good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. a i'm becky quick with mike santoli and steve liesman. there is a lot riding on this. let's look quickly at where the futures stand on this friday morning. red arrows once again. this has been the picture for the year. granted, the year is four days long in terms of trading days. we have seen weakness in the futures in the morning. we have seen markets down for this week and we will continue to keep an eye on it. the dow is off 60. the s&p futures up 10. the nasdaq up 59.

for the year, the dow is d down .20%. the s&p is down 1.7%. now the nasdaq is down 3% for the week. a lot of this is because of what we have seen with the action in the treasury market. treasury prices have come down and yields gone up. t ten-year yield is 4.04%. you see right now with the two-year yield back to 4.27%. bitcoin tumbled after one analyst expects the s.e.c. to reject the proposals this month. this is something we talked about yesterday with pampliano.

he said don't worry about it. it will continue on after this. bitcoin up to $43,741. to today's jobs report. the increase of 170,000 in non-farm payroll. the range is from 100,000 to 250,000 or more. if it holds, the economy added 2.5 million jobs last year. the strongest since 2015. the hot jobs number will push back the rate cuts. we will talk about that in a second. traders see a 63% chance the fed starts cutting in march down from 71%. it is actually 75% and some point it was 80% a couple weeksiweeks ago. mike, the market is getting more realistic paring back the risk if it does or doesn't happen as

fast. i have to put my glasses on for this one. the fund rate at 3.97. it has put back to january of 2025. that has an effect on the funds rate. the story is they are putting one of them back. the fed had forecast three for the officials. now they went to six and now down to five. >> and pushing it out. >> just a little bit. the probability of the next one after the march meeting is up a little higher here. 93% for may. that makes more sense to me. one more thing. that 170 is a bit weaker on that. i'm wondering if people use that 199 from the prior month which

was flattered by the union workers returning. i think the actual number was 160 or 170. i think the idea cooling below that makes more sense to me. >> we are around trend. equilibrium moment. it seems it is a slower, but still relatively healthy level, i guess. >> what interests me is the fed has talked about risk becoming two sided. when they talk about that, that is also true for the market. what does that mean? it means risk of higher inflation and risk of lower inflation and slower economic growth. at some point, as these jobs numbers come down and moderate, there'ses also a lower level t think about. if the lower number comes in below 100,000, is this an oh, no, the thought. >> you have to lean in that

direction. once you know the fed is done and you know inflation is better than they expected by now and once you know they don't want to keep rates too restrictive and you put everything we are already aware of about how they may react to the incoming data and say which direction is the risk in terms of more cuts versus no cuts? you think it is probably on a hedging basis and the other thing is the markets overshoot the short-term. buy treasuries and assume disinflation and assume the fed easing and also stay with the stocks that are winning. we unwound it. >> in terms of overshooting, that's what it felt like. >> the market right now, the s&p 500 has checked back to the december 13th fed meeting at 4,707. ten-year treasury yield over 4% on that day. that's where it is back to right now. this is what the market does.

two steps forward and one step back. >> you think of it as ebbing and flowing. >> you explained the difference with the fed forecast and market forecast. think about the roulette. >> badly. >> it's a terrible game. >> it's not a game. >> here's the deal. the fed official when they do a rate forecast, they have to come in and essentially put their chips on one number. that's a fed forecast. the market, as mike just b brilliantly explained, can put chips on a variety of numbers. when we look at these probabilities is the result of not one bet with one guy with one number, but one guy's bet or woman's bet on a variety of numbers. ten chips and put them on 9 or put them on red. >> that's the smart way to do it. how often is the fed forecast righ right? >> the point is the fed forecast

requires the official to come in and say pickinler pick a number. the market has to bet not only on the possibility of upside inflation, but downside. the idea the economy is weaker. you have to put some chips over there and that's one of the reasons you get the dispersion and it is a look at the markets and how it has leaned an degrees suffi aggressively. the market and fed are more in line and adjusted the price level to the risk of two sided and the market can move from there. >> you have the reset of expectations and also i push back against the idea that because of the s&p got to 4,750 and the fed acts at that moment and we're going to get 150 basis

points of cuts. those do not explain one another directly at that moment in time. we're going to get to all this continually in the next couple hours. one of the world's biggest supermarket chains is dropping pepsi products over price increases. carrefour operating in 30 o countries and will stop selling in france and italy and belgium. it will add notes explaining the issue to customers. they have been in discussion with carrefour for months. >> this is one of my favorite stories of the day. the push back and forth on it. i think you need to be concerned as an investor that this could be the end of the margin expansion. they are pushing back. carrefour is pushing back

because inflation has slowed down. you can't keep raising prices. that is not acceptable to the customers. if you see this happening with other retailers, which i anticipate is the trend and it is happening with the walmarts and costcos of the world because they have control over these things. they push back on these things happening. if you see that continuing, it will signal to investors that you are not going to continue to get margin expansion. you can't use inflation as an excuse for raising your prices. >> this is the macro meets the micro. tom barkin, the fed president, talking about the process of inflation. micro process of inflation before the pandemic and you went to your customer and say i need to charge you 10% more. they broke during the pandemic.

prices were accepted. they pass on to customers. we're now on the other side. i think barkin looks at this and smiles and he's happy about this. the pushback from the customers to the supplier is an improvement in the micro inflation dynamic that then ends up in the macro numbers. >> granted, carrefour doesn't have many locations. what iss interesting about this is after a year of investors saying the food companies had the pricing power moment. we are betting it doesn't continue. it seems lagging. pepsi was absolutely one of the companies that felt confident. >> and great margins. >> even in the disinflationary time. >> carlos came on with us in the middle of the issue and he saw

prices in latin america. inflation was 15% in south america when he was orunning kel kellogg. he said american ceos were behind the eight ball. if they didn't do it, they would be in big trouble. this is reverse of that. >> the buyer saying i don't feel i can pass these along. other side of this, mike, i want to throw at you is profit margins have been high. it is probably correct to expect them to come down and normalize to historical levels if the analysts have their profit margins in at rates from the pandemic or after, they are probably wrong. normaliz normalizing. >> the adjustment has been under way for a little while since inflation with goods and food peaked. >> we are nerds are us. we had two stories in the first

11 minutes. show. this is my type of friday. >> i haven't been yelled at yet. >> this is my type of friday discussion. >> glad we can help bring it to you. shipping giant maersk out with an update. it will continue to cdivert around the cape of good hope for the foreseeable future. it will avoid the red sea and the gulf of aden. coming up, apple shares sliding again this morning. now down 6% since the start of the year. we will dig into that move after the break. and jennifer granholm will join us at 8:00 a.m. eastern. "squawk box" will be right back. . don't take if allergic to nurtec. allergic reactions can occur, even days after using. most common side effects were nausea, indigestion, and stomach pain. ask about nurtec odt.

shares off to a rocky start for apple down 6% since tuesday with two downgrades. joining us now is an analyst who downgrade the stock. the senior analyst here with us is bar tton. you saw the writing on the wall before folks were out there. i thought it was interesting when he read your notes. reporting on apple is like reporting on a small country. there are all of these sectors out there. i'll quickly summarize what i got. you think the valuations are

high relative to the historical norms. give us detail. >> i think apple is a remarkable company. i would argue it is a stock you can trade. you don't have to own it all the time. i think you can do that because it is a maturing business. the growth trajectory is very much leveling out. i think the combination of the growth slowdown and valuation which was downgraded in august was at an all-time high. you did not need to be overweight at that point. since then, the stock has pulled back a little bit. not enough where i feel you need to jump in. this is a business that's going through cycles and the cycle they are in right now is one of muted growth. it is a business that you love to own if they are rolling out new technology. i don't think vision pro is that. i think vision pro is more of a

bunt than a home run. the rest of the business is fighting through choppiness. as great as apple is, i don't see them putting up the earnings that is compelling at this point. >> the biggest part of the business are the phones. i guess you are not excited about the growth rate of the phones. talk about where it is and where you expect it to go. >> you know, i think the phone trajectory in the december quarter is one of flat and not much growth. we are expecting to stay through that trajectory through next year. if you are not growing that line and the trajectory is met, which is where i think the consensus is at this point even if they are hitting the lower bar, i don't think that will be something that is really compelling for the shares. flat iphone is a tough set up.

iphone is there. it is really not a lot of excitement right now in iphone. >> one part that looks like it is doing reasonably well or better is the service part of the business. apparently tim cook is excited about this. that's not enough to get excited about the growth prospects for the company? >> i think services was tremendous he in the september quarter. i think that is tied to search. the search ad market. i think what we have there are difficult comparisons. i think to argue they ex accelee from the september quarter is difficult in the face of that. you have a lot of regulatory noise with the app store regulation. those headlines could be

problematic for the business. you may be a little bit concerned about what could happen there. >> barton, apple is a fascinating stock in the way it trades. everything you said has been true for some time. you downgraded it back in the summer. the stock continued higher in the latest quarter. the valuation has gone up. there's this separate thesis on it which is a super defensive stock. insulated from the rate pressure or anything else that's going on out there. at the same time, you know, berkshire hathaway owns and it is not selling any. this is a magical meltup machine. it has been this tough one to trade. how do you approach it with all that? >> i think it is okay to trade it. when the valuation is trstretch

it is okay to ease up on it. you know, if the stock were to pull back a lot and you could get into it with muted growth. i think you have to look at it much like other consumer products companies where you are not in there all the time. you are there when it makes sense. as for the macro, you know, if we are in a more difficult macro and the economy were slowing down and the stock were certainly no more expensive than it is now or cheaper, one could get interested in it as a relative stability cpg play. that's not what we're feeling right now. we're feeling the economy is, you know, pretty good. goldilocks. that is maybe not the defensive argument for apple. i think the growth argument for apple is challenging. >> barton, do you have an entry point you feel comfortable? >> we have a $189 price target.

i like to see double digit opportunities to our price target. you know, i think you have to see it lower for us to be interested. >> barton, thanks for joining us. >> thank you. >> thank you. coming up, ncaa an they're all expecting more. more efficiency. more benefits. more growth. when you realize you can give your people everything, striking age deal. t that's coming up. and more. thank you very much. [applause] ask, "now what?" here's what. you go with prudential to protect, empower and grow. with everything you need to deliver, you guessed it... more. one more thing... who's your rock? learn more at prudential.com icy hot. ice works fast. ♪♪

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three times the value of the current deal. ncaa spokesperson confirmed additional 25% or $28 million annually will help with production and marketing costs. the deal runs through 2032. it includes the rights to 40 ncaa championships and 20 women and 19 men's. it includes the men's championship which is carried by cbs. endeavor consulted on the deal included 57% of the deal is tied to women's basketball. specifically the next major sports deal. the next major sports deal up for grabs is the nba. the deal expires in 2024 and 2025 season. >> it makes sense because of gambling of sports which increased viewership. it means you can charge more for ads.

if you watch caitlyn clark in iowa, she is about to break the scoring record for the ncaa. >> i know our minds are warped in terms of dollar value, but it seems cheap to me. $115 million a year. >> they didn't used to get the viewership. >> of course. >> now they are getting the viewership. you have the dollars an an along with it. >> espn also can create the interest itself. the promotion. bob iger said this. nobody else is talking about your tournament like we are on espn. feeding into the promotion. almost creates its own demand. >> i had an opposite take from you, mike. i'm blown away about the money in basketball. in my lifetime, what has gone

from you can find the college game here or there. now it is big money. >> fair enough. in real world dollars, it is big. in relative to history, it is big compared to pro sports. >> i watched every championship game. when is the championship? >> next monday night. >> i'm glad to see the agent li athletes get a share. it makes me sad everybody leaves every team. they go to the transfer portal. it is hard to be excited about the team. you get invested with the player and they leave after a year. >> as an economics reporter, the guys from florida state sitting out makes sense. you go in and get an ankle injury and reduce your value by $3 million. as a fan, they are sad to see what happened. >> right. it's hard. okay. let's move on. last night on "last call," brian

sullivan talked to the clean energy conference representatives. here is who michael wirth said about the future. >> the world will use more oil and gas. >> in five years? >> using more than it is today. we meet demand. we supply demand. we will grow our oil and gas business over the next five years. we will grow renewable fuel and grow hydrogen and carbon capture business. we fled to reduce the emissions from traditional energy which we are doing. at the same time, we invest in new technologies to grow new sources of supply which is demand on all forms of energy continuing to grow. >> wirth said the strength in recent oil output is the largest in the world. shares of chevron falling 17% in

2023 amid the 10% decline in the price of crude. separately, exxonmobil warning investors that it will be taking a $2.5 billion writedown of the california operations. it comes dayrotesaid it would incur a hit of $4 billion largely because of california's energy policies. exxon is related to the operations in santa inez after the 2015 pipeline leak there, it shifted crews to trucks, but regulators stepped in and restricted the ability to move oil by the road citing risks to the drivers and environment. the continuing challenges in the state have impeded progress. that is part of the reason that gas prices are so high in california relative to other states. part is the gas tax and the other issue is the refinery. exxon shares up 22 cents.

when we come back, the impact on the fed and the markets and your money. that's next. later, dr. scott gottlieb will join us on the fda probe of the potential side effects for the weight loss drugs which have surged in popularity. as we head to break, let's look at the s&p 500 winners and losers. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. ncredible. let's check it out. says here it gets plenty of light. and this must be the ocean view? of aruba? huh. this listing is misleading. well, when at&t says we give businesses get our best deal, on the iphone 15 pro made with titanium. we mean it. amazing. all my agents want it. says here...“inviting pool”. come on over!

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good morning. welcome back to "squawk box." we are live from the nasdaq market site in times square. the futures this morning are under pressure. you are talking about the dow futures down triple digits. decline of 108 points. nasdaq off 73. s&p down 17. this is all coming before the big number that hits at 8:30. >> that december jobs report is less than two hours away.

joining us now is jack cafferty and michael gapin. good to see you here. gentlemen, michael, you are expecting 175,000 net new jobs. is that now, i guess, the new run rate? do we have theequilibrium? >> we should expect growth to slow further. the three-month average coming out of december was 321 i year ago? we should expect further cooling. we shouldn't hit the point where growth has stabilized. >> is the top spinning slowly enough where we see it falling over toward getting to a stall? >> possibly. most of the job gains from leisure and hospitality.

the last of the catch-up sectors. in terms of private sector outside of those over the last six months, we lost about 48,000 jobs. the concern is when the catch-up effect fades and when does that happen and when it does, are we at zero employment growth or will we have jobs coming back in the remainder of the economy in leisure and hospitality to keep us at the level? >> zero growth at 3.7% unemployment is a funny spot. >> an odd spot. maybe a fed more concerned of sticking the landing and a more balanced reaction would react to that more quickly. i think that is the open question. where do we settle in when this catch-up effect fades. >> jack, since at least the november cpi report, november 13th, we got further confirmation of disinflation was here. it seems like that released

investors to view good news is good news for the economy. is that still the case? are we still making sure we want to see the economy is resilient here? >> i think we had a little bit of creative tension where the equity markets wants good news. they need good news to justify the prospect of double digit earnings growth. i think the bond market wants to lean into inflation being transitory and we are going to get to a softer landing and i don't want to accuse my fixed income colleagues of always looking to the dark side, but they remain a little more bias toward the downside is possible and the downside is good news for them. looking to drive everyarnings, need something miraculous. wages are sticky-ish. if you go back and think about over the weekend where i watched the regularly running customers

with 256 people drafted in the nfl, but 450,000 trades jobs. ad for a build for submarine. i have never seen that before in my 58 years of life. you have this need for employment, which we have not seen. we actually lost jobs. that makes me think wages remain sticky unless companies start firing in order to maintain profitability. if that's the case, you are not getting growth to drive earnings. how do we get the operating leverage with the slow economy without pricing and where you have sticky costs? >> all of this is an old discussion that we are toying with the idea that there is not a lot of connection with job growth or wage growth or economic growth and inflation. we have seen, and mike, you mentioned this, the economy he

remains strong and resilient and inflation comes down from 10% to 3%. there is a lot of on twitter and the twitter with economy and maybe this is disconnected. >> i think there is a lot of distortion from the covid cycle. we have not been in a situation in decades where we have come off the massive supply constraints like we are. whether it is global supply chains or in the domestic labor market, there was 12 to 18 months ago we were talking about shortages and early retirements that won't go away. it is the surge in participation and the economy to grow faster and still giving us inflation. >> lower inflation? >> a much different mix than we're used to dealing with over

the normal cyclical demand story. it is the supply story. >> jack, if you characterize the implicit desires of equity investors, it would seem like that is not one you think you would bet heavily on. >> i think companies spent 20 years being good at managing the cost structures. if we go back and think, you know, i'm a child of the '80s and we talked about rolling recessions. if we look at the equity market, we had a rolling recession. it was growth almost, if you will, with profitless prosperity. suddenly something changed in the world of inflation that i need you to make money. those companies were aggressive at cutting costs and turning that into restructuring charges which turned into margin

expansion in q1 and add the hope and those stocks took off and led the market last year. can we see some rotation underneath the surface of companies saying i'm getting slower and i'm going to start firing people. hope nully not y full thely yo to see the consumer even ntrenc. to drive that miracle. >> muddle through is an option. i point out the magical mid '90s soft landing. it was like, you know, you don't think about it. >> the mid '90s was the problem that the fed caused happened out of the united states in the derivatives markets. mexico going bad. create treasury programs. the u.s. wasn't touched as much

by that. >> it is not perfect. you can always point to winners and losers. >> exactly. >> thanks a lot. i appreciate the time. coming up, we will talk about new tax credit roles to help car dealers sell evs. as we head to break, here is the read on the economy from the royal caribbean ceo. >> the consumer is healthy. when we poll our customers and look at credit card data, they are sitting on a lot of wealth and visangs and low credit card balances. we are encouraged by that. you know what's interesting these days? bitcoin. look for bitwise, my friends.

new tax credit rules for 2024 should help dealers move evs. there is an issue over which qualifies for the incentive. we have phil lebeau with more. >> reporter: steve, the rules that went into effect on january 1st require the ev batteries and c components to meet a category in the u.s. take a look at the evs offered or eligible for federal tax credits. we are talking pure electric vehicle that's point. nine models for $7,500 discount.

another five could get half of that. you can take that at the dealership if you are buying or a future tax credit. as i mentioned, the goal here and this is driven by the biden administration, is for ev components to be sourced here in the united states or in trade friendly countries. that's the key. we will not get into the percentages and how it shifts over the next couple years. suffice it to say the sourcing with the ev batteries and raw materials coming outside of china. not being in china where most of the battery chain is now. is the ev market responding with more buying evs because they are eligible and they can take it off the price of the vehicle? maybe. the number of evs topped 1 million for the first time in 2023. 7.6% of the market.

a nice increase of the market share, but not all automakers are qualifying all of the evs right enough. gm is a good example. bolt is structured right now for the company and they will offer 7,$7,500 off on all evs. don't be surprised if you see that on others until they get the sourcing to offer the discount. i want to show you auto dealer stocks. autonation and group 1 and penske auto group. they can offer these at the dealership. when you go in, instead of saying i'll take $7,500 off the federal teaxes next year, you cn take it off the price of the vehicle. that means more people are willing to buy an electric vehicle. leasing is a loophole.

foreign aut o makers are not qualified. last month, guys, 55% of all ev sales were leases. don't be surprised if that continues. the market overall is 20%. you see a lot of people saying i'll lease an ev. >> phil, using the tax policy is hard enough in and of itself. do you think they made it too complicated here for people to say i don't know if i get the $7,500 or not? >> reporter: they don't believe so. the biden administration is trying to make this as consumer friendly by you going to the dealership and you taking it right now. i don't want to take it 12 months from now when i fill out the taxes. as a result, they believe in that more people will be willing to buy an ev at the dealership. you know, it is early to tell, steve.

the bigger driver is not tax policy, but the cost of the vehicles. >> yeah. doing it at the dealership like tesla, it doesn't have a lot of dealerships. >> interesting. >> reporter: tesla doesn't have de dealerships. the goal is you will see more evs at dealerships. >> phil, thank you for joining us. when we come back, dr. scott gottlieb will join us on the potential side effects of the weight loss drugs and eli lilly's decision to sell directly to the consumers. "squawk box" will be right back.

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welcome back, everybody. the fda is examining possible side effects linked to obesity drugs including reports of

suicidal thoughts. alopecia or hair loss, and inflation of stomach contents. it was evaluating the need for regulation for these drugs including wegovy, ozempic, mounjaro and zepbound. the labels already list suicidal thoughts as a possible risk. joining us now to talk more about the fda's probe and the new direct to consumer model that eli lilly launched this week is former fda commissioner scott gottlieb. he sits on the boards of pfizer and alumina and is a cnbc contributor. let's talk this through, the risks of what potentially could be side effects for these drugs, i think we have all been waiting to see is it as good as it sounds, something that takes the weight loss off, a magical cure, a magical pill. how concerned should we be about these potential side effects? >> this is an early stage investigation by the agency.

so these are events or reports that came into their adverse event reporting system which comprises reports sent in by doctors, reports collected by the company, as well as spontaneous reports generated by consumers and data they gather from paired databases and post market surveillance they do including modern electronic medical records. these are fairly routines gettingsget i ing these post market reports. whether or not these side effects that have been identified in the post market monitoring are related to the drug needs to be evaluated. that's what fda is going to be doing, looking to see if there is a causal relationship. are the side effects related to the drug? are they incidental and just being detected in the background? or could they be related to the actions of the drug, for example, the weight loss is being achieved could somehow dramatic weight loss that is

achieved by the drugs instigate alopecia. those are the kind of things that the fda is going to be looking at. i wouldn't be surprised to see these reports come up and i wouldn't be surprised if over time the labels of the drugs start to reflect a higher incidence of some of these kinds of side effect as they look much larger at a broader population using these drugs. that doesn't mean it is going to change the risk-reward of using the medicines. >> inhalation of stomach contents, that sounds disgusting. i was thinking about it. if part of the drug's effect is to slow motility and it makes you feel fuller because you are fuller, doesn't digest your stomach contents as quickly that would make sense if something happens -- >> reports of aspiration, so, you're exactly right. it could be related to the mechanism of the drug in that instance. >> here's the question, you said that risk-reward scenario is still the most important thing to be looking at. and i think that's probably the key, the idea that somebody who is morbidly obese can be on the

drugs and give them a healthier life is probably worth the risk of some of the side effects. my concern with these drugs has always been that they're being used off label prescriptions, they're being used for wider uses, they're being used for cosmetic purposes, somebody who wants to fit into their gskinny jeans again. how do you manage the risk-reward scenario under that sort of situation? >> i think it is inevitable there will be inappropriate use on the margin. i suspect it is much lower than we think right now. i think a lot of the inappropriate use, the more cosmetic use is just very visible because we see it on tiktok and hear about celebrity reports of people using these drugs, but they have made it harder to get access to these drugs if you don't qualify based on your bmi, co-morbid risk factors. for the target population right now, people who have diabetes, people who are overweight and have risk factors related to obesity, certainly patients who have severe cardiovascular

disease and maybe have suffered a heart attack or stroke and are overweight and can use these drugs to try to reduce their weight and get better control of their blood sugar, these drugs can really provide a substantial public health benefit. we saw the data that came out last year from the novo studies looking at the substantial reduction in cardiovascular risk related to use of these drugs in that population, patients who have established cardiovascular disease. there is going to be inappropriate use in the margins. i suspect it is much lower than we think. there is a supply constraint on the drugs and the payers are making it difficult to get access. >> when you say the payers, you mean the insurers. what we heard from lilly sounded like an end run around where they will drop the price and make it so you don't have to go through pbms or insurers. >> still expensive, even though they're dropping the list price. this is only for patients who are underinsured or uninsured, providing incentives in the market for patients to get access to the drugs if they

don't have insurance or underinsured. it is still expensive out of pocket. that's not going to preclude some people from using it and some people from using it in a cosmetic fashion. with respect to the telehealth that lilly set up, they seem to have taken care to try to provide oversight over that. it is hard for a drugmaker to set the programs up because they're going to be subject to the fda regulation on promotions. they got to put in place measures to make sure doctors can't pay -- aren't parid to promote it. you saw lilly say things like the telehealth providers they're using are going to make sure patients have the access to the full complement of weight loss options and aren't going to be steered to one drug over the other, although within the telehealth mechanism that is set up, the lilly product is going to be shipped for free, other products will presumably be shipped for a cost, implicit inducement there. maybe one reason why lilly went to two smaller telehealth providers to do this, a company called nine am health, and a

company called form health to provide the drug through telehealth, the weight loss drugs through telehealth, one of the reasons they may have done that i'm just speculating, because the smaller providers, two companies that were financed in series a financings in the last two years, the smaller companies may have been more willing to give up some of the potential upside of thgsin like promotion to get the lilly business. >> dr. gottlieb, thank you for your time. >> thanks a lot. "squawk box" will be right back.

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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. look at the futures, another day of weakness. at least in the morning, s&p 500 indicated off a quarter of a percent, a little more than that, four straight down days for the s&p 500. the index is about 2% off of its high from very late december. you see the dow indicated lower by 72, firmed up a little bit in the last half hour or so. nasdaq has been the downside leader, down almost 4% off its high, it is off 56 points in the premarket. treasuries, also a story here, ten-year treasury yield ticking back above 4%, where it was when the fed meeting occurred december 13th. we have retraced some gains in

treasuries. >> less than 90 minutes to the big jobs report. let's get to dom chu with a look at how the market is trading. he's going to tell us how it is all going to change after the number. >> all right, so, let's talk about some of the -- exactly. some of the individual stock stories of the morning so far. outside of that macro narrative on this friday morning movers edition. we'll start with energy. exxonmobil shares, the int integrated oil and gas giant up fractionally in premarket action around 1500 shares or so of volume. thinly traded. exxon says it is going to take a charge between 2.4 and $2.6 billion to write down the value of its production assets along the coastline of southern california that have been really unable to get online, given some of the regulatory hurdles in the state. exxon joins chevron in taking multibillion dollar charges tied to those challenges for production in california. so those shares up about one quarter of 1%. checking in on peloton, up another 3% this morning.

just around 175,000 shares of volume. this follows a big gain yesterday. hard to see on a chart like this. but it was a 14% drive yesterday to the upside. that positivity coming out of yesterday's news that the connected fitness equipment and content company is partnering with chinese-owned social media platform tiktok to offer short form fitness videos and other content. it is part of a broader strategy at peloton to increase its appeal to a wider range of customer demographics, not just the upscale side of things. we'll end with a fitness as well, on the apparel and foot ware side, nike, which is just about flat on the session, around 8,000 shares of volume. analysts at ubs named nike one of their top picks in u.s. soft lines retail, saying that some of the best growth outlooks aren't yet priced into shares. nike shares, ones to watch as well, steve. i'll send things back over to you and more on that big mac row narrative around jobs and interest rates later on this morning. >> i think -- thanks, dom. the market is setting up for a

weaker number, stronger number. what is minus here? >> it is modestly minus. i'm more interested in how the bond market is bracing perhaps for something. joining us now is kamal sh shri kamal we're unwinding a little bit of the moves that occurred at the very end of last year, in equities and in fixed income. bond market got pretty confident in a hurry that disinflation is certainly has some momentum to it and the fed is going to be cutting significantly. where do you think that leaves the ten-year around 4%, corporate credit spending is very tight, seems like everyone was very happy with the soft landing scenario. where did you come down? >> i think a good part of what is has happened, dom, is the result of the fed, the uncertainty, the volatility that was caused by contradictory messages from the fed. if you were to look at the bond

yields by themselves, and you did not concern yourself about the fed messages, then you should have had a much more stable ten-year treasury yield. instead, what you had was a december 13 press conference by the fed chairman who essentially gave a propeller up and then pushed up and then john williams of the new york fed pulling you down. we had different fed people, including raffaele bastic talking how it is too soon to expect a rate cut. has anything really seriously happened to cause all of this move? i don't believe so. i really think that around the 4%, 4.10%, 4.15% mark, you're going to be very happy a year to

two years from now. >> on some level, sri, it is markets doing what markets do around an inflection point in policy and the committee is not necessarily all in unison about, you know, their particular outlooks. it doesn't seem to me that the market has been really unusually volatile around this. however, if you think 4%ish on the ten-year is a buy, what are your assumptions that feed into that view? do you think that we have a rapidly decelerating economy? is it just about inflation being friendly and we have real yields are now attractive again? >> that's a great question -- set of questions, mike. my assumption here is with the interest rates having risen so sharply during 2022, 2023, and now being reduced or at least kept with the possibility of a decline, you still have something that is going to break in the system.

whether it comes from banks which are losing deposits, if you look at the small and medium size banks, or if you look at the commercial real estate problem, the credit crunch, any one of those could cost under the big failure and that is what is going to cost the fed to ease, not lower inflation rate, and that in turn is going to cost the long dated yields to also come down. so it is a breakage in the system, rather than the result of the inflation coming down. >> sri, didn't something break ten months ago? we had banks go bust. we thought a lot of people thought the fed has to be done, should be cutting soon. it didn't happen. we absorbed it. i guess before that you could argue we lost trillions in crypto value, speculative parts of the stock market implode. what particularly makes you think we're further -- we have further vulnerabilities systemically? >> something did happen last march, between march 1st and

march 15th of 2023. you had quantitative tightening shifting to quantitative easing. the assets of the central bank went back to the 2022 level because the fed hastily gave up on its tightening program. and then they started to go back again to quantitative tightening. but you're talking about relatively small banks in the setup. if you have medium-sized bank failure, or if you have a big failure on the commercial real estate side that makes big news, then you are going to have a more long lasting easing of policy and that is the difference between march of last year and what i look for the next three to six months. >> sri, we have a minute. walk me through all of 2024 in that 60 seconds here. tell me when the fed cuts, how much it cuts, and i think the most important question that wall street really is focused on now is when or if the curb

disinverts. >> terrific question, steve. let me give you a timeline, obviously subject to change, but within the one minute you gave me, i'm expecting within the next three to four months something breaks. let's assume it breaks by march, april. then the first rate cut also happens in march, april. quantitative tightening is stopped. and then you have quantitative easing following and then that is the whole thing progressives for two to ten-year, above minus 38, minus 40 basis points goes to zero very quickly within three months and then it -- the yield difference becomes positive for the rest of the year. >> okay. we're going to have you back, sri. i have a different take on this, which i believe now and into the future the fed is the -- the bar for using quantitative easing is much higher, and i believe the

bar for zero is much higher. i believe the fed doesn't want to go there again and next time it is faced with that choice it will be much more reluctant to do so. but i'm not disagreeing, not saying he's wrong about it, i'm saying it is an important debate to have. >> sri, thanks so much. >> thank you. when we come back, corn ferry's chairman talks wages and the labor market in 2024. what he's seeing in the nation's workforces next. and then, professor, author and podcaster, author brooks, lloius. we're going to get his take on the art and science of happiness in 2024. "squawk box" will be right back.

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and up to 4 hours of battery back-up to keep you online. only from xfinity. home of the xfinity 10g network. counting down to theempt the december employment report, joining us with more on the job market, alan garino, korn ferry. let's talk about what is happening with wages. i think that's a big part of what we're looking for today. we had the adp wage insight data on yesterday. and it showed that things are coming down, not only that, it is not paying as much anymore to leave a job as it is to stay at the same job. what is your take on what is happening broadly in the job market, specifically when it comes to the wage component? >> sure, steve. the beauty of this topic is that

it is still parallels what you talk about a lot, which is the economy and economics. we had significant wage growth over the last couple of years during the reopening for a whole bunch of reasons. we had the great recession. we had this sense that there was a big piece of the economy represented by people that, quote, didn't want to work. so there was that whole buzz happening. and the reality was it was true and so employers had to bid up wages to get people to work in what was a rapidly growing economy that had gone through a nosedive. so, if you think about it, it is really a stabilization. if you think of wages as a reflection of supply and demand, we all know how that works, right? price is determined at the cross. so we have meaningful demand right now. we have meaningful supply, but still looking at very low unemployment from a historical basis. the reality is this, to me, is

just sort of a normalization of what was the phenomenon of let's say explosive wage growth. >> your business is on the front line in terms of demand. give us a feel for what your book looks like in terms of what you're hearing from your clients, are they pulling back from the searches that they had for executives and other positions last year? or is there demand that is pretty constant? >> well, you know, fortunately, we're 10,000 plus people and 60 countries. so what happens inside our firm is, you know, just a microcosm of what, you know, may or may not be directly reflected. what is important is what we're hearing from ceos and other leaders and we're all hearing it in the same dialogue around the market and the economy. i think right now we're certainly not in a party economy. but we're not at a funeral either. and so i think as steady as you go, and i think that what we're going to see is maybe, maybe

this jobs market, jobs report data over the next year is going to be a proxy for this thing that we're talking about called the soft landing. and, look, we all lived through what is not a soft job market situation where literally job opportunity market place fell off a cliff. i can think of at least two or three previous cycles over 25 years where we all know what that looks like. this doesn't feel like that. i'm pretty optimistic and by the way, as a free marketer and person that has looked at trying to understand the economy as it is over the last year, it has been perplexing. it is defying a lot of gravity. but the reality is maybe indeed this is reflective of a soft landing, job growth will continue, but not at a skyrocketing pace. numbers like we have seen in the last, you know, few months, the 190s and so on. >> right. i'll tell you my concern, which i don't know how to look at this in terms of data, but i've seen

this behavior before, which is this motion of labor hoarding, that it was such a hassle to hire people that even when sales were going to come off, you're not willing to let people go the way you would normally adjust your head count to revenue or profits. and that suddenly a dam breaks and all of a sudden we have all this unemployment. do you have any visibility into this question as to whether or not companies are holding on to people, because of what a hassle it was to hire them in the first place? >> love the question. i actually have seen it myself, twice i've been in this business a little longer than some, so i have seen it. honestly, the counterbalance to that is we have a massive skills shortage in the world. and so when -- previous years, quite frankly, hiring is more fungible. it was easier to find great people 15 years go or 10 years ago than it is today relative to

the demands of jobs. so i don't think we're going to see anything like that again. i think that if you look at the data for the next decade or more, depending upon how a.i. helps ease some of this pressure, we have a massive skills shortage across the world. there are more jobs than there are people who can fill them, and i think that will be, you know, if you think of the job market as a free market, a moderator. >> hang on. i want to show becky, she asked yesterday about the wage data, so we made a couple of charts for you. here you go. here is the charts i should have had available yesterday because i knew this was going to come up. i had a nice chat. we're looking -- alan, i don't know if you can see it, at the percentage change in year over year wages for job stayers versus job changers. and i look at that chart and what i see, becky you tell me what you see, it was a massive premium in the midst of the pandemic to change jobs. >> yes. clearly. >> you got a big, big raise that was up near the double digits,

now that premium has now gotten to be smaller where the change -- >> i'm surprised that it is still 8% versus 3% or whatever we're looking at. >> it is still 8%. so, alan, do you want to talk to this chart? i should have sent it to you ahead of time. it is not quite as lucrative now, still lucrative -- >> a lot better than it was before january 2021. >> that's true. but not as lucrative as it was. you're on the front line, talk to us about it. >> right. love the last minute chart, but i did get a chance to figure it out in the last 20 seconds. it looks to me like a classic reversion to the mean. and so, if you look at where we're going, you're going to get a moderate increase, which we always have, to change jobs and go to a new company. however, we're not going to get that major delta that we had between the bid and the ask at staying where you are versus going to some place new.

and, again, i still think that's also reflective of the fact that, you know, we had a significant jump. you know the old saying, 50% of a number that is twice as large as it was two years ago is still at the quantum of fairly sizable number. so, people got big raises, and now they're getting what looked to be smaller raises on a percentage basis, but i bet if we looked at the dollar amounts, still meaningful dollars in making changes. >> alan, thank you for joining us and giving us insights into the job market. >> great to talk to you, steve, thank you. >> see that, you ask and boom, boom, boom, just like that. >> in just 24 hours. >> i could have had it right away, but i didn't -- >> coming up, congress has nine days to negotiate four spending bills to avoid a partial government shutdown. a look at how washington is preparing for that. "squawk box" will be right back. >> announcer: time now for today's aflac trivia qstn.ueio what was the worst performing stock in the s&p 500 in 2023?

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>> announcer: now the answer to today's aflac trivia question. what was the worst performing stock in the s&p 500 in 2023?

the answer, enphase energy, which fell by more than 49%. welcome back, everybody. the odds of fully funding part of the government by january 19th are look less and less likely as top lawmakers still haven't come on an agreement on how much to spend next year. emily wilkins joins us now as congress gets set to return to washington on monday. that does not give them many days to get this together. >> it really does not. and the main thing that is missing right now is exactly how much they're going to spend. that needs to be figured out before the details can get there. house speaker mike johnson, chuck schumer, they have been negotiating, they're continuing to negotiate on the overall amount to spend for the federal government for the remaining 2024 fiscal year. right now the house and senate, they're about $120 billion a part in the spending bills that each chamber have come up with. tennessee republican chuck

fleischmann, one of the top government appropriators, said both sides will need to come closer together to ultimately get to an agreement. >> house republicans are in the position right now of saying, we are at the base line lower level and that's where they're holding. do i think that number will go up? if we get a budget deal, i think it has to. does it go up to the senate levels? absolutely not? to the white house levels? absolutely not. >> about 20% of government funding is set to lapse on january 19th, unless congress acts. that includes bills covering the departments of agriculture, energy, veterans affairs, and the department of transportation. plus military construction, the fda, housing and urban development. although speaker johnson has vowed to have no more short-term stopgap bills, he said if lawmakers were close to an agreement by the 19th, there could be a short-term stopgap to last until february 2nd, when

the rest of the government needs to be funded by. >> we could see the potential if the parties are close for the olive branch of a continuing resolution maybe from the 19th to the 2nd. as a stopgap or something like that. that's not beyond the pale of reason. >> the senate gets back on monday. and the house returns on tuesday. and, becky, they're going to basically have to get right to work if they have any hope of making that deadline. >> emily, what pathway do you see? this just feels a little unknowable because we don't know as much about mike johnson, who he works well with, who they might be reaching out for the white house to be working through the senate doesn't seem like a particularly constructive path when somebody is going to have to figure out what the house is going to agree to on all of these things. this feels more unknowable than some of the things we have seen

in the past. >> you're absolutely right, becky. this is yet another big test for mike johnson. he hasn't been in the speaker's office for three months at this point. this is really a test for him to be able to negotiate with schumer, to be able to negotiate with the white house, and at this point, i think there is a big question about how he negotiates with the hard-line conservatives. they have come out, they have really criticized some of the discussion about what the top line number should be. they want to see these major cuts that really don't stand a chance of actually getting into law with the senate. and so, johnson has a lot of folks he has to negotiate with, a lot of people to try to keep happy. there isn't a lot of talk right now about trying to oust the speaker again. i think everyone is exhausted from the last time that happened. but i think there are growing concerns about what johnson is doing, how he's negotiating, and whether he's paying attention to kind of that right most flank of his party. >> if anybody can herd the cats, that's been the problem for the entire year. and with the republican number

dropping, and the gap between the republicans and democrats there, that just seems look a tougher and tougher fix. >> absolutely. and, you know, the end result here, if they don't get these bills done, johnson said he's going to continue 2023 funding into 2024. and that is making a lot of folks nervous, especially in the defense industry, because that would mean there would automatically be a 1% cut across the board. that translates into billions and billions that the defense industry says they need to make sure that the u.s. is just simply ready for whatever comes up on the global stage. >> emily, thank you. coming up, harvard kennedy school professor, author and podcaster arthur brooks joins us to talk about the contrast between how consumers were feeling and the real economy. as we head to a break, here is royal caribbean ceo jason liberty last night on "last call" from the goldman sachs energy conference on what he's seeing from the consumer. we'll be right back. >> i can tell you that the

consumer is very healthy and when we llpo our customers, we look at credit card data, they're sitting on a lot of wealth, a lot of savings and low credit card balances. so we're very encouraged by that.

signs of cooling inflation in last month's jobs report paint a relatively upbeat picture of the u.s. economy, but economists are saying watch the gap. according to the most recent all america survey pessimism about the economy reaching an all time high of 66% last quarter. that's despite the good news about the health of the consume, the spending, low unemployment rate. you have no idea where this next interview is going to go. for a look at supposed disconnect, let's bring in arthur brooks of the american enterprise, with harvard and the atlantic and his latest book is "build the life you want," co-authored with oprah winfrey. we're all excited you're here today. i'm going to start with the mundane and becky has crazy stuff she wants to talk about. let's start off with this disconnect. >> yeah. >> the data looks pretty good. and you say that to people and they're, like, are you crazy? obvious explanation of, well, the inflation rate is high and the price level is high. hasn't come back down, my wages haven't -- does that explain the disconnect? >> if you've been to an unhappy

family that's rich, i bet you have, they're doing just fine, but everybody is unhappy. the truth of the matter is your relative level of prosperity and ups and downs of paycheck has nothing to do with whether or not the family is going to be happy. this country has been seeing more and more people saying the country is on the wrong track and out of control right now. the truth is we have leaders who are just unfailingly negative about the country. we have media that is talking down the country. it is all bad news all the time. people are grumpy about that. the result is that they can't even actually get through it to see some relatively good economic news. we -- what we need, we need happier leaders. we need to make america happy again and that starts with leadership. you go to a company, you've done it, we have all done it, you go to a company, and you can see there is something wrong. you start with the leader and usually the lead say downer. that's where it starts. that's what we got in america today. >> sounds okay to me, but what i look at, i think about some of the prospects out there for

solving our problems. and they look more intransgent or unsolvable. you tell people we have trillions of dollars worth of debt and i'm sitting around with a bunch of people my age, they don't think they're getting social security. you look at the prospects for the country's finances. you look at your own prospects for getting ahead in the world, and you feel like, well, maybe it is capped here. i don't know. the idea there isn't -- it is the expectations component, i've been doing this survey for 20 years almost, so, what always happens is if the current assessment of the economy goes down, the expectations component goes up. that's not the case right now. that's why that thing is so high, pessimistic now and for the future. >> right. >> typically those have worked in a somewhat inverse way. it is not happening anymore. people are down now and they're down about the future. >> yeah, you have the right

word. pessimism. that's exactly the wrong quality for leaders to have. pessimism is the -- when you're a leader, your main job is to say, there is a better future, you see it? do you see your part in it? will you come with me? that's what leaders are born to do. what do we have? leaders who don't speak with hope, don't speak with the optimism, and, by the way, optimism is realism in this country. let's not kid ourselves. the people who say the best years are behind us, that's crazy talk. this is the most prosperous upwardly mobile country in the history of the world. we know perfectly this is a great country in our hearts. but at the same time, we have lead woeers who are talking it . bad news all the time. >> are the political returns to pessimism higher than the political -- >> of course. they're shorter term. >> you get paid better as a politician to talk trash about the future -- >> misery is good business. misery is great business. i'm telling you. >> i think it is -- sorry. >> is there a generational component to this?

the leaders, what age they are, i know i'm supposed to be in the happiness trough age-wise. relatively speaking. >> how old are you? >> 53. >> nice. that's exactly the bottom. 53 to 70 is the greatest increases in happiness that people actually feel. >> why are you at the trough at 53? >> they think they're going to get happier from the early 20s all the way through because life is going to get better, your dreams are going to come true. they mostly are. not entirely. but the whole point is that the things you're working for are going to come true. the problem is those aren't the things that bring you day to day happiness. >> that's what i think. >> that people have a slight -- most people have a slight decline in happiness early 20s to early 50s and that's incredibly disappointing. >> is it that our expectations are too high, unrealistic expectations? >> everybody is optimistic about their own life and it turns out

life is complicated in your 30s and 40s. now into your 50s, things turn around. my students are on average 28 years old, i show them this data, they on average their happiness is declining from early 20s to early 50s and then turn around and go up it a bad news, good news story. the bad news is your happiness is declining. the good news is i'm getting happier. >> you're consuming their happiness. >> we have unrealistic expectations. part of what plays into that are the things you see on instagram, the same thing we have been seeing in movies and television and magazines for so long that life is going to be this idealistic perfect thing. it is not. >> no, we feel we should be happier than we are. and we look at other people who have their fake portraits up on social media and their ideal lives that is going on. and the other thing is we don't have a good culture for dealing with unhappiness, which is part of a normal life. back in the '60s, the hippies said, if it feels good, do it. a great strategy for ruining your life. for all kinds of reasons.

but today the mantra for a lot of young adults is if it feels bad, make it stop. if i'm suffering, you better treat it right now. you're broken if something is making you unhappy and that's exactly wrong. one thing i do with my young adult children is i talk to them all the time about the sacredness of suffering. about the humanity that actually comes, the learning, the growth that comes from these negative emotions and how to manage these things. the real skill, the real reason that you're going to get happier over the next 15 years is because you know how to manage yourself now. >> i'm not as dumb as i -- >> turn us around. tell me if you're advising a presidential candidate right now. >> yeah. >> what is the message you would be giving right now? >> well -- >> run the campaign for me. >> make america happy again. we need somebody who says our best years are ahead of us, here's how we're going to get it, here's the role you're going to play and i truly believe we can actually get there as opposed to the three-week campaigns, the political highly glycemic messages of everybody's crummy and they want to hurt you

and i'm your only savior. that stuff works in a very, very short run and we go into short run cycles again and again and again and again. this plays kind of with the media, it plays with the political messaging and it is bad for t think thinking about last 30, 40 years, ronald reagan and barack obama perhaps embodied that strategy best. am i wrong about that? >> bill clinton was great at that too. bill clinton was exceptionally good at that. but, look, ronald reagan coined the term make america great again. >> mourning in america. >> in detroit at the convention, and he was extolling the virtue of immigrants. think about that. he was talking about how great immigrants are to remembering our spirit, that these are the people who show us who we truly are, that is what make america great again was about. >> i wonder if there is something more acute or cyclical about the period of years we have been in. when you tell people, we got to stimulate the economy, the shortest recession ever, wealth

has gone up, wages have gone up, outpaced inflation, the sense of disorder and big stuff out of my control is happening to us, that even if we responded to it well, it didn't feel comfortable. >> right. this is true. and this is the balance that national leaders, by the way, corporate leaders, family leaders, community leaders, there is a lot of stuff out there we can be scared of. you need to direct people's attention to the things we can control and the things we can make better and to help them see their role in getting us there. that's exactly what leaders -- >> also successes. i was thinking about the pandemic, both monetary and fiscal response. i don't think you can tell the story of what was done unless you begin with the following. at the beginning of the pandemic, the debate was would the unemployment rate be somewhat lower than, exactly at or above the unemployment rate of the great depression? we avoided that. whatever story you tell about the post pandemic period, and the response, you need to begin

with that part of the story. it was at least up until the point where this inflation thing happened was a pretty good success. also, by the way, talk about the pandemic response to the health response, how many people were we thinking might have died, and how many people actually -- >> i think the question might be does our brain chemistry seize upon counterfactuals to make us happier? >> this is a communications point. this is a really important point to make. you have approximately seven seconds when you talk to somebody for first time to make an impression. >> seven seconds? >> to frame your argument and to frame yourself. you have about seven seconds. a part of the brain that actually decides who you are when you talk to somebody for first time, don't waste your seven seconds. so this is what politicians need to do when they get up in frochfront of new audiences, you might disagree with me, but you're not going to go away tonight thinking i don't love you and your family. that's the seven seconds. that's what they're going to remember. you get the point?

you have to frame everything. when politicians are talking about covid or the economy or anything else, they need to frame it. there is victory around that. >> corporations know this already. >> not enough cfos are doing it. >> in terms of how they talk to, and how they advertise to you, it is about making you feel either hungry, which happens to me a lot, or good. or good. right? they don't come out and say, your life is miserable, but we're going to make it better. >> yeah, yeah, yeah you poor miserable sob, you need to buy my product. all they remember is poor, miserable so and so. >> there is a huge investment thesis in what arthur just said, you have to figure out what it is. >> all right. >> i want more of you, arthur. i have 50 other questions. >> yeah. it is -- i love this show. thank you. >> thanks for coming. >> yeah, yeah. see you soon. >> when we come back, google introducing a new tool that defaults to blocking third party cookies has begun. we're going talk about how

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welcome back, everybody. google is shaking up the online ad business. this week, google completely remove third-party cookies that online advertisers use to track people on the internet. joining us now whether the $600 billion a year digital ad market is ready for these changes, adamson golda founder of a native advertising platform. disclosure we should mention. it powers ads on cnbc.com, but thanks for being here. this is a little bit of a complicated question. just the idea of cookies crumbling. what does that mean first of all for users of the internet? >> i think, it's interesting to take the consumer point of view and thanks for having me on this topic. i'm not sure people read the story in the "journal" yesterday what this did to the industry,

but to me what's interesting, back to the consumer, is, who are the losers and winners? the few winners of this transaction and what does that mean to consumers? to consumers is means i think less freaking out. those ads, becky, buy shoes christmas for your kids, and internet following you with those shoes. after you buy those shoes even? >> yes. >> seeing less of that. a good thing. but also means to investors companies will rely on those cookies to track consumers between websites and surely those ads might be out of the game in some way. however, the winners, clear winners of that transition i this would be companies that have a lot of scale, a lot of strong signal. specifically perhaps good as ecommerce. >> meaning what? >> i think you know, if you're able to -- look, ecommerce is one of the thoeft interesting segments in advertising and it's

no surprise to me meta is all over marketplace trying to get ecommerce and tiktok saying in 2024 transform into $7.5 billion. i think companies and websites such as cnbc and others are able to i think contact consumers directly, know what they want to buy, sell it to them. benefitting from this kikés gone away and re-birth of kind of direct-to-consumer ecommerce business. >> let's just say what this really means. thinking it through to me it means google will say we're killing cookies. good from a privacy perspective. not having marketers following you around all over the place, but probably done more out of self-interest where they can say, okay. want to reach the consumer you have to come through us and pay us for this instead of allowing us to have all of these more fishes swimming in the sharks -- you have to pay us for access to these people? is that the right way thinking of it?

>> definitely a point of view there, but i think outside of google, almost $100 billion of open-web industry outside of google. right? a generally large industry of companies and publishers and journalism of companies participating in that space outside of google. the question is what happens to them? google benefit from that? maybe. not necessarily the right person to say that. to me, more interesting, what happens to the $100 billion sits on side of google and who are winners and losers of that? >> basically annoying, right? don't be annoying. i don't mind ads targeting to me if it's something i want but don't be annoying. >> google's part or just saying you can't track customers, only we can track customers? what's the reason for this? >> remember, this is in the back of apple during 2017. baking in that segment, we have the segment on cnbc probably before in 2017 when they

aggregated cookies. privacy matters to us as a company. consumers, don't be freaked out, if you use iphone good for you. less ads follow you in a wear you're not suspecting. not only supply google doing that. however, i do think we have to think what does that mean to the advertising industry as a whole outside of the googles and facebooks of the world. looking at tiktok doubling down on that. companies that, the "new york times," right? wire cut want to buy trampoline for your kids? you don't know what to trust. read the "new york times." read the evoos. review coffee machines, buy it. that i think is a big part of the future. you trust publishers and journalism. you should buy from publishers direct, not on amazon. >> adam, while you're here, hoping to ask you about something you posted on twitter earlier this week that came across my feed. excited to see it.

you've lived in this country 14 years, said you had your further anti-semitic moment recently? what have you seen? what's happening? >> yeah. interesting, because i've been here 14 years and never felt more welcome in this country. you know, and never actually had cha experience before. my wife and the kids outside playing with the kids, a guy came to me and started talking to my wife and us, random, casual conversation. from that jumped into something nasty about the jewish people. luckily my wife was there and told him, dude, we're with the kids. move on. so he moved on. my first interaction with something i think was not educated enough knowing exactly what's going on but jumped into a fairly nasty experience. i'm praying for better days than what we're seeing these days. >> what was the outpouring on twitter? how did it come down, i guess, as you got a little of both sides? >> mostly support. i don't think anyone is into hate of any kind and this was a

very hating thing. the world deserves better days. more love, more compassion, more empathy. and whether you have strong opinions, empathy is the way to go. choose to give kindness towards one another in the world. my affirm's in israel, people in israel, i think about them all the time. i am biased but i still think hate has no room anywhere. >> agreed. adam, thank you for joining us today. we appreciate your time. >> thanks for having me. >> thank you. still to come, energy secretary-general fer granholm joins us to discuss oil prices, the situation in the red sea and the impact on the economy, if the situation gets worse. then a december jobs report released 8:30 a.m. eastern time. the numbers and market reaction quk x"ilahd. "sawbo wl be right back.

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unfortunately more losses, shipping time, saying avoid the red sea for the foreseeable future. talk about the impact to energy and global commerce and tensions in the middle east. with us, u.s. energy secretary jennifer granholm. final hour of "squawk box." we have the big jobs number. we begin -- right now. good morning, everybody. welcome back to "squawk box." right here on cnbc we are live from the nasdaq market site in times square. i'm becky quick along with steve liesman and mike santoli. joe and andrew are off today. it is jobs friday, as steve mentioned. ahead of that we're watching the u.s. equity futures. dow down by 85 points. s&p futures down by 13. nasdaq off by 65, or 56, should say. treasury yields have been

picking up. this has been the story for the week. market's down, treasury yields up. ten year yielding just above 4%. twoyear at 4.4%. shipping giant maersk saying this morning all vessels due to sale through the red sea and gulf's aidan diverted south around the cape of good hope for the foreseeable future. houthi militants based in yemen threatening shippers for weeks and making attacks on some ships. tensions in israel, gaza, ukraine, and russia, keeping energy markets on edge. chevron's ceo said this last night on "last call" from the energy conference in miami. >> very close to the russia/ukraine conflict with our kazakhstan business and primary gas in israel and platforms shut down during the conflict and ships attacked by the iranian navy within the last few months in the straits of hormuz. we have ships that transit

through the red sea we work very closely with the u.s. navy and other military forces to ensure sage passage of those vessels. reality doing business around the world in our industry as we face these kinds of risks. >> joining us now to talk how global tensions are impacting energy and much more, u.s. energy secretary jennifer granholm. secretary, thanks for being here today. >> you bet. thanks for having me. >> let's jump right in and talk about what's happening in the red sea and surrounding areas. mike worth irth talking about t iranian navy, what can we do to try to ensure safety of shipments? >> yeah. this is an issue certainly top of mind for the administration. in fact, we've put together a coalition of more than 20 countries that are countering these attacks and really protecting international commerce focused on that through an effort now called "operation

prosperity guardians." the title of it. we issued, the u.s. issues new sanctions last week on individuals and entities that are facilitating these attacks. and we're going to, obviously, continue to be very much on this, but with respect to how we're seeing it play out in the energy space, so far the ongoing conflict and attacks, which are, you know, indiscriminate. really not, not on any commercial vessel coming through whether touching or related to israel or not, but this conflict, they have not really been successful in terms of getting their targets, but this conflict itself has really only had a limited impact on energy prices, you know, for us in the u.s. gas prices, for example, are at $3.09 today. $3.089, something like that. more than $1.93 lower than the

peak after putin's war. 30 states -- 30 states, the average, is less than $3 a gallon. so we are, so far we aren't seeing the price per barrel or impact at the pump, but obviously the united states is on it, and leading this coalition to protect those commercial shippers. >> yeah. honestly, wti at $73 a barrel probably doesn't reflect a lot of these removed concerns. the news, latest from maersk this morning saying they're going to be diverting vessels from the red sea for the foreseeable future ashes highly volatile situation, and there's a big security risk here. we have seen these types of actions in the past. what will it take to actually ensure that ships can go through that area? how complicated is it? >> yeah. there has to be this coalition effort. i know many commercial shippers are really not just -- they're

doing what maersk decided to do. circumvent the red sea and suez canal. that may add some price to energy in terms of how long it takes and how much more fuel it takes to get those shipments around, but this coalition and the active, not just monitoring but, but insertion of both sanctions as well as lots of discussions behind the scenes, i think -- we're going to hopefully, if it doesn't escalate further, we'll be okay. even if there has to be a whole sale diversion of shipments around the red sea. >> secretary, we've talked a lot about what's been happening with exxon mobile and chevron as well. walking away from basically the refinery situations. their operations in california. taken a massive write-down to billions of dollars. mike wirth on talking about this last night, and mentioned that

the situation in california is largely because of california policy. i realize that's not a federal policy but when you look at california and the gas prices there, it creates unhappiness with the consumers. they've basically said, we can't continue to make investments in some of these operations. whether that be refineries or pipelines, because we don't think we'll get return on investment. when they say something like that and you have multiple pig companies basically walking way from some of these things, what does that mean? what can you do on the federal level? >> it's interesting, because i think there's a lot of those who have refineries who are converting some refineries anyway to biofuels. significant policy incentives to the creation of drop-in biofuels, so you're seeing some of that happening. refineries that are around the country are working full tilt, and are producing. so we are -- but i will say this, becky. we have seen, in the united

states, we think that we have achieved peak gasoline, because of the increase in electric vehicle sales and obviously this is just the west. other more developing countries will, are still looking at, you know, significant -- potentially significant but the less so increase in demand. but in the united states we're seeing levelling out and diminishment of the demand for gasoline, and you know, we just got the numbers yesterday for the sales of electric vehicles. i know had you a segment earlier about this, but in 2023, 1.4 million sales of evs. that's 50% increase from the year before. that's going to have an impact. >> still a -- >> 10%. 10%. 10%. >> to see some of these policies embraced in california where they say we want to be at peak gasoline usage and as a result we're going to make more and more strict laws that require all of these other things that

make it less and less likely for companies to want to invest in the refineries there. i mean, what you've seen is gas prices are much higher than than anywhere else in the nation with the exception of potentially hawaii and alaska. what you see are these california prices significantly higher. see that carried out throughout the rest of the country you'll have a very unhappy electorate. every time they see gasoline prices up $1 they scream. >> of course. i don't think you're going to see california taxes or prices carried out through the rest of the country because these are all done, as you say, on state-by-state basis. california is unique in -- >> saying things just talked about. bio diesel and other issues. spread those on a national level you'll have similar reactions? >> a lot of the increase and price gap for california, the, you know, significantly more expensive price per gallon what do with gasoline taxes too. i think everybody knows, becky, we are in this transition right

now. it is for consumers. significantly less expensive to operate an electric vehicle than an internal combustion vehicle -- >> with tax incentives taxpayers are paying for. >> on federal -- there's federal tax credits they benefit from if they're able to take it up, and if they're able to afford a lease, a lease, of course, cheaper than perhaps a monthly payment for purchase and tax credits $7,500 on a lease, you can really have an affordable vehicle. it's much cheaper for somebody to operate that. so we're in a transition. it is not going to always be smooth and easy, but on the other side of this transition i think that people will -- will come to love, as people who drive electric vehicles have. 95% according to jd powers' survey are extremely happy with

their electric vehicles because of cost and they're fun to drive. i think you'll see this transition increase. when it is at about 10% of the fleet right now, but that is going to continue to increase at the same sort of pace we've been seeing. >> and add to that, you're right. gas prices are higher per gallon in california. something like 52 cents. but gas prices in california are $4.71 on average versus $3.09 national average. not just gas taxes. an awful lot more there? >> there is. no doubt there are other policy issues in california that are affecting prices. that's their choice. and that's why they have such a massive uptick in electric vehicles in california, but i just don't see -- i don't see a massive ruling of the california policy framework in the other 50 states. that's just not going to happen. >> secretary, you said we're in the middle of a transition. one transition we're in the middle of is this notion or the

availability of charges stations. it's the number one complaint of people who buy evs. becky says she's not buying an ev unless charging stations is fixed, among other reasons, becky, right? >> that's the biggest issue. i drive a lot, and -- >> you had an experience, madam secretary, too, with the idea of charging your car. i mean, you can't tell people to go out and buy something if they can't charge it. >> yeah. no. this is -- it's a real chicken and egg question. right? so we've got about 170,000 public chargers available across the united states today. we're adding about 900 per week. the bipartisan infrastructure law put $7.5 billion into expanding that further. we think that by 2026 we'll have about 500,000 charging publicly -- publicly available charging station ace cross the country. by 2030, 1.2 million. so -- and i will say oil and

gas, the industry many are seeing this as an opportunity to put charging stations at gas stations, where you can have your choice, whether you have internal combustion engine or an electric vehicle, but this is why year seeing now 30 states have issued requests for solicitations for installation of these charging stations. all 50 states have now had plans approved for the rollout of charging stations that are from that bipartisan infrastructure law. it's very exciting. ohio and new york, past couple of weeks, have ribbon cuttings on their first charging stations through the president's bipartisan infrastructure law. you'll see a lot more of this happening and i hope you'll feel confident -- >> madam secretary, what happened to you on the road? >> there wasn't an available space, when we were on the road. so -- but that's going to -- that's my point. we need more.

>> right. >> need more chargers. >> energy, can't get a charge. that's the problem, i think. right? >> that's the point. that we are fixing that problem. you can't snap your fingers. >> count e think, becky, should snap your fingers, right, becky to get a charge? >> i don't think so. becky oh hope your fear of being able to charge is soon being addressed. >> at not just fear. it's a reality. >> but if you have a garage -- >> a working mom got to be practical and efficient. evs are not at this point. good for some people and not for everybody. >> depending how for a you drive. >> more expensive and tax credits make it cheaper but paid for on the back of taxpayers. chicken and egg. >> $50,000 per car or something like that? seen that report, madam secretary? >> yes. >> $50,000 of subsidy per car? >> oh, no. i didn't see that report. i thought you meant they were on

average about $50,000 per vehicle, to cost, to purchase an electric vehicle. >> subsidy in there. how do you justify that to the people who want combustion engines? >> well, no. people who want kbcombustion engines can have them. >> they're paying for this as well. >> here's the deal. we are in a moment. what a great thing it is, that we as a nation are going to be building these electric vehicles that will be in demand across the world, and we are reassuring all of this manufacturing in the united states. yeah does that involve some policy? sure it does. involve policy on part of other countries who are subsidizing their industries? yeah. we've been competing against countries that have been really aggressive about it. up to now we have not been, but now -- we've got 350 companies across the country who have announced they're going to open up manufacturing shops to do evs, pbatteries, supply chain fr

batteries. it's so tremendous that we are going to have a manufacturing backbone in this country again as result of this, and when you take it to scale, as you know, prices will continue to drop. the price of an electric vehicle has dropped significantly, because price of a battery has cro cropped significantly because we're taking that to scale and building it in the united states. that is a good story for america and americans and people who want to work to get good jobs in these industries. >> secretary granholm, thank you. good to see you today. >> you bet. all right. good to see you, too. coming up, fund stretch joining us wrapping up the first week of the year on wall street. and counting down to the december employment report at 8:30 eastern time. economists expecting a gain of ay0,000 jobs. st tuned. you're watching "squawk box" on cnbc.

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box." futures under a little pressure. awaiting the big jobs report that comes in just under 12 minutes' time. right now dow futures down by an 43. s&p off by 6. nasdaq down by 3.

year-end target, and joining us for a closer look what he sees in the charts head of technical research. good morning. >> thank you mike. good morning to you. >> we have what seems like a, perhaps, overdue somewhat controlled pullback i guess going on in the index. s&p off 2% off from the high. nine straight up weeks. saying overbought, overheated. is that what's going on? >> the narrative probably too complacent heading into year-end. normally the case. people are a bit over their skis thinks disinflation and the labor market easing. bottom line is that the data inconsistent with that view. quite resilient and strong. the pullback we've sooner hasn't been all that technically damaging to the market. we've seen a necessary meaner version in the form of leaders

in technology. meanwhile, seen other groups like health care, which recently started to outperform. i see this completely healthy and if anything going to be a chance to buy for investors in the days ahead. potentially as early as today after the jobs report. >> yeah. there is certainly a lot of rotation within this index retreat going on. a lot of excitement, i guess, about the slight catch-up move in small caps and broader list of stocks against the very largest ones. do you expect that to continue? something like apple down 8% off its high. down a lot more than the market is right now? >> i do like small caps for 2024, mike. i think a lot of groups out of favor are slowly but surely showing evidence coming back. small caps should do very well as rates start to pull back. my own thinking is that the ten year likely gets down to three and quarter.

potentially low at 275. a good thing for the small cap arena when they've underperformed dramatically for years. this is a necessary catch-up which happens this year. >> that suggests you think treasuries are pretty strong buy right here. right? ten year at four? just based on the patterns that you're witnessing? or is that a rate cut assumptions what inflation's going to do? >> i don't think it's a straight line. already seen over 100 basis points or so back in the ten year of late. it's not going to -- in general first quarter probably will see a little bit of a bounce in treasury yields, but my own thinking is that that is going to happen between likely the spring of this year, probably into the late summer. a lot of that predicated on cycles that i look at with technical yields pulling back pretty aggressively. the good news, the u.s. is in much better shape than the rest of the world. that's a very good thing.

my thinking, we'll see a continued retreat until yields. >> you mention that the s&p might actually sort of run its course in terms of this pullback even as soon as today after the jobs report. at what level would you suggest that this is showing itself to be more than just an orderly, little pullback that you'd want to buy? >> good question. under 4,600 a concern for short-term bulls. bottom line we've seen such a huge period of catch-up in broad based participation in sectors that lagged, it's really right to concentrate on the degree of which all of these other sectors are getting to join the rally and buoy the market at a time when technology started to pull back. if anything it's a very healthy rotation. you know, look. we have, what? close to 80% of all stocks above their 50-day moving average? since gotten prit forward done with regard to breadth and

momentum not that overbought. that's the key. if anything, this pullback -- >> yeah. breadth and momentum seem to give the benefit of the doubt. good to talk to you. thank you very much. >> likewise, mike. thank you. coming up, former fed vice chair roger ferguson joins us straight out of the december jobs report to talk how the u.s. central bank will look at the data. stay tuned. "squawk box" coming right back. at morgan stanley, old school hard work meets bold new thinking.

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month . still to come this morning, the big number. december jobs. thlar pamee bodertnt report is next. "squawk box" will be right back.

welcome back to "squawk box." we are just over a minute away from the government's december employment report. welcoming our jobs panel. chief investment officer, and an american action foreign president and economics professor at stony brook university. steve liesman is here, our very own mike santoli and just a minute to go. quickly what should we expect, steve? >> looking for 170. big hopes on wages, below the 4% point. >> and seen a lot of action in the bond market ahead of this. yields have started to rise back up. ten year back above 4%? >> yeah. it's not only here. if you look at the uk up 28

basis points. a gig move. eurozone inflation hotter than expected. i would look for the unemployment rate to be the key today. i think we can get it, know, a little bit up from these current levels. thinking closer to 4%. >> okay. it is time for that december jobs report. a few seconds away. of course, rick santelli is going to have those numbers as soon as they cross. rick? >> the numbers, and -- non-farm payrolls a bit stronger than expected at 216,000. 216,000. that would be the best since september when it was 262,000. i don't see all the revisions yet specifically, but the two-month revision in combined form is minus -- minus 71,000. traders find these revisions very disheartening. now, look at unemployment rate -- it remained at 3.7. we've got no uptick in the

unemployment rate. if we look at average hourly earnings, up 0.4%. expecting it to be a little lighter in the rearview mirror it was up 0.4%. look at october up 0.2%. topped that and seems to hold that pop. look at year-over-year, warmer than expected. 4.1. 4.1% year over year is the best since 4.2, also from september. now, if you look at average hourly workweek, 34.3. 34.3, 34.4's numbers. not a lot of movement. labor force participation reverses. isn't a good sign. 62.8 is what we had. that was the best level going all the way back to february of 2020, were when it was over 63. now we back it up to 62.5. that is the lightest going all the way back to january of last year. and just very quickly here to

point out a few thingsthat are very important. much anecdotal evidence suggests on the wage side, even inflation side and push between the two, look at some raises out there. gets pretty hard to think that it's going to be as tame as many think. and once again, as i said, if you look at germany's cpi, 3.8 versus 2.3. seems as though the globe is depressing inflation from a media standpoint, certain doesn't seem to be disappearing as fast in the numbers. becky and the gang, we see interest rates popped up near 4.20 -- excuse me. excuse me. 4.10 in a ten year. yeah. 4.09, 4.10, pre-opening dow futures extending losses closer to minus 200 mark around minus 180 as we speak. now back to you. >> rick, stay with us. got a lot more to get to our jobs panel for instant reaction on this.

steve what do you see in the details on these numbers? as rick mentioned, futures sold off yields picked up. >> very disappointed in bls and consistent downward revision. big provisions, too. one 150 out of 105. other was 199 out of 173. consistently downward. i wish bls would get on this, what's going wrong here. no particular bias in this, but keep coming out with a number here and revising down here a problem. i think this number is a little weaker than the face value of it. tell you why. only 142,000 on the private sector. we have two things happening in this economy. one is that the government sector remains, i have to check it now, came into this number below pre-pandemic level. economy's grown over that period of time. you think at least government employment would grow with it. it hasn't. remain as bigger deficit. government added 52,000 jobs

with a lot of those jobs coming in, local government, education and local, state, non-education jobs. that's one. two, it's that the two big places we've gotten the jobs are in leisure and hospitality. still a sector that was running below the level and the other in health care. and we need and have needed and will need nurses and doctors and other folks in the health care sector for a very long time. so that's sort of normal. i don't see this as a particularly hot number. i think this is a problem. not going to jump on that right away, discretionaries. >> 4.1% annual? >> with the private -- >> that's hot. >> with the private sector 122,000, the number i'm looking at. >> yeah. >> for the how hot the job market is right now. >> rick sounded a lot like paris hilton. before we dig in deeper on the numbers sarah get to you to talk about the market reaction to it. it's something worth watching.

particularly when looking at the yields. >> yeah. this number is good for the economy, but it's not great for the market. the two factors that have driven the market weakness are the fed and market valuation. this number will continue to throw cold water on the narrative of six rate cuts for 2 2024. that needs to be priced out of the market. headwinds for equities. valuations in this year, fourth quarter last year we robbed peter to pay paul. that market rally was overdone. the returns from this year and now going to keep unwinding those. good for the economy, but that means less rate cuts this year and higher yields. negative for equities. >> focus on good for the economy a moment? >> yeah. i think so. this is the 36th straight month of labor market expansion, and i agree. steve, the downward revisions aren't great to see, but this is the fifth longest kpangs of the

l kpan expansion of the market and what the fed's after all along. right? so-called better balance in the labor market. we aren't seeing redeterioration but a down shifting and i hope it become as more stable trend. i think you know, from where i sit, nats what this looks like to me. i'm not anxious about 4.1% rage growth. we were roughly running at 4% before this essentially to where we still are. a couple percentage points of productivity growth and 2% inflation and there's nothing unsustainable about 4%. >> doug, agree with that 4.1% inflation growth, average hourly wage growth, something the fed's going to look at think, wow, maybe we have not killed this inflationary boogeyman? >> well, i certainly think the fed is in no position to start cutting. that's oversold dramatically. look at the core pce price

index, it peaked. that means another third. procedure another year. nothing about the fed's position that's, that indicates it will cut soon. enjoy this report. like steve said. i think it's going to deteriorate going forward. you know, if everything's driven by supply and labor market a while. shifting to demand-driven market. no question. aggregate demand. business is flat. flat in the third quarter. flat in the fourth quarter. it's been carried by households and government spending. i don't see the government spending changing but households are looking for fragile. i think the first half of '24 will be very, very rough. >> you know, earlier i was saying this report and market reaction will test this. with inflation more comfortably in a downtrend, at least recently, seems as if good economic news could be embraced ultimately by the market. do you think the big challenge to equities will be the economy

holds up too well? >> we're past, definitely past peak of inflation. the question, are we past the peak of monetary tightening? the conversation this year will shift from how high to how long? going to have an elongated pause in what the fed is doing. how does the economy react? great places to still invest within equities, but be cautious. segments such as reits. they tend to outperform not only during periods of rate cuts but during periods of rate pauses. time to look at technology again. software stocks underperformed. palo alto networks outperforming cybersecurity moving from legacy to cloud will be areas of weakness. be more selective, though. in a world not having easy money coming back to us so quickly, we need to think how to invest in equities entering the year at 20 times earnings. i don't think there's going to be much room for valuation outside for the s&p this year. still room for earnings growth selectively. >> want to chime in here quick.

the wage numbers, i want to remind people. we have this adp number, a sample of 10 million people and that's coming down. higher than this number here, but it's been coming down. i am more moved by that. but then i want to ask this question, you're such a smart economist. are you really -- i don't know. what's the right way to put this? are you ready to separate this idea that, look, inflation's coming down. we've had strong wage growth. strong jobs, strong economic growth. what is the connection here between inflation and the economy? isn't it merely just a supply story and restoration of supply? >> a restoration of supply. also got everything broke our way on inflation in 2023. we got a big bump in productivity. running negative first two years in the biden administration. went to 2.3%. huge supply shot. oil's down 11%.

overall in >> genergy, 6%. everything went right in the inflation front. doesn't happen every year. we're in a position worry about business cycle dynamics. every business cycle after world war ii except pandemic led by downturn in business fixed investment pt that's dead in the water. we have been dead in the water for six months. very concerned about that, because you can't have household sector growing strongly and business sector flat. they have to come together somehow. good news is, if business comes up. i'm afraid equalize at a lower level and we'll see a really slow first half. >> risck, throw this out. in a sense a victory for the fed. it's not a straight line. bumps along the way. not going to have a straight line dmown in any particular measure. you have to acknowledge. the fed saying this is not a

gimme, all of this stuff. so i like the idea of the market just backing up here. taking more account of the idea that there is some risk in the forecast of where things are going? >> yeah. >> markets deal wig thing with numbers very well. the issue, steve, look at the fed and want me to give them a compliment, all they talk about lately three and six-month annualized rates based on one-month inflation. that's leading us down the wrong path, i think, personally. 4.1. put that in real context. all emotion out of it. pre-covid, 3.1. jan. february, 2020, pre-covid, 3.6. since then the lowest its been, 3.9 in december of '21. okay? 4.1 a bit high. pick up the newspapers everybody day. go online, get news from wherever, right? how often do you see, oh,

raises, 2% or 3%? i don't see any of that. i see raises 18%, 20%. 100%. i think you can call that anecdotal evidence that i do think there's a certain amount of inflation and wage inflation, and government policy inflation, and i don't see a lot of that going away in a lineal fashion, period. >> i would have to agree with that. i think he's right. >> and weigh in on what you see the fed doing with all of these numbers? does this make the rate for, the case for rate cuts much tougher? >> i don't think it does, becky. i mean, last week we were talking about whether inflation might be decelerating too rapidly. right? inflation numbers. pored over there. wow. look at the last six months and annualized. we're actually running below 2%, which triggered the whole conversation whether the fed would move in march versus may and how many rate cuts and maybe

get more than we thought we might get, because inflation is decelerating quickly. now because of one month of new data we want to change the whole conversation. we got to take a longer look. the trend is our friend. labor market is coming into, forecast better balance for a long period of time. inflation decelerating. sure, anything could happen. we've got, things happening in the mideast and god knows there are other things that could happen, that could cause inflation to accelerate, but i think, you know, leaving those sort of things aside, we're in a very good place right now. >> now, there is a little bit of -- go-ahead, rick. >> no. this is doug. >> doug. >> i want to remind everyone from the beginning of this tightening cycle what powell said in the, in '22 was, the only mistake the volker fed easing prematurely. we will not make that mistake. been on that page since.

they're not going to ease first half of this year. stay where they are. and they are essentially effectively tightening. running down the balance sheet. letting real rates rise as inflation drops off and freed to need to do that because of risks inflation being much more stubborn than people perceive. i think that's the right thing do and everyone's way ahead of themselves talking about rate cuts. >> what did you get? revised, what, november and october? >> yeah. i see the revision for non-farm for last month, from 193 to -- 199 to 173. i don't see the previous month, but i see the cumulative total at minus 71,000. i picked that up off the wires. >> i want to point out. put the numbers together in a straight way, but adp has been well below these numbers the entire tire. taking some, you know what, from the street for being low.

>> revisions come out. >> revisions seem to be in adp's way. a more statistical search of that, but interesting. >> all right. thanks to our jobs panel today. sarah, doug o', stephanie, rick, steve and mike and me. we'll take it. see you later. coming up, much more on that december jobs report and what the federal reserve will focus on. the lows. former fed vice chair roger ferguson will join us. reminder as we head to a brate, get the best of "squawk box" in our daily podcast. follow us on your favorite podcast app and live anytime. we'll be right back.

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welcome back to "squawk box." the economy hitting 216,000 new jobs in december. that was above expectations by the prior two months revised lower. unemployment unchanged 3.7%. forecasts for 3.8. better than expected. future now, up a little since the number. yields also up. seems reflux reaction right now. >> all right. joining us to break down what the new jobs report means for the fed and the economy, a it considers its rate policy former fed vice chair roger ferguson and ceo, luc lucky to have him cnbc contributor. good morning. >> good morning. >> nice to have you on right after this number. we'd all like a little more time

to think about it, but here we are and the market's reacting as we speak. before does this put in the context of what's going on in the economy, especially in luigt of the fact this number has been revised quite a bit lately? >> i think this report has two or three complete elements in it that support different stories. i think the overall story that the fed will take from this, they have been right to push back on expectations of a quick pivot towards cutting rates. you sgloe know? the rate-cut story starting early in this year stands out from the standpoint of the fed. you'll continue to hear pushback there, i think, and i think that's probably right. look at that 4.1 number and say, okay. things are hard. moving, rough in the right direction but not at quickly as some thought. point two, that you've put your finger on just now is, wait a minute. some revisions. you've got to be really pretty

careful here. we have been keeping money policy fairly restrictive. some voices. austan goolsbee from chicago comes to mind, point to that saying let's be more cautious here. i think that's a slight contrarian point of view versus majority point of view. all view. all of that means that you'll hear them continue to use words like cautious, too early to declare victory, preparing to move nimbly if need be. i think this leaves them roughly where they were before, pushing back on the notion of many rate cuts this year starting early, but in no sense yet declaring victory on soft landing, because there are some things here that do suggest potentially a hard landing might be ahead of them as well. >> roger, when the number came out, i focused on the private sector number. is that the one you think that the fed is maybe a little bit more focused on for what it says about the economy? we have had this surge in government hiring as government, it appears, is trying to catch up with where it was before the

pandemic. is that a better way to think about this number? and in light of that, don't you sort of come up with a less or a cooler job market than you would if you look at the topline number? >> well, look, i tend to look at the topline number, and here's why. the government is an important part of the economy overall, along with health care, along with tech, along with other things we talk about. it's a reflection of different kinds of supply and demand imbalances. remember, one of the questions that is driving inflation is how much fiscal stimulus is there put into the system. that gets reflected in the government number. i would be a little cautious about saying private sector numbers is where we should put most of our weight. the government is an important part of the economy, and it's a reflection of fiscal policy, and it's a reflection of a different kind of supply and demand. i tend to look at both, but i would be a little cautious in saying, you know, all weakness or more weakness in one versus other. >> i'm only saying that because local government just got up to

the level it was at before the pandemic, so maybe some of that eases off. let me turn to another issue that was brought up by doug which is the idea of productivity. we have had fairly strong productivity. is that another reason to look less cautiously or be less alarmed by the wage growth numbers? if productivity is high, then wage growth should be higher. >> no, i agree with that completely, but you also hear some of these anecdotal stories come into play. you're a fed watcher, you know what the beige book is, all the anecdotes, and i think they're trying, and you hear them talking about supply and demand coming into better balance and the labor market, so, yes, don't put too much weight on the 4.1, because productivity is an important part of that story. on the other hand, they're looking at the whole question of job openings. i think they may be a little concerned about the labor force participation rate pulling back, which means the supply coming in may be a little more constrained.

so, again, i look at this and say, you know, the cautious they have been talking about, the pushing back on, let's cut quickly, all of that, i think, is value dayidated by this repo. >> roger, i've known you a long time, and you have been cautious the whole time i've known you. would you be cutting rates and when and by how much? >> i think i would be very much in a watch-and-see mode, prepared to cut rates if things look like they're getting trumpy. right now, i'd be in the let's wait and see, probably rate cut in the second half of the year, so call me in the median of the dot plots as they showed up most recently, but prepared to move more quickly. >> but it would take a really rocky economy before you would say, go ahead and cut sooner? >> i think so. yes, becky. now, look, we have some concerns, and i have heard, i think, doug or others talk about

what exactly is happening with the household sector. you know, are they running on fumes, so to speak? no evidence of that thus far, and unlikely with the strong labor market. there are some concerns about the business sector and business fixed investment, so there are places to look for softness, but right now, i think the major theme is the economy is holding up pretty well, getting back into balance, and so far, so good, and let's hold on to where we are with the discussion of arnothbenng herds the end of t ye, t e giinof the year. force to be reckon with. no, not you saquon. 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. when you think of investment risk, 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,

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government employment report showing a gain of 216,000 new jobs last month. futures are lower off that, yields higher, but actually, that has unwound a little bit. you've seen the little bounce in the futures, and yields are off their highs as maybe the number is not quite as hot as the headline makes it seem. joining us to talk markets is chief investment officer at santo global advisors and a cnbc contributor. brenda, good morning. we came into this year, market seemed pretty confident of an idyllic soft landing scenario. what do you make of the market's rocky start to 2024? >> well, i think, you know, if

we look at what this data and what it means, i think this continues to support a strong consumer, which in our view is really key to the economy maintaining its health as we move through the year. but i do think we look at what happened during the fourth quarter of last year. it really was a stunning move across the board, both in equities and in yields, and i think we're just digesting here as we move into the new year, but i still think that the fundamentals should be relatively healthy if we look at earnings growth for this year, if we continue to have a strong economy. we have inflation that's easing. we also have an environment coming into this year where if you were a corporate ceo managing your business over the last couple of years, thinking there might be a recession six months down the road, you're going to think about the world differently than if you suddenly think, well, actually, hey, this may not be coming to fruition, we may have a decent economy here and potentially think about spending in a different way. >> for context, this little 2, 3% decline has brought the s&p

back to where it was three weeks ago right as the fed gave its decision in december. hasn't retraced that much of the rally. where, within the market, looks interesting to you, whether it be the big tech stocks that led last year or something else? >> we think that more the small mid cap area within the u.s. continues to look attractive. those large cap tech names, still important to have some exposure, but we wouldn't be overexposed here. they absolutely participated in the rally during the fourth quarter, even though they had a tremendous first half of last year, and valuations not looking as attractive. also, those are multinational companies where i think we are going to hear more about weakness in china. those areas are more exposed versus small mid cap stocks that are more domestically focused, should benefit from strength in the united states, and valuation is more attractive, and even after the run that they had during the fourth quarter. >> sermcertainly more room to c up.

brenda, appreciate the time this morning. thank you. >> thank you so much. all right, a final check on the markets right now. you're going to see that the dow futures are up by about 65 points. nasdaq futures down. s&p futures down by ten. we had seen bigger declines right after the numbers, but things are coming back to where they were just ahead of that. anyway, want to thank both mike and steve for being with me today and all week too. it has been fun. >> pleasure. >> have a great weekend, everybody. see you next week. right now, it's time for "squawk on the street." ♪ good friday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer at post nine of the new york stock exchange. dave david faber has the morning off. 216, the higher print since september. wages run a tad hot. ten-year touches 4.10% before backing off. that's where our road map b begins, the blowout jobs report. better than