good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen. andrew is out today. welcome back, joe. >> thank you. it's a new year. have i got that right? they go fast. >> good luck writing that on your checks. >> does anyone do that? >> i still have some checks. >> really? >> i have a few checks i write. not everything is done electronically. last week, not a great first week for the markets. you did see the declines across the board. nasdaq with the biggestdecline down 3.5%. just under 3.5%. this morning, you are adding more red arrows to the futures. dow futures off by 191.

s&p futures down 11. s in nasdaq down 40. we will tell you about boeing in a moment. the ten-year treasury is 4.19%. the two-year yield at 4.37. boeing shares are responsible for what you are seeing in that dow trading pre-market. the faa grounding dozens of the 737 max-9 planes. deja vu. after a piece of the aircraft blew out during the alaska airlines flight on friday. i know ontario. i have never been to portland, phil, but it must have been the long 30 minutes. >> joe, the two seats next to the inactive door, flew off.

nobody was sitting in the seats right next to where that happened. if they had been sitting there -- could you imagine? >> no. >> look. carry e scary enough. i'll bring you up to speed. ntsb and faa investigations. 171 737 max-9 planes have been grounded as they look into the cause of why this section of the planeripped off at 16,000 feet. the focus has been that fuselage plug. that plug in the fuselage. they found the plug, by the way, in suburban portland. that is part of the investigation. fortunate this did not happen at a higher altitude. >> it happened really at a lower altitude than i would expect. it tells me that that door was really not doing its job in keeping the pressure inside the fuselage.

>> the pressure problems were documented with the aircraft before this flight. there had been issues, the ntsb said yesterday, and there were restrictions. they could not take the long flight from the west coast to hawaii which is a popular route for alaska. if you look at shares of alaska and united. the max-9 flights scrapped here, depends on how long the planes are out of service to know the impact for alaska and united. the protocol has not been developed with boeing and the faa in terms of what the airlines should actually look for with regards to where this plug is on the fuselage in order to determine if this is a broader issue or a one-off with this particular aircraft? the boeing investors are looking

at a short-term hiccup or a big headache and say that happened and we will get past it and increase production. here is the production plan on the 737 max. they are not at 38 a month. you go up to 47 by the third quarter. roughly speaking. the goal is to get to 50 per month by 2025 and 2026. as you take a look at boeing shares, keep in mind the other stock under immense pressure today. that's spirit aerosystems down 20%. spirit makes the fuselage for the 737 max. it also makes the plug for the max-9 plane at the center of the investigation. we have talked at length over the last year of the problems at spirit. we know that boeing is putting money into spirit to stabilize the situation there. for boeing, this is a question. for dave calhoun and his

leadership about how it can address the ongoing questions about quality and about safety and about the culture at boeing. they will have a meeting, all-employee safety meeting in renton, washington tomorrow. we will see what what happens with the impact and pressure on the shares of boeing. >> boeing and the corporate culture reminds me of the big three from years ago. it was so inn sular. any of those guys. calhoun was around for all those. still there. >> he was on the board. >> he is like a lifer there. through thick and thin. >> he has said -- joe, he said repeatedly -- we talk to him every quarter. safety has to be first and foremost in our minds. the quality control has to be better within boeing in terms of

manufacturing of aircraft. >> you go. >> you go. >> i'm going to shift off of boeing just for a second. i care about the financials. i care about boeing. i care about how the stock is impacted. you say things that -- can you hear that, becky? oh, no. you're on a plane. we would never take this plane you are on to hawaii. we're not sure it will make it. >> not now. >> they said -- did you say this was a plane they already earmarked for not going? >> there had been issues. >> the plane you are getting on is not suitable. if you are going to hawaii, we would not use this plane, but we are putting you on to go to ont ontario, california? >> my anunderstanding was on the

flights before this, the plane had the depressure lights going on. that is an issue. >> you shouldn n't do that. >> becky, the word ignore is a strong one. you make it sound like they are taking off and the light came on. >> the door blew out. >> becky, what i'm saying is did they ignore this? ignoring implies alaska mechanics were like whatever. takeoff. they clearly would have made sure. >> let me hit the dashboard. you're good. >> i want the plane that can go to hawaii. if we need it to go to hawaii, we can take this one to hawaii. not that we would never get on this one to hawaii.

we'll never make it over the ocean. >> joe, i understand what you're saying. i'm not defending what their decisions were with regard to the pressurization problems. the ntsb has looked at this and part of the investigation is what happened with the past incidents where the pressurization warning light went on? was it one component and the light had a malfunction or was it something broader? that is at the heart of the investigation. do we get answers quickly or will this drag on? that will determine how long the max-9s parked will stay parked which has an impact on alaska and united. >> phil, let's dig into this. this is the big decline in shares of boeing down 8%. my understanding and i don't understand all this perfectly. the fuselage for the max-9,

which is an extended cabin. some seat configurations, you have to have extra emergency doors because too many seats and too many people to get out. you can make the choice with the airline which is customizing that and we want those extra emergency doors or we don't because we don't need them. >> it is required. >> it is cheaper for boeing to make them this way because the fuselage is the same in every one and you customize as you go. if that is a structure problem where you cannot guarantee the plug stays in. is this a one-off or the design of the aircraft? >> becky, that's the question. did this plug on this one aircraft have problems that are not being seen with any other? that is at the heart of the question which is ultimately what the investigation will determine and also what the inspections that will be done by all airlines that have the

max-9. i don't know, but my guess is they will focus strictly on the area around plug, first and foremost, and then pressurization. >> have any other flights had pressurization lights go off? that was there for a couple of months in service. if you have pressurization lights which have gone off on any of these, i would want to know immediately. >> you are absolutely right. that's at the heart of the investigation. what caused the pressurization lights to go off and was it because of this particular plug or was it a more widespread max-9 situation? if it is more widespread and max-9 situation, it will drag on longe longer. if it is isolated to this one aircraft, that is fortunate for boeing as well as for alaska and

united that it was this one aircraft. it is too early to know. >> all right. phil, thank you. >> we will talk more about this today. >> when are we going to davos? >> sunday. >> okay. i want the plane that can go over the ocean. with that said, when is the last time we saw it? >> more than ten years. >> you can point fingers at boeing. would you rather be on a boeing or a chinese? >> the journal does a good case of the troubles we have seen in 2024. you have the japanese airlines flight that collided with another flight and caught on fire p. t they managed to get all 300 plus people out safely. that says something for how they were able to maneuver the people

getting out of that. we had more near misses. this happens as we are taking more flights and airways are getting more crowded. you are doing it with less experienced people. these are problems the faa is pointing out. we need to continue to do it with a great safety record. again, thank god no one was injured on this flight that landed. >> seriously. i'm sure they are all damaged. >> yeah. thank goodness nothing else happened. we are grateful for that. in the meantime, congressional leaders reached a $1.59 trillion deal on top line spending to avert a government shutdown. it would allocate $886 billion to military spending and $704 billion for non-defense spending. funding for of the rest of the government expires on february 2nd. we will talk more about the negotiations with punch bowl's jake sherman at the bottom of

the hour. when we return, the inflation data is due this week. we will tell you what to expect from cpi and kickoff to earnings season straight ahead. later, we will talk about the new journal piece that says board members at elon musk's companies are what they say are persistently worried about his drug use. "squawk box" will be right back. 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, changing demand for products and shifting regulation. what does this mean for your business, your clients, and your investments? ice offers data and markets that can provide critical insight. manage your climate risk with ice. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools and paper

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time for the "squawk planner." investors get a key reading on inflation on thursday and the cpi report is expected to show high prices continue their downward trajectory in december. at least the rise started moderating. earnings season will kickoff in earnest on friday with reports from several of the big banks. including bank of america and jpmorgan chase and citigroup and wells fargo. dallas fed president lorie logan spoke out at a conference in san antonio, lorie said in light of the easing finance conditions in recent months, we shouldn't take the possibility of another rate increase off the table yet. fed officials signalled they have seen enough progress to

signal cuts for the year. covering the equity angle is joanne feeney. michelle, what gives? this is a shocking thing to think maybe rate hikes are back on the table. this is based on the market a activity recently? >> there has been an easing of conditions and the market got euphoric with the peak in rates and anticipated rate cuts. the market is ahead of itself. the fed may be trying to pump the brakes in terms of market e exub exuberance. the data is not as weak as the market had thought. the bottom line is we do think that the fed is done raising interest rates. it really gets back to the fact that not only is the economy he

s slowing, but inflation is moving lower. when we get this week's number, we can talk about it. the dramatic issue is the year over year figures will start to decline as we get into the spring with the comparison of high reading in 2023. >> you think rate cuts will start when? >> we think it starts in may. we think the market is betting on the march start. the market is looking for a series of six 25-basis cut points. when the fed starts, we think they will start with 50-basis rate cuts. we feel they will cut rates by over 200 basis points in 2024. we have inflation year over year down 2% by middle of the year. >> michelle, we spoke with roger ferguson, the former vice chair. >> roger.

>> yes, i would call him roger. we spoke with him after the jobs report that came out. he said that if the fed were to start cutting rates in the first half of the year, it would require the economy took a significant downturn. it was under serious pressure. is that what you think happens to get the rate cuts in may? >> i should have said not only do we see the dramatic decline in inflation, but we are forecasting a recession. we feel like we will see negative gdp. we think the consumer will continue to come under pressure. it is the combination of inflation being back at or below target and the economy in a mild recession that leads to aggressive rate cuts. >> joanne, the markets traded significantly on the fed cutting sooner. if they do it because recession is taking place, does that still

make sense? >> our argument is different. we don't think it is projected for the fed to cut rates any time soon. we think the market is too optimistic. the consumer incomes are rising and spending has been going out of play. the labor market remains tight. there is wage pressure. nor do we see recession on the horizon with the strength the of the manufacturing and services sectors in the u.s. we think it is early to call a rate cut. we think that can pressure equities. valuations are taking into account the rate cuts. we think earnings and guidance can be sufficiently strong to offset any reversal in those interest rate expectations. >> you think the market is maybe

misjudging things from what is happening with the economy and rates, but you think it is okay to stay long at these levels because companies will perform pretty well anyway? >> the reason we think the market is ahead of itself with the rate cuts is because the economy is strong and the labor market is tight. it tells us firms are trying to hire and they do it because they see strong demand. in that environment, that sets up companies well to continue to grow sales and profits. we think it will be something on the risk side to keep an eye on which brings on china and then taiwan. not that there are not risks out there, but the u.s. economy is pretty strong if such a way that is keeping pressure on wages and potentially on inflation. rate cuts are farther out. >> there are some people who are looking at the markets right now and saying this is the year for

all of the non-growth stocks to catch up with the growth stocks. you think the growth stocks are a pretty good place to be? >> depending on the strategy, we think there are roles for portfolios. dividends got hurt last year because markets drew out of the equity markets. especially in the modest dividend payers. similarly, as you point out, value stocks did not do well. that was a.i. driven and a.i. focused. that was a narrow market. we see lots of attractive opportunities in value and broader recovery in areas that suffered declines because of weakness in the spending with the higher interest rates. >> joanne, do you have thoughts on boeing? we are watching the huge

declines this morning. >> we have avoided boeing. we have been concerned about their problems with the max and how long it would take for them to iron those out. we were a little enthusiastic about the recovery with shipments to china. obviously, now we're much less enthusiastic about taking another look at boeing. quality problems will make investors really concerned for quite some time about that particular name. we prefer ratheon. it had an issue with the powder metal contamination. we like raytheon. and for that defensive role in the geopolitical risk. >> michelle, what are you looking for this week? >> .20% on the core. the core will particular down from 3.9% to 4%. that will be good from 5.7% from last year. the declines will be more

dramatic. that's where i think the fed will find themselves questioning the need to have rates at 5.5% when inflation is so close to target as jay powell said they will not wait until inflation is at target. it takes too long for monetary policy to act. to have the foot this strongly on the brake when inflation in the coming months will make progress to the target, i think that will be the main impetus driving the fed decision. >> michelle and joanne, thank you. >> thank you. coming up, we will dig into thewall street journal piece that says board members of elon musk's companies have persistent concerns about his drug use. that's coming up next. later, punch bowl's jake sherman will join us on the top line spending deal reached by congressional leaders.

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now to the piece in "the wall street journal" over the weekend. some executives and board members at elon musk's companies are concerned about his drug use. musk has smoked marijuana in public and on the joe rogan podcast. people have witnessed mr. musk's alleged drug use and others have knowledge of it say musk used lsd, cocaine, ecstasy and mushrooms at private parties

around the world. mr. musk is regularly tested at spacex and never failed a test. board members at tesla spoken about their concerns, but haven't said anything formal that would end in meeting minutes. if it is illegal, the illegal drug use to violate federal contracts and would break company policies. you did have an opportunity to do all this in college, like most of us. >> what drugs are still illegal? walk down the street in new york city and you get a contact high. i understand the theory. these companies, spacex and tesla are entirely dependent on elon musk being there. even ron barron has told us that. he is a long-term bullish

investor. you know, we'll see. >> he's 50 something? >> yeah. he's in his young 50s. 52 or 53. >> still dabbling a bit. psychedelic drugs. >> ket amine. >> that is trying to get off of other drugs. in college, i guess he skipped that period. you know, some people think it is -- you don't remember. timothy leary was a huge advocate of the mind expanding properties. >> a huge portion of the silicon valley that do the same think. it actually opens your mind for additional creative uses. i've never tried any of them. >> i'm not going to weigh in. >> you will sit silently? >> i said.

college was when you experiment. you get beyond it by the time you are 50. maybe not. to each his own. it is not a private matter. >> a publicly held company. defense contractor. >> far out. >> you're over 30. don't trust anybody over 30? >> yup. if you remember the '60s and '70s. you weren't there. when we come back, a big sports week ahead and the college football championship played tonight and the nfl playoff games are set after all the action yesterday. more details next. reaction after the grounding of 171 boeing planes after the fuselage blew out on the alaska airlines flight on friday. that stock this morning down

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good morning. welcome back to "squawk box." we are live from the nasdaq market site in times square. the dow is indicated off 170 points. s&p futures down by 8 and the nasdaq down by 25. the faa grounding 171 737 max-9 planes after the piece of the fuselage of the alaska airlines plane blew out friday. we have more on that story. the stock is down 8.6% for boeing. the question is whether this is a situation that is specific to that plane or the tdesign of the 737 max-9. now to the weekend's nfl and the college championship game tonight.

let's bring in patrick rische. he is a forbes.com distributor. he just keeps, patrick, good to see you. it just keeps getting more surprising. the live sports business model, especially with the nfl, is just beyond anything else being close. i was talking about it with my son yesterday. he said we watch. he doesn't like it as much. he likes movies more than i do. he sees a lot of football on at our house. i'm sorry. a lot of football is on in our house. out of the 100 top rated shows, 90 are nfl and 10 are college football. it is mind boggling. >> joe, the betting events are pro football games.

what is amazing is the difference between the gambling on pro football versus college football. tonight, college football championships. michigan and washington. i had someone frothe industry s they expect $200 billion to be bet on that game. juxtapose that. week 18 yesterday, $1 billion is bet on a typical nfl weekend. we are expecting $20 billion to be bet on the foosuper bowl. although huskies fans and wolverines fans are excited, there is a big bet on nfl. >> we were going to talk about the betting. as more states keep adopting betting and not enough are -- i made 10 or 12 bets.

i went ahead to make them so i would have an interest in watching the games when i'm not in a state which is living in the stone age or, you know, i'm surprised they are still burning witches where i go on vacation. it is so interesting to bet $5 on a game if i want to do so. i don't know the problem with these politicians. >> joe, we have seen a jump in the number of states where gambling is legalized. you touched on something. you have major players in california and texas where it is still not legal to wager on sporting events. again, both of these states is not expected they will pass gambling in the states until the earliest is 2025. >> what is it? the criminal element? the criminal element is if you don't have legal, then you have the criminal element.

is it puritanical? a holdover from that? they never read history books about prohibition and what it did to people's drinking habits? what's the problem, patrick? >> one of the issues in the state of california in particular is the native american tribal casinos. these are massive and they are huge political forces. when you try to introduce legalized gambling into the state, they stand up and say you are cutting into our business. that is the key dividing force. if you negotiate, you will find some resolution. i don't think the state of california did a good job of working with that group two years ago when they tried to pass bills. i anticipate both states will see legalized gambling eve even eventually. it will take a while.

>> i guess i can't ask you to solve the -- no one plays the last few games. that happens in the nfl and it happens also in all of the bowl games. it is not even the same teams that they were fielding during the normal games. you can't bet on them. you have no idea, right? >> yeah. it is tremendously complicated. i think because next year we are moving to the 12-game bowl system, you will see more bowl games that matter. hopefully you will see fewer college athletes skip the games. you can't blame them. a kid gets injured and blows out a knee. there goes their pro career. you understand it, but it is frustrating. it is less of a problem next year. >> what do you think it means for big media companies that maybe not have enough presence in all of these things?

i can also imagine there will be cross ownership with gambling concerns in some way. >> absolutely. you can only imagine the gambling companies or media companies which get frustrated when the players are sitting out. joe, you mentioned it. the gambling industry is integrated into the business of sports. it impacted how teams are building venues. they want to bring fans to the venue. you are now seeing teams incorporate sports books into the venues. media companies are now betting shows that you used to have to watch on the usa network. now they are on mainstream television to get people to watch. >> i enjoy it. i really get in a bad mood at times because of a $10 bet. other times i'm happy because of the $10 bet.

it does make you look forward to the games and you are more attuned. we are all looking for enjoyment. especially when nothing is on regular tv except for "squawk box." >> it is all about fan engagement and gambling impacts fan engagement. >> patrick, thank you. i don't know. are we giving people hypodermic needles with gambling? >> i do worry, joe. >> all right. thanks, patrick. >> thank you. little bit of soul searching taking place. >> i'm wondering. when we come back, we are watching the price of bitcoin after a key hurdle was cleared on friday that could lead to the approval of the spot bitcoin

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welcome back.

berkshire hathaway settled a lawsuit over how berkshire acted for the travel centers. the haslam family alleged berkshire adopted accounting that they would pay for the 20% stake in the pilot travel centers. berkshire accused haslam to boost the value of the company so his value could get a bigger buyout. berkshire and pilot said they reached agreement to settle the case, including the dismissal of all claims and counterclaims. a decision is expected this week from the s.e.c. on whether to approve spot bitcoin etfs. they held discussions on friday with stock exchanges about the final wording on changes for the filings of the etfs. reuters reports the issuers

describe the s.e.c. wording changes as minor. the report says that several issuers expect approval of the etfs out late tomorrow or wednesday. we'll see whether the journal is right. the journal says -- i don't know. how do you write an article like that, becky? we think or someone says that the recent rally in bitcoin, which was the way they phrased it is like petering out. did you read that? the recent move in bitcoin, which is moving higher, based on the etf, that is -- here it is. skeptics. i'll read the actual piece. skeptics say that bitcoin rally provoked by the expected launch of the first etf is nearly out of room to run. >> it's not such an unusual thing to think if you buy.

>> they have no idea. >> how often do we see that same terminology for any number of investments? >> from 17 back to 44. 25 to 44. >> there was an article last week and one analyst said he didn't think the s.e.c. would do anything. anthony did not believe it. he said if it didn't get approved, bitcoin would come up eventually. this is what makes the market, right? >> i don't understand. it reminds me of hamlet in terms of what do i do? make up your mind. it is almost mainstream with bl blackrock and gensler. it reminds me of a tragic flaw. like shakespearean.

get on with it. give investors some visibility. finally make up your mind. make up your mind. your father, your stepfather killed your remember father and married your mother. >> i remember hamlet. coming a deal to fund the government and avert a shutdown. punch bowl's jake sherman intooiusext.is the award-winning trading platforms. bring your trades into focus on thinkorswim desktop with robust charting and analysis tools, including over 400 technical studies. tailor the platforms to your unique needs with nearly endless customization. and track market trends with up-to-the-minute news and insights. trade brilliantly with schwab.

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proposed deal, we wanted to bring in jake sherman, "punchbowl news" cofounder . this is really good news. everything i've read since then suggests that i should hold off a little bit and wait to see that there are still some pretty big hurdles to come. what do you think? >> temper your expectations, becky. here's the deal, congress has effect i ively reached a budget agreement, which is the top line spending numbers. the number that the government will spend in total for fiscal year 2024. but the issue is this, number one, there was already a spending agreement that was reached between kevin mccarthy and joe biden, so this is not anything new. this just affirms that agreement essentially, but the big problem here is that, you know, conservatives elected in their telling, mike johnson, this new speaker of the house, to cut spending and to be a conservative, this will cut spending effectively $16 billion

more than the previous agreement, so what they did is they clawed back about $6 billion in covid relief money that was unspent, and secondly, it accelerates $10 billion in irs cuts to this year instead of next year. not a huge agreement, and i'll mention one more thing. today is what, january 8th. the government shuts down in 11 days. there's not much time to get this done. there's four big bills that fund the government that need to be passed by january 19th, and then the rest of the government by february 2nd, so they still have to pass legislation. conservatives and republicans in the house included all sorts of red meat provisions in their spending bills back a couple of months ago, earlier last year. those won't get through the senate, so they're going to have to -- conservatives are going to be pretty angry they didn't get the budget cuts they were seeking ask they're not going to get the policy changes they're seeking. >> that's what i was going to

bring up, the freedom caucus tweeting this is a total failure. what happens next? because for speaker johnson to be able to get this passed, he's clearly going to need help from the other side of the aisle. if this is a bipartisan deal that both some -- that some democrats will sign off on as well, what does that mean for his speakership? because this feels like the same road that kevin mccarthy was going down. >> same road and let me just take it back a little bit further on the railroad so to speak. there is no chance that they could pass this without democratic support. in fact, because of the tight margins in the house and kevin mccarthy retiring and other people leaving congress, they can't even get it to the floor without democratic support. so this is going to be at a higher threshold, what we call suspension of the rules, which will require two-thirds majority for passage. it will require 270 something votes to get through the chamber. this needs to be purely

bipartisan in the house. what does it do to johnson? i don't know the answer to that. logic would dictate that people understand that washington is controlled by democrats with one bastian of republican control, democratic white house, democratic senate. you get what you can get and you don't get upset as my kids always tell me, and you have to realize that the governing dynamics are not in your favor. you've got to build the cut spending year-over-year based on the deal that kevin mccarthy cut, and it's a relatively good deal for divided government. >> jake sherman, thank you very much, jake. >> "squawk box" will be right back.

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go national. go like a pro. good morning, everybody. boeing shares slide, the faa grounding a large portion of its 737 max 9 fleet after a door plug detached from an alaska airline's plane. we will have the latest and get reaction from the street. will a spot bitcoin etf win approval? jay clayton joins us to talk about what it could mean for investors. and one of europe's biggest grocery chains pulling pepsi

products off the shelf over price hikes. we'll talk food inflation with former darden ceo clarence otis, the second hour of "squawk box" begins right now. ♪ good morning, and welcome back to "squawk box" here on cnbc live from the nasdaq market site in times square. i'm joe kernen along with becky qu quick. andrew is out today. did they do that this year? >> do what? times square confetti? >> yeah, there's still confetti out here, did you see it? >> i actually did see a little bit of it. >> there's still confetti this morning. >> i'm old. i watch what's his face. >> ryan seacrest? >> i don't know who any of those people are he has on.

i don't know who the people he has on are. i don't know who the people are california are. i don't care about niany of the. i can't talk like them. where is guy fricken lombardo? and where is -- >> well, i can't tell you for sure. >> dick clark, people that make me feel like this is an actual important moment. >> let me call lawrence welk for you. >> i saw ll cool j, he's pretty cool. he's a big dude. >> i actually saw him too. >> i saw him, i'm kidding a little bit. i did understand some of it and i've met him before. i know, i don't care. >> am i wearing underwear? >> you better be quiet, or i'm going to put you in a rest home. i'm already in a rest home. we're going to put you in one that was on "60 minutes". >> welcome back. >> good to be here! so they did -- it all happened?

>> yeah, it did. >> and it is 2024? got that right? >> it is 2024. and boeing shares this morning are getting hit pretty hard in the premarket. the faa grounding scores of 737 max 9d planes after a piece of the aircraft blew out during an alaska airlines flight on friday. phil lebeau joins us with more on this. phil, a lot of questions. >> oh, definitely, becky, and i don't think we're going to have answers. i would be surprised if we have answers today. maybe we'll get some more answers in terms of exactly what happened and a move towards a solution in the next couple of days. but if that happens, i think people are going to say, wow, boeing is getting off relatively kw quickly in terms of a major, major scare for the airline, for the company as well as for the airlines that fly the max 9. everybody has seen the video that came out over the weekend from inside the alaska airlines plane. we'll talk about that in just a little bit. here's the focus of the investigation.

the fuselage plug, which is essentially where an emergency door would be. it's been plugged as part of the manufacturing process. the pressurization problems with this particular aircraft three times before this incident. the ntsb describes them at least initially as being benign issues, but did that play a role in what ultimately happened in the air and the grounding duration is unclear. the seats next to the aircraft or near the plug that was stripped off the plane, they were empty. thank goodness because this could have been much worse, and this happened early in the flight. here's the ntsb talking about just how lucky everybody was that this was not a worse accident. >> the aircraft was around 16,000 feet and only ten minutes out from the -- from the airport when the door blew. fortunately they were not at cruise altitude of 30,000 or

35,000 feet. think about what happens when you're in cruise, everybody's up and walking, folks don't have seat belts on. they're going to restrooms. the flight attendants are providing service to passengers. we could have ended up with something much more tragic. >> very, very fortunate. here's what's going on with the grounding. there are 218 max 9s that have been delivered, but only 171 are grounded. those are the ones that have the fuselage plug. the remainder are not grounded. united has 79 planes that are grounded. alaska has 65. six other foreign airlines have the remaining 74, and this is a relatively new aircraft in question with alaska airlines. so it was only delivered on november 30th. so what happened or october

31st, ir should say. what happened between then and this incident over the weekend? that will be at the heart of this investigation as the ntsb looks not only at the aircraft back at the airport in portland, but also the fuselage plug, which has been recovered. it fell into a backyard in suburban portland. they now have that. they'll look at that. they'll look at the cockpit voice recorder as well as the flight data recorder. they'll try to get a better sense of exactly what happened with this incident, and does it portend or indicate that there might be a broader issue with other 737 max dash 9s. the important thing for a lot of investors this morning separate from this investigation is whether or not this has legs. will this mean boeing has to slow down plans for ramping up max production, which they are in the process of doing between now and the end of 2026. there is a big scheduled

increase planned for max production including the max-9. take a look at shares of spirit aerosystems. seems like we talk about spirit every six or seven weeks, there's another issue. the stock is getting hammered today. spirit makes the fuselage for the max. it made the max plug in question that is at the heart of this investigation. we've reached out to spirit, by the way. they have a new ceo there, pat shanahan, who was a long-time boeing executive, served in the trump administration briefly, guys. we have not heard back from spirit at this point that mr. shanahan will be talking anytime soon, but he's got his hands full in terms of correcting a lot of the problems that are at spirit. again again, we don't know if spirit is directly the cause of what happened withairlines, but certa of the of questions for investors today, guys, back to you. >> yeah, i mean, phil, the video is so graphic. it's hard not to put yourself in

the position of the passengers who were on that plane, and i think that's the instant reaction everybody had. imagine even driving into work with your windows down and think about these passengers went through. when you look at the stock implications. spirit aero, that used to be a unit of boeing, the idea that it was spun off at some point. >> yeah, it's been separate. it's been its own company since 2005, and it has diversified its product portfolio. when it was spun off initially from boeing, almost all of its business, as you would imagine was from fuselages were built, they were built in kansas. we have talked, i think it was like eight weeks ago -- i'd have to go back and look exactly when -- there were a couple of incidents involving holes that were improperly drilled that required inspections.

we've had other issues with spirit aerosystems. this is at the heart of a lot of questions people have not just for spirit, but for boeing as well in terms of quality control. what's going on, and this has been a focus for dave calhoun, the ceo. he has talked about it at length. he will hold an employee town hall tomorrow in retton, washington, where the max was built. and he'll be there along with stan deal, steef phanie pope, t new coo is expected to be there. boeing is front and center right now for a lot of people saying what is going on? explain to us whether or not you have your arms wrapped around the quality control issues there. that's going to be a major question for calhoun and the leadership team at boeing, not just today or the next couple of days, but over the next several weeks. >> thank you. that stock off by more than 8% right now, and it's the reason

that the dow's under so much pressure this morning. we'll be speaking with phil in the next hour. we'll also speak with an analyst about this situation later in this hour. joining us now to talk markets, katie stockton, fair lead strategist founder and managing partner. she's also a cnbc contributor. we look back at the previous year and try to look ahead. just natural because of where we are on the calendar, people are talking about apple losing some momentum. that could be important for the overall market because it's such a leader. is this something more than just a, i don't know, a backing and filling period for apple? >> i think we have to contextualize it, right? we had such a huge move from the major indices ahead of this pullback. it was more pronounced finor ape than most of the mega caps. to me we now have a short-term oversold reading for apple. it's still within the context of a long-term uptrend. there's good support right

around 179, 180. so it's a bit of a proving ground for it. i'm not ready to add exposure yet, but just with a little stabilization, i would say i'd feel confident adding into weakness. that's often hard to do. people often talk about buy the dip. here's the dip, it has people a bit shaken. >> for a technician you do talk about election years. you don't need to talk about it in a fundamental way. you can just talk about it statistically what happens during election years. also, what about sentiment? no one expected the type of gains that we saw, i think, in 2023. could it repeat itself in 2024? and is that likely in an election year? >> the thing about q4 was that we saw this major breakout, and it was a breakout shared not just by the large cap indices, but also the small cap indices. we saw big breadth on this big move, resistance levels cleared. that does set a very positive

tune for the year, for the whole year, in fact, because we have what technicians call these big cup and handle formations. if you look at a chart long-term of microsoft as one example, microsoft being a big heavy weight like apple. we have this major breakout to new all-time highs. that shows a sentiment shift and a willingness to go farther down the market cap spectrum. i think that's going to be key for the market and also the spreading out in terms of sector participation. we had technology, communic communication. all the megatech sectors did best, even with the q4 rally. now we're seeing financials kick in and maybe even health care. >> it was a hated rally, and it gave the bears hope that they were going to end up being right about october lows. now we've had -- we've got to specify which october we're talking about. for two straight years, people were married to the october lows and retesting those.

for most of 2023, people were either not in love with the rally or thought there was going to be a come up pans or it wasn't going to continue. that was all taken care of in the fourth quarter? it was solidly -- >> i would say so. even earlier in the year when we had a breakout pback in may, tht is where we emerged to that bear cycle of 2022. even though leadership was narrow, we had this bull market cycle in place. we can arrive at for the s&p 500 a price objective of about 6,100 if we see new highs, and we are looking for new highs after this consolidation. and we're really not reading too much into the consolidation because it does follow such a strong relief rally, and with that, of course, you get the uber bought reading and market sentiment and market breadth. >> it was just a couple of weeks ago, becky, 3,500. still talking about 3,500 on the s&p. did you just say 6,100? >> 6,100.

and that wouldn't necessarily be relevant for this year, but it's something to sort of remind you to keep the bullish buys when the markets are trending higher. the long-term momentum shift is really very meaningful what we saw last year. it took kind of a long time to unfold based on the nature of the 2022 bear market cycle. but now we have these long-term momentum gauges pointing higher and jooverbought conditions so r being well. >> next time you're on, we can talk interest rates. how do you look at inflation? do you do charts for inflation? >> we don't often chart the macro data in that way. it's a little slow moving for us. >> you could use the ten-year. >> we think yields will be in a corrective mode, meaning sideway to low for much of this year. >> the yields. >> yeah, the yields. >> bitcoin, we won't talk about that either. maybe next time. >> next time. >> and that's a long -- that's too long to promo that when we don't even know when she's on

again. >> she'll be on very soon. >> i'll be back. >> don't miss a minute. >> i'll be back. >> thanks, katie. when we come back, the biden administration announcing its second chips act grant worth $162 million to microchip to expand fabrication in colorado and oregon. it're going to talk with the whe house's former chips coordinator next. we'll be right back.

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welcome back, everybody. the biden administration has announced a $162 million investment to expand chip factories in colorado and oregon as the u.s. continues to bet on american-made semiconductors. joining us now is duke university distinguished professor ronny chatter ji who was most recently the white house chips coordinator. thank you for being here with us today. we are watching these announcements very eagerly to try and figure out what they all mean. what does this latest investment, what should we think about it? >> well, this latest investment really emphasizes the biden administration's commitment to supply chain resilience. a lot of the attention with the chips act goes on the most cutting edge chips, those things that power artificial intelligence or your latest iphone. what's really important is microcontrollers, and other older and legacy semiconductors that you find in automobiles, medical devices, in the grid.

these are some of the things that were in short supply in 2021, and these two first awards, which are pretty small, this recent one $162 million are a preview of what's to come and are focused on supply chain resilience in key industrial sectors. that's what i see from the first two awards so far. >> it seems like it's taking an awful long time. i mean, it was 2022 when the chips bill passed. it's been well over a year, and we're talking about $52 billion that was approved just in subsidies, another $24 billion in tax credits. why does it feel like this stuff is just coming out -- i mean, 100 plus million dollars is a lot of money, but it does seem like it's taking a long time to get the money kind of doled out. >> the 162 million will support two plants, expand to modernize them, but you're right, there's a lot more to come. you have about a dozen awards according to secretary raimondo that will come out in 2024. i think some of the big ones people are looking for, that's when we're likely to get the news in 2024. these are big, complex deals.

if it was the private sector, there would be a lot of due diligence, a lot of back and forth. i'm expecting to see a lot of action in 2024, i'm not surprised these initial awards have been smaller and focused on supply chain disruptions during the pandemic. that's an important problem to solve. >> there was a news story earlier today that we were kind of looking through about chinese companies saying they aren't interested in nvidia's slower ai chips, that they are now looking to huawei and to in-house solutions for some of these chips. so when we look at security issues and think, okay, we're going to be able to maintain control over this, how long does that last? >> well, you know, according to huawei's recent product releases, they released a phone that got a lot of attention, they released a computer that got a lot of attention. the chips in that phone are about 5 years old and really don't show that the chinese are making up significant round to be the leading edge. it is a tight window, but five years is still way behind. if you look at the computer, the laptop that was just coming out,

they were using a chip made in taiwan in 2020. i think you have some early evidence that the -- relatively narrow and not focused on commercial advantage, but really for national security, are working. this is a situation we're going to have to continue to monitor, both at the advanced chip, also at the legacy. the chinese government has done this in other sectors before. cratered the market prices around the world and put a lot of companies out of business. we have to watch the legacy older chips, the ones that power automobiles, the grid, medical devices. that's the area where the prc is making massive investments, i think there's 18 new chip factories starting in china this year. >> ronnie, how long until we're in a better position just in terms of controlling our own chips that we're manufacturing? not only does it take a long time for the awards, it takes even longer to build some of these foundries and other things. when you look out, do you say 2026, we're going to be in a more self-reliant position or is

it longer than that? >> i think you're already seeing industry make a bunch of bets here. companies are making those investments. they're making a bet that the american chip sector is back, in terms of when these factories are going to get built. these are huge capex investments, really complicated machine tools. i think it will take a couple of years for these factories to get up and running, build in all the equipment and start producing at scale. but honestly, we need to start now. the deterioration manufacturing in the chip industry took a long time to take hold and it will take a few years to come back. we've got to keep watching these announcements. i'm sure there's going to be more exciting ones coming in 2024. >> thank you for joining us today. thanks for having me. when we come back, the vulcan rocket lifting off overnight in the first lunar landing mission in decades. we've got the details next. the futures this morning are under pressure, particularly when you're looking at the dow. it's indicated off by about 160

points thanks to weakness with boeing shares. s&p futures down by 4, the nasdaq is at the flat line. "squawk box" will be right back. knock, knock. number one broker here for the number one hit maker. -thanks for swinging by, carl. -no problem. so what are all those for? uh, this lets me adjust the base, add more guitar, maybe some drums. -wow. so many choices. -yeah. like schwab. i can get full service wealth management, advice, invest on my own, and trade on thinkorswim. you know carl is the only front man you need. (phone rings) oh, i gotta take this, carl. it's schwab. schwab. (feedback rings)

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the united launch alliance launched its vulcan rocket and lots riding on its debut. morgan brennan joined us live from port canaveral. >> reporter: that's right. this is the first flight of a new rocket, and it is the launch of the first lunar landing attempt by the u.s. since the apollo era, so five decades. at 2:18 eastern this morning, united launch alliance vulcan center lifted off at cape canaveral in a maiden flight a decade in the nation. it launched that if all goes according to plan will become the first privately owned spacecraft to successfully land on the moon. now, ula, which as you mentioned is a jv between boeing and lockheed martin had a lot riding on this mission, which ceo tory bruno called a dead-on bull's-eye in an exclusive interview with me this morning.

>> this was tremendously important for our position in the marketplace and for the government. we replaced four families of rockets in 51 configurations with this single vulcan, it's part of what allowed it to become so affordable that it also means this is the platform. >> reporter: so next, six more launches for vulcan this year before ramping to 25 per year. 70 missions spoken for already between the u.s. government and commercial customers, including amazon as it launches and built out its satellite-based broad ban service, launch price undisclosed, believed to be much more competitive with industry leader spacex, and it comes as ula is on the sale block, which did decline to comment on. as for astrobotic, its spacecraft is headed to the man. it will orbit there for a few weeks before attempting a soft landing on february 23rd with

payloads for nasa and others including, by the way, star trek lun areas. it's launching its own commercial lunar landing next month. in total in 2024, five u.s. commercial lunar landers are expected to launch to the moon as nasa does prepare to send astronauts back later this decade. >> amazing. when it happened. so morgan, the payloads, are they coming -- they're not coming back the stuff that it gets, is it? >> nope. >> how do they do it? >> reporter: it is not coming back. there's payloads for nasa, so astrobotic and these other landers in this public private partnership known as clips, commercial lunar payloads services.

in this particular case, it's going to attempt that landing on february 23rd to time it with the lunar, the sunrise on the moon. it's going to land, if all goes according to plan, payloads for six other countries, some commercial customers. there's going to be all kinds of research it does. it's going to collect it, send it back to earth to scientists. it has ten days to do all of this before the sunsets again, and basically all of that equipment is rendered useless. >> wow. >> so that's cool. so it can do it as if it was manned and then send it back. when we do sent the astronauts back up there, they're coming back obviously, but this is -- >> oh, yeah! yeah, it's totally different kind of mission, but really cool. and exciting. i just don't know, is there anything going on on the moon? you know, we've been there, tone t done that. there's always more to figure out. >> there's so much more, and to be very clear here, we talk about geopolitical tensions here on the earth the between

countries like the u.s. and china. you're seeing a very real space race play out where things like the moon and this idea of colonizing the moon are a concern as well. what's so incredible about this moment in time, particularly from the u.s. standpoint, it's being commercially driver. astrobotic is doing this mission for $100,000. a similar mission done by nasa wot hundreds of millions of dollars if not closer to a billion dollars. just to give you a sense of the role private sector is playing in this. >> port canaveral, cape canaveral, kennedy space center. you got to update us on that. >> space coast, let's keep it easy. >> yeah, okay. see you later, thank you. coming up, we've got a story about a different kind of race. this one a spot bitcoin etf, former s.e.c. chrmaian jay clayton will join us right after the break. we'll be right back.

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by some of its peers. in comparison, value ka ri investments and fidelity are charging fees of 0.8% and 0.39% respectively for their planned spot bitcoin etfs, and i just noticed we're getting a pretty firm bid this morning on bitcoin. it's almost 45, i saw 44 and change a second ago. joining us now to talk about the possible approval of a spot bitcoin etf is former s.e.c. chair ma chairman jay clayton, a cnbc contributor and adjunct professor at the university of pennsylvania, which i say now and it's like -- it's a loaded term all of a sudden. it's so weird. you know what's really loaded is harvard. that is a loaded term if there ever was one. but maybe we'll talk about that in a second. i just have been flabbergasted

so many different ways recently. now it's like to the left, you know, they're enabling plagiarism and cheating. it's like if it's in the their best interests or if it's in defending some of their sacred cows, nothing no matter how absurd it is, they'll look at you with a straight face and tell you, oh, yeah, yeah, yeah. do you know what i'm talking about? are you surprised at the way it works? >> i do, and let's go there. why is this happening on college campuses or why the reaction? because there's been no real j oversight sor accoor accountabi. what did people see in those hearings? they saw a terrible response to a question about anti-semitism, an equivocal response when there was no room for equivocation. what else did they see? they saw people unwilling to examine the status quo. if you're a company -- we're talking about boeing this morning, right? if the ceo of boeing comes out

and says, you know what? there's nothing to see here. we'll fix it. don't worry about it. we'd all be like that's not how you act when you're a leader. what america saw was that kind of action from the leaders of institutions that have, what, 14, 15, $20 billion in annual revenue, no willingness to be introspective. and i don't blame the leaders themselves for that. that's institutional perspective. that's what was going on there. >> they're a product of their environment. >> well, if they challenged the status quo, they challenge the faculty -- >> they wouldn't be there. >> but to bear that out, i mean, boeing's not going to be able to say that because the faa is stepping in. what are you calling for federal oversight at these universities? >> i'm calling for some oversight. i think they lack any meaningful oversight at all, right? if public companies, they have incredible public feedback

loops, the service you guys provide. you are asking good questions this morning. you're asking good questions of the government. why are these planes fryilying all if they can't go to hawaii. >> we had ackman on and i was like, wow, now you notice something's happening? we've had you on a million times where you've been spewing esg as, you know, some wonderful thing, and now you realize what it actually is. in the piece today it's there's dei with a capital de, a capital e and a capital e and dei with a small d. i'm for the small d and i'm for the small s -- i'm just not for the capitalized dei. it's just all crap. >> with esg, the elements of esg, the basics make sense. g makes sense, good governance. >> obviously. but the way that it's been -- >> but with no accountability, no checking, no questioning, the fact that you could say to

people, you know what? you can binarily screen investments, and not only are you going to do at least as well, you're going tomake the environment better. that's -- >> how do we do dei now? claudine gay,was she the best person for that leadership role at harvard? i saw guys like jason furman die on this hill. that's the hill he's going to die on that we're not going to outsource getting rid of this. but was she the right person from the very beginning? >> look, i don't know because i wasn't there making those decisions, but i think that people have to ask themselves are we doing enough rigorous selectio14 billion of annual revenue. management experience and the like. >> why do we care, though? it's a private university. let them wither on the vine. if this damages their reputation -- >> private companies, okay, we

still care a lot about what private company dies do in our society. they may not be subject to the public shareholder checks, but they're certainly subject to regulation and the like. if you're a private company in the oil and gas industry, you're subject to all sorts of regulation. >> harvard moved on this because they saw job placement for their graduates drop significantly. they saw the number of people wanting to get into the school drop significantly this year, and they saw donations down. >> checks from the outside on what's going on. but look at the -- look at the place that universities hold in our society. what do parents -- what are parents willing to do to get children a ticket to these exclusive universities? they're willing to do -- that tells you how valuable they are. and look, we've all benefitted from what universities have produced. the fact that people take what they learn at universities out into the world. we are the leaders in the world in so many industries.

that has its roots in our universities without a doubt. now, we can't lose that, and if it takes a little bit of a kick from the government or a little bit of kick from the private sector to get that kind of accountability and introspection, so be it. >> there's been some damage. there's no doubt. i was thinking about it, so i have all these sweatshirts from my daughter who went -- and i wear them now, and people -- it causes conversation. you came in today, talking about bitcoin, i said you're an adjunct professor at the university of pennsylvania and here we are, ten minutes later, that's all we've talked about. it's not good. >> we should keep talking about it, though. we can't -- i mean -- >> what happens with bitcoin? are they going to -- is the s.e.c. going to sign off on a bitcoin etf, do you think? >> i think approval's inevitable? >> imminently? >> i think there's nothing left to decide. look, i credit the s.e.c. for where they are. what -- where are we w?

we're comfortable with the exposure. people need to know what the cost is. they need to know about the underlying bitcoin market. is the bitcoin underlying trading market something that is what i would say is robust enough, efficacious enough where you can rely on it? it is much better today than it was five years ago. five years ago, there was laddering, there was all sorts of hithings that you wouldn't wt to make available to the general public because of that risk, and the last thing -- and i think this is missed, is technology to actually provide the product. the custodying, create the redeem. this is a big step, not just for bitcoin but for finance generally, if you can digitize, tokenize underlying assets and trade that way, that's a potential significant change across finance, not just in the, you know, crypto space.

>> but you think bitcoin etf approval is coming and imminent as well? >> yeah, i do. i could be wrong, but that's what i think. >> okay. your opinion matters, former s.e.c. chairman. >> i don't like what's happening. and then when you abuse dei, then you set back the movement, and we're still nowhere where we need to be, s&p ceos, board members, people of color that represent. we've got miles to go but this like casts a pall the way that it was administered. i mean, we can't ignore that we have a lot more work to do. >> well, i think that's where you have to start, joe. we have miles to go. but let's -- i mean, let me recognize, we have miles to go. we still have problems. anybody who says that they don't see bias in society doesn't have their eyes open. >> old boy network and all that stuff. >> absolutely. >> yeah. >> i've seen it in every organization i've been.

lesser and more people making improvements. let me give the american people some credit here, if you travel the world, there's no country that is trying to assimilate, respect, provide for more different cultures, religions, and the like than the united states. >> all right. jay clayton, thanks. thank you. "squawk box" coming right back. with nurtec odt, i can treat a migraine when it strikes and prevent migraine attacks, all in one. 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.

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they come -- actually, they're not down 20, 19 3/4 as the faa orders the temporary grounding of certain 737 max-9 planes. this follows an incident on alaska airlines on a flight on friday night when a portion of the fuselage blew out midair. let's bring in ron epstein, b of a securities aerospace analyst at enron. thanks for joining us. it's good to see you this morning. do you know anything that we don't -- that we haven't tried to talk about already as to whether this is an alaska air problem or a spirit aerosystems supply problem or another 737 max problem? >> yeah, good morning, joe. obviously the ntsb has been workiw working closely on it. i listened closely to their press conference last night, and in fact, all the press conferences that had -- you know, they've been trying to

follow the chain of facts. it's unclear at this point the root cause of this. just unofficially it seems like it's not a maintenance issue. i mean, this is an airplane that was tldelivered in late october. was it a boeing issue, was it a spirit issue or was it, you know, spirit doesn't build the door. they get it from somebody else. the real question here is, i think you have to put this in perspective. imagine if you bought a car in late october, pick your favorite car, whatever it was, and then you went out just two days ago, opened the door and it fell off. these door plugs are nothing new, right? they've been used in other boeing airplanes and other air bus airplanes, it's sort of like a standard thing. but what happened clearly wasn't supposed to happen. i think investors kind of want -- everybody's kind of jumping to sort of it's their fault, it's their fault, it's their fault. if we knew exactly the chain of

events we could say that, but we don't. but most certainly it shouldn't have happened, and the bigger question here is on an airplane that, you know, right now boeing is not ser f-- it wasn't caught faa. it went through the boeing process, and boeing didn't catch this. if it did indeed happen at the supplier at spirit aerosystems, they didn't catch it either. you know, everybody got very lucky in this situation because this really could have been horrible. and luckily it wasn't, and it seems like the faa is taking a cautious approach to this just to make sure that we fully understand what's going on here. if you were to -- from a financial perspective, the modest good news here is most likely this is not a design issue because it's a very

standard thing used in industry, but a fabrication issue, an assembly issue, and where did that issue happen, and why wasn't it caught? that's what gives me pause. you know, at this point, it's one of those thing whes where t program was inching back some confidence, that kind of gets blown away by this. you know, boeing's reputation was, again, the same thing, it's impacted by that. but the reality is, joe, there's really only two airplane manufacturers, major airplane manufacturers right now, bowing and air bus. so i can't imagine unless we're interpreting some of this stuff wrong, that this will have ultimately that big of an impact on the 737 max program for now given the situation with the duopoly industry and the demand for airplanes. so my -- >> yeah, hopefully it's not a

quality control issue that involves, you know, just in general the way that business as usual has become. i maean, because they can look t every plane that has one of these plugs, they can obviously look at it now, and i'm sure there's a that its, you know, that -- you know, that this doesn't happen again, and in that case you're right. nothing -- the worst-case scenario didn't occur and now we've got a heads-up to look at it more closely, at all the planes. ron, got to run. plane is out, and good to have you on. thanks. >> thanks, joe. >> okay. coming up, tired of paying high prices at the super market for groceries. supermarkets fighting back again the food producers by pulling their products off the shelves. ta autlkbo that and much more right after the break. "squawk box" will be right back. hm? you! your business bank account with quickbooks money, now earns 5% apy.

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francis carrefour with thousands in many places no longer taking prepsy products and other brand names to protest what the company considers to be unacceptable price hikes. the move shows consumers might be approaching a breaking point. bring in our next guest for more on this. clarence otis, former darden restaurant kceo. clarence, two years extreme inflation when it comes to food prices, restaurants and beyond. what do you think the situation

is at this point just in terms of the consumer ability to continue to take anymore? >> becky, for sure, despite the fact there really is slow employment levels and rates growth, many consumers definitely are feeling pressure. look across the board at major spending categories. so food inflation, rents escalated. fuel costs, in unit right now, but consumers know they're volatile and could spike at anytime. so that weighs. then when it comes to digital lives. think about connectivity, content, devices, those are taking a bigger and bigger share of consumer budgets, and so moves like these are not surprising. i think what's surprising here, because these things happen all the time is that we're talking about brands that have market dominant positions, and so that typically doesn't happen with

those brands. so that is a new signal. not sure that that might, would happen in the u.s., but definitely is a warning shot to producers in all consumed categories. >> let's talk this through, because i remember a few years ago carlos g gutierrez came on, two, three years ago, saying any ceo who wasn't raising prices were doing a real disservice to the company and share hold egs. inflation would spiral, lived through it with high inflationary prices out of the country and you have to deal with inflation. get ahead of it. the point you can't boost margins anymore. you have to deal with reality around the idea inflation is coming down. better bring prices down, or at least slow the roll in tern in

these price hikes. >> it's been significant. consumers reached a point don't have that incremental spending power and producers have to focus on the cost side. i mean, the reason why retailers are pushing back is because, you know, a significant portion of their business model are labor costs. and labor costs had inflated. and in addition to that, they've also raised technology s.t.e.m.s to get less dependent. focus on fissures to protect markets. >> some doing that but used to hiking prices and consumers taking it to a certain extexten. does this signal the consumer just isn't going to take it

anymore? >> it does. so people, i don't think, have real been working as hard at it as they need to, and this is a sign that that's going to have to end. >> do you think as a former ceo that this is a sign that profit margins are going to come down? >> i don't know. i mean, i think for any particular company, it really is about your ability to operate well. you can maintain margins, but you've got to work pretty hard to change your operating model. people have been talking about digitizing, for example. their processes. for a long time a lot of people made a lot of progress, but it's been pretty incremental which you step back and look at it. so now you've got to double down on those sorts of things in order to maintain margins. >> clarence otis. it has been a while but really good to see you, clarence. thank you g.

>> good to see you. still to come, market economist jeremy segal and ceo daniel o'day joins us live from the jpmorgan health care conference. "squawk box" will be right back.

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i sold that. and you can manage it all in one place. i built this. and it was easy, with a partner that puts you first. godaddy. good morning. boeing shares much lower in pre-market following that accident involving part of an alaska airlines fuselage late last week.

boeing almost single hand dlid respo handedly responsible for the drop in the dow. and a $6 trillion in spending, but a government shutdown still not out of the question. the first u.s. lunar lander in more than 50 years is on its way to the moon. we'll tell when you it's going to try to land, or land, hopefully. final hour of "squawk box" begins right now. good morning, everybody, and 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 joe kernen, andrew is off today. and on this monday morning, a little slow start. at least for the dow futures. dow futchers down by 137 points.

because of weaknesses with boeing. not us. talking about the -- >> a little bit of a slow start. >> just joe and i here. sorry. it's a monday. trying to wake back up. >> a little bit of a slow start. >> indicated flat this morning. nasdaq indicated up by about 16 points. treasury yields rose significantly last week. this morning the ten year is well above 4%. 4.04%. two year sitting just below that at 4.389, just above that. below what we'd seen a little earlier. >> phil lebeau, a weird job, phil. all the time, obviously busy since friday. investigators trying to figure out what went wrong on friday with part of an alaska airline boeing jet ripped part of the fuselage, ripped away from the plane's side. phil lebeau joins us with the very latest. >> what investigators are doing today, pursuing a number of

different areas. first of all, the data recorders. flown back to washington. whether or not analysis is done today, might be too quick. an area focused on. also analyzing the aircraft itself as it's parked at an airport in portland, looking at the hole that was, that happened after a plug on the 737 max 9 was ripped off. there you see investigators looking at it'sthe focus that fuselage plug. by the way, they have recovered, in suburban portland, they found it. somebody said, hey, it landed near my property. they now have and it will analyze in a along with the aircraft itself. 175 aircraft grounded. alaska and united adjusting their schedule doing it all weekend especially for alaska, it's a decent size of the fleet for that airline. in terms of january flights, this is data from siri. united has almost 8,000 max 9

flights scheduled in january. alaska, a little over 5,000. there you see the number of flights scheduled by foreign carriers. obviously, this is going to change dramatically. those max 9 flights won't happen until an agreement has been worked out between boeing and the faa and investigators are confident in term what's should happen with inspections to determine if the remaining 171 max 9s are safe to fly. the max 9 is about 2% of boeing's 737 backlog. not a huge part of the backlog, but increasing max production. this raises a whole host of questions regarding the ability to safely manufacture and to have quality controls in place so that you know that every aircraft being delivered is safe. this was an aircraft delivered on november 11th. you should not be having this happen to any aircraft let alone one that delivered just three

months ago. quickly look at shares of alaska. canceled 170 flights. did that yesterday with regard to their overall schedule. most of those being related to the max 9, and then you have united canceling 60 max 9 flights yesterday. able toll adjust its schedule to a certain extent, as was alaska. the longer this goes on the more it becomes one of those situations where the impact of the bottom line, similar to a bad winter storm, if you will. depending on how long they have to keep those max 9s grounded. >> yeah. i didn't remember, if, hear that first time. a brand new plane. delivered in ovember. brand new plane. >> yep. >> yeah. >> calling it a plug. basically it's -- >> and reservations -- >> no. becky, that's -- that's incorrect, becky. in this regard. it is where a door would go. >> i understand. where a door would go. you say "plug" and don't see the

video. you think plug of a bathroom or something. it's the size of a door. the hole that's there. >> it is. where an emergency door would go, if the plane was configured that there were enough seats they had to have an emergency exit there. yes. it is basically where a door would go, but it's plugged. it's never opened. not like a door that could be opened occasionally by the staff. it's in there. not to be opened. >> phil, do you know anything about -- do you know anything about whether -- i've seen something, i don't know if it's true or not. infants on laps of anybody in these planes unsecured? i seen somebody, i don't know if it's true. heard anything about this? >> saw early reports and not able to confirm that, becky. we're very lucky, a., that this happened at a relatively low altitude. 16,000 feet. not at 35,000 feet. because if it was at 35,000 feet you could see there would be people moving around.

going to the bathroom. flight attendants doing, you know, drink service up and down the aisle. then you would have a really bad situation on your hands and we're fortunate that there were not any passengers seated in the d two seats directly next to where this piece of the fuselage was ripped off. a far different situation, i'm sure. >> okay. phil, thank you. again, it's kind of a story people are digging into. the other story, top congressional leaders reaching a deal on fiscal government spending. threat of a shutdown is still alive. emily wilkins joins us now with more on that. emily, the thought this was very good news. sounds like a lot of hurdles still need to be cleared? >> yeah, becky. we are not out of the woods yet, but there is optimism in d.c. today. a major deeg congress member hs to get over and we learned

leaders agreed how much they're going to spend in the current fiscal year. lawmakers are going to be spending $ 1.66 trillion overall. mike johnson able to negotiate several cuts of previously allocated funding. about $60 billion in covid emergency funding and cuts to the irs this year. $6 billion. senate's chuck schumer and hakeem jefferies said in the house clearing the way for congress to act to maintain important funding priorities for the american people, and avoid a government shutdown. and the senate's republican le le leader mitch mcconnell was happy with this. all congress leaders happy with this, but the deal is already facing pushback from hard-line conserve nirchs in the house. saying it doesn't do enough to cut spending. chances of a partial shutdown

january 20th decreased now that we have an overall number. congress still has work to do. the house and senate still need to reconcile spending bills. currently funded at different aamounts and have to negotiate exactly when program gets what, and that is going to take time, to sit down to write all of that out and to have those negotiations. plus, to deal with the politics and see exactly how many member, going to be pushing back against this final proposed deal. becky? >> emily, deadlines are coming up. odds of making first one, through the second one -- >> i think at this point the odds have gotten a lot better for both of them, because this top-line number, this $ 1.66 trillions the package of bills needed done by january 16th and those need to be done by february 2nd. the defense industry macing

major cuts if they did a year-long spending cut levels have to feel much better this morning. this means more likely that they can actually get some of these bills done. not to default to year-long spending and face 1% across the board cut. translating to billions less for numerous industries and numerous government departments. still a ways to go. don't want to declare victory too soon but definitely getting these top-line numbers was the next big thing that had to be done and they did it in time to actually work through and potentially avoid that partial shutdown that would be coming january 20th. >> emily, thank you. see you later. right now, though, back to the markets with major averages coming off their first negative week in the last ten and joining us right now to talk about why the rally stalled is jeremy siegel. professor emeritus of finance at pennsylvania's wharton school of business. what do you think is the first week of this year, a precursor

of what to expect rest of the year? >> no. not necessarily. remember, the huge run-up end of last year, a little profit-taking. you don't want to take your capital gains in december to pay in 2023. rather take them in 2024. i'm still bullish year in, 2024. i don't think we'll have the rise we had in 2023, but i don't think there's as much difference. a lot people are talking about the difference between fed funds futures and what the dot plot is. you know, wall street has all of these calculations from the fed funds futures. thinking that those are the expectations of the market. well, we in finance know actually they are downward biased numbers. in other words, it looks like there are six cuts. by the way, as a result of the rise in interest rates, there's now five and a half cuts built

in, but about one and a half of those cuts is really what's called risk hedging. buy the contracts, something terrible happens, geopolitical risk, pandemic, a financial collapse, they will go way up so they yoffset the risk in other assets. i estimate there's really only about four cuts that are built in to the fed funds futures, and we know the dot plots had three. really, there isn't that much of a difference between the two right now. secondly, this is important. you know, it's not so much we need those cuts. it's that powell said if there's going to be some slowdown, i'm ready to cut. that willingness to cut is more important than having the cuts. and i think that -- we're not going to be as stubborn on the way down as we were in retrospect on the way up. i think that's the flexibility. you know, honestly, i would love

the economy to keep on chugging along and for them, you know, chugs along and 5% fed funds, that's not bad for stocks. so i think there's, those two things, if you, combine them, not much a difference. not all that bad about if we don't have cuts in march or may. i think that's, profits will be good in 2024. >> a very rational approach, because i keep getting the feeling that people think, oh. rate cuts ar great thing. that's going to save us, but if the fed cutting rates means the economy is dropping. maybe that negates the whole thing. your idea doesn't matter with rate cuts or not. don't get them it means the economy is really strong. make as ton of sense. why don't more people talk about that? >> one reason why i don't think the market is, you know, as worried about it as others about when they will cut. i mean, you know, another thing that is bad is that they don't cut rates because inflation goes up again.

i don't see any sign of that. by the way, i do think they're going to cut rates, because i think inflation is really going to slow down, and that's a real positive for the market going forward. so i think that they should actually cut rates, slow down inflation, with the same rate does pinch the economy more. that's been brought up by all of you and wall street also. i think we are going to have rate cuts. one has to realize, big rate cuts might mean a real slowdown and recession. the stock market doesn't want that. i don't think we should get as hung up about exactly the pace of rate cuts as so many people are in looking at the market in 2024. >> in terms of what you expect from maybe just cpi. if you think inflation is not going up, cpi read later this week. hotter than anticipated will it cause you to change? you wouldn't look at any one number? and research into it? >> yeah.

truthfully, for instance, like people are worried about that wage increase that we saw on friday, and one has to remember. there's a big wedge between wages and inflation. that's called productivity. productivity has been fantastic. last year, 2.5% most in many, many years. since the pandemic year, and what that means, 4.1% wages and 2.5% productivity growth that's under 2% inflation. so i was not worried about that wage. you're right. going to have cpi and ppi end of the year. remember, the fed and the bls still doesn't get shelter right. talked about it so many times. take out an awful lot of things, but look at the sensitive commodity markets. oil's gone up a bit because of the red sea. outside of that we see nothing really going up. it's those sensitive markets that are early indicators, in my

opinion, of inflation, and that's why i remain calm about that. >> professor siegel, thank you. >> thank you very much. coming up, the ceo of drug giant gilead joins us from the jpmorgan health care conference in san francisco, talking about the pick-up in pharma mergers and acquisitions. also regulation and the company's most promising treatments. stay tuned, you're watching "squawk box" on cnbc. (♪♪) but there's nothing like being there. at national, you can skip the counter... and choose any car in the aisle... even manage your rental right from the app. so you can give some quality time to a quality cause. swing by to see one more customer... [audience cheering] and really get down to business. go national. go like a pro.

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the jpmorgan health care conference kicks off today in san francisco. joining us from the west coast for an exclusive interview, daniel o'day. company is expecting nearly two dozen updates on treatments this year. good to see you, daniel. it's been a while. i don't know -- >> good to see you. >> in a nutshell if i were to describe gilead right now, can you do that for us? hiv a powerful, powerful drugs you have. huge revenue from hiv medications. hepatitis c basically cured it, but i don't think necessarily

either one of those two things would define your company effectively right now. it's so much more. >> joe, yeah. a pleasure to be here with you. i mean, you said it. 2024 is going to be a very important year for gilead sciences. that's because of the work the team has done to transform the company, to your point, over the past four years. you know, we more than doubled the number of medicines in our late-stage portfolio over the past four years because of investment in scientific research. it's really a new era for gilead sciences in that many of these results have potential to improve lives on a massive scale. nothing done before. in 2024 results from around two dozen clinical trialing of which five of those are in very lace stages of development. the step before approval. those are particularly in the areas of long-acting hiv prevention. we'll talk about cancer and lung cancer in particular, and then

also covid-19. >> the, and we also, you know, in the back of all investors' minds are patent expirations, et cetera. tell us about the hiv franchise? that's got to be your biggest drug. is it bittarvcht i? pow do you say that? >> bit-tarvi, number one treatment for hiv today. more than a million patients treated. it's made a significant impact on the, on the epidemic of hiv. but what we're also really excited about is the work we're doing on long-acting medicine. you know, joe, the current medicines you take a pill once a day. we're working on less frequent dosing. this year, the first-ever twice a year treatment that could prevent hiv in people at risk of hiv, and this is a medicine

that's really remarkable, actually, when you think about it. it's been 16 years in the making by the gilead scientists. the same ones that developed bittarve. this is really important. end of the day, i believe moving to a twice a year hiv prevention medicine can really change the way we prevent hiv across the globe, and really we're on the cusp of i think seeing a seminole difference in the hiv epidemic around the world. our goal, joe, we're not going to rest until we achieve this is to end the hiv epidemic for everyone everywhere. >> how would that work in terms of who's -- not talking about developed countries necessarily. we're talking about lesser countries. how would you get that to every single naernperson that needs i around the world? how do you maneuver around those concerns, dan? >> yes. it's for both the developed world and the developing world.

so today we have an effective medicine that prevention hiv, but it's a once daily pill, and only about one out of four people that could benefit from so-called hiv prep are taking it today. imagine, joe, that taking a daily pill for a disease you don't have, in either developed world or developing world, is a difficult thing. >> right. >> this twice-a-year a simple shot administered once every six months. in both developed and developing world this presents all new opportunities to prevent people from ever getting the disease. of course, if you do two things. if you treat people effectively that have the disease, you suppress the virus to a level where they can't transmit it, and then prevent those people that could benefit from prep, you really can imagine the whole incidence of hiv coming down across the globe. we have programs in both the developed world and developing world getting ready for this

trial readout this year. >> you have the -- the breast cancer drug that might work on other things. what's the mechanism? what is the potential for -- i mean, how many solid tumors are you even thinking about testing the drug on? how's it work? >> yeah, joe. this is one of these new mechanisms called antibody drug con you gants. the medicine is a leading antibody conyougent. attaches to cells that express a certain protein and carries with it a payload, if you like, that kills that cell. it avoids all of the other complications or many of the other complications soassociate with general chemotherapy any an effective way. it's currently been available for three years. it's approved in two forms of breast cancer and a form of bladder cancer. but because of the nature of

tridelve it can be used in many more cancer readouts. this year, latest stages of development, it's in lung cancer, which is, you know, the largest, most frequent form of cancer. so we're really looking at making advances now. not only in breast and bladder but lung and other cancers as we move forward. >> i just, when we had you on, decided to look at moderna verse gilead. gilead in effective performer from 2010 to 2020, and covid, gilead didn't participate much in covid in the whole pandemic in terms of revenue boosters. i wanted to look at that just to see how that -- very strange. what i thought we'd see. so, but you almost -- ended up at the same place. for moderna made the round trip. did you get involved at all with that, dan?

>> we did. we did. we actually had the first treatment that was approved for coronavirus called remdesivir in hospital setting. do you remember, joe? >> that's right. >> we talked about it, gosh, back in 2020. it was, really has made a big impact for patients in the pandemic. it's still the standard of care in the hospital setting for patients. more than 60% of patients that enter the hospital with covid-19 do receive remdesivir. in fact, we've gone on now to develop an oral version of the medicine called ovaldesavire that will come out this year. we look at overall business, joe, from the standpoint of the impact we make on the pandemic with medicines like remdesivir and also look what our yu underlying business it doing. the have a majority o'of our business. you see our underlying business because of the transformation the team has done over the past four years, is now growing

quarter on quarter for the past eight quarters. consecutively year over year, because of that investment in the portfolio, because of the doubles of the portfolio and continuing to play a major role in hiv and the covid-19, but also in the cancer work we do. tridelve and we're a world-leading company in self-care. a technology actually with the same emphasis on care a hallmark of gilead with mentioned with hepatitis c, seeing it with self-therapies and certain forms of blood cancer. the totality of what the team has put together is really extraordinary, and it builds upon the legacy of gilead, but allows us to look to make a much bigger impact on patients in the future. >> looking at, i remember all the remdesivir and controversy -- everything about it happened as we all went

through that over a three-year period. daniel, appreciate it'sthanks for joining us, and good luck. thanks. >> thanks, joe. okay. still to come this morning, we will speak with former faa administrator on next steps for boeing and the airlines flying the company's 737 max 9 after friday's alaska air accident. and later, california democratic representative ro khanna joins us on his warning to his own water when it comes to a.i. stay tuned. you're watching "squawk box," and this is cnbc. ♪♪ ♪♪ ♪♪ ♪♪

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welcome back, everybody. the first lunar lander in more than 50 years is on its way to the moon. that lander is made by pittsburgh's astrobiotic technology and caught a ride in the alliance. a round-about trip to the moon and culminate an attempted february 23rd landing on the lunar surface. astrobiotic is trying to become the first to successfully land on the moon, that another company is about it try and could win that race. also, deal news for you. johnson & johnson buying ambrx for targeted cancer therapies.

j&j paying for every release. continuing to work on its drug candidate for prostate cancer and the rest of its pipeline. you can see nearly doubling in price up by 100%. johnson & johnson shares off. >> and washington commanders. would you hire belichick? washington? >> oh -- they had a rough year. >> i think belichick, think he's gone? bob kraft still loves him, i think. >> said he wasn't going to do anything mid-season. what we heard at one topoint. coming up, randy babbitt joining us on what went wrong when part of an alaska airline boeing jet ripped away from the fuselage on friday. the plug that you don't even know's there.

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federal officials say the door plug from an alaska airlines flight that suffered an accident on friday has been found in the backyard near portland, oregon. the plug blew out several minutes into a flight on its way to southern california opening a hole in the side of the plane damages seats and sucking ins flati insulation from the walls. fortunately, no one injured. the boeing max 737-9 had a pressure problem over the last month and unclear if that's related to friday's accident. the faa ordered most of the max 9s in operation grounded including all of those that are used by alaska and united airlines. joining us now is former faa administrator and pilot randy babbitt. randy, we have been speculating an awful lot about what happened, what could be explained. obviously, you know a lot more about the industry than we do.

what are you thinking about what you've seen so far? >> well, thank you. i think the facts are unfolding for us right now. the ntsb is on the site. they certain will look into and, you know, run through a range of potentials. was it just a simple one-off failure of "a" part? an installation problem a design problem? those things have to be uncovered, which they're probably capable between the faa and ntsb are getting to the root of the problem. >> you know, randy, rather than speculate about what caused this, whether than spend the rest of the time talking about that, why don't we talk about how safe commercial air travel is at this point? still the safest way to travel, but i think there are concerns, because the number of accidents and near misses have risen dramatically over the last several years. in some cases talking higher levels than seen pre-pandemic as

well. what's happening? how concerned should we be as consumers? >> well, i mean, let's start with the most remarkably safe system in the world, when you think are when there was a serious accident. haven't had a fatality in more than a decade. at any given moment there's 7,000 airplanes in the air over this country every day. i think what you're seeing is, certainly more focus in the capabilities whether social media or other vehicles, a way of getting any information out. it doesn't matter if somebody's armrest fell off it would make the news. i think we're highlighting a lot of things but overall, this is a remarkably sound system, and safe. >> no, no question. i start with that preface. this is still the safest way to travel. look at the numbers, first ten months of last year rates of serious incursions on u.s. runways jumped to 0.01 and just 0.24 in 2019 according to faa

d data. the reasons people are pointing at for this are, seeing a big increase in commercial traffic. you're seeing fewer numbers of experienced, whether it be pilots, people working on the, the ground for some of these airlines. a lot of people retired. eat of people moved out. problems with faa air traffic controllers because they're having trouble finding experienced people as well. what would you pinpoint for the reason that those, the near misses seem to be increasing? >> well, as you well know, we went from a full operating system in covid down to 20% of the operation. people made adjustments. whether offering early outs, retirements things like that. we spun the system down. spinning it back up puts a lot of new people in new positions in reporting.

i also would be slightly critical. we've been a little slow to adopt some of the technology out there today. for example, wing incursions. we have ability today, can you buy a gadget, put it on your dog and find out where he is in the yard. we surely should be able to find out where airplanes or in airports and have the technology to do it, but it does take an investment. >> so when you look at the overall system, what kind of investment do you think it would take, and where do you think that money should be focused? >> uh-huh. well, i think, you know, right now we're in the throes of faa reauthorization and the finances behind that. if you look at the rate of increasing of the faa's budget, it hasn't really increased much in real dollars in the last decade. we also, i mean, we have to acknowledge, too, a lot of the positions you're talking about have somewhat of a long pipeline of training and entry. you don't just hire a controller

and three weeks later put him in a position. it's years. same thing with pilots. it take as number of years to go from a novice pilot to a commercial airline pilot and all of those, you know, it's a learning curve that goes with every bit of that. good news is we've got safeguards around that. these incidents get reported. and i would much rather read about the report why it didn't happen than not get that report and find out that something bad did happen. >> you and me both. randy babbitt, former faa administrators. randy, thanks a lot. >> thank you. when we come back, california democrat ro khanna joins us with his thoughts how to make sure america benefits broadly from advanced in a.i. also get his reaction to the fiscal 2024 budget deal reached in congress. stay tuned. you're watching "squawk box," and this is cnbc.

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our next guess making a plea to business and his own political party ensuring that a.i. does not leave the middle class behind. bring in congressman ro khanna of california whose district is in the heart of silicon valley, and congressman, good to see you. before we get -- before we get to a.i., it says here we want to ask you about the emerging spending deal in d.c., and i guess i also want to point out, i think we've missed some filing

deadlines, if we were going to ever really do anything with rojo, or joro. too late, right? a lot of people wish there are alternatives, congressman? i think we've missed our chance. >> joe, didn't make the move. waiting for the call. i was waiting to -- >> because you wanted me to be on top of the ticket and i don't want to work nearly -- i want that cushy vp job. told youthat before. what do you think of this, i mean, i'm not sure i'm worried about democrats with the deal. i'm worried about the flank that speaker johnson might not be able to control for this latest deal of $1.6 billion. >> i'm going to support the deal. speaker johnson and i came into congress together we have strong disagreements on many issues but he was willing to sit down and compromise. everything in the deal i agree

with? no. spending cuts on issues more than i would want? yes. but in a democracy with 435 people you compromise and you keep government open and functioning. i think a big question is, to identify, is the 20 to 30 folks in the freedom caucus. are they going to let johnson do this deal? or let him keep his job? >> i'm going to needle you a little bit here for -- it's what we do, though? isn't it? we have that kind of relationship. in terms of a.i., terms of a.i., you say that the democratic party cannot claim to be the party of the working class. if we allow a.i. to erode the earnings and security of the working class. and my question is, can you really claim to be the party of working class when you spend so much money that inflation just goes out of control for three, four years so that people are

actually making, the middle class are actually making less money than they were making three, four years ago? i don't think you can claim to be the party of the working plass. >> look, we've got a lot to bring back. manufacturing jobs in this country. we've done a lot to try to reverse the trend of offshoring, to china. we put money in people's pockets with the stimulus checks to give people a child tax credit and help them make payments. yes, inflation. won't deny's both parties trying to get out of covid and finally wages going up. wasn't the first couple of years but i won't deny, people, when sitting in the grocery line they don't have higher prices and that is a challenge of managing covid. >> always make that point sort of tongue in cheek, that the path to hell. we all want to help people, but if the policies that we do with good intentions end up, you

know, hurting the people you are trying to help a lot of times that doesn't get, i don't know. i think feeling virtuous on the way in sometimes messes us up in terms of really the outcomes. but that's a discussion for a later time. as far as a.i., you are right, and if anybody is going to get screwed it's probably going to be the middle class from a.i. same way as you said from globalization. how can we prevent that? >> two ways of doing a.i. and i worked at m.i.t., there's a great piece on that. either use a.i. to help people become better workers. enhanced capability, or just use a.i. to try to eliminate jobs and eliminate payroll. we've got to be very intention saying how are we going to involve employees getting better credentialing where they can apply for new roles and having their input how a.i. will make

it better than just saying let a.i. do your job and not think about. it i like my conversations with you, joe. i don't want to have an a.i. version of joe ask me to be on their ticket and people like you enhanced as a customer request. >> it's a tough one, ro, and when you let something out of the bottle, it's almost like you can't really control. we thought that gaining function resource was a good idea to prevent the next pandemic and we may have ended up causing a pandemic. technology's very powerful, and if you can't see into the future, sometimes you don't know where the pitfalls really are. do you have a good grasp of how we need to control a.i. from here and what kind of guardrails we need? >> look, i have enough humility to tell you no one fully knows what the consequences are going to be, but a lot of benefit. i mean, people now can get

personalized medicine, figure out what's wrong with them and treatment that is really tailored to their needs. a huge boom in production. education can improve, but two places i would focus on. one to have guardrails in making sure in making sure these systems are safe and there's always a human decision maker, that we're not just automating and taking out the human decision maker, and second, that the employees that are being affected, the workers that are being affected are being consulted in the design of these tools, that you don't just have a harvard mba who made the decision, oh, let's just have offshoring to china come in and say, let's eliminate payroll without thinking about a company's culture of productivity and using the tools to enhance human initiative. >> how do you think this is going -- is it a slam dunk that income inequality is going to be worsened if a.i. takes over?

is that -- you just assume that's the case? >> no, i don't, and that would be really sad for the country, given that income inequality has been increasing. there's certain things that may make it easier. now don't have to learn complex coding, complex math to be able to use machines, and so if we introduce basic technology education in all our schools, people actually may be able to acquire new skills and use technology in ways that are far easier and far more accessible than they used to be. but we've got to get that kind of education everywhere. you come to my district, and people are very, very optimistic about the future, and i guess my question is, why is that just in a few districts in this country? how do we get the education and opportunity more distributed? >> am i going to see you in davos? it's got you -- that is just your people. are you going to be there? you're like a davos man like

andrew. >> i've never been there. i start my op-ed criticizing what happens at davos, where they basically told us for 30 years that we were all going to be fine, and then we lost the manufacturing class in this country. >> you're right. you're right. so, that's not -- >> don't announce your candidacy in davos. >> no, i'm not going to -- what happens in davos sometimes stays in davos. i thought you might be -- all right. so, anything you want me to tell klaus from you? we'll talk to you later. thank you. >> thank you. thanks, joe. >> maybe not. globalization has been tough. >> it's really more of your kind of place. >> it's really more of my kind of place. i get the stockholm syndrome over there. when we come back, we'll get you ready for the monday morning opening on wall street. after the s&p, nasdaq indicated

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just over a half an hour to the opening bell on wall street. joining us now, portfolio manager and a cnbc contributor, just overall, happy new year. you think it's too much to ask to get a similar year? would you sign on to another 2023 if you could right now? >> i would love to get another 2023, but i don't think we're going to get that much of an uptick. but i do think the year going to end positive. obviously, the last six weeks, we have had this huge run, over 15%, so i think the key now is earnings. where are earnings going to go? how are companies going to actually talk about pricing, margins? i think that's going to be really important, and also balance sheets are going to be important. one of the things, joe, we haven't really seen is, you know, where are credit spreads going to end up by the end of the year? right now, they're extremely tight. credit market is telling you that things are much better than most people expect.

>> we sort of took any rate hike off the table, maybe. maybe they're still off. maybe the possibility is that inflation is not conquered. what do you think? >> i'm in the camp of, i think it's going to be higher for longer. if you just look at kind of fundamentals where companies are, you still have employment pretty high. wages are already rebased, so it's pretty hard to take back wage increases, and i think the other thing, joe, that we haven't focused much on, the commodity side, we could talk about copper on aluminum steel, it's not that they have pricing. it's just that we don't have enough supply going forward, and i think that's going to add to the inflationary pressure. then you look at supply chain, things about shipping, not just, hey, what's going on overseas in the two wars we have, but look at what's going on in the canal. so, i think all that said, the fed is going to be hard pressed to get six cuts. i think you'll get a couple at

the end of the year, and the markets will have to reprice that, especially for the growthy stocks that are taking into account 2% again. >> back-end loaded. the market might not be set up, but that would be disappointing to the market. >> it absolutely would, and you could get a correction, but i think the correction would come from some of the stocks that are priced way above where they are. i would look at staples, utilities, commodities. not to say you don't want to be in the mag seven. you can, but be diversified. having some others in your portfolio, some of the stocks that have been out of favor -- look at life science companies, health care, bio companies, nobody wanted to own them last year. i think those are some good opportunities to be in. >> some people were saying that it's safe to buy -- to load up on duration and bonds at this point with at least a portion of

your portfolio. do you ever do that? or you just strictly tell people what stocks to buy? >> we have them in our balanced accounts, depending on the client's risk profile, and for those clients that need protection and don't want volatility, i think you can go out, but i wouldn't go out more than three to five years. i think you do get paid to go out there, but be very careful as to the credit. as i mentioned earlier, the spreads are still very tight. if you're going out more than a couple years, you want to make sure that the companies that you own have good balance sheets and good cash flow, because you can get 5 to 7% going out three to five years, and if you look at the curve, it's saying it's going to be a lot lower in a couple years, so yes, i would do that, but i would do that based on your risk profile. if you're a growth investor and you're young, i would say equities are the way to go. if you're retired and you need your money, absolutely, there's a lot of opportunity. i think that's where some of the money is coming out of the market as well. investors are saying, i can get 5 or 6% on pretty safe companies. >> okay, we're going to have to

end it there. >> thank you, joe. happy new year. >> yeah. happy new year. won't be long, we'll see you again. let's check on the final check on the markets. the dow is still down with boeing under some pressure. s&p, basically flat, and the nasdaq is actually positive. we got one down for 2024, right? >> no, we've got five down. >> you already got five down? >> you're back. we had four days last week. >> i'm behind. make sure you join us. oh my god, we're late. "squawk on the street" is next. ♪ good monday morning, welcome to "squawk on the street," i'm carl quintanilla at post nine of the new york stock exchange. cramer is at the jpmorgan conference, david is back at hq. very busy week ahead. jpmorgan