling of treasuries from the end of 2023. the 10-year yield is below 20%. firming up across the curve. 30 minutes into the trading session, three movers we're watching, another day, another downgrade for apple. this time from piper sandler lowering its rating to neutral from overweight, cutting its price target to $205. shares are down 4% to start the year. more apple discussion straight ahead. couple names in the health care space to watch. walgreens plunging trading at session lows right now. the company beating system but slashing its dividend by almost 50%. eli lilly shares are higher making a big move to go direct to consumers with its weight loss drug. more on those two stocks in a moment. and then look at shares of peloton riding higher. the company partnering with tiktok to offer short form

fitness classes and other content. the stock is still down almost 40% in the past year. it was trading well over $150 during the covid pandemic, but signs of life there today. carl, as far as the data to discuss, i mean, two i would say better than expected reports, adp on jobs and jobless claims all ahead of tomorrow's jobs report, the monthly jobs report, we'll get, which i think continues to point to what we've been seeing, an economy that still has a strong and pretty tight labor market, which is softening, but not softening in any sort of worrisome level. jobless claims again, cooled off by 18,000 last week. here's the adp breakdown. there is private sector hiring and what's interesting is, it's all in services. 155k jobs added in the month in services. barely any in goods. manufacturing was negative. you can see where the industry is hiring. leisure, hospitality, education health services. this is what we've seen in the

jobs report as well and speaks to the continued strength in the services sector and the only question mark there is, how fast inflation can come down in that part of the economy. >> yeah. meantime challenger layoffs, more tame. last month than the prior month. takes you could argue continuing claims have begun to peak. if that's true you can maybe add a point for the soft landing team. we did get decent german cpi numbers which is helpful to the ecb as it's not just a deflation or disinflationary story in the u.s. >> a big eurozone inflation number tomorrow, which i think some people are worried it's going to tick up a little bit but they're going in their fight as well and seen a lot of progress. >> for jobs, goldman out just now keeping 190k for tomorrow. morgan stanley at 180k for tomorrow. i think they see unemployment going down to 3.7, so we'll see -- >> that's strong. >> yeah. >> and also sort of goes into the argument that maybe the market got a little too excited about all those rate cuts starting to price in march, for

instance, especially after the minutes came yesterday. a lot of ways to interpret the minutes. i pulled out three sort of interesting quotes that i thought were particularly relevant for the market, and they offer some mixed signals on the whole rate cut debate. so participants viewed the policy rate as likely or near it peaks for the tightening cycle. we know that. that justified how the market took the last fed meeting. these are notes from the last fed meeting. based on productions implied a lower target rate for the federal funds rate would be appropriate by the end of 2024. they expected three cuts in their projections. but they reaffirmed that it would be appropriate for policy to remain at a restrictive stance for some time until inflation was clearly moving down sustainably toward the committee's objective. what is "some time"? is it march? is it may? i think that's where the debate is right now. are they willing to tolerate the restrictive higher interest rates for longer until they see more progress toward inflation? inflation is still above their

target and there's still signs that the economy is looking good. >> yeah. i'm looking at a note out of jpmorgan. this is about global cpi, but they do say goods deflation is likely transitory and downward pressure on goods demand and input costs are fading. that's why they think global corep cpi could go back to 3 in the first half of 2024. >> two schools of thought, it goes up and comes back down. and they're splitting. there's evidence on both. financial conditions are loosening. people think that will make inflation stickier. on the other side, we continue to see the strong trend, even wages have come down and the adp numbers today, the job switchers which people have been looking at because they've been getting raises, 8% raise. that was the lowest level since 2021. there's evidence on both sides, and that's going to be a debate on the inflation front is how fast we can get down to a 2 level where the fed is going to feel comfortable. there's the 8% raise. 5.4. these are lower numbers, softening numbers. that's good for a fed that has

been worried about a wage price spiral. now, we're watching shipping rates. there's nothing the fed can do about it, but we saw how much shipping rates impacted inflation during covid. they're elevated because of the houthi attacks, the yemen rebels backed by iran, which continue to happen. maersk is on pause, the global shipper. the rates are up, but if you look at a long-term chart, they're nowhere near where they were, say, during covid in terms of how much they spiked and for how long. so we'll see. it's definitely a risk that threatens exacerbating the inflation story. >> you wouldn't argue that minutes told you -- i know barkin did say hikes aren't off the table but that the minutes lead anyone to believe hikes are coming back? >> no. didn't leave that. but the whole, you know, for some time we could remain restrictive, that along with the data that we're getting, doesn't

give you any urgent feeling that fed needs to lower rates, cut rates, which is what the market is expecting right now. i think that's the takeaway. let's see what jobs does tomorrow. >> tomorrow will be important. our next guest is out with his latest market moves. downgrading communications services and real estate, upgrading financials, health care, and consumer discretionary, scott crowner joins us. great to see you. >> happy new year, carl. >> does the degradation in sort of the communication services trade, for example, is that unnerving right now? >> no. i don't think so. i think the message that we're sending here we continue to have the view you want to be a holder of growth in the mega cap growth cohort of the market, with the comp services downgrade, we're likely on the internet component of that, but remain constructive on tech, particularly on software. but, you know, we've been using this broadening analogy, as you

discussed earlier, we think it's going to be a key theme for this year and what we're looking to do is replace some of the traditional growth angle with a weighting that focuses more on early cycle and cyclical behavior, which speaks to a financials overweight now. >> the overweights here, financials, you're looking at at info tech and industrials, is that the results of race, depending on the pace, that go lower, that eases the prospect for industrial activity, lending out of financials and banks? >> yeah. it all plays to that for sure. when you look at the response in the market since rates peaked back in mid-october it's interesting. you see sectors like real estate which had a really strong move which predicated our downgrade recently. you've also seen financials really begin to kick in from a relative performance perspective, since that timeframe. what we've been impressed with has been how resilient bank earnings were last year during

'23, even as we were ontending with the fed hawkish narrative. then interestingly, when you look at it from a valuation perspective n a market that many would say is pretty aggressively valued, the banks, in particular, stand out as still, you know, not very stretched from that angle, and so we think you get a combination of fundamental consistency from here, combined with the relatively attractive valuation setup, as a catalyst for this component of the market. >> don't you just have to be a bond market strategist to predict the equity market right now? i ask equity strategists what they forecast is dependent on bonds, and they sa no, but bespoke put out, bonds and stocks are marching in the same direction 19 of the last 24 months and that's the tightest correlation in years since the late '90s. >> yeah. i think there's no doubt that the rate setup here is important. we talk about it from a couple perspectives. first, you'll recall we've been

shifting our focus away from fed funds towards 10-year nominals for some time now. that's two reasons. the 10-year nominals will give you insight as to how economic activity is going to respond to higher rates, but at the same time we have to factor in how rates influence valuations. so again, the focus on 10-year nominals is critical because we think what it does do as rates begin to reflect a gradual transition out of the fed, it gives you a little bit more room to put on more confidence in an early cycle rotation call, which is essentially what we're focused on right now. >> that's a good setup for going into at least the month, scott. look forward to talking again soon and see where we get. scott crowner over at citi. thanks. >> you bet. walgreens shares are sinking, posting an earnings beat but slashing its dividend nearly in half. bertha coombs spoke to the ceo about the move in a cnbc exclusive. i think it's the first time

we've really heard from him. what is going on here? >> you know, he is looking at very focused on right sizing the company's growth and preserving capital. walgreens shares under pressure after they announced that they're slashing their dividend 48% in terms of the quarter, the company beat on the top and bottom lines. u.s. retail pharmacy sales almost $29 billion, topped expectations. higher brand drug prices drove that pharmacy strength offsetting weakness in the front of the store. international revenues more than $5.8 billion also beat on strength, while the u.s. health care unit which includes village m.d. came up light on revenues at $1.9 billion. as for that dividend cut, walgreens first in 45 years, ceo tim wentworth who started october 23rd, told me he thinks shareholders will understand this move to preserve cash. >> we didn't love having to make that decision. we actually thought it was

incredibly important and responsible, and i will tell you, the majority of investors i've met since taking this role not only expected it, but are excited about the fact that we're going to have additional capital to invest in the core business in a way that stimulates growth again, because that ultimately is going to be the most shareholder friendly thing we can do. >> really not excitement in terms of what's happening with the stock today. it's having its worst day in seven months. you know, wentworth only on the job 2 1/2 months, and he told me he is focusing on shoring up the company's capital structure to return to profitability and growth, and that includes a potential sale of the uk division. >> on the table. you mentioned boots, as you probably know, boots, a couple years ago, was being looked at to be sold. the market conditions were not right at the time. we've removed the major roadblock to considering that in the future, if that's the shareholder smart thing to do, by virtue of ensure our pension

plan and removing that as a barrier, and so boots is one of a number of things that we will be looking at to make sure it makes sense in the long term for our strategy. >> the thing is, everything is on the table, and he is stressing that walgreens can really leverage right now its portfolio services to appeal to employers and health plans that it is more than just a pharmacy. he told me, for example, that their specialty drug division shields has signed two dozen servicers to provide services for gene therapy to make sure patients take the drugs properly and get the full benefit of the drug. watch the full interview with tim wentworth on cnbc.com. >> it's not just a near-term problem for walgreens. if you look at the under performance in the last few years, roz brewer had to step down after just a few years on the job. what is the issue here, say, versus rival cvs? >> well part -- >> that has outperformed them by a wide margin? >> cvs has more parts, right, in

the sense that walgreens under ross tried to build up their services. you can't just be a store. you can't just be the back of the store pharmacy. so they bought up all these companies to offer services with, you know, investing in village m.d., shields pharmacy. cvs, they have other parts. they also have an insurer and the pharmacy benefits management. interestingly enough, tim wentworth came from express scripps. he had been the ceo of express scripps before that was sold to cigna and then he retired. he says he's come back here, but doesn't envision having a pbm for walgreens. he thinks that they can continue with the strategy of trying to sort of be someone that can work with everyone and provide services for everyone. carl? >> huge story, bertha. obviously, indicative of where the dow is, although we are managing gains of a couple hundred points despite that. bertha coombs this morning. take a look at the road map

for the rest of the hour. first of its kind from a pharmaceutical company. lilly taking a big step to go direct to consumers. dr. scott gottlieb will join us to discuss what's at stake and health care overall. apple gets another downgrade. a ton of big other analyst calls out today as well. we'll break them down. >> walgreens cutting its dividend almost in half. what's ahead for dividend paying stocks in 2024 when "squawk on the street" continues. trading at schwab is now powered by ameritrade, unlocking the power of thinkorswim, the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization. and track market trends with up-to-the-minute news and insights. trade brilliantly with schwab. that first time you take a step back.

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eli lilly launching lilly direct, an online direct to consumer pharmacy service. patients will be able to get the company's obesity, diabetes, migraine medications, with a doctor's prescription or be able to find a doctor on the site and have the prescription sent to their home. joining us with more on what this means, former fda commissioner and cnbc contributor dr. scott gottlieb. welcome back. nice to see you. >> thanks a lot. >> i can't tell, is this a big deal, because it eliminates middle men like pharmacy benefits managers? is this a potential game changer or not? >> i'm not sure it's a game changer. i think it's meaningful. this direct to patient model has been around for a while. it's been used by small biotech companies to sell pharmaceuticals to consumers. iron pharmaceuticals used it with their drug linzest and we've seen companies do this before and it's picked up

transaction since the pandemic since consumers have gotten accustomed to using telehealth services. it's significant to see a pharmaceutical company getting into this. we could see more companies following lilly into this kind of an arrangement. i think they're equipped to do it responsibly offer a broader suite of services to patients and that's what lilly is doing. they're not just offering direct to consumer shipment of drugs but offering, for example, access to providers, brick and mortar providers, and a comprehensive solution which is one of the advantages of getting a big player into this kind of a model. >> who gets hurt the most by this? >> well, i'm not sure anyone is going to be immediately hurt. this does reflect, to some degree, the erosion of the tradition selling model in the fact that traditionally pharmaceutical companies have used rebates they've paid to the pbms to drive the uptake. they were incentivized to drive adoption of drugs because they were being paid rebates they

were using to offset other costs like the costs of premiums for health insurance plans or pay them back to the employers. the employers like to get the dollars to use for other services. now that you have -- you've seen the erosion of those pbm dollars of that gross versus net spread, it makes more sense for the drug companies go direct to patient now and sell directly to them because they no longer depend upon pbm to push their pharmaceuticals. pbms could see some of their business eroded. the reality is the pbms are in the space as well, doing some of the fulfillment. we're going to see the pbms get more heavily into the telehealth space. i don't think they're just going to see control of it. cvs has a comprehensive offering in the space and i think they will lose on one side of the business and perhaps gain on the other as these kinds of telehealth services gain wider use by consumers. >> meantime scott, i'm wondering if you were struck by lilly's language regarding these wellness centers and the use of the drugs for cosmetic purposes.

how bad must it be for them to come out and say it like that? >> look, it makes sense to say it on a day like this, because there's multiple telehealth offerings in the market, really two models. one is a broad telehealth offerings like teledoc which offers a suite of services like traditional brick and mortar doctor, and they make money by taking insurance from patients. then we're seeing the advent of the focused telehealth services that make their business around selling a single product like erectile dysfunction products or now the weight loss drugs. they make their money selling the drug. they're not charging patients for the telehealth visit. they're making money on the pharmaceutical itself. oftentimes typically they're not taking insurance. so i think that all of the pharmaceutical companies, lilly included, have to be concerned about the telehealth providers just pushing weight loss drugs outside of the boundries of broader comprehensive health care services, that that could be used by some consumers for

more cosmetic purpose, for more elective purpose, and, you know, a day that they're trying to offer their own telehealth service, i think they want to differentiate what they're doing from the single product players. >> despite what we see on tiktok or celebrities. do you worry about long-term, unknown consequences of these drugs? >> as we see broader adoption of these drugs at higher doses -- remember the dose used for weight loss is higher than the doses traditionally used for diabetes, upwards of three to four times the dose -- as we see more people using higher doefsz these drugs we're going to unmask more side effects associated with them. we have a lot of experience with these drugs. they've been on the market as long as the iphone has been on the market. we do have long-term experience with them, albeit at lower doses. i'm not too worried we're going unmask significant unknown side effects we haven't seen already. i do think on the margins we start to see more things crop up in, you know, small percentages,

and fda, in fact, announced in the last 4 hours, they're setting things like hair loss and some other side effects that seem to be cropping up in the reporting back to the agency. we have a good vigilance system and lilly does as well, and they will gather the reports of side effects and investigate them aggressively. >> we mentioned earlier this morning the wealth of health care news right now. you have lilly, there's cigna news, we talked about the upgrades of the likes of merck and the jpmorgan conference next week. 30,000 feet, what sorts of narratives you'll be looking to see in the early part of the year regarding health care? >> yeah. look, in addition to just the general innovation narrative, i think we're going to have data cards that get turned over this year that are significant, particularly in cell and gene therapy. you're seeing dislocation and changes in the selling model. today's news reflects that. legislation targeting the pbms and the spretsdss. we're seeing a rapid deceleration in the gross versus

net spread. list prices came down on the whole from the pharmaceutical companies really in modern history, and so companies are aggressively compressing that margin between the growth versus the net and taking the spreads out of the system. that's changing the whole pharmaceutical selling model. you will see other companies step forward with different ways to try to market directly to consumers like lilly did today, and that's going to also include the pbms. they have to find different revenue streams and cvs aggressively looking at new business models including getting into biosimilars in the last 24 hours, they will be launching their own biosimilar to compete. >> finally, really quickly, because i can't talk without asking about covid and we are seeing a surge in the u.s., the jn.1 variant. how much less of a threat is it, if it is, than others we've seen before? >> it seems to be contagious. piercing the immunity people acquired. the vaccine seems to be protective. cases are going to pick up

around 29,000 hospitalizations in the last week. heaviest in the midwest, picking up in the northeast. still low in the south and the west. but i do think that we're going to see a wave of covid this winter. no reason to believe jn.1 is more virulent or dangerous than previous strains. in fact, it seals on par with some of the strains we saw last year so far. it's not as dangerous, for example, as delta, but it is going to spread around the country and a lot of people who could be protected are going to catch it. people need to be vigilant. there's treatments available and certainly boosters available for people who are vulnerable to this infection. >> we appreciate it as always. thanks very much. >> thanks a lot. >> scott gottlieb. check out the following mystery chart. wall street favored for the year. more than 95% of analysts call this a buy at these levels. we'll talk about why and which one it is after the break as the nasdaq briefly flirting with some green arrows. ckn miteba ia nu. to be reckon w. no, not you saquon. hm? you! your business bank account with quickbooks money,

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the dow, of course, hanging on to a gain of 175 points. but analyst calls out today. let's get to dominic chu with what's moving. >> let's start off with the dow moving shares of apple working on a fourth straight day of declines heading towards its 200-day moving average or longer trend line. that level stands at roughly $180. today's catalyst attributed in large part to an analyst downgrade of the iphone maker by piper sandler which downgradeded that and cut the target price to 5 bucks. they cited what it sees as a broader handset and macro weakness picture in the first half of the year couple days with valuation concerns. this follows a downgrade by barclays this week citing, amongst other things, demand concerns. so we'll keep an eye on shares of apple down 1.5%. on the financials front the mega cap banks are getting attention thanks to bank of america. they're out with a slate of commentary calling names like jpmorgan, chase, morgan stanley,

citigroup among the top sector in 2024. from a thematic perspective, the group trading at a 50% discount to the broader s&p 500 on a price to earnings basis. they think citigroup offers the most compelling risk-reward on a better earnings and return on tangible common equity visibility picture. jpmorgan, morgan stanley, they call best of breed and goldman sachs from better trends in investment banking. those shares higher across the board. a couple consumer oriented calls. home depot upgraded by barclays to overweight from equal weight. target price raise to $372. they think home depot has better exposure to longer term home improvement trends and gives exposure to benefitting from fed rate cuts down the line and getting tagged as a top pick in the sector from wells fargo. they cite amongst other things better opportunities for capturing business from contractors and other professional customers. home depot shares up 0.75%. we'll end on shares of general motors. the automaker up to an

outperform over at wolf research, they put a newly installed $42 target price there. cited reasons like an under appreciated earnings and cash flow generation story and better cost advantages alongside the continuing campaign to buy back its stock. general motors shares up nearly 2% right now. a lot in there, but i'll send things back over to you. >> thank you very much. amazon named a top 2024 pick by a number of firms on wall street. kate rooney joins us with more and why analysts are getting more excited about it than some of the others? >> yeah. yesterday alone we saw five wall street analyst comes out with amazon as their highest conviction tech name. the tally rooting for amazon as a top pick for 2024 is at least 18 firms. we have citi, goldman, wells fargo, rbc, wedbush calls amazon the everything stock, a play on the everything story for the sprawling business model and fly wheel effect. there are consistent drivers of

that optimism. first you have aws growth reaccelerating. growth had dropped to the lowest level in the history of the third quarter, down about 27% a year earlier. cloud revenue appears to have stabilized and cloud spending is expected to pick up. you have artificial intelligence, big theme there. raymond james among those arguing that amazon is the best position, and among the best positioned, to influence the next commercialization phase as they call it on the enterprise side of that business. wells fargo thinks it could account for 7% of aws revenues next year. you've got operating efficiencies. wolf points out you have a shipping inventory placement and returns that could help gross margins. maybe the biggest upside could be advertising. wolf estimates amazon makes up 8%. global ad markets and it's expected to get a boost from things like prime video and retail. bank of america says advertising could add $5 billion to amazon's top line this year. it trades at a slight discount

to the rest of the magnificent seven and peers there. the risks to amazon includes macro, regulatory, competitive e-commerce risks from the likes of shein and temu. big pick for the year on amazon. >> appreciate that. a lot of good information. a news update as well with courtney reagan. >> good morning. welcome back, of course. here is the news update. a funeral under way for the senior hamas leader who died in the attack in lebanon on tuesday. lebanese media reported a drone strike killed seven sparking fears of a wider conflict as israel continues its war with hamas. israel has not confirmed whether it was behind the attack. four ports of entry on the southern u.s. border are starting to reopen shut down one month ago as agents dealt with an influx of migrants. they prosed 300,000 last month. the queen of denmark took a farewell ride in her gold coated horse carriage for the last time as monarch this morning. the queen announced on new

year's eve she would abdicate the throne to her oldest son after 52 years. she is europe's longest reigning monarch. carl, back over to you. >> thanks very much. coming up after the break, what to do with apple as another wall street name downgrades the stock today and big tech takes it on the chin. wl scs aer sverblown? weildiusitft ahort break. to duckduckgo on all your devie

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welcome back. china getting positive economic data overnight. let's turn to eunice yoon from beijing. >> yeah. that's right, sara. the data that we saw for the services industry was better than expected. this was for december. but the outlook overall is still subdued. the private survey the pmi

posted an expansion of 52.9. this is the fastest since july. companies reported a pop in new customers and demand. they also said that they were hiring slightly more according to an increase in business demand, and despite rising costs they maintained prices because of market competition. taken as a whole china's data has been mixed. even for these pmi numbers that we're getting out for december, they were contradicting each other both on the services side and the manufacturing side, and then on top of that, of course, there are a whole host of other issues that have been weighing on the economy as well as on consumers, falling housing prices, for example, the weak job market. there was a bright spot, travel, once again, china posted $135 million domestic trips over the three-day new year break, higher by 9.4% from prepandemic levels, and the aviation authority today said that they expect that

international flights would reach 80% of precovid levels by the end of this year, with an emphasis, they said, on what they hope to be a significant increase in direct flights with the u.s. >> that's important news. we've been talking about opening up transpacific traffic for a while. big implications for american exporters which have already had signs of success in delivering airp airplanes to china. >> yeah, that's right. you see the authorities here are trying to address some of the challenges, not only with the flights, trying to increase flights, but they also just announced that as of january 1st, they are going to make the visa regulation process much more simple, specifically for american tourists. so you can see that the effort on the part of the authorities here to try to create that bridge. >> yeah. i mean i noticed also the

finance minister said they're going to expand fiscal stimulus in the coming year to support demand in the economy. what is the case, eunice, a lot of people want to look at china as like a comeback story, certainly the market got beaten up in 2023, what is the case and how are people feeling about the prospects for a rebound? >> well, i think that the comment that the finance minister made to the peoples daily, the communist party paper, was saying as you said, the fiscal spending would be increased this year. i think what's important, though, is that he didn't really say by how much. there weren't a lot of details. there wasn't anything that would indicate as to whether or not this would be a significant move. that's the big question, because we haven't really seen a whole lot of movement in terms of policy that would really address some of the fundamental problems in this economy. >> all right. eunice, thank you very much. eunice yoon live for us in beijing. still ahead, verizon shares

in the green as the stock gets upgraded to buy. the analyst behind the call joins us to make the case and tell us how much higher the stock can go from here. the dow is up 18. tech is lagging again today, as we have seenor f all of 2024 so far. we'll be right back.

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welcome back to "squawk on the street." verizon shares continuing to move higher following a second analyst upgrade this week. wolf research upgrading the stock to outperform to $46 price target, and he joins us now. what is there to be excited about for verizon right now, peter, beyond the high dividend yield? >> good morning. yeah. thanks for having me. the funny thing about telecom businesses is the narrative is never any good. everybody has a -- the industry seems saturated and they look the same. beneath that, the big three telecoms are solid businesses. verizon in particular has been refreshed by new management and

they're growing by selling more to the customers they have with the 5g money spent, we think now it can drive the stock nicely higher. >> why has it been such a laggard? you mentioned some of the reasons, at&t, verizon, it just feels like it's -- the industry is past growth? >> yeah. the industry is saturated. everybody has a phone. there are a few drivers still driving and influencing volume growth leaving aside pricing. one is that younger and younger kids are getting phones. there are 4 million humans every age level in the united states. i know from raising teenagers that my oldest kid got a phone when 13 and my youngest got one when he was 11 and that trend is going play out for a while longer. small businesses are also adding lines and enterprise is adding lines for people as they want to separate work and personal. these companies can take price. all three of the carriers increased their prices last year. to your point about the what has

been wrong, over the last few years, the telecoms have had to absorb a huge incursion by the cable industry, and that's pretty well played out. i think we know what cable companies are capable of doing in mobile network. >> meantime i love your bit about falling cant intensity at a time when the street is paying attention to corporate capex for the year. explain why that's happening? >> the 5g network upgrades cost over $150 billion for the big three, that's the sum of spectrum investments and also the antennas and computers to support and make that spectrum useful. that spending is almost all done. the spectrum was bought years ago. the radio access networks are three quarters of the way deployed and that will be ongoing through 2025, and capex is falling, from peak levels to trough levels in what we think will be '25 and '26 fiscal years and enables the companies to generate more cash, pay down debt and the multiples are so

low. verizon trades higher than the average european telecom condition. european telecom conditions are tougher than the united states. hold the multiple, pay down debt, the equity flows higher and the 6.5% dividend yields are juicy. >> thank you for joining us to discuss the call. verizon at 46. appreciate it. let's turn to the mag seven here. the stocks on the longest consecutive decline in a month and shares of apple down about 4% to start the year. our next guest out with a note today pointing to the global supply chain reshoring. cowen's research analyst joins us, chris has a buy rating on apple, price target of 220. i love the report this morning, which you basically argue to a large degree, they're reshoring or they're smoothing out of the supply chain out of china, just getting started? >> that's right. carl, thanks for having me. thanks for the kind words. it is a good team effort. yes, i think what you're seeing is there's been a slow, gradual

shift away interest china, but i would say that it's in the very early stages. i don't think it's ever going to be 100% complete, but there's definitely some diversification of the iphone and also the mac and the ipad away from china towards places like india, vietnam, thailand, et cetera. the one thing i would say, when you do an analysis since 2018, you look at the oems for apple, they're accumulating close to 45 billion in kind of moving not necessarily reshoring away interest china, there's some investments in china too, but also towards non-china and to these kind of like u.s., mexico, india now. >> we never like to ask analysts about competing reports from their peers on the street, but i do wonder if the last two rounds out of barclays and today piper, are -- move you in any way when

they talk about macro weakness, valuation concerns, difficulty, difficult times ahead in analog? >> you know, i think, you know, basically you look at it, if you look at the main iphone data coming out, december 9 was fine. i think people worry about the march quarter, the setup in march, and for the full year it's still too early. if you look at consensus numbers, iphone is probably going to be flat to slightly down when you talk on a year-over-year basis in '24. it's too early to make a call on iphone for the full year, but at least given like, you know, when you look at some of the supply chain information, march quarter definitely seems to be slightly on the weaker side. it's not a big price because usually june typically is the weakest quarter for iphones because, you know, waiting for the new iphones that come out in september. team not worried about it. i think the reality is iphone numbers do seem a little weak,

but looking pretty okay, margins should hold up. it's too early to make a call that iphone is done for the year. >> what is the upshot of your proprietary data on reshoring and manufacturing? is apple less vulnerable to geopolitical tensions and worsening relationship between the u.s. and china? >> so, sara, two things i would say is, like i said earlier on, we're in the early stages. it's going to take a while. it's not going to happen overnight. obviously, geodiversification is good for the supply chain and apple. the second thing i would say is that we bring examples tsm, you know, prepandemic, tsm had a higher valuation or traded at a higher multiple compared to the last few years, because as more china-taiwan came to the forefront, the stock kind of got a discount, so i would say that forward, we can see a scenario

where apple's stock gets a premium mult. as they move diversification away from china. i don't think it's going to become immune from china or any other supply chain. i think diversification helps and can help long term with the valuation too. >> monumental task the company faces in the years ahead. good advice on an important name. good. thanks. still to come this morning, what do mike softs, exxonmobil, apple, jpmorgan all have in common? they are, quote, superpayers. what's ahead for those names and other dividend stocks in 2024.

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buybacks had a real pullback there, down 15% year over year. that's because of the banking crisis. banks were big buyback people. they stopped doing that. here's the difference why wall street can pull them away and nobody yells about it but you can't pull back dividends. they scream if you try to pull it back. the yield on the s&p 500 is 1.5%. that's fairly low. it's been low in the last few years. and the reason it's been low is because, number one, fewer companies are paying dividends. only 80% of the s&p pays dividends and prices are going up faster than dividends have been increasing. people ask me, who pays the most dividends here? it's more about the overall yields they're talking about. here's the biggest in terms -- microsoft, exxonmobil, apple, jp

mother gone. some people buy them for dividends. you see they have high yields and a lot of people own those specifically for that reason. in terms of buybacks, here's the companies that are the biggest buybacks. apple, alphabet, meta, microsoft, exxon. this has been going on for years. apple has been reducing its share count for a number of years. as for what i think is going to happen in 2024, a lot will depend -- it's all about cash flow at this point. we could have a pullback on the consumer, we could have a change in the corporate tax structure, we could have some shift in government spending. that could affect things. the most important thing, i put this up every year because s&p puts out every year total return going back to 1926. the average return is 10.4%. here's the most important thing. as a percentage of the total return, the price is only 62%.

reinvested dividends is 38% of the total return. this is the most critical thing to understand about long-term investing. it's the power of compounding interest. you can say, i don't care about 2% interest. i want to make 40% trading microsoft. 2% reinvested over many, many years compounds dramatically and you can see it is a critical component of overall growth. so, if you really want to grow your wealth in the stock market, keep the dividends. look for decent dividend stocks. overall, reinvest the dividends and they grow. you know this, we've talked about this for so many years, carl, the power of compounding interest, it's the simplest thing to understand. a lot of people don't really act on it. it takes patience. you have to sit there and watch your money grow. what a great idea. it's terrific. >> which is why when dividends get slashed like explosive. >> you don't look, let's get a list of the highest dividend stocks on the s&p and buy them.

some people will mindlessly say this. walgreens had declining cash flow for many, many years and known amongst investors. the price has been slashed in half. it was $40 a year and a half ago, goes down to $20, and yet the dividend 48 cents was essentially the same. 46 to 48. when the price gets cut in half and the dividend is the same, the yield goes through the roof but you don't buy it for that reason. you buy companies like johnson & johnson that slowly keep increasing dividends with steady cash flow. that's 101 investing. >> bob pisani with lessons on investing. our live coverage continues. nasdaq is about to go positive and join the s&p and the dow. trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more - all crafted just for traders.

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(guitar music) with other programs i've tried in the past they were unsustainable, just too restrictive. with golo i can enjoy my food and the fear and guilt of eating is gone. good thursday morning. welcome to "money movers." i'm sara eisen with carl quintanilla live from post nine of the new york stock exchange. bob diamond is here with us. why he says the street is pricing in too many rate cuts from the fed this year. plus, ubs says the a.i. hype is far from over and it will be a