it is 5:00 a.m. here at cnbc global headquarters and here is your "five@5." we start with breaking news. the u.s. and allies launch an attack on houthi rebels in yemen. and the risk premium for crude continues to grow. turning to wall street. the dow hits an all-time high despite the hotter than expected inflation report, but futures are under pressure. and today, investor attention turns to earnings season and the strength of the u.s. major bank reports.

big moves in bigger volumes for bitcoin's first day of spot etfs. it's friday, january 12th, 2024. you're watching "worldwide exchange" right here on cnbc. good morning and welcome to "worldwide exchange." i'm frank holland. let's get you ready to start the day. as always, we kickoff the hour with the check of the u.s. stock futures after a mostly higher session yesterday which saw the dow hit a fresh intraday all-time high. the dow would open up 50 points higher. the s&p basically flat. the nasdaq is under pressure. for the week, storescks are bouncing back. nasdaq leading by a wide margin. riding a five-day win streak and on pace since november. we continue to watch the

difficult start for apple in 2024. microsoft briefly overtaking apple as the largest market cap company. apple at 2.818 trillion. microsoft at 2.85. we are checking the bond market ahead of the ppi are report today. we are seeing yields back below 4%. they topped 4% yesterday. we continue to watch yields through the morning. coming off a big day for bitcoin in the first trades of the spot etfs. the 11 issuers seeing $4.6 billion of volume on the first day of trades. the buswisdom tree and ark 21 shares seeing some massive inflows. look at the action right now. all three in the red right now. we will continue to watch these throughout the morning and

moving in cryptocurrency in general. that is the setup. let's get to the breaking news. u.s. and uk launching a series of air sdrtrikes overnight agait houthi rebels in yemen. this is in retaliation to the attacks in the red sea. oil is moving higher in response to the attacks. wti is up 3%. brent crude close to the same level. let's go to ali arouzi in tehran with the latest. >> reporter: good morning. there have been repeated warnings from the international community from the houthis to stop the attack in the red sea. the maritime coalition was formed to protect commercial shipping and deter the houthis. despite warning after warning, the houthis kept up the attacks, each one more spectacular than the last, including against the uk and u.s. war ships this last

week. after the latest warnings, a strike felt imminent. the u.s. and uk along with support from other coalition members hit the houthis hard. strikes reported in the capital sana and in the houthi red sea and dakmar. there were reported 60 strikes from air and sea with over 100 missiles and guided munitions hitting command centers and air defense radar systems and production facilities and ammunition depots and storage depots as the houthis have used drones as the main form of attack. this marks the first strike against the houthis since the october 7th attacks. president biden says this is in response to the attacks by t

ththe e iranian-backed houthis in the red sea. this all is rising shipping costs and insurance costs and making the freight go around the cape of good hope. now the foreign minister has warned the u.s. and uk saying they will pay a heavy price for this aggression and the attacks on the red sea will continue. iran has unsurprisingly condemned the attacks against the u.s. and british military calling them arbitrary action. frank. >> ali arouzi, thank you very much. turning to the white house and president biden promising attacks if this doecontinues.

we have drew petrimoulx with more. >> reporter: all those conducted strikes against a number of targets in yemen used by houthi rebels to endanger the freedom of navigation. he went on to say he will not hesitate to direct further measures to protect people and free flow of international commerce as necessary. these targets were sceen by the president and allies to reopen the critical waterways in the area that is crucial to the global economy. also the houthi spokesperson as the previous reporter talked about is promising revenge for the attacks. calls them the greatest folly.

the common thinking is there is incentive for all sides not to escalate, but there is worry this could lead to furthest can legislation. >> drew, thank you. it looks like the dow would open up 45 points higher off the highs of earlier. the s&p is slower, but close to flat. let's check on the global market action with joumanna bercetche in the london newsroom. we have the shanghai in china down a little bit. a lot of focus on the data coming through in deflation. china year on year is minus 7 7.7%. exports picking up through the

course of the december which isi is2.3% for the month. hang seng is dipping down .30%. nikkei, what a spectacular run. up 1.5% today. up 6% in the first couple of weeks of the year. this has been its best week in the last 22 months. that strength continues in the nikkei. in europe, you can see all of the geopolitical concerns have been brushed off. ftse 100 is up .20%. one name we are watching closely which is burberry. it was down double digits at one point this morning. dragging down the luxury complex. disappoint onning sales in it n america. brent is up 3%. that is lifting the oil as gas and basic resources in the ftse 100. dax is up .80%. a bounce in industrials.

cac 40 also up 1% despite the weakness in luxury. let me end with the key defense stocks over here in europe. a focus this morning and no surprise, frank, to see every single tone of the companies in the green. >> joumanna bercetche live in the london newsroom. thank you very much. turning attention to the corporate stories with silvana henao. silvana. >> good morning, frank. sticking with the ongoing disruption in the red sea, tesla will suspend production from january 29th to february 11th in the berlin factory. that is due to the shipping disruption in the waters. tesla relies on china for key parts and that is the first company to divulge a production disruption due to the red sea. other companies have previously warned of delivery delays.

tesla shares down% 2% in the pre-market. disney owned pixar planning to cut hundreds of jobs following the completion of the shows. techcrunch says the layoffs are not imminent and will take place in the next year as pixar makes less content. the number of employees is still being determined. layoffs could be as high as 20% of pixar's 1,300 work force. as we mentioned earlier, the latest read on the china consumer prices triggering more inflation fears. the longest streak of declines since 2009. factory costs dropping 2.7%. overall exports slipped by 4.5%. there is muted reaction to the data with a number of investors already betting on the possibility of a policy rate cut

next week. frank. >> cpi in it china. we have ppi later today. silvana, thank you. a lot more to come on "worldwide exchange," including more market reaction to the rising middle east tension. our expert market panel lays out what you need to know for the day ahead. and the big banks have the kickoff to the closely watched earnings season. the one thing you need to track coming up. later, we dig into pet health care. we talk to one key player in the $45 billion animal health care industry. a very busy hour when "worldwide exchange" returns. stay with us.

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welcome back to "worldwide exchange." taiwan is holding elections tomorrow and investors are bracing for a potentially volatile reaction. the first major economy to head to the polls this year. this vote comes with rising tensions with china. china is calling this election a choice between peace and war. despite the jitters, taiwan stock rose 20% last year with foreign investors pouring in $3.5 billion into taiwan equities. let's talk more about the market impact of the weekend election rele with the portfolio manager of the china a-shares and emerging

markets x china growth funds. vivian, it is great to have you here. >> good morning, frank. >> this election is coming up tomorrow. there are three major parties in the election. i want to get to the parties in a second. i want to talk about the potential investor impact. in the short-term, what do the elections mean for the taiwan weighted index for china and some of the funds you manage that expose the emerging markets in taiwan? >> you are right. it is difficult to predict the outcome of the election. we expect that the equity market in taiwan will continue to trade on the fundamentals. precisely with the global semiconductor industry. taiwan is the big supplier ofco. the a.i. demanded has driven a lot of growth in industries within the hardware and

semi-related equipment side in taiwan. that was a key driver of the key growth of taiwan and also t taiwanese markets. the fundamental side will continue to see the driver throughout 2024. >> vivian, let's get into the weeds. i don't think too much of our audience is familiar with taiwan. they have three parties. dpp, which controls the presidency and parliament. there is the kmt and the tpp parties. you gave us scenarios which could be good and bad for investors. i want to start with the incumbent party. what is your outlook? >> i think this could be marginally hostile given you could provide checks and balances with the ruling party which would take the position with the parliament.

we know if the dpp candidate wins, we should see more continuity of the policies in taiwan. including the relationship with mainland china. that should be a neutral outcome if he wins. if the party wins by the kmt, the opposing party, who has more constructive and pro-chinese stance, that should help improve taiwan and mainland. i think the markets will receive that positively. overall, the outcome should be neutral to slightly positive. >> one last question, you mentioned the economy is heavily levered to chips. what is the outlook for the economy? we don't know the outcome of the election, but in general, with the restrictions from the biden administration on china and competition with a.i. in ge

general, what direction do you see the stock market going this year? >> this will depend on the global economy. we know the driver of the taiwan economic market is more from the global economy and semiconductor demand. if the economy heis resilient a has a soft-landing scenario, the equities will do well. especially if they keep the supplier of the generative a.i. in that industry. >> we have to wait and see. vivian, great to see you. i wish we could continue the conversation. we have to go. thank you. coming up on "worldwide exchange," we turn back to the middle east with the premium for oil markets with rbc's helima croft. stay with us.

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icy hot. welcome back to "worldwide exchange." the healthcare sector looking to rebound after last year with the optimism of weight loss drugs and ramp of surgeries with eli lilly to all-time highs. health care is the best sector this year in the s&p. it is not just human health, but zoetis sees a boom in knew treatments for animals.

we have whitney johnson from zoetis. >> good morning, frank. >> we had a big spike of ad adopting of pets during the pandemic. your ceo spoke about the demanded for human-quality health care. what does that mean for your business? >> frank, as you said, globally, pet owners see their pets as members of their family. extensive study found 95% of pet owners see their pets as members of the family and they expect human quality for themselves as they get for other members of the family. that is driving our sector and industry for a number of years before the pandemic. as you said, we saw a 10% increase of pet ownership during the pandemic. this has been going on a long time from outside pets to inside their homes. they see them as members of the

family and they want them to have quality healthcare. >> i have a couple of dogs. i do not allow them in the bed. one product is pet arthritis, which i did not know existed. i feel like a generation ago, we fed our dogs and left houtside. what do you see for demand? >> we are excited about the latest breakthrough to street os osteoarthritis. we are excited to bring relief to dogs in the u.s. and around the world with arthritis pain and drive growth for our business. this is the latest expectation for a $1 billion franchise on us with other franchises in the

derm category. >> $45 billion global addressable market for animal health. 2/3 is pet and 1/3 is livestock. we see the emergence of the glp-1 drugs, does that change the demand for livestock? >> livestock is now 1/3 of our business. the global trends driving demanded for animal proteins around the world and we expect 10 billion people by 2050. we see significant demand for quality protein around the world as we have seen in the past. really, when you have livestock t livestock,

it grows 2% to 4%. as we head to break, coming off the first day of bitcoin etf trades. collective $4.6 billion in volume on the first day of trading according to lseg. the blackrock and ark 21 shares seeing the biggest inflows. you see here all three in the red across the board. wisdom tree is hardest hit right now. we will have to continue to watch. bitcoin trade around the clock. "worldwide exchange" will be right back.

it is before 5:30 a.m. in the new york city area. more ahead on "worldwide exchange." breaking news from the middle east. the u.s. and uk carry out strikes on houthi targets in yemen. rbc's helima croft is standing by to break all that down. turning attention back to wall street. investors looking at inflation and shrugging off the hotter than expected cpi report. and top of the agenda with the big banks in focus. the key metrics you need to watch when the results start crossing in an hour. it is friday, january 12th, 2024. you are watching "worldwide exchange" here on cnbc.

welcome back to "worldwide exchange." i'm frank holland. let's pick up on the stock futures after the higher session yesterday which saw the dow hit a fresh all-time high intraday high. it would open up 75 points higher. s&p is in positive nasdaq offer the lows. nasdaq is on pace for the best week since november. we are checking the hotter than expected inflation read ahead of the ppi. the ten-year yield is below 4%. right now it is 3.97. that is the morning set up. let's get to the breaking news. the u.s. and uk launching air

strikes overnight against the military targets in yemen in response to the rebel attacks in the red sea and defiance of warnings from the white house. let's bring in helima croft from rbc capital markets and a cnbc contributor. she joins me now on the cnbc news line. helima, thank you for being here. >> thank you, frank. >> the target strikes in yemen. let's start with the oil market. what is the short-term impact on the oil market with oil moving higher? wti crude up 3.5%. >> i think the market will wait to see if we see this spread to a significant waterway or oil like the straits of hormuz. people will watch iran. obviously, iran is involved in all three threat factors in the

war. supplying the houthis with weapons and financial support and intelligence support. they are involved in lebanon with hezbollah and iraq with the mil militias. the question is does iran become deeply embroiled in the attacks? do the houthis expand the targets? red sea infrastructure? that is why they are concerned about the u.s. action. they called for deescalation. i think they are concerned the houthis could hit the refineries. those are the targets they are looking at here. >> we asked this question a few days ago. you were just alluding to it. what is the escalation risk here? president biden and houthi spokesperson making inflammatory comments. >> the houthis said they will respond. the houthis survived years of

bombing campaigns. the question is what do they have in store for the u.s. and coalition partners? will they hit ships in the red sea or will they respond by starting to hit critical red sea energy infrastructure? that is why the saudis are concerned about today's action. the saudis and emirates have not joined the coalition strikes on yemen. they have a lot to lose in escalation situations. >> i want to turn to the global economy. if we continue to see this escalate, i know secretary of state antony blinken said he did not believe it was escalation. it is sharp military action here. what is the impact to the global economy in the short term? >> certainly the major shipping lines indicated they are not going back through this red sea chokepoint. they will continue to route ships around the cape of good hope in south africa which adds

ten days to the ships routes. that will add to the costs to consumers. i don't see that situation abating. the bigger question, when you talk about oil markets is, doex? the iranians did target ships in the waterway in the strait of hormuz. it really will matter what iran's role will be in this conflict in the coming days and weeks. do they sit it out and let the proxies do the fighting or do they become directly involved? dp fra frank, they took a tanker back. they are willing to show they are willing to escalate. >> helima croft with big questions for the oil markets.

we are seeing brent crude hitting $80 a barrel. brent is 3% higher. we will continue to watch the moves in oil. turning to the kickoff to earnings season as we look at reports from the largest banks today. we have leslie picker with the latest. >> today's results come amid a huge run-up in bank names. kbw index is up 30% since november. with the big six up 20% over that period. the prospect of the fed pivot to lift the sector at the end of 2023. contrast the moves with the fourth quarter eps estimates with the street seeing average declines of 14%. investors are looking past the fourth quarter numbers and focusing on what is in store for 2024. that means the outlook that they get from banking executives on

the calls will be key. depending on what we hear, it could get choppy over the next few weeks with the recent out performance we have seen in the bank names. ubs writes the bar for the rally to continue is high. our universe is asset sensitive to rising rates in the next 12 months and credit quality remains pristine. suggesting near-term and downward pressure and lingering overhang on eps expectations. in other words, the banks are at an inflection point. citi earlier this week disclosed several items like the fdic special assessment and restructuring charges that impact the billions in the fourth quarter numbers. we sit down with mark mason later today to discuss the fourth quarter results as well as what they see moving forward in 2024. frank. >> thank you, leslie.

let's dig into the banks with stephan biggar. >> good morning, frank. >> i know this is a group of four, but what are your ex expec expectations? >> we have the buy ratings on jpmorgan chase and bank of america and wells and citi. our bullish case is that the economy avoids recession here. the fed is given credit for the soft landing. credit quality doesn't deteriorate much further from here. banks are well reserved at this point. also ease pressure on the deposit costs and securities portfolios. we get a rebound by the second half in ipo and m& a activity. it has been a dismal two years for capital markets.

just based on a lot of pent-up demand, the first phase of the improvement tends to be a nice rise in equity we had in 2022. more companies looking to good public. >> stephen, you mentioned two key things here. long growth and deposit costs. you put them together and that is net interest income. what is outlook for net interest income for the big banks? >> the fourth quarter is largely down probably around 10%. the exception to the rule is jpmorgan chase who acquired first republic last may and will have a nice month in that interest income. there is pressure on the deposit costs which pushed that net interest margin lower. that is a headwind going into the first half of this year. >> big story last year were the

losses that banks were taking on treasury. we haven't talked about it much. what is the issue with the paper losses on treasuries? sfl >> the conversation has diminished with the rates going down. that has bumped up. i don't think we will hear much about that on the calls. if long-term rates continue to stay lower here after peaking at 5%, i think that is a non-issue for banks. >> is there one bank you are watching that is the one that will signal to investors good or bad? i want to get your take on citi announcing they are taking that big charge. >> jpmorgan chase tends to be the bellwether. they are in so many areas and can give us a good read on the consumer. particularly credit quality with the lower income consumers which has degraded.

you have the capital markets with the weakness there. they have been showing market share gains. i think we will hear something about the conversations being more constructive. they have their tentacles in a lot of spaces. that is the bellwether with the exception of net interest income this quarter. >> stephen, thank you. buy rating on the four big banks reporting later today. coming up on "worldwide exchange," it is all about a.i. the red hot tech absolutely dominating the conversation at ces. we will hear from dell on how it is looking to capitalize and odtsgrate a.i. into the line of pruc. more "wex" coming up after this. stay with us. [♪♪] your skin is ever-changing,

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welcome back to "worldwide exchange." the consumer electronic show or ces is wrapping up in hvegas as companies are showing off the latest. julia boorstin has more. >> reporter: i'm in vegas where there are tvs and foldable phones, but kwloa.i. is evewher. a.i. is incorporated into everything. samsung revealing the robot called the bali which can

project pictures on walls or check on your pets by sending pictures of them to you. the a.i. refrigerator tells you inside and expiration date and suggests recipes on the inn greed ingredients. and there are more a.i. custom chips for vehicles. mercedes-benz showcasing the in-car generative a.i. ass assistant. >> how about i take you on a unique adventure? >> reporter: it is designed to be empathetic and designed to the mood of the user. >> it is natural. it will sound like a human. it will be predictive. we will give you a suggestion of where you want to go. turning on the seat. >> reporter: l'oreal is the first pbeauty company to have a

a.i. power beauty tool and virtual makeup try on. not all a.i. was ready for primetime. meta has dpglasses to record videos with the a.i. tools they he are added to the glasses are not ready to demo just yet. frank, back to you. >> julia boorstins having a great time. dell is out with a new line of laptops powered by a.i. joining me now is the president of the client solution group at dell. sam, good morning. >> good morning. thanks for having me, frank. >> you made news at ces. unveiling the lineup of a.i. powered laptops. we heard talk about a.i. and how it changes laptops. what gdoes it mean? >> frank, to do grounding, we had a.i. in pcs for several years.

we used machine learning algorithms to improve the pc. making battery life better and configure settings and think about opt myimizing performance. you can run workloads on the high-end work stations as well. the reason we are talking about a.i. pcs and excited about it is the advent of the neuro processor or npu. the processor built into pcs to allow you to run a.i. workloads efficiently on mainstream devices. that's going to change the way that people interact and use their pc and really open up some exciting options for customers. >> this is running a.i. on the device itself, not from the cloud service. >> yes. exactly. >> i want to talk about what your customers are telling you about the devices and demand.

the majority of the business is enterprise customers. home depot and sports carmaker mclaren. what are they saying about the needs and demands? >> our customers, frank, want to make their teams more productive and capable. that is where, as you said, our business is 80% commercial in the pc business at dell. our customers are looking for ways to be more effective in the work that they he do. that's where the advent of the processors are bringing new ways of operating on systems. emer imagine as something as coming back from vacation and the system summarizing the emails you got and meetings that are coming up and helping you get ready for the meetings and helping you reply to colleagues and boss that engaged you. we will see that kind of capability in the pc that will

turn it into this great companion and assistant in getting the work done you need to help these companies in innovate. >> microsoft announced the a.i. copilot is available in the pcs. if you can run a.i. on the pc, what will the copilot do? >> there is capability today that goes to the cloud. we will build the mprocessors o the device. you will take more capability on the device that is faster and better. think about whether it is microsoft applications or other applications you use on your device running really techt effectively on your pc. this is the most exciting piece. if i look at the software companies out there, the amount of innovation in using the

processors, it is across pcs and building applications which helps with innovation. we will see the proper progressive companies investing in technology to drive innovation in the space. they will take the big a.i. models and run them in work flows they do every day on the pc to make the team more efficient. >> sam burd, great to talk to you. thank you. coming up here on "worldwide exchange," the one word every investor needs to know today and investors preparing for a one-two punch with the inflation data and the kickoff of earnings season. the moves to make on the very busy trading day ahead. "wex" will be right back after this. hi, i'm jason. i've lost 228 pounds on golo.

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this is after the agency launched the investigation in the boeing 737 lineup. and ed bastian will speak out as well. that is coming up in the 7:00 hour. ahead of the closesinging bell, we get the let eatest loo inflation which is showing the increase from headline. and earnings season kicks off. bank of america, citigroup and jpmorgan chase and wells fargo and delta airlines and united health reporting. on watching oil this morning on the back of the allied air strikes. wti is 4% higher. brent crude is easing back, but close tothe $80 a barrel.

crypto with the 11 spot etfs with massive in fflows yesterda. wisdom tree is down 3.5%. the grayscale etf down 1%. ahead of that, let's check on the futures. take a look at futures. we had a mixed picture today. still seeing the same thing. the dow off the highs from early this morning. it will open up 45 points higher. with all that in mind, let's bring in simeon hyland and bill stone. good morning to both of you. great to have you here. >> good morning. >> simeon, you are here in the studio. i'm going to start with you. we have macro things. the u.s. and uk attacking houthi targets and oil prices moving higher and we have earnings

season kicking off. >> one focus is on the fed. we already had the rally on the long end of the curve. we're stable there and all likelihood because longer term inflation expectation should hold steady at 2%. 2% makes a 4% ten-year. that sets the tone for everything and puts in context for peace in the middle east. it puts in context the houthi activity. as long as this doesn't spur longer-term inflation, even if the fed cuts a little bit later than folks anticipate, i think you still see stableatilization the long end. >> speaking of earnings, bill, you are looking at the big banks when it comes to commercial activity. i'll show the audience a chart you shared with us. commercial loan activity taking a sharp move to the downside. with that in mind, what is your expectation for later today? >> they will not be good.

i think that is a given. the market knows the fourth quarter earnings are not going to be good. what you are showing here is the loans which are falling off in terms of year over year growth in loans. the fdic special assessment as well. there is a lot in the fourth quarter. the bank stocks are all about the future and when that turn is as you have seen them run up late in last year. it wasn't because the earnings were supposed to be good in the fourth quarter. it is all about 2024. i would venture to say it is latter half of t2024. >> the yellow line, it's commercial line, is taking the biggest dip. to give people context of how impacted the commercial real estate market has been. bill, i'll stick with you. looking ahead to earnings season. right now, we have latest data

from lseg. you sent us data yesterday. it shows a muted growth in q4 right now with a 1% earnings growth in q4. what does that signal about the markets and how does that influence things going forward? >> i think we'll end up having a reasonable estimate. i would go more toward the number you are showing. it is probably the same story that it will be more about 2024 when it is hopeful we get more double digit earnings growth assuming we dodge any res ses recession. that is the big story from last year. the higher probability of a soft lan landing, if that happens, you should see nice earnings growth. >> s miimeon, investors shrugge

off cpi. it was a tick hotter. does ppi matter? are investors looking ahead to other things like pce and the fed meeting itself? >> it is a shrug off for the same reason we just mentioned. the longer term inflation expectations are likely to remain establish. if you look at the correlation of stock prices, they have not that much to do with the fed funds rate. they have everything to do with the ten-year treasury. if we see a little various, it is not that big deal. >> we are not doing the wex word of the day, but what are you expecting? >> i think you will see stability today. as long as the houthi activity doesn't expand to infrastructure, then you are likely to be in the same place. we are waiting for earnings results and if companies can

come in with the double digits. an simeon hyman and bill stone. thk you. "squawk box" is coming up next. have a great day. in order for small businesses to thrive, they need to be smart, efficient, savvy. making the most of every opportunity. that's why comcast business is introducing the small business bonus. for a limited time you can get up to $1000 prepaid card with qualifying internet. yup, $1000. so switch to business internet from the company with the largest fastest reliable network.

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good morning. welcome to earnings season. the next to wo hours, we hear fm blackrock and delta airlines and citigroup. we will get a new read on inflation and the ppi which is due out at 8:30 a.m. and breaking overnight. the u.s. and uk launching air strikes on houthi rebels in yemen. the price of crude jumping 4%. it is friday, january 12th, 2024. "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 is on location this morning in new york. he has some breaking news. andrew, good morning. good morning, becky. we have breaking news. breaking right now. blackrock making the biggest changes to the firm in more than a decade. it is acquiring global infrastructure in a cash deal valued at $12.5 billion. in a memo, larry fink saying the infrastructure deal is one of the fastest growing areas of our industry over the next ten years. the largest asset manager announcing a reorganization. ishares business embedded in blackrock. the changes to the str