in new york to talk about those things paul ryan, thank you very much we appreciate it let's take a very quick look at the markets before we hand things is over you're going to see that we had been in negative territory for the dow. still there, down about 80 points that comes after three days of declines s&p, up by 12. nasdaq up by 117, and folks, thank you for being with us over these past three days. we will see you monday right now, it's time for "squawk on the street. ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer, david faber at post nine of the stock exchange. bulls will get an assist from a high-profile apple upgrade, upbeat guide from taiwan semi. yields bounce as jobless claims hit a 16-month low apple is trying to lift the group as b of a upgrades the

stock. we'll talk about that. plus, shares of humana are getting crushed in the premarket. this is after the company did slash its earnings outlook it had higher than expected medical costs. it's also dragging down some of the other insurers as well and layoffs at google. ceo sundar pichai saying, we're going to need job cuts to reach ambitious goals. china bounce after a couple days on s&p, three days down on the dow. we mentioned the apple upgrades so much to start the year, how much attention should we give to b of a >> this happens to be the level it held, the technicians know that the reasons why they say you want to buy it, frankly, they take that immediate short-term off the table, which is very smart and talk about a series of reasons that i think are very sound, and this is talking about a.i. and it's talking about the

notion of the company -- vision pro, really reinventing. you know, the negative sentiment is just insane versus what they're talking about. i'll just give some of these points here. risks around that, we saw. the recent underperformance. most people disliked stronger iphone upgrade, that was interesting. and david, higher growth in services is my theory of why you can stick with this, because the customer loyalty is such that when you take their products, you take the service, and the service stream is very sticky. >> no doubt about that you're charging your credit card i don't know about you i see how it shows up on my phone. apple is getting charged, i don't know, numerous times a month for various things >> is it 3:20 a.m. i'll be watching and think, i just paid apple. >> that was $9.99, was that for the apple plus

that was my storage. i'm not sure what that one was for. of course, we talked about it for years, jim, it does get a higher multiple in part because of the reoccurring nature of those revenues and the fact that they are very sticky as opposed to coming out with a new phone, and you never know how it's going to be met in the marketplace. that said, the multiple still gives some investors pause >> i'm not going to disagree with that. we sold -- our goal is not to sell any apple ever, but they moved up a great deal. it's becoming -- we were becoming the apple fund, and i didn't like that apple fund's fine if it's 20 times earnings, not if it's 29 times earnings, so i understand exactly what you say that said, this is a road map, this bank of america piece, that really defensive tackles the defeatists who basically say, this cycle is bad. i'm struggling with vision pro, by the way, because candidly, i was hoping -- and carl, you watch a lot of things on netflix, and i was hoping so much that we would have this visual >> apple's been giving demos

i got my shot at vision pro yesterday. pretty fascinating you get a very minority report sense of moving these things around with your eyes. but yeah, the netflix thing is a sign that not everybody developer is going to be on board in the beginning on vision pro. >> maybe that's a whait and see. did you get to see any sports? >> there's some examples of, you're above a goalie at a soccer field or you're on the side of the third line baseline watching sports. >> can i ask a question? you had the first demo of it you have had a demo of it too. >> yes >> okay. just want to make sure >> this is payback for your doubts about apple >> thanks. isn't the best way to actually convert somebody to give them an opportunity instead of not letting them use it? >> i think they've come up -- sni >> do i just not exist, apple? >> there's a special one they're

developing for you where you just watch the mets. >> couple the apple call with taiwan semi, double beat, gross mar margins beat the capex guide this year. >> it's interesting because the n nanometer, talk about apple, they're saying handsets are strong that's very, let's say, counter to the prevailing wisdom that's why the b of a upgrade comes out at the right time. taiwan semi, of course, we all know, is where things are made because everybody -- almost no one has foundries, so you're looking at apple numbers also amd and what i like about the taiwan semi is the tone of it, as you mentioned with capex it's the pc cycle bottom i watched enrico this morning from hp and sometimes i want to say, just sayit. say, listen, this is impact. he's more circumspect. >> you mean about a bottom >> i want him to back up my thesis since my thesis is pred

kate predicated on what i hope he'll say one day. >> he's a bit more cautious, but he must feel the need to be. that capex number from taiwan semi, and the fact that they see demand increasing for the first time in a little while, given all the inventories that have now been worked through, stuff that was left over from the pandemic, for example, is not unimportant. >> it's amazing. >> three nanometer wow. >> it's a hair >> microscopic it's incredible. >> remember, that's good for micron but you know, it's really great for lam research and for kla and, yes, even for amat because they're saying, listen, we need to buy more machinery to make more chips, and that's also -- those stocks have moved up in anticipation that this could happen, but it's still a breathtaking positive story where people didn't think so this stock could be -- kla could

be at $600 today, honestly >> we got a couple nice news points in tech meantime, jim, philly fed shows disinflation continues, prices paid down 13 points. claims where people are throwing the weather at it, i mean, do you file for unemployment in a week like we just had, weather-wise >> obviously, in kansas city, and you don't file, you can go out of your hotel room it was minus nine, and that's not the time you're worried about exposure versus getting a check i will say that a skeptic could come in right now, david, back me up on this, please, and say we do need a rate hike >> a skeptic could come in and say we need a rate hike? okay all right. why? >> well, because there's the numbers other than philly fed, and philly, by the way, is a city where all they really have is the eagles, and i would say that the philly fed is probably depressed by the eagles' performance, but there is -- i'm only somewhat facetious there. i do think that what you have is a series of great numbers, and

yet, we all think that there's -- whoever is the forward yield curve, whoever's buying that, because that is a collective sense, that could be a collective sense of people who have lost their minds. >> couple pieces on the tape this morning about disinversion. we're getting there. getting close. >> by the way, look, if you look at -- there's an acquisition today that we're going to talk about with mdc homes by a japanese company i think that there's a sense that we're going to have dramatically lower mortgage rates. i don't think that's going to happen either. >> it may not. meanwhile, there's another story, though, about $8.8 trillion in money markets that as rates move lower, people are going to be more motivated to consider the stock market as a way to get elevated returns. $8.8 trillion. that said, i don't think there really -- it doesn't -- like who's really going to -- it's not going to go like that. >> when you're making 5% --

>> to your point, if rates don't really move, then forget it. >> if they're giving money away, i mean, i was quoted a 3.8% from new jersey municipals. i have to think that maybe, sure, you can pick nvidia, but you may pick humania, and you're not going the get the return of nvidia >> that's where we're headed now. >> good segue, you mean? >> very good >> humana citing higher than expected medical loss ratios discover is in there as well i know you talked about this on x last night on some of these provisions >> well, you know, i look at discover if this were 2008, you think that they're, like, discovery is, like, look out i mean, the -- david, the losses here, the chargeoffs >> net chargeoffs, 4.11% that was almost -- >> that's terrible >> yeah, it's 198 basis points,

almost 2% higher than prior year >> who are they letting have a credit card? i remember when i had eight credit cards when i got out of law school i said, i got to start paying some of these. >> credit card net chargeoff rate -- this is why the stock is down and just over the quarter, increase in delinquency. >> i thought it was astounding if you're someone like jamie "bitcoin" dimon, i think you would say, those guys are a bunch of -- i don't think he's going to call them clowns. it's a bunch of bleep. >> meanwhile, the carnage at humana from a stock perspective. there it is, over 13%. >> we made a lot of money in humana, and we kept a little back what happened here is the medical advantage plan, they got it wrong they -- i'm trying to get

exactly what my medical advantage -- here it is. i pay $172 a month for the supplement, and that's a bargain, given how much you have to -- >> it was kind of two different things one, they may be happy about they came in below in terms of adding members >> right >> for -- >> they raised the price >> for medicare advantage. but they may be happy because they seem to be losing more money on those members, so they're going to have fewer new members to lose money on because of the medical costs >> it revealed -- david, let's go there >> wait, wait, where are you going? >> i want to go there. >> where are you going where? >> this is so "jeopardy!"-like you know who else was good -- never mind okay, humana >> yes >> the moment you knew that there was a discussion between humana and cigna, that was the hail mary pass, not unlike what dan shulman did at paypal with

pinterest. it was a desperate act of a company that was truly in trouble. cigna announced a buyback after these talks. >> after its shareholders revoted and said, don't you dare do that. david cordani may want to do it, but did back off, and cigna did, as you say, the buyback, as opposed to doing a deal that, again, as i reported a number of large shareholders were saying, please, no they couldn't understand there was a multiple disparity between the two. >> he should have realized >> we also had unh on friday if you recall >> the stock got hit, but unh did better than humana it is tough to figure out -- when you try to figure out the different managed care costs, all you're trying to do is figure out if you can save a little money we stuck with humana because they have a good program but it's quite obvious they lost control of the situation, and

that's how a stock cowboy down this much. when they tried to do cigna, i think that was a recognition of, let's do something we're going to miss the number by the way, that's a good tell for people, when you start doing something that seems insanely stupid, that may be a to cover up something that is ente substantively bad. >> i don't know enough about the talks to confirm if that's the case it was november and december where they really saw higher than anticipated inpatient utilization, and that just cost them more money than they had anticipated. also outpatient surgeries as well, apparently a lot of people went to the doctor in november and december. >> initially, we heard that it was pickleball >> the achilles heel thing >> what i come back and ay, it was really bad underwriting, not unlike the bad underwriting at discover you see people who mispriced their product. some people, just post-covid, didn't figure out what to do humana is not a disgrace they just got it wrong >> we've also got this piece in

"the journal" about lilly and novo boosting prices of mounjaro, ozempic, and hundreds of other jobs. >> lilly can't make nearly enough these are like foundries they're very hard to build a. lot of people in san francisco said they have a me too or something better just so you know, lilly has all bases covered. the fact that the stock is down maybe is a political risk, but i don't really get it. >> make something people want, aren't you allowed to raise the price for it >> it's america. >> it's called capitalism. >> absolutely. >> yeah. >> yeah. in china, they would string up david ricks. i think it's good that he's able to stay ceo. by the way, i think the colts did well this year >> who >> the colts thank you for bringing it back to football. >> i always do i was going to say that you were like joe buck. but i decided to pivot we got a special guest

joining us right now, and that's nelson peltz, founding partner at trian partners, with a bit of news so, nelson, good to see you. >> hey, jim. how you doing? >> all right let's go right to work apparently, you're not happy with the direction of disney and bob iger, so you really are going for it i wanted to get a sense of what you think is fortunate and unfortunate about the current situation at disney and the board. >> first, let me tell you, i want to say good morning to david and carl, and thank you for having us here today you know, today is an important day. we filed our preliminary proxy statement, and we're opening our website, which is restore the magic, and we did all of that, jim, because we love disney. you know we love disney, and it saddens me that the board didn't welcome me, because our goal is just to work with them, to help them,

and to help them make the company better, which, frankly, we have a history of doing you know what was interesting, jim, is last week, we went -- seven of us from trian -- went to disney world in orlando and it was fascinating, because we went not the way board, directors, family, friends go. we didn't have any special passes we didn't have any tour guides we didn't have any leg breakers -- pardon me -- didn't have any line breakers didn't have any leg breakers either and everybody was nice i mean, magic kingdom and the hollywood studios were terrific. the people were wonderful. all the employees were smiling, and that's probably in large part because they didn't own any disney stock >> oh, geez.

>> that's the problem here, jim. this company is just not being run properly the board oversight is awful it really is the park, as i said, certain rides were great, but you can see it's getting a bit long in the tooth. they need more capital invested. they need more capital invesinvested now, because the competition is getting keener you've got comcast opening 500 acres right down the road in two years with a brand-new park. they're also opening parks in chicago, opening a park in texas -- pardon me, not chicago. las vegas. and these -- this is where all the value today in the stock price resides. >> but nelson, i understand from

the background to solicitation, you had as many as 20 meaningful interactions with the board. why is that not enough >> come on, jim. you know as well as i, when you're on the board, you have a vote people need to listen to you management need to hear your position they offered me to come on board last year as a visitor, a guest visitor on occasion. that's not going to do it. we have been around this stuff forever. i think we've been on more boards than any company in the world, and we've gotten unbelievable results, and we did it, at the end of the day, without breaking any glass i mean, think about it even the proxy fights, the ceos stayed on. they worked with us. some became advisory partners to us this is after a proxy fight.

>> yeah. >> said the most wonderful things about us. look what the stock did. that stock, for ten years, stayed in the 70s. we got on the board, it went from the 70s to $160 come on. it didn't happen by -- >> hey, nelson, it's david listen, i feel like it's deja vu, because we had this conversation with you a little over a year ago when you were trying to get on the board, and then you decided not to. and they're saying the same thing they said then, too, which is they question the relevant experience that you have in terms of the entertainment and media business and why you would add anything they, of course, say that they have an incredibly well-stocked board of people who are fully capable of holding the management team accountable, and again, you know, what's the plan like, other than saying they got to do better, what's the plan? >> david, you asked it just like i wanted you to. i mean, as written

first of all, this board, from bob to every independent director, has underperformed the s&p on every measure one year, three years, five years, ten years how much more do we have to go how long do we have to continue to suffer with this great board? by the way, they said i have no media experience i don't claim to have any. but i would tell you, i don't think they have much media experience they broke a record this year. do you know that the last five movies in a row were losers? now, that comes with media experience, i want a guy who doesn't have a media experience. so, david, let's deal with facts. the company is underperformed. i made a run at them last year they promised they were going to improve things i took them at their word. things got worse

the stock went down. results got worse. okay so, no more. i can't continue to give them more opportunities >> understood. although, to be fair, don't you need to be fair to compare it to the overall entertainment group? this is a unique period in time in which as you well know, there are headwinds and changes that are generational in terms of trying to deal with the move to direct-to-consumer and make it profitable so, you know, comparing it to the s&p may be a bit unfair, don't you think? >> oh, really? i mean, that's what gerald is a buy stock compare it to, david that's a good point. look at netflix. netflix, last reporting period, did $30 billion in sales, 20% margin okay then, you have warners they did $30 billion in sales and media with a 20% margin. disney, the big daddy, did

$50 billion in sales, a 6% margin now, that's the competition. those are the guys who all suffering through a change from features to streaming. some have been able to cope with it basicallily plus, this company, bob said it in 2015 and '16, that streaming was a real issue it feels coming. it was here to -- it was going to continue to grow. he said that back then and then, what happened? they did nothing and look what happened to espn the crown jewel in the -- of disney continued to lose subscribers, lose value, and now they're negotiating deals for espn out of total weakness they could have made deals on espn in '15, '16, '17, '18 when they saw the streaming thing

coming they said it directly. >> okay, so, they did miss that, but we do get a kind of flavor of what disney feels about the person you'd like to have on the board besides you, mr. rasulo. it does sound like he was a stalking horse for the largest shareholder. i don't find that wrong, but they do make it sound like that's something wrong there and that bob iger broke mr. perlmutter's heart when mr. rasulo was basicallyfired, passed over, i should say. does mr. rasulo -- is he better than, say, does he know more than, say, james gorman about the entertainment business >> at disney for sure i know james i know how many times james has been to the park i don't know what experience james has with disney. and oh, by the way, james, who i like very much, was given a board seat he didn't have to have a plan

for the company. he did not -- >> do you have a white paper that i could see >> hold it, hold it. he didn't have to set a goal for the company. he got invited on the board. >> yeah, he did. >> and i've got to go through these bells and whistles guys, i'm the largest shareholder in this company, the largest independent shareholder. listen to me >> i want to come back to that for a second are you? i mean, ike perlmutter is. i still don't fully understand -- wait let me ask the question because i'm curious about this 25-plus million of the shares that you are voting, so to speak, are ike's, and then trian owns, my understanding is 7-plus million. what's your relationship with perlmutter is he paying you are you getting fees somehow you're doing an awful lot here that wouldn't seem to add the economic value for trian

holders, given your relatively small ownership of disney when you take out perlmutter's stock. >> david, i am thrilled you asked that question. okay >> okay. >> thrilled, okay? because every fund around has investors, whether it's a pension fund, doesn't make a difference, whether it's a sovereign fund, and whether it's a bunch of individuals what is the difference it's money these guys want to make money. that's why they give money we just save one step. ike perlmutter gave us shares. he said, hey, guys, you figure it out i don't want to come back to the company. i don't want to be an officer. i don't want my job back okay i just want to make money on my stock, and owe, by the way, when i'm gone, it's all going >> but that's not trian fund money that went into buying his

stock. he's just lumped it in with your ownership stake. >> david, what's the difference? if a guy gives me a check or he gives me shares. i have the full right to vote it, to do whatever i want with it what's the difference than if cal gives me a hundred million bucks or shares in a company there's no difference. it's all under my control. >> understood, but your fund holders are only going to benefit from the increase in value on the shares that trian holds. they're not going to benefit from the increase in value that perlmutter gets from your efforts. >> are you asking, or are you telling? >> i'm asking, i'm asking. >> let me tell you something theinvestors in what we call our spvs, they wind up making money on how well we do. now, if they're 10% of an sbv,

they get 10% of the ups. if they're 50%, they get 50% there is no difference you want to talk about this all day long, that's fine. >> no, no. we can move on i just was -- i was interested in getting an answer on that >> but i do want to know, nelson, the last time you were on, it's very clear that you had a successful trade can you tell -- how did trian do when it saber-rattled and then when the stock ran up to $117? did you sell all your stock? >> sold half and you know what i did, jim i want to tell you, jim, and i'm glad, again, you asked that question the stock was $118 when i made the decision and the announcement that we were going to give bob a chance $118 now, i could have sold all my stock at $118. i could have sold half my stock at $118.

but you know what i did? i sold -- i waited until the market settled instead of taking advantage, and by the way, there was no law against it if i sold my stock. >> not at all. >> let me just finish. >> of course >> i waited until it settled, and i sold it at $113. i sold half and kept half. >> but i want people to understand that's absolutely fair but i do want to come back to what is obviously a degree of antipathy between -- maybe i'm reading this wrong -- between you and mr. iger if the if there were substantive talks, maybe you have the white paper to the board itself, the board does have some very serious people on it were they not given or apprised of some of the ideas that you had? >> jim, they have a lot of

substantive people on the board. let me give you this fact. the entire board, the entire board, including bob, own less than $15 million worth of stock each that's not a hell of a lot of commitment to this company, given the fees, et cetera, that they get from being a director or an officer of this company. when you want to talk about bob, bob has taken a billion dollars out of this company since he's been there >> do you think he's overpaid? >> i got to finish this statement. last year, he got paid $31.5 million. okay earnings were down they missed everything the stock was down everything went there, and he got $31.5 million.

you know, i don't understand what this board is doing i don't know what they're there for, other than friends of bob you know, that's what this is all about. just friends of bob. it's a hand-picked group of directors who are not doing their job. i lost you guys. >> well, i think the board didn't get hurt as badly as i thought if they have that little money in the stock, nelson i thought they were going to be clobbered. they obviously haven't been hurt that bad >> they get 100% right, jim. they didn't use money like the great loss the funds, mr. perlmutter, everybody -- everybody's pension fund those are the guys, not the board, not the inside directors. i mean, you know, this guy has

been paid so much money, and i want to work with bob. i want you to know my goal is not to do anything but work with bob, and jim, you and david and carl all know that we work with people look at the phenomenal success they spent a hundred million bucks to keep me off that board. the stock was in the 70s i got off three and a half years later, the stock was about $160. but everything was up. margins, sales, market shares, all of that stuff. that's what we do. and then david taylor, who we thought before i got on the board, said the nicest things about me when i got off, they gave me a beautiful prize. memorabilia. we didn't go to embarrass anybody or hurt anybody. we want to help the shareholders, and let me tell you. these shareholders have suffered

you can tell me, well, maybe they shouldn't be compared to one and three years because of streaming. how about one, three, five, ten, every single time they have underperformed the s&p david, do you want to go back ten years? >> no, i hear you. listen, that's a compelling argument you're making now, that said, bob iger has made it very clear that he is there to -- he's, you know, cutting costs significantly. he started a year ago, and he's only increased that, nelson. he's admitted that they kept -- they took their eye off the ball a little bit when it comes to motion pictures, and some animation. it seems as though they're taking corrective action there and they do have, they say, a plan to get streaming to a positive cash flow place soon, relatively soon, not to mention considering strategic options for espn i mean, they seem to be doing many of the things that a year ago you wanted them to do, and yet you continue to persist in wanting to be on this board. >> but they're not, david.

the promises bob made when he came on the board last year, at the end of '22, have not been kept if they were kept, i wouldn't have resumed by proxy fight. i stopped the proxy fight because of the promises he made. okay i trusted him and hoped that he was going to do it and i said, i'm stepping down. not because i was worried about having a proxy fight that keeps a guy like me -- >> nelson, i'm sorry to be -- i don't mean to be rude, but i know we have to move on. i do, of course, welcome bob iger to call in. mr. rasulo, i'd like to hear from him mr. perlmutter, of course. but i do point out that mr. iger seems extremely opposed to you, but let the -- if we had a vote here, i think given the total shareholder return, you certainly have a shot.

let's leave it at that and see what the opposition says i want to thank you, nelson, for sharing -- for the pictures, of course, at disney world. obviously, you had a good time and for coming on "squawk on the street." it's good to see you >> thanks. jim, david, carl, appreciate it have a great day, guys >> thank you, nelson thank you. >> that does kind of remiddlremind you of what barclay's said yesterday. "we suspect there's significant management attention being diverted towards the proxy battle instead of operations at a time when the company faces strategic decisions. >> yesterday, the stock got hit with a typical wall street view that they're not going to be able to pull it off, and it did sound like something that nelson is not too fond of the underperformance here is stark. let's not mince any words. mr. iger can come on and say that mr. peltz is of no value. i come back and say, it is -- when your record is as bad as disney is, then you would want

change if this were, let's say, and i know david thinks i'm beleaguered, but if this were the nfl, do you think any of those board members would still be here? i mean, i would fire the assistant linebacker coach before i'd let this continue >> part of it does go back -- let's not forget there was a different ceo for a number of years. >> you just -- bob chapek. >> you may want to criticize the board for the lack of success in succession >> what is amazing is that's a very heavyweight board it's not a board of honorarium people >> it's got a lot of very serious people >> it is a little -- i mean, it's quizzical how about that it's quizzical, the performance. but then i can understand people being very angry unless they didn't own stock full disclosure, my travel trust as taken a big bath on this, so i'm not -- i don't like to lose money. it feels awful and this is not like doing daily fantasy where i lost $35 this is real money that i wanted to give to charity

and i think other people feel similar if they own the stock. you feelaggrieved. it's real money. it's not play money. >> one thing we didn't get to with nelson is whether or not the company is culturally or politically tone deaf in ways that cost-cutting or succession are less relevant. >> i.'d like to hear on that side, but mr. perlmutter has some exceptional views i'd love to hear what he has to say about it he's a tough-nosed business person, and it does seem like that's what's blacking. they had a cfo, christine mccarthy, who may not have been at the top of her game near the end of her career. >> speaking of boards, jim,

sheryl sandberg leaving the meta board for the first -- or after 12 years >> right >> that's going to change the color of that board as well. >> it's interesting, because there is the opposite situation. she stayed, and the stock has just been nothing but a horse. i think the new products are going to be amazing, even though they were treated with little respect at ces mr. zuckerberg's relationship with jensen huang at nvidia is about as strong as any ceo i've seen and i think that if you want an a.i. play, you want meta and may i just point out, david, i have to do this -- i'm going to go to carl, i'm sorry >> that's okay >> sheryl sandberg's brother-in-law bernthal mikey. in two different episodes of the b "the bear" just lit it up >> you want to talk about luxury this morning >> are you going to birkenstock me >> no. i'm going to richemont it's hard to figure out what's going on in china. maybe the highest end consumer seems on okay.

but also, by the way, north america, even europe, but generally, better across the board. revenues for richemont, that stock is up over 10% you see it not over the last year jewelry sales. watch sales up >> watch sales is key, because you see, david, your remaining way to be able to show wealth in china without being prosecuted by the government is to have a very expensive watch you can't have a very expensive home >> sales were up 25% in china. >> communists are not against -- >> very low basis. this all compares on china year over year given they were just coming out of covid. but that's a big number, and is that stock isrunning big >> that is a change of narrative versus some of the other, like we just saw burberry not doing very well. richemont, you can get a great

watch, and they will not come after you. it's not considered to be -- i would not say it's extravagant, even though the price clearly is extravagant. >> we had burberry last week with not such a great outlook. you mentioned birk, and it's down 6% or so on concerns about inflation. th they say the consumer is challenged but resilient >> i was a little let down, but the stock had a very big move. it was down a little bit more in the premarket. it looks like the "barbie" premium has come out of it very wealthy -- no, that's the "barbie" premium >> where's the "barbie" premium? >> because there's a tie-in with the film >> i watched it. i did finally watch it >> she had a birkenstock >> that was big? >> it was very big >> got it. >> it was. >> okay. i believe you. i believe you. >> skeptical as always really difficult >> holding you to account is

what we like to say. >> i'm just wondering. i don't know >> i had mattel on i know -- mattel did not benefit nearly as much as i would have thought from that movie, which, by the way, i thought was hysterically funny and watched it twice and my -- just so you know, in all fairness, if you were to go to my closet, david, you would see the birkenstock effect after the movie. you bought them but you don't wear them? >> i don't wear them, david. lisa wears them. >> oh, she does? okay >> jim, information technology is going to lead us today, up better than 1.5% we talked about apple. didn't mention google, though. layoffs now in the past or since january 10th, over 1,000 employees. and youtube yesterday. >> and this is -- a lot of people feel the mag seven is in trouble, but i think the mag seven is now separating itself i do think that alphabet has embraced the year of efficiency, but just didn't use that term, but they're being -- doing what

i thought they should have done two years ago and really hectored them to do. they are doing it. and it's going to bring out a level of profitability david, the stock shows at 24 times earnings is that expensive? >> no. of course it's not expensive particularly given the top line growth that's at least possible there. you do wonder about their monopoly, so to speak, and search, whether it is under some pressure as a result of changes in generative a.i. and what microsoft is doing to be able to accomplish there that's not an insignificant risk that said, people have always been waiting for them to really get fit. that's kind of what they use now is their term in silicon valley. we're getting fit. >> moon shot, other bets >> instead of saying, we're firing a lot of people and putting them out of work, we're getting fit. >> you can't be like -- zuckerberg did not -- he moved down the glass door rankings when he just said efficiency because they're not ruthless zuckerberg -- >> they were first, and meta,

obviously, we all know how much the stock benefitted from their focus on cost after spending crazily, some would say, on the metaverse. >> well, i have to go to someone who's a little more culturally attuned to you after my bomb of birkenstock. we know that harry luck was the first to be killed in "magnificent seven" because robert vaughn said, please don't kill me first. this is to john sturgis, an actual conversation, so i'm beginning to think that the mag seven, is it going to be harry luck that's killed first, which could be tesla, of course, because remember, he was down there to find a hoard of gold, not to help the villagers. he was more like dobbsy in "treasure of sierra madre." the book is incredible >> speaking of magnificent seven, there's one name this year that has shown far beyond all others, and it's up 16% for

the year >> wiare you talking about the "n"? >> of course i'm talking about nvidia not to mention amd is up another 4.5% i don't know if this is on the back of what we heard from gsmc. >> absolutely. >> that stock has had a rocket move >> did mark time from july to the end of the year. >> it did, and the multiple obviously continued to compress as a result of the fact that they were making way more money than anybody could have anticipated would be the case. but it's making up for lost time there, jim >> well, it's the yul brenner of the magnificent seven, and i'm beginning to believe that meta is steve mcqueen >> we got upgrades all around the chip space adi and nxp getting up you mentioned tesla, jim piece in "the times" about drivers, owners who are dealing with cold weather and understanding what that does to a battery overnight. >> and that dovetails with steve schurr from hertz, by the way, and upgraded hertz, because they got realistic about the rear

ending problem >> adam jonas says that was the right move, goads to overweight, hertz. >> i thought that was a great call because the cash flow has improved since steve schurr has come on at hertz, but they are a vulnerable, seven-member, and i think we have to stay tuned about who else is and isn't -- microsoft, by the way, just two pieces of love today and a lot of $400 price targets. that is -- that's going to end up being a survivor. three members. >> mag three >> yes, the mag three, three members, it may end up being the three amigos >> i mean, tesla continues to be under some pressure. of course, it's down significantly this year as a result of questions about demand and/or price cuts. we talked yesterday about the european price cuts for the model y. but rivian and lucid, guys -- lucid is down 35%. rivian is down 32% >> is it too early to buy lucid? >> this year this year. >> the bloom is off the

proverbial, and the cold weather doesn't help, as carl pointed out. they don't do as well in cold weather as i.c.e i.c.e. does better in ice. >> i.c.e. is better in ice it's hard to charge in cold. there's lucid. >> do we have fisker >> well, rivian is the more -- perhaps more significant >> i like rivian >> still has a $15 billion market cap >> backed by amazon. >> and baird makes the top pick today, rivian. >> i think rivian has real horse sense. >> maybe they're going to bottom ticket here, because that thing has gotten crushed >> we should put fisker in on that >> why are you mentioning fisker at all >> why because at one time, fisker was going to be -- we had them on repeatedly that's why >> oh, geez. >> they got to do 100 for one reverse split to get that thing cooking. >> yeah, it's 86 cents >> couple industrials, jim fastenol is leading the s&p. and then boeing, max issues

aside, gets this giant order from a big carrier in india. >> i thought that was very meaningful i do think that yesterday's announcement about where they are, being certified, was a positive but remember, in the end, again, i come back to the idea that if you wanted to get a plane from airbus, get in line. there's just none. and the travel and leisure, we still have the long on money, short on time thesis going post-covid people are traveling they're not giving up. watch booking holdings watch expedia. watch marriott they've all been big winners >> vail resorts gives an update, down 16 because snow has not been great ebitda is going to come in at the low end, but maybe they make up for that as the season develops citi goes to sell save, saying, unlikely to be other suitors unless they do some major debt restructuring. >> that read a little like plug power, and these are companies that are struggling to survive,

and i kept thinking about something you said to me yesterday, david, what happens if a deal is blocked and therefore spirit doesn't survive? what's accomplished by that? >> nothing nothing great. our bankruptcy process is a good one in the sense of you can reorganize and come back, and we know plenty of airlines that have not to mention any number of other companies. i mean, heck, charter communications once went bankrupt remember things do -- >> do you think amazon is being opportunistic with that particular sports acquisition? >> with the diamond? talking about bankruptcy they may be. as they get even deeper into sports at amazon >> amazon, by the way, not against the vision pro willing to cooperate andy jassy, huge sports fan, probably put it on and realized you could watch the giants lose in multiple colors >> there it is avoiding a liquidation there by the way, that was part of the disney deal with fox they're thankful they got rid of them immediately in terms of divesting them, and they've done

nothing but go down in value it's a -- it's an interesting question in terms of what that future looks like for many of these regional sports networks guys, i wanted to end on pharma, just talking about big moves, because pharma is under a lot of pressure carl, you mentioned the price increases for some of the key drugs we've talked so much about, the glp-1s. >> i think health care is having a reranking just because of the health insurers. they shouldn't, but there's a sense that health care was supposed to be a nice place to hide or take advantage, got up to 22% of the s&p, and it's high right at the jpmorgan conference so it's possibly saying, wait a second, maybe this is going to be a rethinking of health care i don't think it should, but i know it's happening. and the glp-1s can't save

everybody. >> unh and walgreens are the two biggest downward impacts on the dow today, one reason why the dow is having trouble escaping that we'll watch bonds today. data's largely out of the way after we got starts and philly fed and claims bostic spoke this morning. we're going to get him twice today, so we'll watch for that take a look at the curve here. ten-year still pressing above that -- or at the top end of that range

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seuss house bought a large home builder to create a top five in the u.s. this reminds me of what happened with letter x, david. >> yes. >> nippon steel. >> the japanese are back buying. it's incredibly important it will become a put underneath our stocks as they did in 1989 when the nikkei average was so high. >> the nikkei is high now too. >> you bet. >> it's not back to -- >> not back to '90s. >> not yet but -- >> it's had -- >> it's knocking on the door and we have to start thinking that the japanese are here, they're buying and paying again way too much, and, carl, their slogan at the housing company make the home the happiest place in the world. i think that's relevant. the dalai lama probably agrees with that. get him, book him for the 10 instead of brian - >> you got it. we'll get on that and get the

dalai lama, please. >> what's tonight? >> i'm - >> dalai lama. >> i'm trying to -- i don't remember i'm trying to suppress laughter elanco, doesn't have great balance sheet, but it's about pets and jeff simmons is doing exciting things for those who have pets particularly if you have dogs, saving a lot of dogs' lives and an interesting guest. >> good show that was good. >> yeah. it was a good show. >> yeah. >> watch the japanese. it's like when they came in and wanted to by komag. >> remember when they bought rock center. >> i sold some of that in the deal. >> they didn't own it too long. >> no. sold to you, david. >> movie business, what didn't they buy. >> all right columbia, watch the columbia presentation yesterday. >> it is time to sell. can we sell the show to them. >> whatever -- bought everything in the end you kidding me >> see you at 6:00 p.m. eastern time dow trying to shave opening losses down 100. don't go anywhere. eward analysi,

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good thursday morning. welcome to another hour of

"squawk on the street. i'm carl quintanilla with david faber and leslie picker. after a few days down on the dow and the s&p 500, finally some enthusiasm surrounding tech and semis as some of the etfs that track that space at an all-time. >> i we are 30 minutes into the trading session. here are some movers we're watching at this hour. shares of humana plunging, the company warning medical costs will be higher than previously expected in q4 due to higher demand for medical services. the company reports earnings next week. other names like centene and united health down shares of discover falling as shares at the company 60% due to higher bad loan provisions shares down nearly 8% right now. watch apple today. the company says new versions of its watch without blood oxygen sensors will become available after apple denied a reprieve in its court fight. apple did get an upgrade from the street today more on that later lots of apple news sending shares up 2.5%

keep an eye on disney, activist investor nelson peltz joining us last hour saying the promises ceo bob iger made when he came back have not been kept. shares of disney up about 0.4% right now. let's talk about yields. they're sitting at more than one month highs. that's yields on what you get investing in treasuries and the like let's bring in mike santoli. yields figure into our views of the stock market what do you make of the move lately >> 10-year, 2-year risen to where they were in mid-december and the past couple days you've gotten a little bit of a test on this idea, is good economic news good for the markets if you believe yesterday's retail sales number, had gdp estimates going up the fourth quarter, today, really low weekly jobless claims do we extrapolate and believe it's a real number, the economy we have right now? that's where the market i think is trying to sort out.

i don't think that we necessarily are going on the assumption we have a 5% nominal gdp economy, which is what we had coming into this year if you believe the gdp because if that's the case, fed maybe doesn't have to do anything in march. i think we're going back and forth on all of these things at the same time, i think the entry point was crucial for this year, which is, super over bought market, we went straight up, and what the market does when it gets stretched is goes hunting for the cluster, the clustering of crowded consensus opinion. one was the broadening of the markets, two was the march rate cut and maybe a series from there, and i think it's really kind of a normal process this kind of predictable, necessary, and probably ongoing correction. half the s&p is more than 10% from its high, so not much damage at the index level. i wonder whether you get rescued by taiwan semi and apple as we move on from here.

>> in the last hour we referenced the "wall street journal" story not one we're unaccompanied to seeing, 8.8 trillion in money markets, are people going to be forced to look for returns in the stock market again give me historical perspective. >> i dislike this line of logic around, well, there's this massive pile of cash which in nominal terms seems enormous, and it is, but i went back and looked at that chart and said in early 2015 you were at $4.7 trillion in deposits and money markets. that was a bigger percentage of equity market cap then than this is at 8.8. we have a $45 trillion stock market a lot of that cash, leslie, you know, the money market stuff is just deposits that migrated there and it's not money that's about to go into the stock market, but i think the key is, the more time you spent figuring out which discreet dollar is destined to go into stocks, is it buyback, is it money market

funds, is it cash on the sidelines? the less i think useful it gets because you don't have to worry about it if the economy holds together and earnings come through, people let equity exposure goes up, don't sell stocks as readily and the market does fine you don't have to account on the ledger for where the dollars are coming from. >> right. >> you've never liked that discussion. >> it's a tough one to - >> although bofa today puts the cash at households at $18 trillion. >> he yes. >> a lot more than - >> that's a buffer for consumption and shows you that inaggregate the household sector is in good shape but doesn't mean, you know, x number of those dollars have to go into equity funds in order to kind of meet my s&p target i don't think that's what she's saying. >> some kind of psychological component given the incredible rise we saw in the stock markets last year if you're talking about household cash and talking about money that's in cds, difficult to get out perhaps maybe less inclined to do it to

put it into the stock market this year, psychologically given how much it rose when talking about just overall asset allocation. >> but also if you're already in the equity market it raised your exposure to stocks because it went up in value the rebalancing effect, if i just look at the equity allocation among households, it's not low it's not like people aren't in this market. no they're above historical norms in terms of exposure to stocks i feel like that's a little bit of a kind of circular parlor game. >> mike, thanks. we'll talk in a little bit mike santoli let's dive deeper with charles schwab investment strategist liz ann sonders. hope you don't mind me dragging you into the discussion of sideline cash and whether you think it's important this year or next year on an index level >> i 100% agree with everything that mike said i think that that is stickier money in the sense it's come

from more traditional deposits and/or maybe even places where investors had gone in the low rate environment to pick up yields, now they can do it in the safety of something like money markets, the percent of total market cap is fairly low relative to history, and it's also the case and i don't think mike mentioned this, that if you want to find reasons to be bullish on the equity market it doesn't necessitate a move of some or any of that money going from money markets into the equity market. for the 1990s, you had a simultaneous move up in money market assets and the equity market, so i agree that for or disagree for people putting a tremendous amount of weight on that as sort of a perspective reason to be optimistic about the market i think the market can do well, but not necessarily because that money has to shift gears and move into equities. >> right that's pretty interesting. interesting also that the journal gave it so much play

today. as for yields, liz ann, how much are you on guard to see if at least the 10-year dives deeper into the 4s and starts to challenge our assumptions about not just the pace of fed cuts, if there are any, but the pace of inflation as well >> well, i think yields are still in the driver's seat, i don't think we break that relationship in the near term, and by near term that probably carries through the march meeting when we see what fed does, and in particular, since the mid-point of last year that connectivity has been extraordinary with the move up in the case of the 10-year from sub-4 to 5%, directly corresponding to the correction from late july to late october in s&p, slightly bigger correction in the nasdaq, and then you had the flip back in the boomerang in yields from 5 down to sub-4 that gavenot onl a lift to the overall market but really was fuel for small caps because of that greater sensitivity to moves into yields, and a lot of people are thinking about the calendar year

turn as some reason why the market has struggled a little bit. i don't think that's it. it's just coincidentally maybe you saw the bottom in yields occur right at the end of december, december 28th i think was the date for the 10-year, and sure enough choppier action in the cap weighted indexes or larger cap indexes and much weaker performance in the small caps i think that that tight inverse correlation between bond yields and stock prices is the story, at least near term and will continue to be. >> continuing from 2023. tomorrow will mark actually a week of fourth quarter earnings season which, speaking of choppiness, it's been kind of a noisy quarter out of the gate. do you expect the rest of the fourth quarter earnings season to be kind of more of the same we've seen downward revisions, some mixed picture in terms of analyst notes and so forth >> yeah. i think the downward revisions have been pretty notable right now what they call the blended growth rate, which is

the still fairly low percentage of stocks or companies that have reported it's their actual results blended with the consensus for the companies, and that's, obviously, going to change on a day-to-day basis as we get more actual reports in. that's down just a little over 4% right now the expectation just as recently as october for q4 earnings was 11%. that's a pretty decent haircut you've seen not just the haircut for the quarter we're reporting but all four quarters in 2024 have been haircut down what ultimately may happen is analyst during earnings season cutso so much you bet better than average percent beat, but it's the broader trend we were too optimistic heading into the end of the year and almost certainly too optimistic for a calendar year 2024, so i think there's probably still more downside to go to sort of level set 2024 earnings to the macro

backdrop. >> finally liz ann, on ai, obviously, the discussion surrounding it is driving some chip demand, a lot of the chip names at new highs today, it's getting discussed in davos and being used by some corporates as a reason to either lose head count through attrition or through outright layoffs i wonder if you think the impact of ai is coming into the fuller view in the few weeks of the year >> not only coming into fuller view and maybe rightly so, but the focus this year is just as much on the users of ai across the spectrum of sectors and industries where last year was more a story of the creators which companies sat behind the engines of ai. now i think you're seeing it in earnings season, where you can't get thigh a conference call without analysts, if it wasn't mentioned by company management, how they're thinking about ai and bringing it into the mix, whether it's for margin production or efficiency and i

think that will continue to be more of the story this year the utilization of the ai, again, across the spectrum of sectors and industries. >> it's pretty interesting to watch the markets try to price that in as best it can liz ann, talk soon thanks so much good to see you. liz ann sonders. >> as we head to break our road map for the hour honing in on housing what latest data points are signaling and what's ahead for home builder stocks. >> magnificent seven seven names outperforming the broader markets this year. we've got a number of bullish analyst calls on some of those names today including apple, microsoft, and nvidia. we'll break all that down. one of the biggest luxury names out with earnings and what its latest results are revealing about china and the health of the high-end consumer as "squawk on the street" continues after this

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we've got fresh housing data crossing and we'll go to diana olick who has the numbers. >> housing starts and building permits came in better than expected in december but break out single families where we have the biggest problem with supply single family starts were down 8.6% compared to november wiping out a lot of big november gains and up compared to december of 2022 the monthly drop is surprising given how much demand there is due to the exist shortage of homes for sale and december was

the warmest on record for the month. in addition, builder sentiment rose if both december and january because of the sharp drop in mortgage rates into the 6% range on the 30-year fixed. multifamily starts were up 7.5% for the month offsetting single family but they're more volatile and the starts were down as a record number of new apartments come online this year building permits an indicator of future construction were up for single family month to month up almost 33% year over year. still we might have expected that number to be bigger given what larger builders have been reporting about demand builders did say in the sentiment report yesterday they're facing headwinds on the supply and available land and labor and the costs of materials. leslie >> never a dull day in housing thank you. sticking with the housing market our next guest says despite lower rates housing and affordability and supply chain issues will remain and this year

will be a purchase centric market all of those variables you talk about, you know, supply issues will remain, yet it will be a purchase centric market, how does that calculus work out? >> good morning. thank you for having me on i think for the home builders they're benefitting from a pretty severe lack of existing homes for sale, which have been the home builders' biggest competitors. i think they're going to benefit from that. also with rates trying to stabilize, high 6, low 7s, that's going to help people be more confident in what their monthly payment will look like the builders have the ability now to build homes faster, cycle times have come in, so people who want to buy and are qualified to buy the home, the builders can deliver that home faster from a mortgage perspective of course purchased mortgages will be up we think over last year

and with assuming as we do that mortgage rates probably stay around these levels, there's not going to be as many opportunities for refinance as there is potentially for writing purchase mortgages >> do yields rising over the last five weeks change, you know, the interest level, the demand for these mortgages and for that purchase centric market you described? >> i think, you know, it's going to -- it's certainly going to slow things down a little bit. as you move rates higher, your addressable market is going to shrink a little bit. in terms of the underlying demand for the houses, what we've seen is when mortgage rates pull back, the demand shows up i think from the home builder perspective they are probably going to have to be doing more on the buy down side in terms of buying down mortgage rates to keep these homes affordable. but no, i think the demographics in terms of the size of the millennial population and out in gen-z population coming into home ownership, i think we've

got very strong tailwinds behind us it's just figuring out from the balance sheet builders' perspective and the mortgage perspective what that affordable monthly payment is. >> i know you've been focused on the nonbanks as well we spoke yesterday about the basel iii end game capital rules and if they're finalized in the way they're written could cause banks to retreat including mortgages. how do you think that might change the game for the non-bank financial sector and what does that mean for the overall housing market >> so i think the -- you probably see, you know, we're home builders analysts don't care about the banking sector, but the read through is that the nonbanks probably gain share in here i think that's an easy assumption to make, given all the different things that the banks have to face on a regulatory front i think for the home builders specifically some of the builders have their own internal

mortgage operations. that's going to give them the ability to be a little more aggressive in terms of buying down rates and being more competitive relative to where maybe your local bank is or some of the larger banks are, so for the builders that have their own mortgage companies, i think this has been something of a tailwind, given the ability to be more competitive and help byers find the right payment for them. >> interesting we'll certainly be keeping an eye on it and you will as well thank you for helping us break it all down. >> thank you still ahead, pretty decent morning for big tech as apple gets the upgrade at bofa and analysts raise targets on microsoft and meta we'll talk about why after the break.

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is. they said i have no media experience i don't claim to have any. but i would tell you, i don't think they have much media experience they broke a record this year. do you know that last five movies in a row were losers? now if that comes with media

experience, i want a guy who doesn't have a media experience. so david, let's deal with facts. the company has under performed. i made a run at them last year they promised they were going to improve things i took them at their word. things got worse the stock went down. results got worse. >> that was, of course, acty vest investor necklace of trian seeking two seats on disney's board directors, one for himself and one for former disney executive jay re sue lo. maybe an uphill battle for mr. pena peltz but did join us, why he's back, the reference he had undertaken a proxy fight around a year ago only to then say no, we're calling that off because he heard things that he liked from returning ceo bob iger who had been in the chair only a couple months since returning to the company.

disney, of course, has moved forward with significant cost cuts trying to increase those margins that mr. peltz certainly has been focused on versus its competitors, given he says, they are far too low. he will compare the stock to the overall performance of the s&p, perhaps not as fair a comparison given you should compare it to its group. if you include netflix it doesn't look particularly good not as if disney isn't grappling with many questions many companies are facing with direct to consumer, how much you spend when you get to profitability, how profitable can you get or can it be? iger is working through a lot of these issues and he's got to deal with a proxy fight as well. >> not to mention, as carl mentioned last hour, analysts see this, it's not just nelson peltz, blackwell as well, which is smaller but still out there aggravating for things, largely supportive of disney but critical of nelson peltz you got that he's only been in the seat a year. >> a little over -- november i

think. october or november was a year. >> getting back into the swing of things. >> yeah. >> i mean, these things take time it will be interesting to see how this plays out. >> we should know as soon as perhaps -- we don't have a date on the annual meeting but it could be as soon as late march, early april, a record date prior to that. this will continue we'll see if we hear from mr. peltz again. disney making part of its case yesterday as why they are not interested in having him or mr. ra sue lo on the board. >> does the universal proxy change the dynamic >> allows the likes of blackwells to do what they're doing. makes it easier for the randos to mount proxy fights. >> gives people the choice you can choose one, three. >> peltz is definitely not a rando. he's, obviously, maybe one of the best -- he'll come back to it numerous times his track record, and the fact that he believes he can add a great deal of value in terms of actual

execution on that board of directors. >> right it's interesting to see if that kind of encourages him to settle because of the nature of the universal proxy or if given that you're dealing with two people who kind of have seen that settlement take place before, not going to -- doesn't feel like - >> doesn't look like it's going to happen here. >> the news of yesterday and today doesn't feel like a settlement either. something to watch. >> yeah. meantime the dow has narrowed its losses by more than half a bunch of bullish calls on tech names today and dom chu is tracking those. >> good morning. not rando names for sure on the mega cap tech front. a lot of calls on the analyst front this morning we'll start with the gain that we're seeing in shares of apple right now. up 2.5%. bouncing back from two days of losses after briefly dropping below its 200-day moving average trend line in yesterday's action new today, analysts at bank of america have upgraded the iphone maker to a buy rating. it was a neutral before. they raised the target price to

225. it was $208 before that. they cited amongst other things a stronger than expected iphone cycle to take advantage of new ai applications being developed overall and higher services, related growth when you want to know more about that trade and call tune in to "money movers" when bofa will join us in the show to take us through the details of the upgrade call on apple shares coming up next hour. speaking of bofa, software and services and cloud computing giant microsoft getting reiterated as a buy there, a boost to the target price of $450, it was $430 price. they expect growth to accelerate given expected strength in office software offerings and azure cloud computing and analysts are reiterating microsoft with an outperform with a $432 price. microsoft up 0.3%. keep an eye on tesla down after getting rerated as a buy idea over at guggenheim

those shares down 0.3% meta platforms about 1.5%. the parent company of facebook and instagram getting its target price under at bernstein to $435 they cited better revenue growth expectations and meta as a potential winner in artificial intelligence those shares up 1.5% on the ai chip front, shares of nvidia which earned another record high today thanks to tigris financial which upped its target price to $790 to $560 keep it a buy rating and record highs and we'll cap things off with the fractional gain we're seeing in netflix stock up about 0.5% the streaming videoed movie studio gets its target price up by ubs to $560 from 500. they see netflix as a beneficiary as the industry raises prices, consolidates platforms and cuts spending, so leslie, to you, david, and carl's conversation about netflix and disney, there is

that move there netflix up 0.5%. >> clearly not a rando move. >> no. >> to speak of there thank you. after the break, all the tech headlines you should know from fresh layoffs at google to sheryl sandberg's lean out at facebook and the latest from ai leaders on the ground in davos stay with us we're back in 2 minutes.

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militant bases on the pakistani side of the border two days ago. this latest incident is continuing to sew fears of spillover violence from the israel-hamas war in gaza. e. jean carroll back on the witness stand to testify in her defamation damages trial against donald trump the former president won't be at today's proceedings because he's attending his mother-in-law's funeral. during carroll's testimony yesterday, the judge threatened to throw trump out of the courtroom following several outbursts. send it back to you. ai's front and center at the world economic forum in davos with leaders weighing in on how the growing technology will impact their business. this is openai ceo sam altman. >> i believe and i think the world believes the benefit is so tremendous we should do this, but i think it is on us to figure out a way to get the input from society about how we're going to make these decisions not only about, you know, what the values of the system are, but what the safety

thresholds are and what kind of global coordination we need to ensure that stuff that happens in one country does not super negatively impact another. to show that picture, so i think not having caution, not feeling the gravity of what the potential stakes are, would be very bad i like that people are nervous about it we have our own nervousness. we believe that we can manage through it. >> meantime palantir's co-founder and ceo alex karp spoke about the technology and how it's transformed his company. >> our u.s. product, i'm not here to push our product, but it's going so quickly and we have to rebuild the whole company. the reason is in the beginning of the ai revolution - lessons that people are learning now. >> i thought it was interesting the cto of ericsson told davos forum that half of the company has gone through basic ai

training, some 5,000 company employees have had extensive ai upscaling. >> what is ai training and can get some because i honestly have no idea. i actually sat in on -- or i listened in to a fireside chat with gary gensler of the sec where it was all about ai and regulating the financial markets, and he believes that it's a net positive to society he thinks it's going to be a net positive but said there were these nodes in the financial system where regulators don't see and don't have access to and that's his main concern with regard to being able to fully regulate this based on the way that current system is functioning. those nodes, he didn't go into detail about what the nodes were, but they're out of his pursue and regulators' purview and that's his main concern. >> let's talk about this our next guest has been vocal about the impacts of ai, generative ai, a long-time investor in technology overall,

roger mcnamee joins us i assume you heard altman's comments i would love to get your reaction to them >> i think microsoft and openai have orchestrated the greatest hype campaign i have seen in technology, which is really saying something i mean, what they have done to get the world to treat this tech as the next big thing is really, really impressive, but i do think some caution for investors is appropriate. i would put is this way, generative ai has a very simple goal it's designed to pass a test to create the illusion that you're dealing with a human being on the other side in order to do that it makes no attempt to be accurate what it does is it focuses on being plausible. and in the real world, business setting, there are very few instances where plausibility is more valuable than accrasy the thing i would point out in

this entire thing is that we have no independent verification of the numbers of users, of the amount microsoft paid. what we have is a very carefully orchestrated campaign. it's working really, really well they've got everybody focused on it but i'm very worried about what return on investment is going to be it reminds me a lot of what sap anderson consulting did in the '90s around enterprise resource planning when they orchestrated a similar hype campaign, got the fortune 500 to embrace this intensely, and most companies had massively negative roi because the technology was as in the case of generative ai half baked. >> you don't think it is improving at a rapid rate and/or i guess i hear you questioning, perhaps, the thesis ta says there's going to be great productivity gains for enterprises across the board over the next few years as a result of their use of generative ai? >> well, david, let's focus on a

couple of the core use cases carp is talking about it in the military we need to understand, these things are not intelligent and they are not human the notion that you're going to delegate important decisions, decisions of life or death, to an ai, is irresponsible. that should not be happening the technology may eventually get there, but it is not there today. we've seen this with self-driving cars. you have to have one and a half human beings operating every self-driving car in order to keep the thing from running over everybody it sees. so you -- [ inaudible ] right you see in warfare it's a terrible idea. using it in business for productivity requires the assumption that it's going to do better than a human being. if you look at it in coding, for example, which is one of the really promising cases, it's producing high school level coding and we're essentially going to accumulate massive technology debt as you get tens of thousands and then tens of millions and billions of lines of code that are taking the

space that something much more efficient could be doing so i just -- my point here is, we want to separate a thing that has huge potential over a period of decades from what people are trying to buy today, which is something that is not nearly that good. >> yeah. but i mean it seems to be advancing at a rapid rate. i can think of these hurdles we've heard about in the past that have been overcome quickly. again, you don't -- you're talking decades and others are talking a handful of years until this thing advances to the point it's no longer coding at a high school level but at a fairly high level. >> well, let's wait and see. people are investing in it today. in today's product, as though it already does that. if you're -- look the rule of thumb with sap in the '90s was being long sap is a stock but short its customers, that was one of the great arbitrages of all time

i suspect something similar is going on if you look at the companies that make the greatest commitment to ai today, these guys are going to be too early they're going to put stuff in there that does not work well. our economy is going to be concentrated so in some industries companies will get away with this because there's no competitor who can createp an alternative product that works better, but i think what we're going to wind up with is a lot of crap product all over the place and if you think about it from an information system point of view, this will launder this disinformation and increase the amount of spam and scams in the economy because when you're creating a product that's just designed to fool people, the most valuable applications are ones where the goal is to fool people, and i just think from a policy point of view, the folks in davos are just -- they're just missing the point interest rates are higher. i get that it's harder for corporations to buy stock back i get that

the economy, you know, for many of these people, they haven't had competition for so long the products are mature and they don't have anything to replace that i get that i don't think ai today is going to be the answer to that question. >> it sounds like, roger, you think the ai of today is more susceptible to fraud and schemes and that the positive outcomes from ai require more technology, better technology, that could be decades away if you're a regulator tuning in now, is there anything you can do about this at this point in time >> absolutely. two things -- two things that need to go on. the first is to recognize these companies are happy to pay nvidia for chips, happy to pay cloud service providers for cloud services, but unwilling to pay the people whose content is actually creating the value and the product. the first thing enforce copyright law. the second thing insist these companies not be allowed to experiment on the whole

population in an uncontrolled way. i mean, to me, i want to see really aggressive development of ai i want to see big investments in this stuff, but i want to see it done in a way that doesn't either undermine our public health or elections or financial marketsnd and we'll have to sei we get that opportunity. >> let's end on that i am curious what your thoughts are about the upcoming election season and the role that generative ai may play and/or play in terms of muddying the waters from a perspective of truth. >> well, david, the thing i've asked the internet archive to do is to create a product from the way back machine for the day before chatgpt was brought to market because i think we are going to suffer this thing where generative ai is essentially, because it goes out there and looks at statistically the most frequently occurring next word for any word you have previously, as disinformation gets into the system, because of the way disinformation works,

you're going wind up laundering it and increasingly the stuff you get as an answer to any query will be disinformation and it's going to be really hard to make sense of the world and that's going to have happen very quickly because there are no controls on the experiment and it's -- this is not just about politics but financial markets and what actually happens. i look at this and go there's nothing wrong with generative ai that can't be solved by running the experiments in a careful scientific way, but this notion that this technology is the be all and end all for productivity i find very unlikely. >> roger, always appreciate your time we'll continue this conversation, i know thank you. >> you bet take care. so could 2024 see its first, quote, deep fake eleioctn? we'll talk about that after the break. don't go anywhere. with non-melanoma skin cancer. 40 years later, i've had almost 20 mohs surgeries.

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we were just talking about it, ai warnings continue to grow

around the use of deep fakes ai altered media defecting fake reputation of others, usually celebrities and some sounding the alarm 2024 could be the first, quote, deep fake election quite scary. let's get to julia boorstin who i believe is not a deep fake, the real julia boorstin on the other side that can help explain this to us >> that's right. i am the real julia boorstin but there are growing fears this could be the first deep fake election with the potential for ai manipulated audio or video to spread on social media impacting whether voters want to support candidates and even with whether they think it's safe to go to a polling place. governor ron desantised used deep fake images in an ad to attack former president trump and the rnc used ai generated images portraying an apocalyptic biden-harris second term experts are waiting for ai to be

used without disclosure intending to manipulate voters. >> the prevalence of deep fakes and the ability to sew mistrust using generative ai technology takes these problems and hyper charges them because it's easier to spread convincing disinformation it's easier to cast doubt on the legitimacy of an election and it's easier essentially to fool voters. >> though there has not yet been widespread use of deep fakes, experts are concerned about increasingly sophisticated technology consumer advocacy group public citizen is advocating to take action, warning deep fakes threatens to deep dee stabilize our fragile election system and maybe decides elections. the notable example, slovakia's election, a fake audio clip was posted on social media talking about rigging the election and

doubling the price of beer, and he lost despite having led in the polls. now meta announcing plans for identifying and restricting the use of ai in political ads, including mandating advertisers disclose whether they used ai. youtube requires synthetic election content to be labeled both on the video and in the description adding that any content meant to mislede is not allowed on the platform. tiktok telling us it removes quote inaccurate, misleading or false content that may cause significant harm to individuals or society but many say that the responsibility lies not with the platforms but with the ai companies. openai announced its efforts to prevent chatgpt from being used to mislead voters, including banening people from building applications for political campaigning and lobbying. intel is working on technology called fake catcher which social media platforms could use to prevent users from uploading deep fakes looking at the legislative

landscape five states including california and texas have adopted regulation to limit deep fake use around elections. 16 more have introduced bills. nearly half of the states could have ai legislation in place by the election while there is proposed federal legislation with bipartisan support, ho hard it is to get anything passed back over to you >> julia, it comes down to whether you have rules in place, policing those rules we have rules in place that we see not adhered to by the social media platforms, for example what's the expectation you can get this thing under control, even if you do have a number of different regulations? >> you know, that's the key question, david, that's a question i asked many experts about this what i've heard is that for now, the technology exists to detect deepfakes. there's plenty of ways you could do it, whether audio or image

deepfake audio is a little easier to manipulate than video or images. here's the thing, is that right now you might have the technology might exist to identify deepfakes but six months from now, a impreer from now, we know how quickly this technology is advancing, that's when there's real concern we won't be able to keep up with the manipulation. >> it's scary stuff. to your point, technology is just changing and advancing so rapidly, just the ability to keep up with it is quite the hurdle there julia, thank you for telling this important story appreciate it. after the break, a look at one luxury name beating fears of a slowdown in china. we'll bring you the numbers next. still ahead next hour, a deep dive on the health of the banking system, the consumer and more with ceos of not one but two regional banks first horizon and synovus. it kicks off in ten minutes. rylee! from rylee's realty! hi! this listing sounds incredible. let's check it out. says here it gets plenty of light.

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♪ ♪ get iphone 15 pro on us. ♪ ♪ ♪ ♪ shares of richemont popping higher let's get to robert frank with a breakdown. >> good morning. those shares up 10%, pulling up the rest of the sector sales up 8%. that was much better than

expected and they were, as you mentioned, two big drivers, china and jewelry. sales from china, mau kau up 25%. that was a huge surprise given weak economic data we had out of china this morning cfo saying on the call this morning, quote, overall i'd say the china business is rebuilding so, that's good news jewelry was also strong at richemont led by cartier brand, up 20% led by buyers in the u.s. that's a good sign watches are still weak it, of course, owns brands with watch sales growing only 3%. watches in switzerland selling sales down 3%. shares of lvmh also up on that richemont news next week lvmh, the big leader

in luxury, reports next week. >> struggling to understand exactly if there are broader trends or it's very idiosyncratic, i guess what is your sense at this point? >> the broader trend, david, is the must have brands among the sort of highest regard luxury companies of those brands at lvmh, cartier at richemont, h hermes, those are doing great. the not so great, those like burberry where they raise prices on products that don't have an audience, are struggling we see the well-run, well-executed company and the b-brands >> robert, thank you robert frank in the brief time we have left before we hand it over to the next hour, worth taking a look at the magnificent seven, as we like to call them, they have been quite strong. outperforming the broader market thus far today no exception you did get that upgrade at b of

a of apple i believe the analyst will be joining "money movers" shortly that stock is up sharply meta up over 2%. nvidia continues that huge run that has up 16-plus percent for the year at this point again, the key here is they're back broader market be darned more on the banks in the next hour we'll have the ceos of first horizon and synovus join us. live market coverage continues right after this [♪♪] 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.

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good thursday morning. we will come to "money movers. i'm carl quintanilla with leslie picker at post 9 of the new york stock exchange two bank ceos paint a picture after the widespread panic struck the sector. the ceos of first horizon and synovus are with us. an upgrade of apple after three downgrades bank of america goes to buy. the analyst behind that call is with you. nelson peltz doubling down on his proxy fight with disney his message to us at