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 health care, bank

earnings friday. our road map begins with boeing. shares are tumbling after the faa grounds 737s. futures are pointing to another lower open. and we're keeping an eye on shares of apple, perhaps just about what would be an eight-week low at the open, carl. >> let's begin with jim at the jpmorgan health care conference. last year, you said m&a would be a running theme this n this conference, and we're already getting there. >> we have j&j buying a company. we have boston scientific buying for $7 billion. moe moderna, now, seeing return to profita profitability in 2026. this looks like the most active conference in many years, and i think one of the reasons why is because we're post-covid. that means we're able to do deals in-person and that makes

it easier. >> and i'm post-covid too, but i'm not allowed to be in-person yet. but i'm glad we're all back together, guys, at least virtually. and you know, jim, interesting, of course, we always -- often do see a number of deal announcements prior to the big jpmorgan health care conference. i'm glad you're there this year and looking forward to your coverage of it as well, and no surprise this morning, perhaps, that we did see a couple of these. again, deals that are similar in size and scope to what we've seen previously over the last few years, namely big pharma buying companies that are relatively small, high premiums that have just finished usually phase two trials of a promising treatment, for example, in the case you mentioned of j&j, and that company, ambrix, where they're buying these targeting antibody drug conjugates that they have that conceivably will allow for the new therapies to be much more effective in attacking things like advanced prostate cancer.

>> exactly. and one of the reasons why i find myself out here, and carl, we watch the tape, we see amd up, we see nvidia up, the usual characters. i think these companies are radically undervalued versus the hardware companies that suddenly we love and radically undervalued of what we think of as a.i. companies. life-saving companies are taking a backseat to companies that are allowing you to plagiarize, that kind of thing. we have to focus on health care as an undervalued cohort. all the companies that are here are doing things, like glp-1. they're doing things that change people's lives. this group got radically undervalued versus tech, and the -- i tell you, the differential has to be changed. >> jim, you mentioned moderna. in addition to all the m&a threads, product sales, modest beat for last year, but trying to get back to sales growth and

maybe break even in '26? >> yeah, look, i think moderna is still in that -- the hangover of covid. lot of the companies out here are hangover companies. i'm going to be speaking to pfizer, dr. borla. they're still trying to figure out how much covid there is. a lot of these companies are reliant on vaccines, and there's definitely a lot of scientific evidence that says that if you take these -- the booster, you're going to stay out of the hospital, but only 19% of the people have taken the booster, david, because there's a tremendous, really, kind of vaccine ennui, and it does make me think that travis kelce, kansas city, is changing that. >> i took the booster, and i got covid. but it wasn't that severe. thankfully. you didn't get it. >> i'm happy about that. >> having been together last tuesday. you know, that said, you look -- >> i tested every day because of you.

>> listen, we have had no shortage of conversation about pfizer and the challenges that mr. borla in particular faces, but you brought it up, jim. i wonder as they close the cgen deal and move forward from this point with great windfall they had from paxlovid, i'm not sure what the future holds and there are a lot of restless shareholders there. >> oh yes. let's talk some boeing. the faa is ordering these temporary groundings of numerous 737 max nines for inspection after a section of an aircraft blew out after an alaska airlines flight. ntsb said the missing door plug was found lately. bespoke says this will be the biggest gap lower since 2020. >> i think, first of all, no up with's talking about this.

you can blow a hole in a boeing and it still just flies. that's one of the positives. the negatives are this is a spirit air problem with boeing, and spirit air is something they spun off in 2005, and we're going to speak to phil lebeau about it, but it's time they brought it back because the quality seems to be suspect. one thing you have to remember is there's only two companies in this business, and i did own, david, boeing at one time, and i forgot the fact that in the end, no matter what you do, you need boeing. the system needs boeing. they'll solve this problem. yes, you can sell it today, but no one's going to downgrade it because we all realize this is an opportunity, not something we should throw away. >> how seriously do you take it in terms of an overall concern, though, jim, in terms of the execution of the company when it comes to manufacturing? >> well, anything that is life-threatening is very serious. it's just that i think they'll fix the problem.

the 737s -- this max hasn't been -- hasn't been widely distributed, but it is pretty amazing that you could have ones that were sent out at the end of october and they already have this problem. i think there's a taint, david. i think the street is selling boeing because people just say, you know what? more numbers have to come down because of this. the airlines -- we had southwest air on, and they were complaining about boeing, and they still went and bought the max. you can sell it. there's no doubt about it. it's bad. but i do think that what's going to happen is that the stock will find a bottom, because again, the system needs boeing, and this is not going to change things, even though, obviously, if it had been a 30,000 feet and not 2,000 feet, people would have died. >> let's talk more about this. the cockpit voice recorder, we have downgrades of names like southwest, not really tied to the nine but sort of the idea that capacity -- this is going to be a key year to get guidance on how much capacity the

industry adds. >> yeah, and if there's ever a time where you want to see capacity taken out by a situation like this with the max nine, this would be the time of year when you want that to happen, when it's the slowest time of year, january and february. so, even though this is not good news for alaska or united, you'd rather have this happen now than in the busiest season that might be out there. let's give you a quick update in terms of where things stand on the max nine alaska airlines investigation. the ntsb is looking at the fuselage plug. they now have recovered it. it was found in suburban portland. they have that. they are also looking at the plane, obviously. was there a pressurization problem? we know there are three reports of the pressurization, auto pressurization light going on that was looked at by alaska airlines, and then there's finally the question of data recording analysis. the data recorder has been flown or is being flown to washington, d.c. they don't provide investigators

a lot of answers to a situation that, frankly, could have been far worse than what it turned out to be. think about this. the two seats that were right next to where the blowout occurred on the max nine from alaska airlines, they were empty. if people had been sitting there, if people had been moving around or were at a higher tult when this took place, it would have been a far more dramatic and potentially serious situation. by the way, there were no serious injuries with this max nine accident, but the question for boeing investors is, are you comfortable that this company will be able to increase 737 max production as planned following this investigation and whatever comes out of it later this year and over the next couple of years? we asked that, because as you take a look at shares of boeing, the stock is under pressure. as people look at it and they say, okay, will they get up to 50 maxes per month as planned by 2025, 2026?

right now, they're at 38 per month, just barely at 38 per month. so, can they ramp up as planned? remains to be seen. for jim calhoun, once again, he's talking about a culture that needs to focus on safety and quality control. he sent out an employee memo yesterday saying, "while we have made progress in strengthening our safety management and quality control systems and processes in the last few years, situations like this are a reminder that we must remain focused on continuing to improve every day." that's from dave calhoun yesterday. he'll be holding an employee town hall tomorrow, along with stan diehl, stephanie pope, the new c.o.o. at boeing. there will be some board members there, the leadership team from boeing. they're in renton, washington, and they're going to be talking with employees tomorrow about focusing on making sure they build the safest planes possible. one last note. take a look at shares of spirit. jim brought this up earlier.

i'm at a loss for words in terms of what to say here, jim. we have talked about this off air, on air, repeatedly. now, we don't know if spirit is directly implicated in terms of what caused this accident, but we do know that they made the plug and they make the fuselages for the max, so there are questions about whether or not spirit -- what role they may have played in this, and that's why shares of spirit are down more than 12%. >> you know, phil, we all remember when boeing kind of off loaded spirit. it was one of those things that really kind of raised numbers for boeing. but you know what? $3.6 billion company. it's caused so many problems, and i wonder, is it just too complicated, the way boeing decided to make these planes, by trying to organize all these little companies, including spirit, which they sold? i mean, it just seems wrong to me that something could happen. just because they wanted to save money.

>> well, i don't think that they did it because they wanted to save money. remember, you know how this goes, jim. wall street falls in love with ideas like, let's break down companies, let's put them back together, vertical integration versus not vertical integration, and when this happened in 2005, everybody said it made acceptance. i think the thing to keep in mind when you look at boeing and spirit aerosystems is they agreed a couple months ago to pump, i think, $100 million into spirit to help them out as they try to fix their manufacturing processed. pat shanahan is the new ceo at spirit. he's a long-time former boeing executive. highly respected in the industry, highly respected at boeing. the belief from people that i have talked to within the industry is that he will get things straightened out. having said that, they went a long time where they had mistake after mistake after mistake in wa wichita, and a lot of people feel that perhaps spirit's board

waited way too long to make some changes and to address the situation. that's in the past now, jim. nothing you can do about that now. the question is how quickly can spirit and boeing address the situation that's going on right now? >> speaking of that, phil, i mean, jim mentioned the duopoly defense as people try to defend the stock today. the other is that the inspection itself really only takes a few hours, right? >> yeah. four to eight hours. not very long at all. what's happening right now, just so you understand, boeing, along with the faa, are sitting down and saying, okay, what exactly happened? what exactly will we ask the airlines to be looking for when they do these inspections of the max nines that are parked? so, it's not as simple as saying, just go out and check them. they want to know exactly what caused this accident, and therefore, what they are looking for in the max nines that are parked. >> phil, appreciate that. big story moving the whole market today. we'll get back to you later on. take a look at the

premarket. we'll talk about boeing a bit more. we'll get to apple, nvidia, of course, the banks coming up on friday. oil and tesla. some calls on chevron, dash, and others when "squawk on the street" continues on this monday.

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now you can stay reliably connected through power outages with unlimited cellular data and up to 4 hours of battery back-up to keep you online. only from xfinity. home of the xfinity 10g network. apple is moving higher in the premarket after a nearly 6% decline during the holiday-shortened week. stocks down in each of the first four trading days of the year.

hasn't happened since 1982. we got this jeffries report on china sales, and there's lingering expectation we might get vision pro headlines out of ces this week. >> sounds like the preorders for vision pro are going to start in two weeks, and it's going to be released february 2nd. i like the empire strikes back here, jpmorgan talking about a floor on the stock. getting more bullish on apple's a.i. opportunity. i think the stock, down, down, down, is really a reflection of the fact that it was up 48% last year, and i do not want to say that therefore it's over. i think some people are fearful it's going to be a preannouncement. i'm not buying that at all. apple, iphone, fell from boeing, still working right after. i would focus on that, because 16,000-feet drop and still works. i don't know. i mean, do you really want to sell a stock that is able to do that? not that we would be dropping phones regularly from 16,000 feet, but i think there's this sense that apple's come

down too much, and the vision pro, i don't know, david, $3,000, i happen to love it, but $3,000 seems a pretty high price tag. >> i've been saying that for a long time, and you have disagreed with me in terms of its ability to become a mass market product. so suddenly you've decided $3,000 is a lot of money now? >> we need to -- look, i've been working on mike seifert to back it. >> i know, you've made that point. it's off the wi-fi. it's not off the cell network. >> all right. you wear me out. look, i think that -- yeah, okay, so, right now, i think it's still a little pricey. david, the consumer is more strapped than i thought. that's why $3,000 is a high price tag. >> i'm going to be nice to you now. you've, for years, said, own it, don't trade it on apple. i would also point out, though, last tuesday, jim, when we began our first broadcast of the new year, you were cautious on the mag seven overall, and you said, hey, time to maybe take a little off the table. not sell your entire positions,

but just be more cautious, perhaps. not a bad call, given that 3% decline we saw last week. do you still feel that way? >> yes. i do. i think that the mag seven is probably one of those places that i, frankly, every time they're up, i think you should do some selling, and you're right, apple had become too big a position for me. nvidia, very big position, but what really does matter is that this group is out of whack. 37% of the s&p's value, seven stocks? no. look where i am right now, david. we have companies like eli lilly that are saving people's lives. is that less important or more important than whether you can run chatgpt? >> it's very important. we've talked a lot about glp-1s. we covered that news from lilly in terms of going direct to consumers in certain areas. no doubt. a.i. is really important too, jim, come on. it is. and it's going to have an impact

on every single enterprise and every person's life potentially over time as well. >> i'm just talking about the disparity, david. a group of stocks really be worth so much versus health care? i think that those stocks got -- look, some of these stocks are high multiple. meta platform's not high multiple. apple got to a 29 multiple, david. that's high for that stock. >> it's still high. barclay's downgrade from last week, they were talking about 25 times, i think, fiscal year '24 numbers. maybe that, you know, listen, right now, that downgrade looks pretty good, not even a week old. >> oh, it does. i mean, carl, my reservation about these stocks is that i think you have to be a little patient. let them come in. i think amazon is an amazing company. i think they're doing incredible things. at the same time, amazon, along with these other companies, have been a source of funds to go buy other stocks, and carl, i get that, because you have a lot of companies -- a lot of fund managers piled into these stocks in the fourth quarter to show

that they were smart. literally, that's what happened. i do expect there will be profit taking once again because the stocks are up, and people want to use them to go buy something like the health care stocks that i'm seeing, which have been rocket ships. the insurance companies, the banks. i mean, the banks are up very big. that's money coming outfit of t mag seven and into the financials. >> rotation, rotation. we're going to talk about what to expect from the banks on friday, including downgrades of the credit card names we got from baird. still to come, a west coast edition of cramer's "mad dash" as we count down to the opening bell. "squawk on the street" continues in a minute. trading at schwab is now powered by ameritrade, giving traders even more ways to sharpen their skills with tailored education. get an expanding library filled with new online videos, webcasts, articles, courses, and more - all crafted just for traders. and with guided learning paths stacked with content curated to fit your unique goals,

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. time for jim's "mad dash," of course. cross country edition as he's at the jpmorgan health care conference, which is a good opportunity for us to discuss in more detail this deal that we mentioned at the top of the program, jim. j&j getting further into oncology. it's not a large deal, dollar-wise. they do pay a huge premium for amam. 28 bucks. so, over 100%. that's not a bad price to wake up to if you actually own that stock. >> no, it's not. and david, one of the things that has really dogged j&j, of course, is the talc

possibilities, that this is for cervical cancer, whether it's asbestos or not. this is something from j&j. it's 16 times earnings, j&j, that's rather low versus a company that we know is doing a lot of good things. but yes, david, it's cancer, it's cancer, it's cancer. that's one of the things that if you're not doing glp-1, you're trying to solve cancer, and obviously, cardio and cancer are the two ways that people, well, that cause death. so, this is one of the things where i do think that if you buy a clinical stage company, the market applauds it, david, even though i think you and i both know, when you have a money loser like ambrx, you can't talk about it being additive or it's dilutive the moment you buy it. >> we should explain to people. i mentioned these adcs, targeting antibody drug conjugates. these are out of phase two trials already. what this does for j&j, they say, is to help them design, develop, and commercialize

targeted oncology therapeutics using this new technology by targeting monoclonal antibodies currently linked to a potent chemotherapy payload to target elimination of cancer cells without the prevalent side effects typically associated with chemotherapy. >> this is one of the things that dr. borla talks about at pfizer. the idea that this is going to replace chemotherapy because it causes less nausea. chemotherapy is nuclear. it targets the whole body. if you can target just the one part and not trigger the massive reaction that hurts or even kills people, it could be major. we have not gotten that far on it. it is very early. i don't want to raise hope that this is going to work. >> right. but that is the key time, often, when these companies are purchased. there is some risk, but of course, a lot of it perhaps mitigated by what are successful phase two trials, for example,

jim. >> absolutely. and we want to watch this and j&j has a really good cancer franchise. this adds to it. it is great to see a little news flow that is about saving people's lives. at the cnbc realtime exchange, a recent spinoff, and at the nasdaq, the invesco nasdaq biotechnology etf. speaking of news flow, between the health care conference you're at, ces, icr consumer, cpi thursday, banks on friday, some argue this is really the first full news day of the year. >> oh, absolutely. this is an actual series of events that are occurring that i think will define things. have the banks run too far? we've got research that says they have. have the health care stocks lagged? they have had these parabolic moves, but there are health care

companies that are so cheap that they're interesting. the news flow, this kind of apple, don't sell it news, research, that, again, is just trying to support mag seven, and i think mag seven, i still think is going to be under pressure, because people want money to buy these different areas, and there's mag seven fatigue, and i think they're not acknowledging it. take a look at apple and say, listen, we've got two major firms that say buy it, and this is all it can muster? i think you have to be careful. >> we were just talking about apple and the vision pro. tim cook with a tweet about 15 minutes ago, jim. "the era of spatial computing has arrived. vision pro available in the u.s. on february 2nd." >> well, look, i'm going to get the vision pro. i'm going to preorder it because i just think that i like sports. it's an incredible way to watch sports. i happen to like apple plus. i've been watching pretty much everything on apple plus, but what i think is really great is

this. you can toggle, very easily -- i was on an airplane, and i was in the front row seat where you can't have your computer. you can have something on your head. but david, i think the problem is, you know, and i do like the vision pro. don't knock me here. but it is something you put over your eyes. so far, that has not been a way that people like to receive information. >> no, it hasn't. god, i can go back to google glass. remember that? that's a long time ago at this point. and then, obviously, we think about meta. i mean, is this a competitive product to what meta has out there in terms of being able to access the metaverse, again, with what are essentially goggles? although they continue to try to downsize them in terms of size and weight and everything else. >> there's two -- there are two metas. there's the quest 3, and then there are the ray-bans, and david, the ray-bans are so cool. answer messages, take pictures, go to insight, and you know what? they look like ray-bans because they are. and i think we have to remember

that the problem with apple might be, do we really want something that is a little bit heavy? i like it. i like to be able to go back and forth between my research and what i'm watching and be able to communicate with others about watching the same thing, which you can do, but i understand. meta has got -- until people try the ray-bans, i don't think people realize exactly how cool they are. david, you're cool already. i need the ray-bans in order to go to the next level. >> if you say so, jim. that's fine. so, right, it's going to be like keanu reeves in "the matrix." didn't he have those ray-bans on? he could see everything and do whatever he needed to do is jump back and forth from the real world to the digital world? >> it works. awe you got to do, david, is say, hey, meta. don't say, hey, siri, because that will be received poorly by meta. >> right. as buffett says, never talk about father on mother's day,

jim. boeing is obviously the drag on the dow this morning. bespoke did some nice work looking at declines of at least 5% or at least downside gaps of 5%, plus stock tends to bounce back over a reasonable time period afterwards. >> oh, absolutely. and i think that, again, if you're one of these companies that has a boeing max, you're -- you mentioned how long it takes to check out whether something's wrong. again, there are no alternatives, because boeing and airbus are sold out for years, and there's been such tremendous demand. the stock can be down, of course, as phil said, because the deliveries, which are what everyone was so hopeful for, for the max, have to be slowed. but you know what, carl, in the end, when the stock settles, maybe around $215, $220, you got to buy it, because it is a great year for transportation already, and i think that continues. >> although, jim, bernstein today, as we mentioned earlier,

cutting southwest to underperform 24. their point is that the discount airline model is clearly not working. everybody's going premium. got an upgrade of american at morgan stanley on that same note. i just wonder what you make about the pricing dynamics within the industry, separate from the max. >> well, i think that phil was talking about what you actually need fewer planes. the thing is that you and i talked -- we talked to southwest last week, and they're just making a lot of mistakes right now. i think -- i hope they come out of it. but you know, david, i think that when you look at what's going on in travel, and you look at what's going on with the airlines, people want to be able to buy new. the theme, david, this year is newness. we want to buy something new. we're tired of buying alphabet endlessly. look at american. now, i know, david, american is not market cap anywhere near alphabet, but we are percentage gains buyers. we don't care about how big a

company is. we want to get 5% gains. well, i hope -- we're not traders. what we're trying to do is say, here's a way to make money that is not just based on what you think about nvidia. and you know i love nvidia. don't get me wrong. but i want this 5% gain. >> understood. although, you know what, jim? to your point, nvidia is up for the year now. it is bucking the trend of the overall mag seven with a gain today of nvidia. you can see right there. some 1.6%. that stock is actually now up and different than all the other big megacaps. actually, meta is slightly higher now, very slightly for the year. but what is going on in nvidia that has that stock sort of bucking that overall trend in terms of the megacaps right now? >> we're going to hear jensen huang at ces. i think he's going to talk about the software component.

people are talking about it being at 24 times forward earnings. and it is the foremost a.i. play, obviously, amd up too because it's got secondary a.i. i think nvidia really has just marked time for so long. you know, you haven't made any money since july in nvidia, and i think that you and i were at -- and carl, at santa barbara when they reported that giant miss. miss of $4 billion to the upside. so, carl, i think that nvidia is -- i know. when i went with jensen huang for dinner, he turned to lisa, my wife, and said, we had this terrible miss. we were $4 billion off, but it was $4 billion more than anyone expected. >> jim, there is that reuters piece, which we just showed viewers, saying they will begin mass production of this china chip in the second quarter, although this digit times piece argues china is not interested in nvidia-downgraded chips. >> oh, give me a break. they'll take anything from nvidia. i really think that one of the

things that the chinese have to recognize is that the really high-end nvidia, the grace hopper nvidia, we think, well, no, secretary of commerce, gina raimondo, is not going to give them a chip that they could militarize. i think that anyone who can get anything from nvidia, whether it be gaming chip or the high-end, is happy. the stock makes -- again, the stock has done nothing since july. it's the only mag seven that did not have just a radically great fourth quarter, so i like it, and i think that the chinese companies are going to have to just understand, this is as good as it's going to get for you guys. >> david, i want to get your take this morning on what you think the banks are going to tell us on friday. big piece in the "ft" this morning saying they are poised to report a sharp rise in bad loans. got some downgrades of capital one and axt over at baird. just looking at delinquency in consumer and so forth. >> yeah, and we've got a couple of downgrades. we've got baird downgrading

wells fargo to a neutral from an outperform, although keeping their current price target. i'm sure there will be a decent amount of conversation, yet again, as there should be, most likely, about the broader economy, what they're seeing in terms of loan demand and concerns about commercial real estate, specifically office, although as again as we pointed out more times, and the banks are happy to tell you overall, if you look through as a percentage, it's just, jim, not necessarily going to add up to something that's going to become a clear and present danger. that said, over time, there are going to be significant losses when it comes specifically to commercial and office space, and i would reference, of course, that story today that we're talking about levels of vacancy the likes of which i don't think we've ever seen since they started to measure in 1979. well above, what, 19.3% of all office space in this country is currently not leased. >> yeah, well, it's interesting.

sl green caught a major price bump today. sl green, classic commercial real estate, and i think, david, you mentioned that the banks have pretty much derisked. i know that charlie scharf at wells fargo gave a talk and said, listen, we don't have a problem with commercial real estate. david, you're right. the work from home was supposed to go away this year, and it's not. and therefore, there is just far less demand for office space. >> and conceivably, there will be for quite some period of time. the question that we've always -- well, the problem that we've raised is that when you have a refinancing coming up for these buildings, oftentimes it's not just the fact that your interest rate is going to tick far higher, but you also need to put more equity in, and there are -- it's hard to find those sources of new equity, given a market like this, jim. it's just very difficult. and you do end up with a scenario under which the banks, as reluctant as they might be, do have to take the keys back, and then the question becomes,

what do you do with a lot of these buildings in these areas where you simply cannot imagine there's going to be enough economic growth to make up for these other trends, so they're going to be empty for a very long period of time, and an eyesore, frankly, for many areas as well. >> well, you're absolutely right, david. carl, i walked for a mile on mission street, which was one of the major streets for business for silicon valley, frontside, so to speak, and almost every building had a "for rent" sign on it. and i do think that when you look at a company like jpmorgan, which has such a hot move going into the quarter, it has historically been a mistake to buy a bank stock when it has come in this hot. so, i want to just kind of make people a little more discerning. there are ways to be able to find a bank stock, let's say, something you don't like in a bank stock, and that happens after you have a move like 135 to 170, which is what jpmorgan has had since the fed pivot. and that's really a remarkable

run, and t it's the opposite, b the way, of so many different stocks, when we take a look at -- this is exactly like a tech stock. it's not acting like a bank. i like the regional banks, more, carl,because they're still where they were in the banking crisis last year in the spring. >> right. jim, on the consumer itself, couple points. one is just energy. saudi's cutting february official selling price. wholesale gas, we're going to make another run at a $3 average in this country, and then you got the upside guidance out of lulu and abercrombie this morning. >> englancrocs up too. one of the things that i think people have to recognize is that the consumer, as we saw from the unemployment number, is incredibly strong. david, the unemployment situation in the country is still, i would say, robust, which is why you can have fed governors and fedpresidents talking about how maybe we're going to have a raise, not a cut.

one of the things that i think people are ignoring is the consumer's spending far more than we thought. look at the online sales that amazon got in the last two weeks before the holiday. >> yeah. no doubt, that's true, but don't you feel like the look at that jobs report after the headline was it was actually weaker than it appeared to be? and perhaps even though it's not pointing at a cut for march, it's certainly not saying anything is quite as positive as you might have thought, given the 216,000-job headline number. >> well, look, i do think it was a goldilocks number, is what the fed wants. they want to keep employment high, but at the same time, they don't want wages to go up. i do think -- and by the way, lulu was down because people were expecting even better numbers. i think that's asking too much out of lulu. carl, look, when you see a abercrombie, it's been the best. look at that. they don't have a.i. that i know

of. i mean, does hollister have a.i.? they've got six packs but not a.i. i'm not speaking about beer. >> the one call this morning that made me think of you was this upgrade of dell at jpmorgan. they go to overweight on the a.i. refresh cycle that you were talking about last week in the wake of that microsoft copilot button story. >> david didn't have a chance to make fun of me for the fact that nobody else bought on this one. i keep thinking that both dell and hewlett packard, now hp, should benefit. it's a clearly refresh cycle by amd off this too, because if you get a button for microsoft copilot, that's a radical move, having had something new like that since the '90s. don't you think that's going to have an impact? >> i do. and you've been talking about it fueling a potential cycle in the pc market. others seem to have caught on to that, that a.i. could be a significant add-on, so to speak.

i'm not sure what it allows you to do. you may have the button, but you're still going to have to pay for the service. >> right, but the button is going to allow you to be able to talk to your pc and make it so you can make reservations for dinner, cancel things, make a reservation for a plane. obviously, don't have to type in things. people are tired of a keyboard. we don't like keyboards. we think it's a relic. david, what is that with the qwert? what is that? >> i don't even know. i couldn't explain that to you. although, i don't know, are you -- >> i like -- hey, meta. >> i have not gotten comfortable just talking at inanimate objects yet. i guess it's generational. >> wake up and smell the coffee. >> okay. i'll try. i can smell again and taste. that's good. >> hopefully it wasn't too bad, david. we did miss you. it's good to have you back.

really quick, actually, jim, i'm just looking at the nasdaq, just clearly outperforming this morning, and it's all about nvidia. crowdstrike is in there too. top pick at rbc today. >> oh, look, people want -- people don't want tech to go away. enterprise software probably has the most ipos in the queue. do you really think people want this thing to disappear? i think that people have to -- look, there's money to be made here, and also, i think that apple has just been such a source of discussion that people just have to have that stock go higher in order to make it so the mag seven rallies. i would point out that microsoft is the one that is the biggest beneficiary of the, obviously, copilot's working. crowdstrike endlessly raising the -- do you know they've never missed a number since they came public? incredible. i would throw in -- i would lump in palo alto, panw, because they are the competitor to crowdstrike, and they are doing incredibly well, and ni nikesh aurora is a billionaire.

>> that's great. i was worried about him. it's funny. i was saying prayers every night. i'm really glad to hear that. yeah. >> david, are billionaires allowed to do anything they want and criticize anybody and say anything they want? is that what happens when you're a billionaire? you can basically have impunity? dave tepper at the panthers. >> once you become a billionaire, you get to a level of expertise on all things. you know everything. just suddenly, it happens. not at $999 million, but at a billion, you can expert in all areas. >> you can throw cops. you can challenge m.i.t. it's a great university, but you can just throw them under the bus. >> he's a billionaire. he must know what he's talking about. >> sure. guys, on that note, a quick reminder, you can get in on the cnbc investing club with jim, sign up at cnbc.com/jointheclub or use the qr code on your screen. as we go to break, let's watch bonds. ten-year back to 4.02%.

coming down over the course of the morning. we're going to get bostic this afternoon and more fed speak this week. we'll be right back. all right. 60 seconds to draw the perfect gift. what's it gonna be? a bottle of don julio, 1942, delivered. delivered with drizly. gifting without the guessing. drizly.

boeing and oil are the drags on the market this morning. dow down 150, but the s&p up about 13. take a look at some gainers here this morning. this consumer discretionary, technology, travel all working, american, nvidia, delta all in the top ten. trading with jim after a short break.

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anti-obesity, anti-diabetes market, and we try to figure out who is hurt by it. so far not beer. >> yeah. we talked on friday about your view that there might need to be portfolio management at constellation between spirits and beer? >> yes, absolutely. i think that spirits, what you call them the clear and brown, the bourbons, gins, doing badly. the wine that is not expensive doing horribly. constellation has to find a way to get rid of that. if they could just be a beer company the stock would be higher. >> the companies joining you over the next couple days, but raise the curtain on what the next 48 hours will be like for you. >> well, i've got pretty much everybody who is doing anything. roach, pfizer, bristol-myers, david ricks tomorrow on our show, eli lilly. medtronics, a lot of things. amgen. powerhouse. a lot of these stocks are at their high, just had a run.

i think, carl, people recognize maybe these companies got too under valued including walgreens where we have a new ceo after they cut the dividend last week. >> we look forward to that. and, david, it's good to have you back and eventually we'll all be back at the same desk. >> we can always hope. always hope. yeah. >> jim, we'll see you tonight, of course. >> thank you. >> "mad money" at 6:00 p.m. eastern time. when we come back more on the grounding of boeing 737 max 9 jets including a perspective from one of the whistleblowers when we come back.

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sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. good monday morning. welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla, live from post nine at the new york stock exchange, along with david faber who joins us from cnbc hq this hour. good morning. let's kick it off with the markets and show you the mixed picture we see. s&p 500 up 0.3%. nasdaq is higher by a whole percent. dow down 182 points, but that is

really boeing which is tracking on the dow and why you're not seeing it in the other parts of the major averages. looking right now, boeing shaving 141 points off the dow. goldman, chevron, jpmorgan dragging. take a look at treasuries. firmer yields that's how we started the year and the 10-year yield is above 4%. kind of unchanged right now. we await big data this week like cpi or inflation on thursday and a lot of big bank earnings this week. we're 30 minutes into the trading session. here are three movers we are watching. boeing, the big stock story of the day, shares dropping after the faa grounded dozens of 737 max 9 planes for urgent safety inspections after that alaska airlines jet suffered a midair incident when an unused, it door blew out. we'll talk a lot more about that. spirit, aero systems shares dropping. the company manufactured and initially installed the fuselage portfolio part on that boeing jet that suffered the blowout.

big decline there. alaska airlines is down on that news and more on the developing story straight ahead and we'll speak with a boeing whistleblower who worked on 737 projects coming up with phil lebeau a little bit later in the hour. but guys, as far as the macro setup today, we're coming off of a down week for stocks, the first one in the last ten weeks, on the back of higher yields, which is something we haven't seen. the comments over the weekended that everybody focused on was lori logan who is a dallas fed president. it was a hawkish and dovish speech. here's the most hawkish thing she said. she talked about financial conditions, which we've been talking about here a lot, and she said if we don't maintain sufficiently tight financial conditions there's a risk inflation will pick back up and reverse the progress we've made in light of the easing and financial conditions in recent months we shouldn't take the possibility of another rate increase off the table just yet. in other words, they're aware of the risks rising for inflation because financial conditions

have eased, or potentially one reason why yields are higher. maybe the market was just a little too optimistic, pricing in the six rate cuts next year, double what fed had in its original forecast. >> but then there were her comments about the balance sheet and you made the point over the weekend she knows these markets having served on the new york fed markets desk. >> she got -- the reason i say dovish speech, it was a hawkish speech because she left more rate hikes on the table but the fed might have the conversation, should be having the conversation, around stopping to trim the balance sheet because of these reverse repo balances declining on the back of higher yields. it's a liquidity proxy, something the fed is talking about because it was in the minutes of the last fed meeting and it's getting people excited that we're going to start talking about the end of qt, balance sheet reduction, after the fed managed to get more than a trillion dollars off the

balance, lower balance sheet. that's something, but as far as the economic data, you know, the chart of the day that we made and we talked about this on the jobs data day, is wages and cpi and the fact that wages are now rising faster than inflation and more than a point and that's real wage growth and it's relief for consumers because they're getting relief at the gas pumps and at the grocery store at a time when wages are rising 4% or so. that, david, bodes well for the consumer in 2024 amid other questions. >> what are the expectations in terms of the sustainability of that trend, sara? >> well, i think that, you know, as long as consumer balance sheets are still in decent shape, and i will be curious to hear from the bank ceos and the bank earnings this week, about where we stand, you know, bank of america's brian moynihan said we're above the 2019 levels on balances and deposits and checking accounts, and, so i think we want to make sure that's still the case, and, you

know, as long as people have jobs and they're still -- even though the labor market is weakening a little bit, it's weakening slowly. cpi is in orange. it's come down a lot. we'll see if that continues on thursday. average hourly earnings have remained elevated. and they're still growing. that's good. and i would just note, you know, at lulu and abercrombie at the conference conference they raised their holiday sales guidance, it's good for the consumers but those are examples of strong retailers right now in terms of what is resonating with the consumer. here's lulu. our sales trend remains balanced across channels, categories and geographies. abercrombie was bullish, the stocks down but these were winners in 2023. abercrombie's stock tripled. lulu's up. these are examples of retailers getting it right. >> retailers that raised guidance today. lulu and abercrombie.

crocs and five blo below. wholesale gasoline down 3%. our lowest gas price in this country since the middle of 2021 which is another win for the american consumer at least. >> used cars continue to come down in terms of pricing. the manheim used car index out. we saw a big drop and a big drop in 2023. that's not where the fed is concerned about inflation at this point and the goods sector because that's been deflating and disinflating, but, services also, you know, showing a little bit of signs of pulling. as long as we get on thursday core cpi coming down, i think the headline is expected to go up a little bit, but if core cpi continues to come down, it would be good news. along with this good news in the economy. let's talk about what it means for stocks. major averages breaking nine-week win streak. it's a nine-week win streak last week. investigators taking a fresh look towards inflation, earnings, including the banks. mike santoli here to break it down for us and whether the pullback is a healthy one, mike. >> i would say until further

notice, yes. you mentioned nine straight up weeks, went up 16, 17% in the s&p 500 in two months. you're down 2% off that high. 3% pullback is like half a dozen times a year on average. just on that basis, it seems as if this right now is orderly routine. doesn't mean it's over. yeah. i would point to the idea that the breadth and momentum and all the kind of statistics on the strength of the rally off the october low, kind of won this bull market status, where for operating by bull market rules, 3 to 5% pullback, you see the 50-day moving average, down in the 4500s. anything toward that level still seems normal that gets you back to early december where we launched after the december fed meeting and then i mean december jobs report and then the fed meeting where the levels are trading at right now. i would point to maybe an increase sensitivity to soft spots in the economy, believe it or not, after the good jobs report, but one that had some cracks in it and people could make the case either way, not on

the wage side but on the household survey and labor participation, and where the jobs are coming from. ism still weak. it's a mixed market. you also have seen a pretty good downgrade, good meaning deep, in fourth quarter earnings expectations. you started out with 8% growth expected for the fourth quarter and september 30th. down below 2%. that pattern has been familiar. the sort of cut and beat afterwards but one of to be alert for what that means for valuation. final point is, all this pullback stuff, i also see the bond move as just profit taking. massive gain in bonds, bond prices into year end, and so it seems like an unwind of some of the profitable crowded trades. i would point out that, you know, it does seem as if the fed outlook is still when the first cut happens, i don't think it's as crucial as the fact that it's a less dangerous game to be talking about when the first cut happens than how much more does the fed have to do to undermine the economy to get inflation in line. >> one thing is that the yield

curve has not uninverted. >> right. >> we've seen this steepening but usually at this point in expectation of cuts, it does. >> yeah. >> making some of the bears say, yeah, we're going to have a recession. >> yeah. look, if we uninvert the bears will say that's when a recession comes. it's not that decisive. look, i think you had a steeply inverted yield curve because you had a historically fast and transparent tightening campaign. the fed told you way in advance it was going higher on the short end, and then i think it's a net good news thing we're at 4% on the 10-year. it implies inflation is no longer, you know, the raging fire we thought it was. 2% real growth, 2% inflation f we somehow get there, that's consistent with the 4% 10-year yield. that is a level you don't have to be alarmed about, you know, for an economy to handle. >> mike, you know, it's not a technical term, but the first trading, the trading of the first week of the year is weird. it seemed kind of weird last

week. mag seven, obviously, took it hard. i notice there is a bit of resurgence this morning. curious to get your thoughts as we watch mega cap tech up well over 1%, perhaps some of these names, nvidia leading it, up over 4.5% right now. >> exactly, david. i mean, it was an interesting spot to start the year because we were on this one-way trade, this nine-week win streak, where you did have everything work, and i think that what does often happen in january, is just mean reversion. you have, you know, the crowded trades get less crowded, people take profits on a delayed basis. i sense people want the small cap out performance to continue. there's a sense out there that they're rooting for the broadening of the market, they want the banks to keep doing well. i'm not sure that's going to happen in a straight line, so every time the mag seven goes down a bit -- you had a 10% pullback in apple, for example, and nvidia, it's done nothing since labor day. it had a massive move but all in

the first eight months of last year. i think at some point the fact that all those seven stocks still are the source of a huge percentage of this year's expected earnings growth is not going to go unnoticed. >> mike, appreciate that. mike santoli helping us kick off the hour. our next guest does expect a step up in volatility and market stress and says that early fed optimism may be self-defeating longer term. wells fargo securities head of equity strategy chris arby with us, s&p target 4625, joins us this morning at 900. g post nine. >> good to be back. >> you think the action colors you view that last year was a short covering of shorts. >> towards the end of. we exacerbated in trends. ton of short covering. our short interest portfolio was up 15% between the fed meeting and the year, that tells you that people were running for the hills. that's over. we're reprising risk a little bit. you have expectations that the fed will go early and often. i think we need to have earnings come out. we need to bring in expectations

for earnings that will cause a little bit of volatility. sentiment, as you know, is really positive at this point in time. we could get a change in sentiment in the short-term. >> is your view that calls for inflation to come down is exated. >> the inflation is coming down. the fed doesn't need to move as fast as people expect. we had jobs on friday and wage pressure and we have a strong job market. there's no reason for the fed to go sooner than later. they don't get much out of it. i think the fed really needs to slow walk this but we'll see how this plays out. >> even those that think the fed might not cut as much as the market is anticipating, acknowledge that with inflation coming down, the fed is done hiking, for instance, and that should be bullish certainly for companies that have dealt and battled high interest rates. >> i think that's all fair point. i think what fed did is, they really capped the rate market, right. we were trying to figure out what the cost to capital was. right. we had very high, we had the 10-year go up to 5%.

i don't think we're going to see that again. really what you've done is taken the bottom out. lifted the bottom at this point in time. that doesn't mean that high end goes higher. that means you've taken risk out of the market and you're right, that's a positive. it's be too decided. >> you don't think so? you don't think the market is going to go up this year? >> we really think the market will be more flat. what you want to do is trade the market. you want to position in certain sectors. you want some risk off, utilities, had health care, but you want to barbell that with something more positive, which is communication. right. at the end of the day, don't get married to positions. trade around them. >> so what does that mean for the so-called mag seven? it sounds like maybe you like some of them? >> we do like some of them. there's a few in that communication space. really, if you're looking for the best risk-reward we think your best risk-reward is in mid cap growth. if you want to own something longer term mid cap growth is a place we want you to be.

good valuation, technicals and you don't need to he lie on the economy for these to work. >> because we have the banks and wells on friday, do you think they comment on where we are right now? >> i think they strike a balance. they say the consumer is okay but don't get too excite. uncertainty here. the credit cycle hasn't hit. a lot of people are mitigating it and i understand why. i think they're going to strike a healthy balance there's some good, some bad. >> we'll see. that's still a few days away. good to check in with you. thank you. >> thank you. as we head to break here's our road map for the hour. shares of boeing are plunging right now after the faa grounds dozens of certain types of 737 jets of safety concerns. we'll discuss if it's a short-term issue or longer and joined by boeing whistleblower with his take. >> tim cook is giving new details about the vision pro. his comments come as shares hover around eight-week lows, although up today.

close to breaking key support levels. we're going to discuss what is ahead for apple's stock and the company. and crypto investors holding their breath as the sec faces a deadline this week to approve or reject the first ever bitcoin etf. we'll talk about what investors f at to know ahead oth decision as "squawk on the street" continues after this break. at morgan stanley, old school hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

boeing, the biggest loser and drag on the dow jones

industrial average, and one of the biggest laggards in the s&p this morning. the faa grounding dozens of 737 max 9 planes after a piece of the aircraft blew out during an alaska airlines flight on friday. let's get to phil lebeau with the latest. phil? >> and sara, let me give you an update on where the investigation stands because the ntsb and the faa are both working not only to figure out what happened, but also what airlines who have a max 9 should do to inspect those planes. in terms of the investigation into the alaska airlines flight, the focus for the ntsb investigators is the plug that was ripped off the 737 max 9 on friday night on a flight from portland to southern california. they have found the plug, by the way, and they are looking at that. in addition to what you see here, the hole in the side of the airplane, 171 max 9s have been grounded. alaska and united have been adjusting their schedules. they're the two u.s. airlines that fly the max 9. in terms of the global fleet,

218 have been delivered, but just 171 of them have the plug and the deactivated door in question. those are the ones that are grounded. united has 79 max 9s, alaska 65 and six other foreign airlines that have 74 max 9s. those are grounded until the faa can determine what is the process of doing an investigation so that you know exactly what you need to check for to see if there are other planes that might have a problem, quickly take a look at shares of alaska and united. 343 flight cancellations today. these are -- not all are max 9 flight cancellations. there's a chunk of them that are directly related to the max 9, but a ripple effect as well. you see the impact, 343 cancellations. quickly take a look at shares of boeing. it is looking at the max 9 as just 2% of its 737 backlog. it's not a huge part of its

backlog, but if there are issues in terms of manufacturing, 737 maxes and the ability to ramp up a production, that's the spillover effect of this investigation. i want to bring in ed pearson, a boeing whistleblower, former boeing employee, who is the executive director for the foundation for aviation safety. ed, you testified against boeing at the hearings for the max after they were grounded following two crashes in 2019. i'm curious, when you saw the video of this plane flying with a big gaping hole in the side, what was your reaction? >> well, thanks, phil, for having me on here. actually, i would like to say that this was no surprise, unfortunately. i know it's stunning for passengers, but for those of us who have been monitoring what's been going on for a while with the max, it wasn't a surprise, sadly. you know, as we discussed in the past, the company has struggled mightily with manufacturing and we've had over 20 production

quality defects and it's hard to keep up with all of them. they keep getting reported and you have done reporting on this. this is, unfortunately, has been consistent. we've also had requests for engineering exemptions after, you know, two fatal crashes and 346 people died and a criminal investigation, and everything else, the company is still requesting engineering exemptions for flight safety-related systems. this is very concerning. >> you've long had concerns about quality control and manufacturing quality control at boeing and you believe this is emblematic of that. what's at the heart of that, do you believe? what is at the heart of that problem in your opinion? >> well, i think heart of the problem is clearly there's a rush to produce airplanes. there's a great demand for airplanes, and inside the factories, there's a phrase they call schedule is king. even though the company speaks about the quality of their

planes and the importance of that, what the employees are hearing on the factory floor is, get your jobs done. finish your work, get done as fast as possible, move to the next plane. and that type of rush production, you know, it's shocking really, if you think about it. all these people died and a $20 billion loss to the company like we talked about, and for them to just continue to push and push, they're opening up a fourth line, this is -- we've been watching this very closely, phil, we've talked about this, besides the production quality defects, there was quality control inspections that were removed, and we're talking thousands of quality control inspections removed on individual airplanes and this -- not just the 737 max but other airplanes, the 777, 67 and 87, it's our understanding that faa was unaware of these removal of these quality control inspections that have been in place for many, many years, and it wasn't until a couple

whistleblowers reported internally, and this is recent, that these quality control inspections were removed. the union has been fighting back to reinstate these inspections and they've reinstated many, but not all of them. there are planes that have left the factories with thousands of inspections, i'm talking individual airplanes now, that have left the factory without these inspections. and, you know, this is -- you know, i don't think the airlines know about this. i don't think that they know this occurred. the faa certainly didn't know until the whistleblowers provided these reports. >> ed we should -- >> go ahead. >> i was just going to add, you know, when you take the rushed production that leads to all these production quality issues, and there's a long list of production quality defects, you add that to all the other factors like the engineering exemptions. here we are several years after the crashes, ten years into the design and development of the

plane, and the faa is getting petitions for exemption fort boeing company for flight related systems, anti-icing system, stall management, the damper in, the flat slats electronic ook kuwaiter unit -- ac waiter units and they're asking for permission to not comply with safety regulations that have been in effect for many, many years. this is ridiculous. >> ed? >> yeah. >> ed, i want to point out that when we brought your concerns and criticisms either recently or in the past to boeing, they have said look, we have people in our factories who are the faa designate and they sign off on these aircraft. we're not delivering these aircraft until they're ready to be delivered. dave calhoun put out a note, all employee memo, that went out yesterday, and they're going to be holding a meeting tomorrow, and i want to read what he wrote. while we've made progress in

strengthening our safety management and quality control systems and processes, in the last few years, situations like this are a reminder that we must remain focused on continuing to improve every day. when i brought your concerns to veteran aviation safety experts, they say you know what, i think these guys are taking small kernels of truth and blowing them up into much bigger issues than they are. what's your reaction to that? >> first of all, i would say that, you know, ceo dave calhoun should spend more time in the factory than his corporate office. he should be on the factory floor. him coming out to washington now after such an incident is a little bit late. as far as your veteran aviation safety, i certainly respect their opinions, but we also have a veteran aviation safety videos we work with, and as we discussed, just at alaska airlines, 53 airplanes we produced a report on this in september, had over 1200 reports

of safety issues and these -- we're talking about planes less than two years old, some cases a couple hundred hours on them, should not be having these kinds of problems. i really want you to know that the production quality issues and what i understand from the people that i talk to, is it's actually as bad or worse than it was when i worked there, which is hard to believe. so i'm familiar with the metrics. we hear this about the airplanes are flown millions of miles safely. this is an example, if this is the output of all these improvements, then that's pretty bad. and those millions of miles flown, you know, they've never prevented a crash and they provide you zero insight into individual quality, individual airplanes. and in a flight environment, when you have these failures, i'm not saying any one particular thing could cause a crash, although some are serious, like the motor failures we've seen it's a cumulative

effect, multiple emergency that add up and that's a concern. so i think proof is in the pudding. if the -- if we were not having all these production quality defects, if we were not having these types of reports that are occurring that people don't know about, and also the production quality we talked about this before, phil, they removed production quality inspections. >> ed? >> yes. >> i have to wrap it up here. i have one quick question and quick answer if you could, please. what would you like to see happen at the end of this investigation? >> at the end of this investigation, i would like the boeing company to admit that there's a lot of problems that they have yet to admit to. these problems, there's a lot of them. this door, this plug blowout, is just one example and there's a lot of other concerning things. i want them to really do a serious reflection across the board of entire manufacturing and engineering with the max. this plane has problems, and i'm sorry to tell you, phil, my

opinion, this plane is a flying lemon. >> all right. ed pearson, we appreciate your commentary. ed pearson, executive director from the foundation for aviation safety. guys, i will send it back to you. >> quick question for you, phil, on the business aspect of this, as wall street tries to figure out what the impact is going to be. so one of the notes from bank of america, there's a duopoly, ultimately it won't hurt boeing sales. is that prevailing view and the case before with some of these quality issues? >> well, at least initially, sara. i would say that's the prevailing view. looking if this investigation were to determine shut down the max for months on end, far different story. nobody is expecting that to be the end of this investigation. most believe that at some point there will be a determination of doing inspections of the other max 9s and at this point it does not look like it's a systemic

issue. if that's the case, where it's not systemic, you're not going to see boeing customers move away from the max. they're not going to sit there and say why wouldn't i want to keep the max that i have being delivered in three months, so yes, that is the prevailing view at this point, sara. there's no indication that this is a larger systemic issue, though you hear kritscriticisms ed pearson and does raise questions about quality control at boeing. >> a lot of us, a lot of our nightmares to see that refrigerator sized hole in a plane flying. thank god everyone was safe. still ahead, energy is the worst performing sector right now as oil slides to its worst day since back in mid-november. also deals in the health care space to tell you about. more on the day's biggest movers when "squawk on the street" comes right back. dow is down 110 because of boeing. s&p and nasdaq firmly higher.

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let's go to dominic chu who has more on what is moving this morning. >> that's right. those price cuts that you alluded to for u.s. benchmark and international prices have now firmly put themselves in negative territory giving up many of the gains we saw over the course of the last week to start off the new year. it's having an impact on the big energy oil names in the sector. you got names like halliburton, schlumberger and baker hughes. exxon and chevron lower as well. analysts at morgan stanley are downgrading the sector to more of an in-line rating citing a softer oil and gas market and ample supply made oil prices less sensitive to geopolitical risks overall. keep an eye on that sector. elsewhere we want to get a check on a flurry of deals in the health care sector as well. boston scientific acquiring axonics. shares of axonics moving on that

news. merck is buying harpoon therapeutics for $680 million. we end on johnson & johnson $2 billion deal to buy ambrx biopharma another cancer developer. ambrx up 98% overall. a big deal there. all the deals come as we await commentary from big natpharma a the conference getting under way today. carl, back to you folks at the new york stock exchange. >> apple coming off a rough week after downgrade from the street last week. today concerns growing over the atnvto nd china exposure. wh iesrseeto know after this break.

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news update. house republicans on the judicial oversight committee today are recommending the president's son hunter biden be held in contempt of congress. they accuse him of defying a subpoena to appear for a closed door transcribed interview as part of the impeachment inquiry into president biden. the recommendation needs to go to the full house for a vote before it could potentially be forwarded to the justice department for consideration. fears are growing for a wider conflict in the middle east. hezbollah says one of its commanders died in the strike in southern lebanon today. the iran backed militant group didn't give other details about his death which comes days after a senior hamas leader was reportedly killed by a drone strike in the lebanese capital of beirut. meanwhile, secretary of state antony blinken met with the united arab emirates president today to keep the conflict from spreading. he now leads to saudi arabia to

meet with the crown prince before traveling to israel. david? >> thank you, bertha. apple shares are coming off what are eight-week lows, and it is still trading near its 200-day moving average despite the move up today. the stock the worst performing name in the mag seven this year as tim cook posts on x saying, quote, the era of spacial computing has arrived. apple vision pro is available in the u.s. on february 2nd. our next guest acknowledges that apple has had a rough start, but makes the bull case for the stock and says it is time to buy the dip. evercore's senior managing director has an outperform on apple, price target 220. a lot of concerns that sent the price down seemed to be centered on iphone demand in china. you say the pessimism is overdone. why? >> yeah. >> good morning. it's overdone from our view at least the weakness seems to be

centered around china, at this point. what's, perhaps, appreciated is the u.s. is stable and strong, india has done well, so there are positives when it comes to iphones getting overlooked right now. the same to investments for this, the reason apple's stock is up well is the consistency of the tax flow and the levers that have enabled that expansion with apple, perfectly intact. >> trades at 28, 29 times earnings for the kind of revenue growth you're talking about or lack thereof and with the recurring revenue from services and the margins you discussed, why doesn't it deserve that kind of a mult. ? >> you know, it's a very, very fair ze. apple has over the last five or ten years become much more consumer discretionary product versus a technology hardware product, right.

very sim policically if you drop your iphone today it wouldn't take you a long time to order a new one. we would argue the stock trade morse like [ inaudible ] like procter & gamble and those assets do trade due to limited growth pointed out in the high 20s versus p/e ratios. >> this hasn't figured as prominentry in people's perceptions of the company's stock this year, but the antitrust risk directly, because there were stories saying that, in fact, it may be eyed as an antitrust argts, but also in the alphabet litigation, how significant is that, particularly given alphabet does pay apple 19, $20 billion a year to be the preferred search on the phone? >> yeah. listen, that's actually a very big number. 18 to $20 billion [ inaudible ] initially in the doj lawsuit and

that amounts to high teens of revenue and profits that apple is getting from this, you know, being the standard of having google as a de facto standard on the i phone. that could be a big risk and any doj [ inaudible ] would be a big issue. i think the regulatory issue is a wild card. the one thing i would say to think about, is apple getting paid to be the default search engine across all ios devices or getting paid $2 billion a year for the search business. i think there's an angle here. [ inaudible ] apple's products over time monetization effective for them. i do think in both cases the regulatory risks from the biggest downside right now. >> we're going to be talking about the vision pro through the course of the week. to what degree is it a category builder? you've been paying attention to

the initial asps, but when does that come down to a reasonable tlaefl can reach a broader -- levels that can reach a broader base of consumers? >> i think the 3500 asp, what apple is trying to do from our perspective trying to make the product desirable before they make it affordable. i think the affordability will come in the next two or three years. call it 2026, 2027 timeframe. you have have a 1 to $2,000 product that can more mass marketed. this is for the developers. to the extent this is a desirable successful product it could perhaps give you the [ inaudible ] with apple and that would be more than enough to justify. >> all right. we're going to leave it there for today. thank you. >> thank you. still to come on the show, market veteran and rockefeller international chairman rasheer sharma has his top ten predictions for the year and some may surprise you.

check out shares of twilio, the company raises its guidance for the full year and says co-founder and ceo jeffrey lawson will be stepping down. the ocisstk up 7.5%. we'll be right back. e you heard of a town named dinosaur, colorado. we just got an order from dinosaur, colorado. start an easy to build, powerful website for free with a partner that always puts you first. start for free at godaddy.com

welcome back to "squawk on the street." china's stock losing nearly $4 trillion in value since 2 202220 -- 2021 as the company's weight drops to a record low. global investors will continue to reduce their china exposure as part of his ten big predictions for the new year. rasheer sharma joins us now. you don't think they're going to try to stimulate their way out of this? >> well, i think they've played this game, you know, which is a bit of a charade, that they keep telling us they're growing at 5% and if they're growing at 5% the obvious answer is why stimulate or do anything if the economy is growing at 5%. we as investors know that's not the truth. if you look at the revenues of companies, look at the profits

of companies, and the other problems of the property market the economy is not growing at 5%. as long as they keep with this charade they're growing at 5% there's no need to stimulate, right? >> i guess the question comes back to their desire to overtake the united states and to become the global he reserve currency, and it was always thought they would do anything they could to get there? >> exactly. i think they have a major constraint there, if they try to stimulate just now, they're likely to see a big dip in the currency because inflaterest ra in china are below the interest rates in the united states. that's one reason that they're not stimulating because they do not want to see a sharp depreciation in their currency. they want to be the largest economy in terms of more than 70% of the size of u.s. gdp. now for the last couple years they've been falling back, and the explaining rate depreciation

has been one factor behind that. they don't want a weaker exchange rate, even if it's the right policy solution, to try to stimulate the economy. >> you're not allocating money toward china or buying there, even though a lot of people think it looks cheap after last year? >> it's a big market. still the world's second largest stock market. there will be some opportunities that we'll get, but we have typically been halfway china for a long period of time, just because it's size is so big, but the whole idea they're going to stimulate and the market will revive itself, i think the problems are deeper, which is that chinese economy faces a lot of headwinds from demographics to debt, and also the fact that xi jinping doesn't really believe in a free market economy. he has a much more status mindset, and so what his incentive is, and what he thinks is the right outcome, is very different than what investors think. the entire market today is treating it like an enterprise,

the private sector companies are getting derated, and their valuations are converging with the state-owned companies. that's the big shift in china that is happening. the whole market is trading like one big state-owned ent prize. >> great piece in the ifft lookg at china for 2024 and you talk about european resilience, and i'm wondering how you square that, given theirreliance on china trade? >> yeah. i think europe might point to this, they've gone through so many disasters over the last 10, 12 years, it's really the new hopeless continent. that was a term being used for africa for one point in time. today you could use it for everyone. everyone is pessimistic on europe, and my sort of response is that europe may not shine or do really well, but it could be much more resilient than what people think. firstly, the europeans have saved a lot of their stimulus out of caution, compared to let's say in america, where a

lot of the stimulus has gone and spent by the consumer, plus in europe, a lot of the debt is on floating rate, compared to america where a lot of the debt was taken at fixed rate. in a way, europe has already suffered the shock of higher interest rates in a way that america hasn't. also the fact that the energy shock is receding much faster because they had a much bigger energy shock to deal with. wages in europe are beginning to grow for the first time in a meaningful way after adjusting for inflation. due to some tailwinds i think in favor of europe -- it's quite interesting even if you look at 2023, the average european stock, in fact, did better than the average american stock, but it's just that in america, the performance was so flat by the magnificent seven as we know by now, even the market is beginning to sense something there, yeah. simple point with europe is, deep amount of pessimism. this time last year, i had a

japanese comeback as one of my top surprises. i think for this year if i was to pick a surprise europe ends up being more resilient, not necessarily a star, given how pessimistic cannottations are. >> you betmarkets, can they thrive even with china not picking up? >> that's what happened last year. emerging markets outside of china posted a dollar return of 20% on average. many emerging markets from greece to poland and eastern europe, and we know brazil, india, some of these markets, in fact, outperformed the u.s. market in dollar terms. the performance of emerging markets is being dragged down by china, but emerging markets outside china have already been quite resilient. so, i'd say that even the economies, even the foreign trades if you look at it, have been quite low there. i think the world is learning to derisk and decouple from china. as long as china doesn't im

implode. if china implodes, all bets are off. if the air comes out of the balloon slowly like it has been, emerging markets will continue to do well, as they did in 2023. >> good to get to some of your picks and predictions. we have to do a whole other segment on politics in the year of elections we have ahead of us. >> that's the big -- >> yeah, it's huge. i think there's a record number of people in the world that are going to be voting for leaders this year. >> look forward to that segment. still to come, it is a make or break week for bitcoin. we'll tell you why after the break. first, a quick check on the biggest gainers on the s&p this morning as we do see some leisure travel and consumer mes react to some decent guidance. back after this. or moments that matter, but you can invest in them. at t. rowe price our strategic investing approach can help you build the future you imagine. t. rowe price, invest with confidence. a force to be reckon with. no, not you saquon. hm?

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friday. it has been a moving target on dates. the s.e.c. is expected to approve a handful of applications. wants sponsors filing more paperwork this morning where we are getting a sense of the price war emerging. there are 13 applications out there with different fees. some starting at zero and rising. once the fund hits a certain size. blackrock, for example, plans to start at 0.2% and go to 0.3%. fidelity at 0.39%. grayscale looking the highest at 1.5%. this is worth watching. it's looking to convert an already publicly traded bitcoin trust gbc into an etf known as an uplist with $27 billion, roughly, under management. they would become one of the largest commodity-based etfs if approved. it used to trade at a steep to bitcoin and deep decline now narrowing to 5%. if that fund converts to etf,

the discount essentially disappears overnight. starts trading at the price of bitcoin. some are taking that as an arbitrage trade, an opportunity there. crypto prices have shot up in anticipation of this approval. some are cautious, though, including cathie wood, among those taking profits when it comes to coinbase ahead of any news this week. back to you. >> yeah, kate, you know, bitcoin itself obviously seems to have been moving up in anticipation of that if and when it finally does come, as you say, as soon as wednesday, any expectations it will further the rise here or is the news already baked in? >> so, fund strategy did a little research and looked at historical analogies. cme futures that launched and futures etf that already exists. they say there were deep downdrafts and expect volatility potentially on the downside. they tried to say this time is different and pointing to global liquidity conditions. you had strength in the dollar and rising rates. they say that was categorically

different. so, it's a divisive topic. if it is priced in, you have a lot of people on wall street that take it is a potential buy the rumor, sell the event. you've seen this run up in crypto stocks. fund strat says this time is different, but we will see if and when this gets approved. >> we'll see if grayscale adjusts that fee structure. way out of whack, conceivably. cathie wood will be joining "halftime" today. 12:30 eastern. as for us, our live market coverage continues right after this. together, we built something truly beautiful. it takes years of dedication to get to this milestone. the new york stock exchange is a symbol of what america is all about the potential of an american dream. it is day one.

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good monday morning. welcome to "money movers." i'm carl quintanilla with sara eisen live at post 9 of the new york stock exchange. boeing shares on pace for their worst day in more than a year after the 737 max 9 blowout. we'll talk about the street's reaction. lazard chief market strategist, new role on why the fe