and pepsi is calling out who was responsible for pulling items from the shelves. the gang is all here. "squawk box" begins right now. 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 and andrew ross sorkin. the gang is all here. first time we have all been together in a long time. >> it will be this way for a while. >> we're going davos. >> sunday. sunday. sunday. boeing. >> it's a date. >> let's pick things up. let's see what happened and fix

it pronto. not just for us. everyone. loose hardware? >> they will be looking at it. we will talk about it in a moment. they will be looking at many aircraft. not just the max-9 at this point. u.s. equities are pointing to a weaker open. you are looking at the dow futures off triple digits. decline of 115. s&p futures indicated down by 15. the nasdaq off by 71. this does come after the best day of gains for the s&p and nasdaq and several other indexes since november. yesterday was a strong day. dow was up, but not by nearly as much with the weakness at boeing. boeing weakness cost 132 points off the dow yesterday. we will continue to see that. dow did end in positive territory. it did have the pressure from boeing. if you are looking at treasury yields, you will see right now it looks like the ten-year note is yielding over 4%. 4.04.

two-year note at 4.37. let's talk about boeing. the grounding of 171 boeing planes. it found loose bolts on door plugs of several boeing 737 max 9 planes. alaska airlines found several issues as well. alaska has 65 of the max 9 planes in the fleet. united has 79 of them. ceo dave calhoun of boeing, canceled the summit and will hold an all-employee call later today. we will talk to the professor of corporate communications who says calhoun needs to go. spirit aerosystems slid by 11% yesterday. how much of this issue is the fuselage and how much of the fake doors or plugs which are in

place of the door and i don't know how much is a boeing function or how much -- >> it is boeing who is responsible for it. i don't know who puts the plugs in the door holes. it hasn't been clear on that. they found bolts which have not been completely tightened in other areas in the planes recently. >> in a perfect world, the fuselage is one single piece or whatever you make it out of. that great steel we use. if you are flexible where it can be bigger or smaller jet and leave a place for a door, which needs to be filled, this -- >> this is not the only plane that does that. >> it hasn't been a major problem up until this happened. >> you are doing that because it is cheaper to make one version of the fuselage and slap in the parts to personalize it and

customize it for a different airlines. in a perfect world, you would not have it. >> you would have a single fuselage with the stress and pressure. you think about the gs. it is amazing those things fly. >> the door plug flew out and it had been delivered a couple of months prior. >> in november. we will talk about this more. we talked about the jpmorgan chase healthcare conference and m& a. we are seeing that in the arena. shares of cytokinetics jumped 15% after "the wall street jour journal" reported the maker was purchased by gsk. it is due to the surge of the

stock in december after it reported successful data for that experimental drug to treat hypertrop hypertrophic krcardiomyopathy. and hp enterprise is in talks to buy juniper networks. the deal could be announced this week. juniper services routers and switches and operating a growing artificial intelligence business known as mist a.i. we have been talking about juniper for 20 years. it is after all that and it was a cisco competitor.

it is worth $13 billion. it never really ran. overnight in south korea, samsung expects a 35% drop in operating profit in the fourth quarter in 2023. it missed ex-ppectation by a wi margin. the revenue fell 4.9% year over year thanks to the drop off of memory chip prices. sales slump in smartphones and laptops. full results will be released on january 13th. update right now on the story we told you about last week. carrefour will no longer carry pepsi and lay's products. a spokesperson for pepsico said carrefour miss characterized the

issues. we stopped supplying at the end of the year. something they were aware could happen. in response, carrefour responded. we have taken this decision. since last summer, carrefour has been increasing pressure on suppliers to bring down prices. it attached labels warning shoppers of shrinkflation. pepsi and carrefour have been in negotiations, but this could be a potato or tomatoes situation. as a result, products are no longer available. pepsi said they hope they can reach agreement. it sounds like a pretty hairy negotiation. >> i am not shopping at a place which doesn't have pepsi. i'm not talking about pepsi products. >> lay's products. >> i'm not eating those.

all the toes. tiger woods' 27-year partnership with nike has come to an end. he announced that yesterday in a statement on x. he said phil knight's passion brought this together. i want to thank him with the nike employees and athletes i worked with along the way. nike confirmed on instagram with the picture of woods in his e iconic red polo. rumors have been circulating for months. >> ace s a golfer, what do you think? is he making his own golf stuff? >> rumors of another deal. >> with somebody else for clothes? golf clubs? >> what's the roger federer? >> that's not it. they said that wasn't happening.

>> there's rumors he goes elsewhere for this. i heard nike wasn't as involved with golf. >> it stopped making golf products except for the clothes. the clubs did not work for them. >> probably that simple. i was happy. >> why? >> nike has been disappointing to me at times recently. >> okay. >> i always bring up michael jordan. republicans buy sneakers, too. let's not make it and nike has gone far field. tiger is pretty cool. he has never been political. ever. >> i think it is great to see a relationship where both sides are respective of each other. >> nike stuck with him during the toughest of times. in many ways, he owes nike more

than. >> other golfers love phil. phil had different reasons. you go to new equipment and you have to change your stance. it does make an issue. phil had a slump when he went to callaway. coming up, the latest fed commentary. the notable hawk signaling a pivot. that story is next. later, house speaker mike johnson finds himself in a funding battle similar to one that brought down his predecessor. former speaker kevin mccarthy will join us. supposedly nikki haley is single digits behind trump in some places. "squawk box" will be right back. that advances innovations like robotics. fresh, warm hot dogs, straight out of my torso!

one for you, one for you. oh, you're a messy one. cool, right? so cool. anyone can become an agent of innovation with invesco qqq, a fund that gives you access to nasdaq-100 innovations. hot dogs! fresh, warm hot dogs! before investing carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com.

♪ (upbeat music) ♪ ( ♪♪ ) with the push of a button, constant contact's ai tools help you know what to say, even when you don't. hi! constant contact. helping the small stand tall.

the power goes out and we still have wifi constant contact. to do our homework. and that's a good thing?

great in my book! who are you? no power? no problem. introducing storm-ready wifi. 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. federal reserve governor michelle bowman sees a path now to a rate cut. she had been a big advocate to a tight monetary policy. she was speaking at an event in south carolina yesterday. she said should inflation continue to fall, closer to our 2% goal, over time, it will become appropriate to begin the process of lowering our policy rate to prevent policy from

becoming overly restrictive. bowman is not ready to cut yet. she spoke with lorie logan warning this could stall the progress and lowering inflation or cause inflation to reaccelerate. here we go. whenever you get too comfortable, the fed looks at the markets and says they are expecting six or seven cuts. we may not deliver those. we better start telling them now that maybe that's not in the cards. it is amazing. they massage it on either side to make sure no one gets too far ahead of themselves. >> they call them governors. >> they do. our next guest says the rise in zero to expire options and for

more on the option market, let's bring in amy wu silver maman atc capital. i hear people say they check out cnbc and they he har about revee re repos with the fed. let's go back to that and talk about how this has changed. you are talking about options that people place that aren't three months out as far as when the expiration date is. they expire the same day. it is almost like gambling. >> that's exactly right. to some degree, the gamification, joe, it started during the pandemic with the meme craze. one thing i'll say is folks may not have heard of zero dte. that comprises of half of the

volume of the s&p options traded. the analogy i like to give is imagine if options markets were your gps and they used to give you a mile before you had to make that left turn and now they are giving you 50 feet of warning. that duration continues to shrink and when that happens, it is really changing the underlining structure of the road map that the options provides you. >> which have been pretty good. you point out last time you were on and you talked about how bullish the sentiment was in options for small and midcaps. we know what has happened in the past six weeks. looking at those indicators, you say at this point not nearly as bullish, the sentiment, that you told us about. not at this point yet signaling anything significant as far as a selloff. >> that's exactly right. i think the last time we spoke,

you know, one thing i said was on iwm, the small midcap russell 2000 proxy, we saw sentiment go out of the bull park. incredibly bullish with the normal dynamics of options with the downside hedge is more expensive because folks need insurance and actually gone negative. we have seen that reverse. it is not that people are starting to hedge iwm, but that really bullish sentiment has way waned. it could be the inflection point from the rally in november. not just on iwm, but the magnificent seven with the bullish sentiment waning. >> you make the point we are seeing the same thing in the magnificent seven and what i didn't realize we can still use normal -- we have the indicator there because there's none of the options you were describing.

you can still use magnificent seven now. you can use that for the whole market. you can't use that technique on those. >> that's exactly right. it is obviously one thing about the mag seven is the heavyweightness which makes them a good proxy. you are always seeing happen with the diffivergence with the signal. to that degree, although we are seeing breadth in the market, the importance of the magnificent seven doesn't go away. people will read the tea leaves because it will give you more of an early warning signal than s&p will going forward. >> it's an election year. what usually happens? it's different than most years for you and people that follow options. >> yeah. this is going to be an

interesting year. given the political tensions, but also the legal tensions around the two primary candidates. really, i was thinking about history. what is the closest situation we have to this and we have to go back to 2000 to the hanging chad. what does the market do? i wish we didn't. that is the closest proxy you could find. 15 points higher on the vix and arguably, this election could make that look like child's play. >> one thought that i had when i was reading your notes was i'm trying to figure out whether we use a lot of the sentiment as a positive or as a contrarian indicator. a lot of the times you say that is indicating that people are very bullish in terms of

sentiment. normally, you would think that is a bear signal and people get too bullish. a lot of times do you take it as a positive correlation with your work? >> i do. i tend to think of it as a leading indicator. as i mentioned that is starting to shrink on s&p because people are able to place their bets the same day. are you are getting less of the early warning signal. you can still place it one month out or three months out. the way i think about it is if you think something is going to happen two months from now or two months from now, you use the options market to place a bet on something in the future. you know, i do think it is a leading indicator in that sense. we have seen that tested over time. when you look at history where the inflection points came, that leads the market historically. >> all right. always productive conversation,

amy. thank you. if you are ready and people need to get ready. they need it. this is not recipes and stuff. are you allowed to say that? >> you did. >> you need to get up to speed. you can imagine. i'm going to try cnbc. >> the first thing you saw. >> whoa. i think you would be interested because it is valuable. >> thank you, amy. when we come back, notable shakeups in the c-suite. wh we will talk about departures at jetblue and twilio. and later, we will go washington, d.c. and talk about the potential for the government shutdown. "squawk box" will be right back.

oooohhh, it is cold outside time to protect your vehichle from winters wrath of course the hot sun can be tough on vehicles too you need weathertech all year round! come on, protect your investment laser measured floorliners and cargoliner will shield the carpeting from sand and snow for your interior, there's seat protector and sunshade plus, mudflaps and bumpstep for the exterior order american made products at weathertech.com surfs up yeah, right

jetblue's ceo robin hayes is stepping down next month. he said the job is taking a toll on his life. he will focus more on his health and well being. the coo joanna geraghty will take over. she has been with jetblue for nearly 20 years. the transition comes as jetblue is trying to acquire spirit airlines. that deal was challenged by the doj last year. the decision by the federal judge is expected in coming weeks. the stock is at 5.48. this is the transition news.

stories about people moving on. twilio's jeff lawson is stepping down from the company and stepping down as chairman of the board. the company has been under pressure by activists and partners to sell or divest the business. in a statement, the new ceo said jeff lawson's departure was in the right direction. we will talk to a dartmouth business manager who says david calhoun needs to go. he will make that argument after the head to break, take a look at the s&p 500 winners and losers.

>> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. is listi unds incr. let's check it out. says here it gets plenty of light. and this must be the ocean view? of aruba? huh. this listing is misleading. well, when at&t says we give businesses get our best deal, on the iphone 15 pro made with titanium. we mean it. amazing. all my agents want it. says here...“inviting pool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us. (♪♪)

that first time you take a step back. i made that. with your very own online store. 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. you know what's interesting these days? bitcoin. look for bitwise, my friends.

good morning. welcome back to "squawk box." we are live at the nasdaq market site in times square. the dow opening off 145 points. joe. this just happened. the biden administration re revealing the routules to treat workers as employees rather than ics. the rule is set to take effect in march. workers are employees when they are dependent on the company. this replaces the regulation issued from the trump administration that made it easier to classify workers as independent contractors. this will increase costs for companies. uber and lyft don't expect this

to lead to the drivers being classified as employees. obviously, there is wiggle room over what it means to actually be dependent on the company. just more -- it is not clarity. it makes it nebulous over what we are trying to enforce. in the meantime, boeing ceo dave calhoun will have an all-employee call today after the fuselage fell off during the flight of the boeing 737 max 9 plane. he was at the helm in 2018 and 2019 when those crashes combined killed 376 people. for a look at how calhoun can weather this challenge, we will

bring in paul argenty. prof professor, what do you think? this has been a long and difficult run. >> it really has. it couldn't have come at a worse time. this was the year boeing would turn everything around. they were supposed to have a big meeting today. they are back where they were five years ago. calhoun needs to do something drastic and the company needs to do something drastic to get out of this. it sounds like more of the same is going on at the organization. >> more of the same. what do you think that is? >> i think, you know, this is the company that seems to be focused on profits rather than safety. you need to do both. in this industry, you have to have zero defects all the time. you can't possibly have an organization that is doing the kinds of things they are doing. before this happened on friday, there was an article that came out about them asking pilots to turn off a deicing function on

one of the 737s because otherwise the plane might go down. it sounds like a lot of what has happened over the years is still going on there. you know, i also don't see calhoun communicating in a way to express the rj urgency of th situation to the world and say this is too big to fail. we can't afford to have boeing go out of business. >> paul, professor, whatever, when they were cleaning the deck or whatever, people pointed out at the time that wasn't he chairman? he was intimately involved with that entire incident for years. anything that you point at the previous guy to say, wow, this was horrible. this guy has to go. he was just as big a part or bigger part of the company.

how is that cleaning the deck and bringing in new leadership when they picked calhoun? it hasn't gotten better since then. >> no. it has continued. i think that is what i'm talking about. at some point, someone has to start to realize the company needs to change and the only way to have change is to have a leader who is not connected with the past and can take this company where it needs to go. how much more money can they afford to lose? billions and billions of dollars have gone down the tube as a result of this management team over the last five years. it just has to stop. just in the last couple days, the amount of value that has been lost is really disturbing. i don't see him saying the kinds of things that would give me the confidence in the organization going forward. >> so he has the board in his pocket? >> paul, the one thing i would say and i hear your points and

understand what you are saying with the lack of communication on this is problematic. if he were to change and bring in someone new in the middle of the issue, is that more or less likely it will get cleaned up quickly? you are now talking about not just losing confidence from shareholders, but losing confidence from the flying public. i felt safe on planes 20 or 30 years old. if you are loose bolts showing up on planes only a few months in service is a different picture. >> this was not an old plane. this is a brand new plane. i agree with you. i don't know about you, but i'm flying tomorrow. the first thing i did was to make sure i wasn't on one of the planes. i know a lot of people flying abroad this week to go to davos. >> joe and i checked yesterday. it is not just the max 9s they are looking at. they are looking at max8s and

others. what do you do? >> it has to be a widespread problem. to answer joe's question, i don't think there is a quick fix happening here. when you are in a crisis, you have to explain what happened to the public and explain what you are going to do to fix it. if it takes years to get the job done, at least you give people the confidence that something is going to happen to make this work and make the company go forward. honestly, this isn't like what we h we would see in the banking industry. there are two companies that make airplanes in the world. one cannot be in the situation that boeing is in. >> could he change your mind if he did come out and address people and immediately put a plan in works to say we're going to stop and look at every one of these planes and make sure there are no more issues of this? i understand not wanting to talk when you don't know the details, but your point is somebody needs

to be talking right now. >> 100%. the first thing you need to do. explain what happened. give people the confidence you are doing something about it. no, i don't think if he came out now it would make a difference for the reasons we discussed. he is part of the problem. they need somebody new to come in. where that person will come from -- i have no idea. they need a hero to come in and save the company. >> paul, if i told you somebody was natioot an internal candida would you say that is okay? if you bring in an outsider, would you question what they are capable of? >> i would want an engineer. if you think about the old boeing, if it ain't boeing, i'm not going. engineers in charge of the company before the mcdonnell douglas merger. we need to go back to those days and somebody who understands the business and gets the job done.

whether it is an insider or outsider, andrew, it has to be someone to instill that confidence. i'm sure there is someone inside and outside who can do that. >> paul, what if the problems from the issues from the company it works with, the supplier, spirit aerosystems, that used to be boeing, but that goes back to 2005. spirit aerosystems has a new ceo, too. if the problems are coming from -- i don't know who is responsible for putting these plugs in the door holes and who is responsible for putting them in or is it just boeing's ult a im imatly responsible? >> spirit was part of the boeing, as you pointed out. boeing needs to be satisfied with the materials this company

is producing to make a great plane. i don't think they can possibly do that right now. >> powaul, is there a broader problem with the board? you could argue this is the management issue and governance issue. the board allowed this to go on and how much they know or not know is a question. i was saying off camera i was surprised that former president trump hasn't attacked nikki haley as a former board member of the company. >> that's a great point. it is a governance issue. that is part of the problem. where do you start to clean this up when everybody is sort of implicit in the problems going on for over five years. in some sense, you know, when do we get somebody stepping in from on high? a government official? you know the government has been involved with boeing and part of the problems. the fcc allowed them to do what

they were doing and you have the wolf guarding the chicken coop for many years. this will take a long time to unravel. somebody needs to step up and save the company before it's too late. >> powell, it will be muhlenberg and bachelors and has after mas aerospace engineering degree. they brought in calhoun. they had a guy who was a total nerd engineer guy. that didn't work either. >> i don't know. how do you solve a problem -- >> you can go back to the idea of spinning off spirit aerosystems in 2005 which was financial engineering. why not have control over that?

these are problems that are longer problems than the last four years or eight years. this stuff builds up over time. >> it does. at least from my perspective and this is a program focused on financial excellence and organizations, it is focusing on the bottom line rather than balancing that need for safety. even the ramp-up they wanted this year was crazy. they wanted to produce 500 planes. i don't know the exact numbers. that gfs gives you reason to pause. they need to take a pause and get back into the market. whether that is an engineer or not, it has to be someone to instill confidence and communicate with the world over what is going on. >> phil, the m.i.t. engineer. i'm trying to remember what happened there. do you remember something

tawdry? >> i'm not going to say on air. >> i remember. >> he named the company chicago from seattle. >> that's another thing. that's right. that's another problem here. they had the merger with mcdonnell douglas which was the beginning of the problem. they moved to chicago and then moved to virginia. there is not a lot of stability here. >> it's a long legacy of a lot of stuff. it is our pre-he emier manufact company over the entire globe. we very to get it right for everybody. >> 100%. 100%. got to get it right and fast. got to do it fast. >> okay. >> paul, thank you. >> thank you. coming up, news from the

jpmorgan chase healthcare conference. that's coming up next. later, don't miss our interview with former house speaker kevin mccarthy. unshackled, i'm told. he will join us live fm ro washington. he will say whatever's on his mind. meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real.

jpmorgan chase healthcare conference kicking off in san francisco this week.

jim cramer is there. he caught up with a number of major players in the sector. including the ceo teresa graham. talking about one of the most hyped areas in pharma right now. obesity and weight loss. >> 4 billion people are likely to be obese by 2025. that is a massive market opportunity. most analysts peg the owe besit market at $400 million. there are many opportunities for players in the market. >> we have about a half dozen other projects, jim, addressing obesity to generate data for and we think over time there will be a need for a range of medicines to address what is a heterogenus problem. >> for the coverage today at

10:15 a.m. eastern with the eli lilly ceo david ricks. coming up, we will go live to washington in a moment for the latest on the negotiations to fund the government and avert, hopefully, a shutdown. we'll see. "squawk box" returns. that's a beautiful live shot of the capitol right now. back after this.

welcome back to "squawk box." as the government heads to a partial government shutdown, the $1.59 trillion bill is facing opposition, and julie grace

joins us of axios, a capitol hill reporter. we start with where are we, if you can just set the table? >> think of it as we have a framework at this point. we know what the top level is, which is quite a big deal because the house and the senate are about $120 billion apart in their appropriations bills. so what they are going to need to do is go through and actually figure out, all right, if their top line number is 1.6, what does that mean for individual programs. on one hand washington is feeling optimistic that they have the number, and it was not easy to get here, and at this point they have a long way to go, and speaker johnson will face a lot of pressure from his right most flank that are saying we think there needs to be more cuts to government funding, and johnson basically said, look, i will find ways to get other

conservative wins within the will, and that's going to be difficult because whatever passes the house will need to pass the senate, and there's no way they can move in a democratic senate and get to biden's desk. it's going to be a tough couple weeks for mike johnson, but i don't think at this point it's inevitable of a government shutdown. >> julie grace, take us inside -- i think the republican party where they stand, there are fractures, but sounds like there's fractures on the democratic side, too. >> they are cautiously optimistic, but they realize they are on a time crunch right now, and they couldn't get their party line bills through the lower chamber, and i have talked

to people that said a more realistic timeline of getting these passed are march, and they are hoping republicans will blink and pass another shortstop gap even though they said that was not on the table and give them more time to negotiate, and they have ukraine funding and israel funding and a whole issue of impeachment which doesn't make it easier. >> how do you it will impact -- >> i think -- >> sorry, go ahead juliegrace. >> it doesn't help them in getting some of the major

priorities does. >> emily? >> we heard them say the deal that mike johnson came out with is not that great, so you have seen some of the republican presidential candidates jump in here, and you have heard mitch mcconnell say this, that a shutdown is not necessarily good for republicans, it could wind up playing into joe biden's hand, and that's something a lot of republicans do not want to happen, because they are worried about the political impacts of it. >> if we ask former speaker mccarthy, who is on today, whether this is actually -- it includes more cuts than what he negotiated with the president. is that a fact that we can -- will he say, the crazy eight, whatever they call them, will they get on with this?

>> well, there's so much on what was and what was not agreed to. a lot of this is the core of what mccarthy worked out with biden, when you look at the side deal they had with additional spending, and what mike johnson did is came into other places and said let's look in places like covid funding and the additional funding given to the irs two years ago and make cuts from there. he could claim he was able to make cuts, but if you look at the deal overall, this is similar to what mccarthy put on there, and what i am interested in is his read on this, because that deal was the beginning of mccarthy's undoing within the republican conference, and i am curious how he thinks mike johnson will weather pushing this deal forward. the inevitable, too, having to come to terms that he will not be able to get any big

conservative wins across the finish line and a buildup must be bipartisan. >> thank you both. we will see where this all goes. sounds like a story not going away. we will talk more about it. thanks. still to come, much more on the battle ahead for speaker mike johnson. we will talk to former speaker, kevin mccarthy. that's coming up. that let's look at bitcoin, down by 0.7 of a percent. "squawk box" will be right back. with no children and no casinos. we actually have reinvented ocean voyages, designing all-inclusive experiences for the thinking person. viking - voted world's best by both travel + leisure and condé nast traveler.

learn more at viking.com.

are you still struggling with your bra? it's time for you to try knix. makers of the world's comfiest wireless bras. for revolutionary support without underwires, and sizes up to a g-cup, find your new favorite bra today at knix.com

good morning. reading into the latest fed speak, investors trying to figure out how many rate cuts could be coming this year ahead of inflation data due out later this week. we will break down the markets and talk technicals. nvidia keeps rolling, closing at an all-time high. we will talk to an analyst and see if you should be a buyer at these levels. details emerging about the

alaska flight incident, and former acting director joins us with reaction. the second hour of "squawk box" starts right now. ♪ ♪ good morning, and welcome back to "squawk box" here on cnbc. andrew ross sorkin along with becky quick and joe kernen. we have a lot going on this morning. the futures in the red in a big way. nasdaq off by 107 points, and the s&p 500 off by 24 points right about now. treasuries, the 10-year and the 2-year, the 10-year sitting at about 4, and crude will cost you

$72.41 per barrel. and then crypto has been on the run, and right now that price tag at $46,683. >> yeah, on my phone it's up $2,000. we have got it down. a big move all day yesterday, and even into the evening. the eft is supposed to happen any moment, supposedly. we're going to frank, i think? frank? how are you doing, my friend. >> good morning. we will look at shares of bowing and alaska, and the ntsb can't tell whether the cabin panel that blew off the plane had been properly attached. the focus is on the grounded fleet of more than 170 boeing

737 max jets, and both united and alaska found loose parts. united was moving higher, and it's not showing here, but united was moving higher, and the price target was moved, and analyst say they see a valuation disconnect, and we are going to move to a possible merger. and then last year hpe said it was rolling out a cloud system similar to chatgpt. the deal for juniper could likely help that effort. you see two big moves. hpe down, and juniper up 22% on that news. and elliott investment management, according to the

"wall street journal," they discuss ways they can turn the performance around, but it's not clear if it includes management directors, and they are up more than 12%. becky, back over to you. >> thank you. we will see you later this morning. right now for more on the markets, we want to bring in a -- every time i do this, marianne, i have known you forever. >> bartels and james. >> yeah, i know. i am a slow learner. >> it's easy. i go to bars and tell stories. >> true story.

>> a new year -- yesterday was a good day for the markets, outside of what happened with the dow and with boeing. how are you feeling about things? what are you thinking? >> i am bullish becky. we did have a great rally from october to december. it was, you know, a winning streak for bonds and stocks. it's normal to digest those moves. i still believe we are in a bull market. i think we are digesting these gains, i think we have the opportunity to add to equities and fixed income. in fact, we have called this year the year of the bucking bull for stocks and bonds, and we think there will be volatility but will have positive returns. in terms of the s&p, our target range is from 5200 to 5400. that's still a nice double digit

return. we think it's still technology led by semi conductors with nvidia hitting new highs yesterday, and that gives us confidence the leadership of the mar market is still intact. >> we are getting this fed speak and trying to digest it, and you think we have peaked, but in the near term we are going to deal with a lot of volatility, too? >> that's correct. we had a big move in the ten-year last year, and we think rates could be back to 4.5 to 4.6, and we think that would be a good entry point, if investors wanted to add long duration to their portfolio. we like the belly of the curve around 5 to 7, and we think it will be a good year for both asset classes. 60/40 should work in a portfolio

this year. >> you like utilities and real estate, and you say there are buy signals that are flashy at this point? >> yeah, if we take our monthly price indicator, we are seeing those two sectors hit hard last year, and if we are correct and interest rates peaked and if we see the fed start lowering rates, we think these are two pockets that can really see strong gains. other pockets that already moved that we think will have a little more upside are the banks, particularly the regionals, and small cap. we still think leadership will remain in the large cap tech names, although we are getting a broadening out, which is very bullish. that's called the breath of the market. when we see breath expand,

especially the way it has been expanding, it's another confirmation the bull run is still going. >> bill gross has been saying that treasuries are not the place to be at this point. they made a lot of money being there before, and things peaked out. why do you think you still like treasuries? >> because rates can come down, and investment grade looks good, and phaou tpmunicipals look goo and i think you are going to see rallies across fixed income, but you are going to get various coupons and returns depending on where you are positioned within the market. >> thank you very much. if you have one thing you are worried about and watching what would it be, and sometimes it's the unknowns that get you, but if there's one thing you are

keeping your eye out for? >> it's rates and what the fed does, and if the market is positioned for rates to come down and they don't come down, we will see a lot more volatility. >> thank you. we will break down the news and stock move -- 524 bucks around right now. later, an interview with former acting faa administrator, billy nolan. all that and more as "squawk box" rolls on. power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis, help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market.

e*trade from morgan stanley. with powerful, easy-to-use tools, power e*trade makes complex trading easier. react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley.

welcome back to "squawk box." nvidia kicking off 2024 with a bang. the chipmaker planning to begin mass production much china-focused ai chip. joining us is joe moore. we have a cross current of issues here. we have positive news that moved the stock, and we have negative news and that's a question mark as to whether the companies in china will want these throttled chips, for lack of a better phrase? >> yeah, i think there's certainly a lotgoing on and has

been for a while. what we are seeing is they are going to comply with the commerce department restrictions on shipping to china, and there are already products that will ship into that market, some of which will be subject to licensing requirements, so there's uncertainty around all that. when that first emerged we said there would be headwinds coming from china. i have to say given those restrictions, and given 20, 25% of their business had been coming from china, and there's been no discernible affect in the supply and demand situation, and so the fact that they don't have a lot of china revenue in the near term has not changed the near term trajectory, and they are optimistic they will look for ways to fill the gaps in that pro china business. >> what do you think of the throttling question, though, and if there's a market for those

throttling chips? >> yeah, we will have to look at the licensing product for them to ship, and they have a number of products that will come under the threshold, and 50% below the threshold is the number they need to be at in order to ship without licensing whatsoever, and it's more competitive as you move into that part of the market. i think there will be demand, and nvidia has a broad ecosystem of software, services and support. a lot will depend on what exactly they are allowed to ship. a lot of nvidia's strength in the market has been the execution, and the fact that their ai chips are significantly above most of the competition, as you do limit what they can ship, it's going to be more competitive. i certainly don't expect to see them get back to the peak levels they saw in china, but i am optimistic that they will be able to start that market.

>> i don't know if it's philosophical, maybe it's very practical, but what is your take from sort of a u.s. policy strategic defense policy about how you think the u.s. government is going about dealing with chips in china? >> i think that the commerce department commentary specifically to ai has been that they certainly want to enable certain portions of ai. they are not trying to limit things in the consumer domain and focuses on defense issues and things like that. to me that does suggest there will be an area where nvidia will be allowed to ship, but won't be the highest in chips. more broadly speaking there's obviously intent to constrain china's use of semi conductors and manufacturing semiconductors through manufacturing equipment. >> the question i ask, do you think it's working? do you think it's not working?

a lot of folks look at the huawei phone over the summer with a chip that was much more advanced than people expected that was built in china? >> yeah, china has a lot of strong and resourceful siemi conductor companies. at the same time, i do believe that china is spending quite a bit of money. we are seeing a very large portion of that equipment is going into the chinese market. china is building domestic capabilities. >> at $525 a share, what do you tell investors right now to do with the stock? >> we like the stock a lot. what happened, we had such a great year last year with the stock, and i think we need to consolidate the gains and that's the process going on.

we are seeing a situation where there has been a shortage of the gpus, and i am very impressed by how quickly nvidia has brought the supply chain up, and that presents some challenges, and we are hearing some of that now, and maybe some customers were going slower than they were, and there's a lot of demand for product above and beyond what they can currently make, and this is not that expensive of a stock. we are looking at $20 plus of nongap eps this year, and we are going to season the stock a little bit and say it's no longer the stock that carried the market last year, and this is the company that will be valued. >> we will talk more about it

soon. thanks. >> thank you. still to come this morning, new details emerging about the door plug that blew off an alaska airlines flight, and united said it found lose bolts inspections of it's 737 max 9 fleet. former faa director, billy nolan, joins us after the break. "squawk box" will be right back.

♪ welcome back to "squawk box" this morning. beautiful shot of the white house. we do have red on the scene for you, about 136 points down on the dow and nasdaq, off 86. we gate ot a call from morg stanley on bets and draftkings, they say draftkings is poised

for a material ramp up in profitability in 2024 as new states are launched and they refine the national marketing approach. as for lvs, they seek potential for mccow to stay resistance. i can't help to think but what ai will do for betting. i don't know if it will help them make even more money by getting the spreads exactly right, or what can i use itfor to get a better feel for how to bet? how do they do it now? they are so good at those spreads. >> yes. >> is that all algorithms? >> is it money? i don't know. >> they are monitoring to what all comes in, and -- >> yeah, it predates ai. >> i am shocked every day when i see how consistently they nail

the -- >> it has to have something with how money flows. >> will ai help me? can i put in chatgpt -- last night, could i have put in -- >> i would like to see you try that for a while and see how that goes. >> if michigan's offensive line outweighs washington's by 1500 pounds, which i did not realize until i started watching the game -- well, that's not going to help. >> i want to see you try that and see how that works for a while. >> can you look that up. >> i can ask? >> stop gambling and you won't lose any money. >> i'm up. in the meantime, shares of

cytokinetics after the maker of a heart drug was close to being acquired, and they now have a market value of more than $11 billion, and that's due to a stock surge in december with the experimental drug that would treat heart issues. and then a ruling about bitcoin etfs no later than, perhaps, today, and we will discuss what that means for brokers and investors. plus, kevin mccarthy will be our special guest, and that will happen in the 8:00 hour. don't go anywhere. "squawk box" returns after this.

the national transportation safety board continues its investigation into what caused a fuselage panel or a plug to blow out during an alaska airlines flight on friday. now united and alaska airlines

found loose bolts on plugs is the latest news, and phil lebeau joins us now. it's more sophisticated than we understand, but there are torque wrenches where you can tell that, and is it that simple? >> it's not that simple, but it's not that complex. loose hardware, loose bolts, whatever you want to say where the bolts have been inspected by alaska and united, and any way you slice it, it's a bad look for boeing, and it's supplier air systems and it has to make you wonder whether or not some of the max-9s were grounded if they will be back out soon?

the ntsb is continuing to look at the pressurization problems surrounding the alaska airlines flight where the plug was ripped off at 16,000 feet, and united said they found loose bolts in some of the max-9s they grounded, and alaska said the same thing last night, finding hardware in the final inspections that would be needed before those planes could enter service again, and they said initial reports from our techs indicate some loose hardware was visible on some aircraft, and the ntsb is a big part of their investigation. this is the door plug in question on the alaska airlines flight that ripped off on friday night, and it's about 65 pounds

and looks like what would be a door for a plane, but, again, it was not a functioning door. the ntsb explaining last night what they found when they started doing the close-up look at the hinges and the rails that guide that door into the plane. they have a long ways to go. meanwhile, boeing will be holding a safety town hall meeting today. that will be led by ceo dave calhoun. not sure what his message will be beside we have to be doing better at this, but you will have this meeting where the max is build, and stephanie pope, the coo will be there as well. and finally, to take a look at shares for united and alaska, the two airlines had a number of cancelations, and not all of these were max-9 planes, but there's a ripple effect there. we will see more cancelations

today, and perhaps they will be closer to getting the max-9s back in service, and they are waiting for the inspection approval, yes, go ahead, and the faa approved the protocol and now it's a question of if they say to do the inspections and you are good to go. >> phil, so we tightened all the bolts on the plug and we looked at it and tightened them all, and does that make the plane safe or is there something else -- does it beg the question, is there something loose somewhere else on such a sophisticated piece of machinery? >> you are getting to the heart of the question that a lot of people will be asking now? look, all airlines, depending on the type of aircraft, how many cycles or flights it goes through, they go through what is called a heavy maintenance where they pull it off, and there will be heavy maintenance companies, and sometimes it's the airlines themselves depending on the cycle, and they will do a

complete top to bottom on the aircraft, what is working and what needs to be updated, et cetera, and that's essentially what we have in place right now. the questioner asking, joe, is well, do we start ripping off the interiors and checking the fuselage of every aircraft? i would find that hard to believe that the airlines, nor boeing nor airbus would think that's an effective thing to do. having said that, i'm not sure anybody expected to find the loose hardware or to hear about the loose hardware at united and alaska. >> yeah, loose hardware might not be the fuselage. what are the checkmarks that the max was not ready for? we started with software -- >> that was a design software issue. >> okay. but there are so many sophisticated --

>> want to run down the whole list of issues since it went into service? >> there has been a few. >> there has been a few. that's why boeing shares have never gone back to where they were when they first introduced the max, and they were go, go, go and cranking them out and then you had the two accidents, and since then they never got back to that level. >> yeah, and -- >> joe, you are only going to '20. go back to '17. >> yeah, i remember there were things that i didn't even know what they were. were they engine mounts or something? remember, we were saving more fuel so the engine was in a different place or something? >> that was part of the design issue. that was part of the design issue with the max in terms of, look, they didn't want -- we're not going to relitigate all of that, but that ultimately was

hashed out following the two accidents following a number of hearings, and ntsb investigations, and the faa ultimately signed off with the changes in place right now. >> it's probably a great plane and state of the art, but there's the old roaches under the kitchen sink, and you think, oh, no, there's one -- >> yeah, if you pulled every plane out of circulation and went and looked would you find those bolts? >> i bet you would, and maybe not all over the place, but these aircraft are going 17 to 20 hours a day, and this is not something static. i mean, it's in use, and the pressures and everything that an aircraft goes through, i am sure to a certain extent you will find some loose bolts in aircraft everywhere. it doesn't mean they are not safe, no. >> the other question i have is we have not had any reports, phil, of other planes, other max

airlines that had the malfunctioning -- or the pressurization light go off, right? we have not heard of any -- >> to our knowledge, no. to our knowledge, no. >> great. thanks, phil. >> our airplane had that light that went off three different times. >> you were not here yesterday, but it was not a plane they would take to hawaii. they take it other places, and that's why we -- i specifically asked when we are heading over dallas, we want planes that can go to hawaii. if there's this one here, no, no, no, that one we don't fly over the ocean. i want the one -- yeah. our next guest is a veteran of aviation safety views, and let's bring in billy nolan that served as acting faa administrator, and administrator of savate --

aviation safety, and it's good to see you, sir. i don't want to be flippant about it, but when you heard this was a plane that would not fly to hawaii but would fly domestically, doesn't that raise some flags? does that happen very often, billy? >> well, it doesn't happen very often, but good morning and, thanks, joe. typically, so going to hawaii you are on what is called the extended twin engine, extended over water operations, and that's etops, all right, and there are planes that go over water to hawaii or asia, and there are checks in place, and we are four days into the investigation now so we will continue -- the faa, and the ntsb, alaska will continue to work through this and we will

ultimately get to the bottom line of the proximate cause of what happened. for all intents and purposes, it sounds like something with the door itself, but that's what we will see when we get to the analysis phase. we are still in the fact finding phase, and there's the hunger for immediate answers, but this is one where we let that process work itself out. >> it's a great plane. i have no doubts, billy, but the things are sort of adding up, and then again, flying is incredibly safe at this point and these are state of the art, and bow something a great manufacturer, along with airbus. should we be surprised when things like this happen, billy? >> well, you know, as safe as we have become, it's an opportunity for us to be surprised, right? you look at there and you said it, and becky said it and phil said it, and we fly 45,000

flights a day, and all of them go out without a hitch and if you see one dot on that, you look at that, and so it's right for us to go and do a thaorough analysis of what happened in this incident and make sure we have gotten to the bottom line. this is specific and unique to this subset of aircraft. >> billy from a analysis perspective and governance perspective, you look at the board, and if you were on the board of this company, a, would you want to be on the board of this company? how would you grade what is going on with the company right now? >> here's what i say. boeing has had an incredible history in terms of the kind of aircraft they produce, and overwhelmingly they fly every day and complete the mission aroundthe world without fail,

right? it's always an opportunity for us when we have an event, and we have so few of them these days. when they happen, certainly they are magnified in the public's mind. it's the right moment for boeing to take a deep dive and say what are we seeing? is there anything we are missing especially wit comes to quality, the controls we have in place, and the controls we are expected to have in place. those are the questions, and i am sure the team is asking themselves, and it's something the board would ask as well. let's make sure we are leaving no stone unturned. >> but, billy is it unfair to say there are issues under david calhoun's leadership that should be questioned? is it too far to say he was brought in to right the ship -- probably using the wrong analogy there, to right the plane, and there have been what seems like persistent problems? maybe not as bad as the problems earlier, but how do you consider

that? >> myself having been a chief safety officer at a very large airline during my time at american airlines, and you have a large operation and lots of folks, and leadership starts at the top and permeates throughout the organization, and i believe boeing is a well-run company, but still that doesn't mean that you rest again on your laurels, and it will be good for us to allow the ntsb to get through their process, which boeing and alaska is part of, and other stakeholders are part of that investigation that's ongoing as we speak. once you get to the bottom of that, it will give us a better idea. we know what should have happened, and we don't expect you have a door that blows out at 16,000 feet or any altitude, and let's go back and run that to ground and see are there things that need fixing? the answer may be yes, but we need more information than what we have at this point in time.

>> we also heard antidotely about an increase in things that are not happening, thank god, but are close to having happened. ai is frequently mentioned that it will help in terms of air traffic control and everything else. where is the faa right now in terms of the state of the art for 2024? >> yeah, you know, i apologize. where the faa is, certainly it will be helpful now that congress is back to have the faa full and complete authorization, and it has not gotten only the consistent funding stream, and you look at the airlines and aviation sector where they are operating ultramodern airplanes in an ultramodern environment, and making sure the faa can stay on track with that is critically important for congress. i will say the faa is in very good hands with administrator, mike whitaker, so he and his

team has a right to go and look. when i sat in the seat every day, how safe do i think we are, and is there anything that we as an agency should be doing to continually ensure and reinforce that level of safety for the flying public, and i know the faa having worked with all the leaders, they are doing that day in and day out without fail, and safety is their north star. every one of the isolated incidents is an opportunity for the agency, for the industry, for all of us to take a step back and say let's make sure that quality is first, and safety is paramount. >> right at the beginning i asked you about whether some planes should fly to hawaii, and i didn't -- you gave a very good answer, and obviously that makes sense if the planes have to fly much longer, and i thought it

had something to do with the incident on this plane. it was not that there were pressure incidents on this particular plane that removed that from it being eligible to go to hawaii, and it was just not the suitable type of aircraft to make the longer haul? >> i don't have accession to any of alaska's records, so let me say that up front. as a captain i have had times when i had a pressurization light come on, and that could be for a variety of reasons. it could be a small leak or something around a door seal or something one of the valves on the aircraft that help to stabilize and control the pressure within the cabin, and in this case, you know, the boeing max 9, the cabin is maintained at about 8,000 feet, what we call cabin altitude. the pressurization schedule maintains that all the way up to the service ceiling, and there

could be other reasons why one might get a pressurization light, and the role there from aircraft maintenance is to diagnose and figure out what is happening there. >> is that a problem -- just to back that up, if they had pressurization lights that happened three times, and i think it was december 7th, and maybe january 2nd and 3nd or 3nd and 4th, so was that the airlines fault for not checking that out? >> right now, becky, there are diagnostics you can make, and let's say you go out and you have an indication, and you do a reset, and there are no additional faults and you have a write-up, and in this case maybe there's a repeat, and there's probably more to that than i am privy to at the moment, and that

will also be part of the ntsb's investigation as well to make sure there was nothing left undone that should have been done. >> in the relationship between how boeing works with suppliers, and i am looking at the report this morning just out, the lever, which is looking at a lawsuit that was brought by an employee, spirit air systems, and in the lawsuit there's an employee that says and warned that there were excessive amounts of defects in the actual plugs and, quote, he believed it was just a matter of time until a major defect escaped to a customer. this is a quote that was in a document that had been filed already. this was not a new lawsuit, but it's something that is being reported now, and clearly it has come earlier. i asked about it because clearly if this is a -- if this was a genuine problem, how -- and that

was happening at spirit, and you are boeing, how do those relationships work? >> well, you know, certainly there's an oversight relationship there, right? without being able to speak to any specifics of this claim here, what i would say, my expectations, boeing has its controls in place of how it oversees other contractors and s subcontractors, and that's in place for the airline as well, and when i hearing is like what you just described, i would suspect that not only boeing and or the faa and or the ntsb, that will become part of the process. the processes that you go through with the investigation -- i have been that lead investigator myself, and that's to go where the facts take you, and you have to

structure component and a human factor component and you go back and analyze all the past records, and this is a fairly new airplane so you are not going back years and years and years, and so all of those are things you bring in in fact gathering, and that gives you the ability to analyze and come to a good conclusion of what happened and why did it happen and what are the corrective actions and recommendations that will come from the board itself in terms of what needs to be done going forward. >> billy, thanks, a former american airlines pilot and also faa acting administrator. it's good to have all your thoughts on this today. thanks. >> bye. "squawk box" --

this is real time insights, and businesses are being asked to completely transform in response to ai. talk to me about the impact that you're seeing that it's having? >> ai allows us to process and analyze data in a scale we have never seen before, and that can help product innovation. we are using ai to build products based on real-time customer insights. >> can you talk more about how companies can take advantage of these opportunities? >> ai is not only an accelerator but di but a differentiator. you can evolve across service offering to remain relevant against your competition. >> what about across other

industries? >> we are working with the national multibeverage, and for every 30 seconds saved on customer support it equates to a million dollars saved, and we are expanding that across the business from commercial analytics to sales and all these other areas, and we are focused on creating value and that's one example of many. >> thank you for sharing your insights. >> thank you so much for having me.

welcome back to "squawk box." diversity equity and inclusion policies at companies across the country now may be at risk of being interrupted after a group of lawyers and investors are considering using corporate law to challenge the policies, claiming they may have deprived shareholders of talent and violated employment laws. it's a fascinating twist in what has been a fascinating ongoing story. our next guest outlined this case in her most recent letter, joining us right now is liz hoffman, semafor business and finance editor. it's a newsletter, really, but we could call it a letter.

>> i'm a reporter. i write stories and there's some great content around them. >> and a cnbc contributor as well. liz, tell us what's happening here. because there has been a real sort of sea change and it has coin sided with what we'rine seeing in academia moving into the corporate world. >> the same massively shifting political winds have done a 180 on it was just four or five years ago that companies were being pressured really to adopt these really ambitious targets, some people might call them quotas, which is sort of how we got here, to really diversify their workforces. and it was wildly overdue at the time, but the world has changed, and these are really soft spots, i think, for critics of these policies to go after their sort of really soft underbelly here. >> what do you think of the shareholder lawsuits and the entire -- there's been an industrial complex that has grown up in the last five years

around dei. >> yeah, look, i think the wind was already coming out of the sails. if you look chief diversity officers used to be a direct report to the ceo, you know, a lot of those jobs are turning over and getting deemphasized anyway, which is why i think some of these critics will be pushing on an open door when and if they do sue. look, the theory here is that companies have been violating federal employment law, number one, and exposing themselves to big liability, for which they would presumably have to pay shareholders money to fix. the other is that they're depriving shareholders of the best talent. i think the latter is going to be pretty tough to prove. there are plenty of studies out there that companies have been overlooking talent the other way, by being not diverse enough and too presubscriptive in who y were hiring. is there liability here?

maybe. more of the studies have been from the ideological wing of this party, these are stephen miller haven't done that well, starbucks got dismissed in the fall. they're targeting ibm. doesn't seem to be going anywhere. but the truth is that these are just early, there's not a lot of legal history behind it, but people are looking really closely, and ultimately they'll find what they're looking for, which is that these policies probably haven't been fairly applied. >> more broadly, is there a sea change happening inside companies irrespective of what shareholders do around what the policies look like, what the targets look like, et cetera? >> yeah, i think this whole movement may actually provide a little air cover for executives who are getting kind of cold feet about the whole thing anyway. not to say that they don't care about these issues, they do. but i think they were sort of begrudgingly forced to really quickly kind of change so many ways about how they run the company day-to-day, and they

have just frankly bigger fish to fry. they don't want to spend this much time talking about it, they don't want to keep getting yelled about it ron desantis and vivek ramaswamy. they just want to do their job. and if there's a little bit more political air cover to take their foot off the gas, they will. the first place you'll see it, a lot of these things were baked into executive bonus metrics. and i think a lot of us were actually pretty impressed when that happened, because no one is going to change anythingthat they don't get paid to change. i actually think that might be where companies start to get a bit squeamish, if they start baking into how they pay people. there might be some liability and you might start to see those policies change next year. >> we're here at the nasdaq, we have only 30 seconds, but the nasdaq was one of the early companies to put out a policy effectively requiring the disclosure and an explanation around board composition. >> yeah, for their companies that are listed there? yeah. i think that's probably okay. these are listing rules.

there's competition for listing. i can't remember exactly what the new york stock exchange did. but it's less prescriptive. it's saying, if you're not going to have a diverse workforce, we want to know why. there's actually a lot of research that says it's helpful for performance. that's probably a private -- there's no god-given right to list on nasdaq. i think they'll probably be fine. but you might start see some of that change. >> liz hoffman, always good to see you. thanks, andrew. >> thanks. still to come this morning, former house speaker kevin mccarthy will join us. futures ahead of the opening bell on wall street are lower. coming right back.

it's time. yes, the time has come for a fresh approach to dog food. everyday, more dog people are deciding it's time to quit the kibble and feed their dogs fresh food from the farmer's dog. made by vets and delivered right to your door precisely portioned for your dog's needs. it's an idea whose time has come.

♪♪ good morning futures in the red ahead of the opening bell. stocks bounced back yesterday. the s&p 500 coming off its best day in close to two months. but again, all major averages pointing lower this morning. and some new questions for boeing and u.s. airlines flying its 737 max-9 jet. two carriers saying they've discovered loose hardware onboard. and can lawmakers and especially the splintered gop get to "yes" on that new d.c. spending deal? we'll ask former house speaker kevin mccarthy in his first national tv interview since leaving congress nine days ago.

all of this as the final hour of "squawk box" begins right now. good morning and welcome to "squawk box" here on cnbc, live from the nasdaq market site in times square. i'm joe kernan along with becky quick and andrew ross sorkin. u.s. equity futures after a mixed session yesterday, dow was hurt by boeing, but we've got some weakness across the board this morning with the nasdaq down about 86 and the s&p down as well. we've moved into a little bit of a consolidation phase after a great end to last year and pretty good start for the beginning of this year. treasuries, that was part of the problem, go back up in rates that we saw recently. we've got the ten-year today, just over 4%. let's start this hour by getting

right over to frank holland. he joins us with some of the, are they -- what are you -- you have morning movers? what's the other thing we do at 11:00? are those -- money movers! >> money movers! >> money movers! >> money movers is at 11:00. morning movers -- >> yes, we're doing the morning movers. money movers later with our friends carl and sarah. right now, it's morning movers. >> okay, got it. >> by the way, joe, you were doing it for me, but i'm still going to pick it up we're watching shares this morning as the investigation into that failed door plug on that alaska flight, it continues. the ntsb says it cannot tell whether the now-recovered cabin panel that blew off had been properly attached. this morning, attention remains focused on the grounded flight of more than 170 boeing 737 max-9 jets owned by united, alaska, and others. you're seeing shares of alaska down more than 1%. boeing down, but doing a rebound of sorts. it was down more than 8%

yesterday. both united and alaska say they found loose parts on some of their grounded aircraft. united down, up 1.5%. b of a, upgrading united to buy from underperform. raising its price target from $56 to $40. united shares moving higher on that upgrade. we're also looking at shares of netflix this morning. lower after a downgrade from citi. analysts moved it from "buy" to "neutral." price target stayed the same, $500. analysts say expectations are too lofty, including revenue estimates. citi estimates that netflix will have about $8 billion in cash by the end of 2025 without any major buybacks. and citi believes that netflix could use that money to acquire a video game publisher. looking at shares of netflix right now, down 1.75%. and last but certainly not least, we're talking nvidia hitting a fresh record high after revealing its new desktop graphics processor. the chips are designed to, quote/unquote, run ai at home, according to the company.

our jim cramer says the stock is still undervalued. stocks are up almost 1%. nvidia also betting big on healthcare, expanding partnerships with amgen and rekurgs pharmaceuticals as it unveils its own generative ai platform for drug discovery. becky, back to you. >> frank, thank you very much. there's a new read out this morning on small business optimism. kate rogers is here with more. kate, good morning. >> becky, good morning. the national federation of independent business is out its monthly read on optimism for december, increasing slightly. that's below the group's 50-year average of 98, as it's been for about two years now. the top issues for main street this month, inflation, quality of labor, and taxes. notable here, inflation moving back into the top spot for december, ahead of labor, but those two issues remain really sticky for small business operatorses. the nfib reporting overall views on the economy are pessimistic at the moment, in contrast with the hiring numbers we saw from adp just last week.

the group's chief economist bill dunk lberg writing in his commentary that 2024 will be a slower year, quote, overall the growth rate will most likely be lower than last year. the economy will slow down possibly delivering that long-predicted recession by year end. another key area of concern for those looking to borrow, high interest rates. in a separate survey on credit, the nfib found those rates were impacting decisions around financing and that about 80% said that rates were their biggest issue with accessing capital, that's up from under 60% over the summer back in july. becky, back over you. >> hey, kate, what sectors are struggling the most when it comes to hiring? >> the nfib called out construction, which we covered on friday, as well as transportation. they said agriculture and fin fin financing, becky, were doing a bit better. more than half of small businesses that they surveyed said that they were looking to hire, but around the same number said that there were few or no qualified applicants. that's tough there. perhaps if they could find them, there would be even more growth. >> kate, with thank you. kate rogers.

>> thank you. >> okay. let's talk jobs now. and a potential warning sign for the government's payroll reports, like the one last friday. steve liesman is at the desk this morning. >> good morning, andrew. while that december jobs report was hailed a as a strong report, capping a year in payrolls by 2.7 million, consistent downward revisions to the data raised questions about whether there's broader economic weakness underneath the surface. the bls revised down job growth in 10 of the 11 months last year by an average of 42,000 per month. we don't know yet about all of november and december. the question is, why are the data being revised and what does it all mean for the economy? i talked to two top bls economists. they explained to me that the revisions are mostly if not entirely from seasonal adjustments. seasonals have been impacted by big swings up and down during the pandemic and post-pandemic years. but consistent revisions can occur during economic transitions. well, the last time we had such a consistent year of downward revisions, 2008, when the

economy was entering a recession. in that year, 11 of 12 or 92% of them were revised down, compared to 91% so far in '23. since 2001, you can see on the right side of your screen there, there's actually a slight upward bias towards positive revisions. so this is really out of sample, so to speak. the persistence of negative employment revisions tells us the labor market is much weaker than the last monthly report shows, says joe lavorgna. this leaves the economy vulnerable to a downturn. revisions have not been particularly large, only persistent. the total revisions so far this year, only half as large as they were in '08. in that year, job declines were made more negative. now they're just being made less positive. so not as bad. up to a point here, this weakness is good news for a fed trying to loosen up the labor market. the concern would be if these revisions end up being the leading edge of something deeper. emphasizing that the fed now has risk on both sides of the mandate, both the inflation side and the employment side.

i think it also tells investors when these numbers come in, you've got to take them with a grain of salt. >> but as you handcap, and there's always this good news is bad news, good news is bad news situation. has that now flipped? >> i think up to a point, right? if we were revising negative numbers more negative, that's a problem. the idea that there's a little less froth on the top of this market here and there keeps being less froth is probably a good thing. yesterday, it was interesting, around 4:30 in the afternoon, fed governor bowman came out with a speech. she's like the last die-hard hawk on the fed board. she threw in the towel, saying she believes we can get inflation down without additional rate hikes. she also said, it's possible that we are at the sufficiently restrictive level, and there could be cuts this year. everybody else was sort of there, but she was one of the last, and she did mention specifically the idea, the labor

markets loosening. i think that the fed is on to this idea. >> you know what, when you have all of these revisions, what it tells me is it's a lousy way to collect a sample size. adp doesn't revise their numbers, they know what they are. >> they don't. they don't. and the problem is also the seasonal adjustments, which is a problem everybody has with that, especially when you come off of these last couple of years. you have fingered another issue that i didn't talk about in this report, which is, the sample sizes are going down. the response rate for the bls is going down. they eventually get it, but over time, and you're right, that may mean, and we feed to just be careful about this, because i don't want to get too wonky, but adp changes methodology back -- we don't know yet how true adp is relative to what the bls will eventually -- >> i thought it was a sample size of -- >> it's much bigger. it is true, but they still are -- there's still some seasonal adjustments in there that we need to be careful about. i just want to see over time, but there is an argument that

you are making, becky, that is potentially 100% right. >> we trade on these numbers. the market moves on these numbers, that aren't really done on a great database. especially if you've got constant revisions. >> and what's even a little freakier, maybe, when does the market actually trade on the truth? >> on the revisions, never. >> so a big number comes in, the market reacts, then later it's revised way. when does the market trade on that? now, i think it's fair to say, the 71,000 downward revisions to the two prior months that came out in december, there was a lot of talk about that. they said, hey, you know, it wasn't as strong as we thought. >> steve, thank you, sir. >> a pleasure. coming up, former speaker of the house kevin mccarthy will join us for an extended conversation on the possible emerging spending deal in d.c., including what happens if conservatives decide to stay "no" to the package. stay tuned, "squawk box" will be right back. you! your business bank account with quickbooks money, now earns 5% apy. 5% apy? that's new!

yup, that's how you business differently. power e*trade's award-winning trading app makes trading easier. with its customizable options chain, easy-to-use tools and paper trading to help sharpen your skills, you can stay on top of the market from wherever you are. e*trade from morgan stanley.

our next guest left congress just over a week. joining us for his first national tv interview since then, house speaker kevin mccarthy. it's hard to say "former speaker" all the time, but then again, i don't know. if i keep saying "speaker,"

people get confused, because we've had a few in -- what do we go with? mr. mccarthy? what should we do? kevin? >> whatever you want to call me is fine with me. but once a speaker, always a speaker. >> once a speaker, always a speaker. it's good to see you. how you doing? how you feeling? you watching from afar now? you pulling your hair out? you opining more? you going to come on unvarnished? >> i could always -- i've been busy. once the new year, i had jury duty and i had to replace my hot water heater that broke and flooded my garage, so i've been busy so far. >> i think it's a cold water heater, isn't it? >> it's a hot water heater. >> then you wouldn't need it. >> yeah. >> hey, is this going to fly? what do you think the new speaker, after what was a crazy -- you watched that happen and it was -- you were there for

that. i thought it might be you again. how do you think it's going with him in that part of the caucus that you had such trouble with? >> well, look, this is a very difficult job, but the one thing i would say is, don't let somebody else define what conservative is. if you look at the fiscal responsibility act, the simple question would be, would we spend more money or less money. if this goes into effect, we'll spend less money. right now, we're dealing in a continuing resolution because a small group of republicans have held this up in how many months? in doing so, what does that mean? it means we spend billions of more money. it means defense gets less and non-defense gets more if you continue down this path. it also means all the democrat policies, when they were in the majority, are locked in. as a conservative, what we were able to negotiate in the fiscal responsibility act was $2 trillion in cuts, welfare reform, nipra reform for the first time in 40 years, we were able to cut the irs.

and what speaker johnson was able to do, take an extra $10 billion in cuts to the irs that we had put in the agreement to come into effect next year, move it up one year, and $6 billion more of that rescissions of money that was already appropriated for covid, that was not spent, that wasn't available when we negotiated this that has now come forward to pull that back, too. so as a true conservative, you need to get the work done, because you spend more under a continuing resolution or not. and you keep democratic policies if you don't pass the republican appropriation bills. so i don't understand why people would continue to argue. i'm a conservative that wants to govern. and if you govern, you're able to put into law your conservative beliefs. >> i think that was the title of the piece in the journal today, speaker. and that was, speaker johnson's spending deal. house republicans have a chance to show that they can actually governor. so that's -- that's exactly what

you're saying. >> exactly. i mean, maybe i'll get a job at the editorial place at "the wall street journal." >> we also spoke to one of our washington people today, and she noted that there is -- there's a lot of things happening with these, you know -- it's almost like a shell game, some of these budget negotiations. it's hard to understand. does it actually take an additional amount off spending from what you negotiated with the president? >> well, it's in essence, we passed the fiscal responsibility act. and remember this, two-thirds of the republicans voted for that deal. that was the debt ceiling deal. that's one of the highest numbers you have found. and equate that to what were the debt ceiling deals when republicans controlled the white house, the house, and the senate. they add $1 trillion and we cut $2 trillion. what we were able to do in this, the only difference from the agreement before was this actual

moving up the $10 billion that we were going -- additional that we were getting the irs, because this takes us to about $21 billion. and you have to remember this. it's already in law about $80 billion to hire more irs agents, going into the future. they're only going to spend $1.2 billion the first year. we took that back, we took another $10, and another $10 the next year. he moved that $10 frorward, and there were the rescissions of that unspent covid money, a new $6 billion came online that was not spent, that johnson was able to get. so in essence, it's the extra $16 billion into this agreement, which is less money, and the real question is, you have to pass appropriation bills if you want to change the democratic policies we've been living under when they were in the majority. >> you said it's a tough job, and it is. and people say, if you don't like the weather somewhere, just wait 12 hours, and it can change. that's almost like the house. if you don't like the makeup of the house, just wait a little while and it's going to change.

is that going to have to happen before speaker johnson can feel totally comfortable that he's got a group of republicans that are going to let him lead and do what he wants to do? >> if i sat back and waited for someone let me lead, it never was going to happen. the real question i say, the only place where republicans have the majority is the house. don't give the power over to the senate. lead and move forward. did i lose my job for leading? yes, i did, but i would do it all over again. look at where the world looks like today with war breaking out, questions about the leadership within america. you've got a president that doesn't know where his secretary of defense even is. he's got a border rampant running over. you've got an economic issue going. this could be the best opportunity for republicans to show their policies and actually win come november. the last thing you would want is to be sitting down in a government shutdown that benefits the president, that you take all of his mistakes off the

table. show you can govern in a manner that runs government in a more efficient, effective, and accountable way, and prove to the american public that you deserve to grow your majority, and replace the individual in the white house. that is a perfect opportunity that you've had. the president biden's current numbers are lower than any in modern history. lower than jimmy carter. this could be the best opportunity for this country to grow economically and grow for the party itself. and they're missing the opportunity right now. >> can we -- can we look at each one individually? i'm talking about the four branches of government. are there four? >> four branches of government? >> i'm kidding, looking -- yeah -- >> you're looking at me, i'm looking at you. i'm looking at you, kid. >> the judiciary. some democrats think that that's the fourth branch. no, i'm kidding. so let's do three. i know there's three and i know there's not 57 states. but let's do the three.

for the house, there are some that say that it's more likely that republicans take the senate versus the house. and i also want to know what you're involved with, with the presidential race. who are you talking to -- have you talked to president trump in the last -- former president trump. you talked to him in the last month, mr. speaker? >> i support president trump for re-election, too. let's walk through this. the pundits who say the house will flip -- i've been the leader for five years. we never lost in the house. the republicans lost in the senate, the presidency, the governors, every and everywhere else. we actually won five new seats in california when pelosi was speaker and i was leader. they said we would lose 15 seats when biden won election with 82 million votes. it was the first time since 1994, not one republican incumbent in the house lost. the senate lost for two cycles. i believe it's easier for republicans to gain seats in this next election than it was in the last two elections. there's re-districting that just

happened in north carolina. we'll pick up three, maybe four seats. you've got spanberger retiring in virginia. there's more democrats retiring than republicans. you've got slotkin running for the senate in michigan. these are two competitive seats that we'll pick up. alaska, we'll win that seat. republicans get more than 60% of the vote, but the democrat has won because they've got this system up there that it's a ranked system. we'll narrow that and get that right. i believe there's another seat in california, the congresswoman is running for the senate that we'll pick up there. so we will pick up seats -- i know they have to do redistricting in new york -- but if you look at the trend in upper new york, it's going more republican. you look at the crime, you look at the immigration. and if biden is on the ticket, the senate will go republican. i know they lost the last two cycles. i believe they'll win this time. i believe that we will win the presidency if biden is the nominee on the democratic side. >> and you expect that?

>> i expect that. look, the expectations that you see, we're walking into this iowa caucus. that weather is cold, but that will determine a lot. new hampshire, both nominees will be selected by around march 15th. this will be a longer campaign than noted. and this campaign is about rebuilding, restoring, and renewing america, donald trump will win. if it's about revenge, it's going to be a very competitive race. >> who's -- whose choice it is about whether it's looking forward or looking backward? you know, president trump has trouble focusing on anything other than what he feels like was a stolen election in 2020. >> you know what, it's always up to the candidate themselves. the reason why we won in the house, and remember how we won the last two cycles, why republicans were losing everywhere else. we elected the most women and the most minorities. the quality of the candidate matters the most. we have proven we could win in

new york, in oregon, in california, in arizona, places that republicans on other tickets were losing. it's the qualities like the michelle steels, it's lori chavez dreamer. the quality of these candidates are amazing. and that's the attraction that you get more people into the mix and you challenge based upon policies. but it also stems back to what we've been talking about today. republicans have to show that they can govern. it's a great contrast to where president biden was today. think for one moment if you had a secretary of defense, with war breaking out around the world, and you're the leader of the free world, and you don't even know he's in the icu and nothing happens. you have a border that has more people crossing it in one month than are caught on the terrorist watch list than the last entire administration. that's a very concerning issue. you've got an economy that you want to run on, that no one believes is helpful. >> speaker? >> yes, sir.

>> what do you think -- how do you think former president trump would govern if, in fact, he became the president again? not just from a policy perspective, but from a polarization perspective, from a what happens at the end of that term perspective. i mean, there was a moment, obviously, after january 6th, where even you said, i've had it with this guy. >> well, that wasn't the term i used, but that was another member. the thing i would say that how would he govern, well, i would hope that he would even be better than he was before, because we watched what he did on policy where the economy was stronger. we didn't have war in europe. our border was secure. i believe at the end of the day, when you're going to a ballot, people are looking at how does it affect them personally. and they're watching from a gas price -- that's the decision they're going to make. i believe people get better with 10,000 hours. i also believe that people get better when they get humbled, and from the aspect he didn't win the last election, so there is improvement there, hopefully.

it also is, who gets around you. look at the tax policy that he was able to create. look at the aspect of rebuilding the military at the same time. look at the ability that we are able to do with the abraham accords. i would hope if we built on the abraham accords, we wouldn't have had what i was happening in the middle east today. and i think that overwhelmingly shows that it would be a much stronger nation and a safer world. >> kevin, just to put a fine point on it, because i mentioned and you said it was wrong, and i want to make sure i'm not wrong, this was on tape, when you said, "i've had it with this guy" -- >> i don't remember saying, "i've had it with" -- >> and then you went on, quite publicly, you said, he bears responsibility for what happened on january 6th. these are comments that you made. you said that it was astrtrocio and totally wrong. i only say, because you had said it was wrong, and i wanted to -- there's an opportunity to clarify -- >> that's very fair. if you watch his speech on the

floor, i said, he had some responsibility for january 6th, but in the press, is what i said, a lot of people had responsibilities for january 6th. and since that time, we've learned a lot of new information at the same time. and the one thing i've always thought in a presidential election, i'm always looking, what i think should be looking forward in the aspiration of where this nation should go. it's very clear that the american people get to decide who these nominees are going to be. well, right now, you know the two front-runners are president trump and president joe biden. and do i know -- was the world a safer place under president trump? that's an easy question. we didn't have to evacuate five embassies. we didn't have war in ukraine. we didn't have the middle east uprising. we didn't have north korea testing new missiles, just recently, as well. did we have a stronger economy? yes, we did have a stronger economy. we had the fuel price even lower. we didn't have inflation with the runaway spending. we had a secure border. if you poll the american public today, all of the issues that i

just talked about are the top concerns to the american public. and that's what elections are about. ideas. now, if there's a personality difference that people dislike, they're able to make their own decisions. but i know my children and the country will be in a safer place and be stronger in the future if these are the two choices i had, it's not a difficult choice to make to support president trump over joe biden's policies. >> do you remember the last time -- well, you don't remember. do you remember the last time two incumbents were battling each other for president, kevin, do you know when that was? >> no, help me. >> 1888, former democratic president grover cleveland defeated incumbent republican president benjamin harrison. but it's very rare to have two people that have been president running against each other. so, i don't know, that's about the only -- if you're looking for a silver lining for having these two candidates, kevin -- how about a vp?

how about a vice president? w who do you think trump should pick for vice president and who do you think president biden should pick? >> well, if president biden changes his vp, he's acknowledging that he's got problem. so i don't think that will happen. >> that won't happen. >> but looking forward, i always think a vice president -- and they've changed as the process goes. a lot of people would select -- >> who would say "yes"? >> i think a lot of people would say "yes." from one perspective, if you're looking for a republican vp and your nominee is president trump, he can only serve one term. you would be, in effect, the leader of the party and have the best chance to run. so it will be a very coveted position. normally, you would select somebody that is a governor of a state that would add to the ticket, because we go for electoral college. i don't think that plays in as much. i always believe, whoever the vp is selected should be the individual who adds, doesn't subtract? so where are you weak when you look back? where is a califorposition that

>> california, gamvin newsom. unvarnished, unhinged -- well, not unhinged. unvarnished is another word. hope to see you soon mr. speaker. we live in interesting times. i say that a lot lately, but thank you. in the meantime, we are seconds away from some new trade deficit data. futures right now ahead of that, 163 points, down on the dow nasdaq, off about 101 points. the s&p 500 off about 22 points. straight over to rick santelli, standing by at the cme in chicago. rick, the numbers? >> our november trade balance which will be a trade deficit. we're expecting a number around minus $65 billion. it comes in a little lighter, minus $63.2 billion. and in the rearview mirror, a subtle revision higher from october, from minus $64.3 to minus $64.5.

what's fascinating here, minus $63.2 is the smallest deficit, just since september. last month popped a little bit. but more importantly, if you go pre-covid, pre-covid trade balances, which were also deficits, were in the $40 billion camp. and if you look back in 2019, we have a few under $40 billion. so we have, indeed, moved to a bit of a higher level, but we're well off the highest levels. it was $102 billion in march of 2021. so we see them coming down as global trade and economies across the globe normalize to some extent. of course, we're going to have an auction today, three-year notes. and it's going to be important to monitor, because auctions have been quite important. as a matter of fact, not all countries are having huge problems with auctions, we saw a 20-year bond auction in the uk that had record-strong demand, but at this point in time, with global debt at record levels, we want to pay particularly close attention to not only to today's 3s, but more importantly, the

longer maturities, which will be tomorrow and the following day when we move to 10s and 30-year bonds. becky, back to you. >> rick, thank you very much. "squawk box" will be right back. 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.

we are looking ahead to new inflation data later this week, and here to talk about that and some key takeaways from the latest jobs report is scott

linsicomb, the vice president of general economics at the kato institute. also, lindsay owen, who is executive director of groundwork collaborative. let's work through what we think we might get from the inflation data later this week. scott, what's on your radar screen? where do you think we are? >> well, it's looking, you know, like we're going to maybe cool a bit, but, you know, if you look at last week's jobs numbers, they are, i think, indicating a little more softness in the market than maybe what those top-line figures were showing. and then, that's probably why the market's reacting pretty well to those figures and up, because you know, it does appear that things are cooling off a little more than we might first think. >> yeah, lindsey, we just had a report earlier this hour from steve liesman, talking about how those downward revisions have been persistent. the biggest revisions and the biggest string of those revisions we've seen since heading into 2008?

>> yeah, look, for as long as we've been tracking this inflation data, folks have been saying that the cure for inflation is employment. the big story from 2023 is, that was fall. inflation has been cooling for 18 months now, off its peak. and in every single one of those 18 months, employment has come in below 4%. so i'm really looking for the fed to get out of our way here, and start rate cuts before we do get more softening in the labor market. i think that's the biggest risk we face right now. >> scott, that is not what we've heard from people like roger ferguson, who says, that's not going to happen if you're not actually seeing a weaker economy. >> well, look, if you dig into those numbers last week, there are a lot of reasons to think that the labor market is pretty soft. i mean, 60% of job growth in 2023 was in government and health care. these are acycsacyclical indust.

the household survey last month was terrible. that's really volatile. but big declines in employment and labor force preciparticipat. so you take that, those numbers, along with what managers and ceos are saying, you know, the ism services report was also suddenly dour in december. it so does look like there are reasons to think that the mark is a lot cooler than what those top-line figures might say. >> lindsey, why are you so convinced that rates need to come down right now? >> the last mile on inflation is really housing. close to three quarters of the inflation that we're seeing right now is coming out of housing and the last thing you want when you're trying to bring housing down which is ultimately a supply issue is a high interest rate environment.

>> but rates have come down over the last month, and as a result, we have seen a lot more buyers out there skpoishl more people putting their hat -- more people putting their house on the market. >> i think we want to continue that trend. and i think we want rates coming down to accelerate some of the investments we want to see in clean energy. the biden administration put a huge amount of financing on the table for clean energy investments, and not all of those cancel out in a high interest rate environment. i think there's a lot more growth that we can get out of this economy, more productivity. but i think the concern now for me is softening of the labor market. >> but if -- >> over the accelerating inflation. >> the labor market looks pretty strong based on the numbers. you can point to some signs that maybe things are turning a little bit, but i don't see the urgent need to say, it's time to cut rates back to oblioblivion. >> i think historically, one of the big problems that the fed has faced is a "higher for too

long" approach. and i don't think we want to repeat those mistakes. we can have this conversation again in hindsight, but i would be more concerned about staying the course and keeping rates too high and getting a spiral of employment later down the line than i would be about starting to cut sooner. so i would like to see a cut in march. i would like to see it this quarter. >> scott, there are others who say, you've got to be careful about thinking you've tamed inflation when you haven't yet. and that's certainly the lessons that the fed seems to be following or jay powell talked about before. what are your thoughts? >> i don't blame them at all. >> if you look at consumer sentiment and how it tracks inflation data, people are finally starting to think the economy is getting better, and that's pretty clearly linked to inflation cooling, as well. you know, if you're interested in getting everyone back on the same page, and if you're interested in getting the u.s. economy normalized, staying the course seems like a lot better bet, particularly given some of the wage growth we saw last

month. it makes good sense, and i think, you know, if you're a fed official, you were thinking on thursday before the latest data, you're probably thinking today. that's more of the same for a little longer. >> scott, lindsey, thank you both. coming up, what would the government's approval of spot bitcoin etf mean for investors, for crypto volumes, and also for transparency. we will talk about that after the brk.ea bitcoin sitting just about $46,000 right about now. "squawk box" returns. hard work meets bold new thinking. to help you see untapped possibilities and relentlessly work with you to make them real. my little family is me, aria, and jade.

just the three of us girls. i never thought twice about feeding her kibble. but about two years ago, i realized she was overweight. she was always out of breath. that's when i decided to introduce the farmer's dog to her diet. it's just so fresh that she literally gets bubbles in her mouth. now she's a lot more active, she's able to join us on our adventures. and we're all able to do things as a family. ♪ get started at betterforthem.com

coming up, the latest on the quest for firms to begin offering bitcoin etf. the s.e.c. has an initial yes or ay torw.ine ofomro st tuned, "squawk box" will be right back. [♪♪] your skin is ever-changing, take care of it with gold bond's healing formulations of 7 moisturizers and 3 vitamins. for all your skins, gold bond.

you can't buy great conversations 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.

welcome back to "squawk box." the crypto community expecting a call from the s.e.c. any day now on the approval or rejection of the spot bitcoin etfs, though approvals are pretty widely expected at this point. joining us now, john palmer is the president and ceo of digital. it's a separate entity from parent company cboe global markets, which is the listing agent, or i should say, exchange for spot bitcoin etfs. they're not involved in the process of launching the etfs, but it would benefit from their approval. what do you think we're going to hear, and is there a wrinkle in what we might here? >> i think you've seen quitea lot of progress made really last couple of weeks, even yesterday. you know, we saw some back and forth between the commission and the issuers on the s-1s. i think that's good sentiment, right? progress here is good. you're seeing the agencies

engage. you're seeing the issuers engage and all the filings from the exchanges are all up to date at this point from what we can see. >> let's assume that there's an approval. do you think there are certain ones that get approved. all of them get approved at the same time. how does that work, and what does it mean in terms of, as they get launched, how much bitcoin they're going to be buying in the market, what that does to the price, have we already bought the rumor, sell the news? what's the thought? it's obviously a pretty big competitive milestone, right? we have quite a few different issuers with filings, the s.e.c. has different dates for different rule filings on the exchange side that they can approve. but so there's a couple of different scenarios. they can, as you mentioned, approve or approve them all at once. time will tell, i think, between today and tomorrow how that's actually going to go. and you still have the s-1 aspect that has to be made effective, right? so we've seen the agency engage

with the issuers on that. and so both of the rule filings and the s-1s have to be both approved and made effective before they can actually list it. >> impact on price. for those who have been speculating the last month or two or three now that this day is going to come, has it moved as much as it's going to move? is this the day gets announced, it moves another, you know, 20, 30 -- what are we talking about here? >> it's hard to expect. we have to see how the capital flows into the etf. i think an approval is bullish, but we've seen a big move recently. the best part here is that there are going to be additional investors that get access to bitcoin that maybe don't really want to natively hold it themselves, right? >> i told you it was going to move 15%, but i didn't tell you which way. >> i don't think i would be surprised. >> and -- right, but -- >> it's like that every day, practically. >> but pick a way, up or down? >> i think it depends on which way the approval.

whether it's approved or not approved. >> i'm saying if it's approved. >> i think it's likely we see more of an upside than a downside. >> and do you see it become something -- we've had people on this broadcast, kathy woods says it goes to $500,000. we had people years ago come on say it would be $1 million of bitcoin. do you think that's directionally where this all goes? do you think there's sort of a cap on what it is? do you think every investor in the world decides that they need to have some portion of their assets in bitcoin? >> i think it depends on how much we can see flow it in, right? bitcoin right now market cap is just over $915 billion, so even a successful etf launch in one year could be $10 or $15 billion in aum. that would be quite successful compared to some of the most successful etf launches. even that is, we're only talking 1 to 2% of the current market cap of bitcoin. so how much is that really going to inflate the price to the

levels that you mentioned, $500,000 or $1 million? time will tell. but again, we also know there's a fixed supply of bitcoin. so what -- how that impacts the supply and demand dynamics of the market and how much capital is actually flowing into the etfs, i think will be very focused -- >> and what's going to happen to the price andfocused. what's going to happen to the price and the fees around these etfs? part of me says it's going to be close to zero. nothing particularly distinct about any of these funds. >> it's a different question. i think you see different expense ratios and pricing across similar etfs in today's world. the fees of the different issuers converge or not, time will tell. there's that competitive nature. >> is there always going to be a discount on these etfs? you look at the grayscale etf and there's always been a massive discount.

>> there's the expense side of it, so how they manage that and how large the expenses will impact what they're going to get on the return -- >> what do you think about the folks who haven't gone into this? are we going to see a vanguard, all of a sudden, which has been on the sideline jump in? do you think there's always going to be a group of folks in finance that are just like, we're not doing this? >> i do. i think there are going to be folks that maybe will always say that's not for us, this is our core business, so this is where we're going to stake. you'll have those that are maybe on the leading edge of the spirit of different types of products and offering them. for the folks that aren't in the bucket yet or aren't at the table ready to list, they're going to watch this and see how successful it is. >> bullish for a coinbase, bullish for a robinhood? not? because people will buy it as etfs instead?

how do you think about the exchange universe? >> we run a spot exchange with digital. from my perspective there's a couple of different points. you'll be able to access bitcoin through an etf and not have to biannually. you'll have those participants entering the market. i don't think somebody already trading bitcoin is going to trade etf overbitcoin. they've already made that journey. you'll have pension funds, they're going need a place to hedge. sometimes they hedge natively. sometimes they might use derivatives. that's where we see the true growth from our perspective is in the ecosystem and use case is beyond it. >> all very fascinating, we'll see what happens as the week plays out when we come back, we'll talk markets and get you ready for your trading day ahead. the futures this morning. you'll see right now are under some pressure as they have been all morning. dow futures right now down by

about 175. s&p futures off by just over 25. nasdaq down by about 130. stay tuned, you're watching "squawk box." this is cnbc. i know what it's like to perform through pain. if you're like me, one of the millions suffering from pain caused by migraine, nurtec odt may help. it's the only medication that can treat a migraine when it strikes and prevent migraine attacks. treat and prevent, 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. relief is possible. talk to a doctor about nurtec odt.

the first time you connected your godaddy website and your store was also the first time you realized... well, we can do anything. cheesecake cookies? the chookie! manage all your sales from one place with a partner that always puts you first. (we did it) start today at godaddy.com

a little more than half an

hour now until the opening bell on wall street. let's tashg markets with eric lynch, portfolio manager at scharf investments. eric, are we set up for disappointment if the fed doesn't follow through on the number of rate cuts that people are hoping for this year? >> yeah, joe. it's a great question. i think we could be. you're looking at obviously market forecasting five or six rate cuts, the fed sticking to three or so in the dot plot. we've got s&p 500 creating at 500 times earnings. dirty little secret. of the last three months while the investor set has basically been celebrating the fed's dovish turn is that the estimated earnings growth for q4, s&p 500 trended down from 8% on september 30th to just 1.3% as of today.

earnings guidance is coming down. we've got 12% earnings estimate for growth for 2024. we would assume all-time himar engines, joe. that's a problem. there's definitely some downside risk here. >> those other things as well, eric. if some of the leadership were to shift -- things don't grow to the sky. we'd be -- i don't know where we'd be without the magnificent seven. maybe that's a good thing. but do things catch up or do they come back down to earth? >> i love that analogy. here in northern california, we have redwoods all around us. they're great trees but don't grow to the sky. mag seven was up 120% in 2023. what's great is you're starting to see a grubbing out of the market. in december during the santa claus rally, shockingly, the mag seven was only up 4%.

the equal weighted s&p 500 index which i call the boring 493, facetiously, was up 7%. you actually started seeing rotation in december, the first week of january. the mag seven also declined much worse. health care equalled its full return for the year in 2023. utility staples were up as well. you're definitely seeing some kind of rotation of broadening out. it's probably a healthy thing for markets in terms of the sustainability of the markets going forward. it could look a lot like the post tech bubble where the large cap growth tech steks in the u.s. kind of ate the world in the '90s. then they lagged, all sorts of different styles for the next several years. it's not a bad thing if the mag seven slows down. in some ways it's an indication there's a dearth of growth. if we get a kind of harder

landing, the mag seven are really kind of elevated here. i think either way both those scenarios it's a really important way to play. >> that's a fine line if we walk. if we get ten rate cuts because we have negative gdp, is the market going to be down one to 80,000 because we get 12 rate cuts, but it's because of a recession. you see what i'm saying. the more rate cuts we get, the weaker the economy. it's difficult to handicap things. it's got to be just right. >> exactly. it's got to be just right for the mag seven. that's why i think investors would be, you know, smart to look at selling defensive sectors that didn't do anything in '23, like i said. health care up 2%,utilities down 7%, staples were down last year. all of them were up last week. you can get a bunch of these securities at 15, 16 times earnings versus s&p 500 at 20,

mag seven at 30 to 40. so if things do slow down, joe, these companies have kind of high earnings resilience which is kind of gdp into sensitive. that's important as the year progresses. we're seeing negative economic prints, ism services almost down -- >> we're out of time. i'm sorry. i hate to cut you off, eric. >> no problem, joe. >> make sure you join us tomorrow. "squawk on the street" is next. good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla. cramer is in the jpmorgan health care conference in san francisco. david faber at hq. s&p now once again within 1% of all-time highs. ten-year yield just north of 4. light day for david. s&p within strikin