500 and the nasdaq 100 both setting new records once again we'll see if that streak continues. you've got just about a half an hour to go to the opening bell on wall street ten-year yielding 4.1% the two-year at 4.15%, so not a lot of movement there. >> no rate cuts but the dow is up it's weird are we winding up -- winding it up or winding it down? >> down. winding up for tomorrow. >> "squawk on the street" is next bye. ♪ good thursday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at post nine of the new york stock exchange q4 gdp crushes estimates, up 3.3% street was looking for 2%. price index drops to the lowest level in almost four years tesla's tumble, though, the first of the mag seven to

report, warning of "notably lower vehicle volume growth. one analyst calling it a train wreck. plus the s&p 500 is heading for what would be its fifth straight record. gdp surging, strong finish to 2023. we're going to discuss the outlook for rate policy. we got a slew of other corporate results to get to this morning. c comcast, ibm, union pacific, humana we're going to be joined by the ceos of service now and southwest. going to begin with tesla, down sharply in the premarket. the ev maker does post a quarterly miss, says it expects notably slower growth in '24, but elon musk did express some optimism tesla can become the market cap leader. >> i do see a path where tesla could one day be the most valuable company in the world. i want to emphasize that as not an easy path but a very difficult one, but it's on the

set of possible outcomes >> jim, not a lot of downgrades today, but plenty of target trimming >> yeah. that path that he just referenced, he's not on right now. this was a combination of an existential and a cyclical crisis existential because we do have the notion, david, that he would like two classes of stock, and he even talks about the rating agencies, isis, except for i used to call them iss. he talks about incentives, what you need to have people buy cars but then he's got optimist, fantastic video, by the way, but i end up thinking, is there a crisis here, or is it just a pause? and i'm not sure, frankly. i'm not. >> just going to take a while to figure it out? >> well -- >> they're creating the new platform, which is going to lead to the lower-priced evs, but they're not there yet. they made a choice with the cybertruck that may have really delayed that, and is certainly a

question mark in terms of strategy >> right, because demand is off the hook to use his phrase. david, you get to these -- when i say the existential, there's a moment in the conference call he says, well, the chinese car companies are really great they will pretty much demolish most other car companies in the world unless there are trade barriers that, i found daunting it's daunting to have a -- one of the best investors -- inventors in history saying that the chinese have an edge david, throughout this, there are two skeins of thought. one is, give us a chance, it's really going to happen and then there's this other, like, i think it's "westworld," don't laugh, they're my friends. >> we're discussing optimist robot, which we've enjoyed showing video of late, and he does talk about that but that's the criticism, of course, jim, is that, yeah, it was all about the future and

optimists and full self-driving and a.i., but it was not much at all in terms of granularity about actual demand and what's going to happen with margins and where price cuts are when you come close to losing dan ives, you know you're in trouble. >> whose target is still $315. >> he had his pink jacket on yesterday, which means the stock is supposed to go up he will not be wearing that pink jacket any time soon >> to carl's point, he's still positive but "we were dead wrong. "high-level tesla long-term view, another train wreck conference call. calls it a category 4 hurricane around price cuts and lack of g granularity, guidance from musk and tesla. de goes on to say, "our near term confidence is shaken" but he's still a bull, still believes the long-term thesis is intact >> the great untold story is

that mrs. lincoln liked the play this was one of those calls where you read it. you listen to it, you read it, and you just say, is it dickens? is it steven king? is it theckeray? is it shakespeare? there's no way it's earnings and demand nothing. nothing. just -- >> which one are you going with here, jim? >> the wager i use the wager. or i'll use victory, conrad, because there's so many themes going on here that i find myself thinking, something that the late roger ailes once asked me are you nuts >> let's take him at his word, jim, that they are in the middle of two big growth cycles are you willing to wait? he himself said, i'm sometimes an optimist when it comes to timelines. >> he's out of the magnificent seven. i can't wait >> really? >> he shot first

what do you want me to say there's just no -- he's harry locke. he's out "seven samurai," by the way -- it's the six samurai >> could be lilly or broadcom, one or the other, right? >> absolutely. >> they're on the come >> there is a moment, by the way, where musk admits that nvidia is better than what he has. and that's shattering. then, you know, you default to, like, battery life and solar and it was all over the map, david it was stream of consciousness you know who it was? geez it was absalom absalom it was faulkner. >> you're coming back to these shores from the uk >> i think "absalom, absalom" is one of the greatest books every but you have to read it in conjunction with the bible he wants to have two classes of

stock. there seems to be this sense -- you can go otherwise -- that he sold too much stock for some reason and now, he wants the stock back >> well, but it's not about economics, and of course, he did sell a lot of stock to fund the purchase of twitter without a doubt, which you were referring to there or, excuse me, x, thank you. >> get with the program. >> yeah. sorry about that but he does feel as though he wants a dual class structure he made it a little bit more clear than those series of tweets from a couple of weeks ago. i'm not looking for additional economics, i just want to be an effective steward of very powerful technology. and the reason i picked 25%, he says, is it's not so much that i can control the company, so, you know, if i go bonkers, these are his words, then you could get rid of me, but it is essentially negative control we'll give him a level of control over, he feels, his developing technology, particularly as it relates to a.i. and optimus, for example, and not allowing it to become

"westworld." >> i found myself thinking,wha if he doesn't get it does he just go develop a new company? carl, let's say mark zuckerberg said, listen, if i don't get more stake, i'm out of here. i would be inclined to sell meta >> he has dual class >> i know that i'm saying, if he didn't get his way. if he didn't get his way and he said, listen, i'm out, i'm not as positive on meta -- i find when you see something like this and at the same time you're in front of these isis, it's problematic. it's a problematic call. i'm not saying it's the train wreck. cat 4. i just went in, he left out, mistake of nuclear tack. the thermo nuclear what i'm saying is it's not a train wreck. it's a plea. it's, please >> what's the "it's a plea"? >> double class, have more stock. put me in the boardroom.

i want double the stock or i'll -- >> well, no, i want you to reclassify, and i want to get ten votes for each share of a certain amount of my stocks so that i have 25% or iwill leave >> fair. >> and i will take my a.i. and robots >> and bat is ball >> or we'll have an argument about the ip and i'll start all this stuff on my own >> you spent a lot of time with him. >> i did not spend a lot of time with him >> andrew spent a lot of time with him >> no, he didn't either. >> nobody spent a lot of time with him >> i spent some time with him. >> i don't want to be too glib here the next iteration could put him back in the seven. >> you mean this new redwood crossover? >> geez, absolutely. >> that's maybe two years away >> well, i mean, how long was the separation between magnificent seven and the remake >> he does say he's often opti optimistic of course, we're still waiting for full self-driving, which he's promised for years.

he does say, what, '25 >> to begin production >> shouldn't we kill this break? all we've covered so far is tesla. what happens if we kill this break? it's not like comcast reported or anything. >> we got -- the digital transformation does not wait, jim. >> oh, then, you mean we're going to service now >> yeah. >> of course i'm all in >> we are going to talk to the ceos of service now and southwest later on today service now, of course, as it rides the a.i. wave. we're going to get to -- we're going to bang out as many names as we can, humana, ibm, comcast, northrop, the rails, got a downgrade of boeing. a force to be reckon with. no, not you saquon. hm? you! your business bank account with quickbooks money, now earns 5% apy. 5% apy? that's new! yup, that's how you business differently. 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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blowout. servicenow subscription revenue climbing for the fourth quarter and the company raising fiscal year guidance, company saying, "strong appetite for generative a.i. and momentum in the space. bill mcdermott, servicenow,

perhaps the conference call i've never seen more analysts love. congratulations. we're effusive it's joining us now. bill, thank you for coming on "squawk on the street. >> thank you, jim. thank you very much for having me >> let's get right to it there are a lot of pretenders out there, bill. there are pretenders who use the term a.i they throw it around as if it's something that they need to move their stock. i think you, if i can tell right, there may be a billion dollars in revenue that came from a.i. in this quarter for you. you are not a pretender. tell us how you're doing it. >> we're definitely not a pretender, jim we were the first mover in actually bringing domain-specific llms, large language models, to the servicenow platform. we had this product on the market for just a little over a quarter, and it has outperformed every other product that we have ever brought to market and you know, what's happening out there is companies realize that they need an intelligent platform for end-to-end digital

transformation this platform is doing the job for great companies like visa where they want a five-year strategic alliance to transform their payment services using gen a.i. solution for end-to-end dispute resolution, and i can go on with ey and many other companies like chipotle and others it's just been an amazing, amazing uptake in our business >> bill, a lot of times, also, i hear people saying, look, it helps productivity you've got actual use cases. i'm going to give you a choice here you can talk about the german appliance company, or you can give me visa or telco or banks, but you're talking about dispute resolutions, concrete things that a.i. is doing that free up other people to be more productive i need some examples >> yeah, exactly so, if you think about siemens, they're transforming their employee experience using gen a.i. to boost productivity so that cases in hr can be resolved

by the system, not tie people up on 800 lines if you think about companies like ey, you know, they have 400,000 employees, and they have to manage governance and risk. they're using specific use cases on the servicenow platform to do that so, everything we do is tied to very specific examples if you look at banking, banking right now, if you think about integrated risk management, managing an mra process, these are very detailed, specific gen a.i. use cases, you know, and people do it right, they get promoted people do it wrong, they get fired. so, the work that we're doing has a profound impact on the performance of companies, and i always said that this would be jet fuel injected into an already high-performing engine no company in our class has performed like servicenow, not only beating our guidance but doing so at the highest form of

the highest consensus on wall street, and we're performing at the rule of 55, you know, between revenue growth and free cash flow and no other company in the world is doing that at our scale. >> i wish i could -- that's the superlative that the analysts focus on, and of course that's absolutely right 27.5 rpo growth. $18 billion run rate at the end. these are numbers -- you were talking about when it started. i mean, i don't know if you had $1.8 billion but i do -- what i continue to draw down, there are customers that you want. you want the federal government. it seems like you almost own the federal government you want defense that's you you want telco that's you you had 23 out of 24 banks coming in. i was very disappointed that you didn't have the 24th bank. you got that you got visa the most important one that you just dropped in there out of nowhere was aws. will you please flesh that out for us >> you know, it's amazing, jim great companies like amazon/aws

are realizing the importance of servicenow, and their customers are asking them to have servicenow in the aws marketplace, and as of this month, customers are able to choose servicenow in the aws marketplace and do so with the same performance as you would get out of servicenow's cloud. so, we really have great partnerships with wonderful companies like microsoft, amazon, and many others, and i think what's happening is it's truly becoming a standard. servicenow is a platform that is becoming a standard because these enterprises are so messed up with legacy technology, and these ceos don't have time to think it over again and rip and replace things, so we just reside above the chaos, and we give people an unbelievable experience, because they upload their data into the servicenow platform, they optimize their

processes and their execution, and then we apply generative a.i. on the use cases that really matter, and right now, we're getting anywhere between a 40 and a 52% increase in productivity on generative a.i. on the servicenow platform, which is lights-out fantastic. >> hey, bill, just on want to wrap up here to come back to the call itself and the demand environment, you know, i think your c.o.o. said in sort of discussing the demand environment, "it continues to still be tough we're not ready to say that things have improved significantly. obviously, also saying how relevant your platform is. but, so, give me a little more feel as to why your c.o.o. said that >> well, i think what he was really referring to is in the environment today -- and i just consider it a new norm i don't think it's anything especially good or otherwise it's really a new normal where strategic platforms that are chosen in major corporations around the world will have

several different approval processes, and that will very often include the ceo. so, the cycle time for significant transactions is longer than it used to be. but that is really the new norm, and i don't think that's ever going back to, you know, fast transactions just because digital transformation is hot. this is a world that now needs clear value, and if the value's there, they buy. >> really interesting. >> what we get from palo alto, we get that from salesforce. this is the new normal, and i think you need to talk about that, because other people keep expecting things to rurp return >> exactly and you know, jim, i sit down with major, you know, just coming off of davos, sitting down with major manufacturers of very large companies, and i tell them the servicenow story, and in some cases, they really don't know anything about it, but when they hear it, they immediately invite me in to meet them and

their management team to go through the possibilities. so any place we land, we absolutely expand, and we're a growth company, and we've never been hotter than we are right now, and i'm real confident. >> so, bill, we do have to go, but i want to do something for david faber if you can confirm this i understand there are activists who are coming to you before they target a company, saying, what should the company look like >> that's true >> it is true? >> lots of -- it is true lots of people are coming to us because they are absolutely blown away by the business model. you're looking at a company with 10 billion acv now as you rightfully said, jim $18 billion rpo, growing at the rule of 55, and people are like, how are you doing it you're growing, you're expanding your margins, you have 99% renewal rate, which is the highest in the world how are you guys doing it? by the way, jim, i want to thank you because i did hear you say you believed in servicenow, and

you believe servicenow is going to deliver a great quarter so, you, david, and carl know servicenow well, and i thank you guys for the compliment. >> that's very kind. thank you, bill. i'm all in it was an amazing conference call and an amazing quarter. bill, thank you. there's no existential crisis when it comes to your quarter, all right? >> you got it. we're going to keep winning. we want to win >> thank you, bill thank you so much. bill mcdermott >> you talked about this yesterday. >> he decided to deliver an upside surprise because i said he had to. when we come back, we're going to switch gears, talk a bit about boeing's max problems then and now this is what southwest's gary kelly had to say about them back when he was ceo in 2019. >> we're not happy about our situation. you know, we put our future in the hands of boeing and the max and we're grounded every pilot in our network is expert on the 737. there's a lot of advantages, not

just efficiency, but just safety advantages to being devoted to one aircraft type. i'm not saying we're going to change i'm simply acknowledging that's something that will need to be reviewed >> well, his successor, bob jordan, about their max delivery plans. the earnings on a day when we al g arisoetmecan and alk when "squawk on the street" comes back

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. all right, he's got to keep it short it's a "mad dash." we got an opening bell less than a minute away. >> i like to use pop cultural references with you and carl because it brings people home. p at one point in the song, after the gold rush, neil young says, "and the archer split the tree." little did he know he was speaking about tim archer, the ceo of lam research, who delivered ten analysts raising their price targets because he is now making, yes,

semiconductor capital equipment that has to do with? >> a.i >> and >> nvidia. >> yes yes. he's doing nvidia, and he's such a great guy. he lost like $1.5 billion. doesn't matter this is an amazing conference call this is what you buy if you really want the guts, the cerebral, the intellectual property of a.i. resides with lam research it's something we still do in this country, besides make cereal and popcorn >> let's get the opening bell here in the cnbc realtime exchange at the big board, it is latin finance and latin america's top is issuer celebrating their deals of the year. at the nasdaq, cb oncology going public under cgon, jim, as we're not quite back to 4,901. >> i saw ed yardeni talking about, maybe it was happening

too quickly, and ed is probably the hottest analyst out there and also the nicest, to be honest i think we seem to -- nothing seems to hurt this teflon market boeing is so bad, and at the end of the day, you figure someone's going to read it buy i think it's time to kind of think about maybe that there are things you should be more worried about. i know we're going to talk about humana humana may be the worst quarter -- it's not the -- it's not the disaster du jour it may be the disaster du week >> i think the mizuho headline was, "holy humana. that stock was down 16% premarket. >> it's cut its losses it's only down about 10%, but last week, the stock got crushed because they told us their medical costs -- loss ratio was going to be higher they had more people towards the end of the year getting hospitalized, particularly elderly. that raised their costs, and so here we are today getting

earnings and a significant degrading of their ability to earn money both this year and perhaps next year as well. let's give you some of the specifics here you know, they did see, again, it wasn't rsv, they say. it was -- they're still investigating, frankly, what exactly was behind this increase in terms of cost, but the elevated medical costs and industry dynamics, they say, not specific to them, and they do expect they may persist for an extended period, perhaps reset the baseline they say, listen, we're going to do around 16 bucks >> i was number 34 >> a couple investors say, they're going to do better than $16 most likely. that said, they talk about those higher costs persisting, jim, and then they talk about what they can grow off of that, but it's not going to be anywhere near the $37 a share that they had been estimating for 2025 they do have the intent, they

say, to deliver 6 to 10 bucks of eps growth, adjusted eps growth, '25 over '24, but again, $37 seems less likely, although, frankly, the $16 may be a bit low. but you're seeing the adjustment in the stock price as a result >> they lost money >> let me share one data point with you they bought back $400 million worth of stock on the first two weeks of this year >> ill advised >> they buy back roughly a billion a year they bought back 40% of their stock in the first two weeks did they not know -- did they not know what was going on if they knew what was going on, and that they were going to be warning, and then reporting this number and lowering guidance, why in the world would they have bought back $400 million worth of stock in the first two weeks of the year? >> that's why i bring it up, because it's a shocking shortfall as i've ever seen. david, may we go back to mr. arbitrage, you, that when paypal was in trouble, they turned to pinterest. it was one of those out-of-body

ideas. do you remember the cigna? >> do i remember it? i reported on it >> you broke the story >> very much against it. were going to vote it down if they had the opportunity they were encouraging david cordani to abandon it, and it's a good thing he did. if he had persisted in that deal, he would have lost his job. >> some people, eyes askance, not saying it myself, believe that the stock, they're trying to keep it up in order to do a deal with cigna. i would never say that >> the big opposition i heard was in the relative multiple cigna trading roughly ten times. humana had been at 16 times. how is a 16 multiple deserved for humana when elevance, a company that you just saw is very well run, apparently, trades at 11 times >> i don't know. the whole thing was a mystery. i will tell you, david, we got out of it for the travel trust it didn't seem right when they go -- when a company decides to try to merge with someone and they trial balloon, carl, and it's so off the rails,

that's a good time to go just go. >> that said, jim, there is a belief that you need to provide services to keep seniors out of the hospital so, if you have a big medicare advantage business, you want to link it with those services. they don't have that but there had been a view somehow that cigna needed humana more than humana needed cigna. >> you got it. >> we'll see if it ever comes back in some fashion or not. but humana needs services, potentially, to lower, again, to keep that loss ratio lower, keep these people out of the hospital >> well, meantime, deutsche just cuts to hold they are going with 15 times $24 versus that 37 david was just mentioning >> unbelievable. we just cut -- i mean, they have no faith, although the $16 seems low. i have medicare advantage, and i got to tell you, it covers a percentage that medicare doesn't. i regard it as cheap and well worth it

basically, i'm hosing them that's the technical term. >> you're not. if you're not, frankly, getting admitted to the hospital, so you're fine >> i just think this is a disaster of proportions that, carl, it is very hard to find a company that even in a couple of weeks guided down, horrendous from what they said a couple weeks ago. >> that chart, it's hard to see. we're talking about stock that was just, a week ago -- it was last week that we had the big fall >> humana and tesla the biggest laggards this morning. unh is in there as well. on the upside, american's helping out, and ibm, which i know you talked about last night. >> i loved the ibm quarter they're talking about a.i. technology, a.i. at scale. we've been recommending the stock, really pushing it since 160 dwlars thank you, ben, who's probably the most informed on this. they are doing so many right things and they still are willing to lay people off if they don't think that their margin focus -- this stock goes higher he's buying these little

companies, not doing anything nutty, but i would call them, if i had a big a.i. job, to be sure that i was on the right track. very impressive quarter. really impressive. >> look at that move >> deserving >> it's a serious move >> cash flow is monstrous here >> free cash flow is strong. >> not strong. it's monstrous >> monstrous >> monstrous >> wow >> yeah, monstrous like the demolition derby in -- that was in tesla. >> how did he say that they're going to demolish -- the chinese car companies are going to demolish the industry? >> unless we recollect enough trade barriers to keep them out. >> look at mexico. they've captured, what, 30% of mexico what are we looking at >> we forget that berkshire has a $750 billion market value when we talk about the biggest market values i'm just looking to see if broadcom had overtaken tesla in market value >> you want to put berkshire hathaway -- >> no, no, of course not >> they're like the head of the village. that guy invited yul brenner in.

>> the mag seven also is typically the seven largest market caps but does not include -- >> ethan hawke was the guy who -- in the 2016 remake. >> of? >> of "magnificent seven." >> i didn't see it didn't even know they remade it. >> geez. >> carl knows everything >> jim -- >> they remade "the magnificent seven" >> how come you never talk about that one >> it wasn't that good >> amazon just remade "hroad house" >> there's a note every day about how great amazon is, but a lot of people are thinking this is going to be a blowout quarter. amazon web services is doing well, but it's amazon advertising that's the star. i go back to my interview with andy jassy, ceo. they are the winners in this temu, shein. they've got -- go to shein, and it says, listen, may be available in 10 to 12 days

same product, you go on amazon, comes the next day >> there's some headlines that the shein ipo prospects are dimming somewhat >> bwasn't that something? that flies in the face of my newfound love of chinese real estate >> we spent all that time on shein and they're not going to -- >> they're trying to lower expectations >> there are, apparently, some shareholders who are willing to take less to monetize now prior to -- at least in terms of waiting. >> prime video advertising, we spent a lot of time talking about netflix advertising. prime video advertising is very good >> yes, and amazon is an advertising juggernaut as we know what do they do, $40 billion it's unbelievable. all that stuff you're clicking on is ads basically on the amazon platform. >> they're focused there's no existential crisis to andy jassy they're just crushing it >> real quick, guys, got to do comcast. stocks up 3.7% can i get a woo-hoo? >> i want to look at it right

now. >> going back almost to labor day in terms of the high >> subscriber numbers were good. margins, i thought, were a little light based on expectations they set the bar pretty low. this was, by the way, the conference call just had -- it had cfo jason armstrong on it, dave watson, comcast cable ceo it had brian roberts talking about -- you tweeted, you x'ed this or tweeted this, carl, about speculation about consolidation. it had cavanaugh advertising they all showed up >> you want to go into the different lines? some of these lines were very good >> no, i don't really want to do that >> you have to >> what lines attracted you? >> theme parks, record adjusted ebitda >> fantastic >> amazing business. >> number one worldwide box office >> that was terrific >> top five films. >> i have to tell you that our business didn't hurt anything. didn't hurt people >> that's about the best you can say for us >> i'll take it. advertising was almost in line for media. but what i really love about

this, and carl mentioned the theme parks, but it's just the -- the desire to return capital and not mentioned in this part, but i haven't been on the call, the money coming from google what do we think >> we'll see >> for hulu. >> there's an expectation more will be coming beyond the -- not an additional 15 >> no. but valued at? >> that would be 45 overall. possible not inconceivable. unlikely, perhaps. >> well -- >> this is, of course, the process by which hulu will be valued by two different investment banks, and if they're 10% different, you get a third that weighs in, and then disney will owe an additional beyond the -- what is it? >> what did you think about the domestic broadband increase? 6.4 from 6.1 i thought we were supposed to -- we -- i thought we were supposed to be declining in domestic

broadband. >> we did okay we're still losing video customers, as we all know. >> don't be so self-effacing >> not as many as they thought estimate was 61,000. >> i'm going to propose something right here, right now. you know what they need to do? >> new mexico? >> new mexico? you got to come up with some new -- >> if you're going to put one in chicago, i mean, come on david. how about winslow, arizona >> sure, why not >> tacoma. san francisco. l.a. northern california. >> oh, god, the eagles >> the good eagles the winning eagles >> meantime, southwest airlines shares rallying here, going back to levels from last august as profits top estimates on strong holiday travel let's get to phil lebeau with a special guest. good morning, phil >> good morning, carl. let's bring in bob jordan, the ceo of southwest airlines, joining us from the company's headquarters in dallas bob, thank you very much i appreciate you joining us this morning. let's talk about the fourth

quarter before we get into the max. you beat on the top and the bottom line. and it's your guidance for the first quarter and this year. you guys are looking to grow, but at a much more judicious pace in terms of adding capacity, correct? >> phil, that's right. and hey, we miss having you here in dallas, my friend we had a great 2023. record operating revenues, record passengers, record loyalty revenues we got our winter operations preparedness in place. i'm just very proud of our folks. we restored the network and got all of our fleet flying, and so just a ton of progress we actually, with no doubt, we ended 2023 a better company than we started as you look at this next year, 2024, i think we have a great plan we're going to focus on our financials that's the one place where we are lagging. we have a really good plan that has double-digit increases in operating revenues

we expand our operating margins, and we cover our cost of capital and our plan, and that will be the absolute focus you asked about our ongoing plans. obviously, as we look at things like capex and capacity, we will take our progress against our long-term financial goals into account as we think about those things >> let's talk about the fleet, bob. you guys announced today that you are taking the max 7 off of your plan for deliveries this year you're going to take fewer maxes. obviously, everybody knows the story with the faa restricting boeing's ability to grow max production do you really think you're going to get the max 7, which hasn't even been certified, do you think you're going to get it next year, or do you have to push it out even further >> you know, we're going to take one year at a time here. we just want to plan prudently, and that means, for me and for us, taking the max 7 and putting that in to 2025 at the earliest, so not counting on it in 2024.

obvious, if we don't take a max 7, we'll take a max 8, and we'll work with boeing the max 8 is a great aircraft, and obviously, boeing has a lot of work to do. this is unfortunate, but like boeing, we support the work with the faa, the faa oversight, because at the end of the day, it's going to make boeing a better company it's going to improve quality, and boeing being a better company is really good for southwest airlines >> thank you talk about dallas for one second you did win the division, but you were not out in the first round of the playoffs. and what i do want to point out is that you came here and told us that you would have healthy leisure demand i didn't believe it. you told us that your loyalty program was going to kick in instantly. i thought that was actually fatuous. and you were going to manage business bookings much better. you did every one of these things how were you able to accomplish it in three months

>> well, you know, the product is really good southwest airlines has a terrific product, and we've made a lot of progress in 2023, and we intend to end 2024 an even better company as well the demand for the product is really good. again, record operating revenue, record passengers, record rapid rewards loyalty program revenues, and we see that strength continuing into the first quarter. our network changes really go into effect in march, which i really believe that we will see a profitability inflection point in march, but no sitting here today, demand for the first quarter is strong, and if you look at march, we are ahead of normal bookings, so no, demand for southwest airlines is very strong. >> you're talking about $1.5 billion in incremental profits because of these initiatives? that's an extraordinary figure, bob. i don't know how -- how do you do that? how do you -- how does that work >> well, we had a set of initiatives that we have carried forward, things like gds, more

business traffic and then we've added to that a new set of things, primarily network optimization, which is worth two-thirds of the revenue increases. so, if you look at the initiatives that we're delivering before, you add on top of that things like the network optimization, which is very powerful. it's about matching the network to the demand. that adds up to an incremental pretax profit contribution of $1.5 billion here in 2024, and i'm very confident that we can hit those numbers. >> bob, it's phil again. i want to get back real quick to the max discussion and deliveries from boeing you trimmed the number of maxes that you expect to get this year you originally said 85 now you're coming back to 79 are you confident that you're going to get those 79, or do you think you may have to trim that further this year if there continue to be questions about boeing's ability to manufacture and deliver as planned

>> well, the good thing about our order book with boeing, which i'm really pleased that we put a long-term new order book in place, is that there's a lot of flexibility we can flex up we can flex down i think we just want to manage very prudently, and in an environment like this, and plan against what we are confident that we can receive. that's what we did in '23. that's what we'll do again here in '24 you know, there were news last night that boineing is going tob capped in terms of raising its production rate by the faa until further notice that's new news. we don't know if there is an impact on our delivery plan, if any. we'll work with boeing, and as always, if there's an adjustment, we will adjust but again, i support that, because anything that helps boeing improve quality, address the issues, is good for boeing, and it is good for southwest airlines >> you guys have always flown 737s does it matter to the customer

what's happening in terms of the max, or do you think this is one of those, obviously, it matters to the people immediately after that incident with alaska airlines, but long-term, is there a residual carryover in terms of people saying, oh, not real crazy about getting on a 737 max? >> you know, obviously, our customers want confidence in our product, and they have a lot of confidence in boeing just like i do the 737 has a very long and storied history around safety. southwest airlines, we have a very strong technical operations function that assures the quality of the product that is delivered to us, and then ensures the ongoing quality of the product. so, safety is number one here at southwest airlines we take that very seriously, and i feel very good about our programs at boeing and our programs after delivery to ensure safety. obviously, boeing improving quality, addressing the issues

is good for their brand and the way our customers think about the aircraft, which means it's good for southwest airlines. but no, i have confidence in, again, the max 8 is a terrific aircraft i have confidence that boeing will address the issues and our customers have a lot of faith in southwest airlines. >> bob, real quick, we've got to wrap up, the inflection point in terms of profitability in march, what's the catalyst there? >> it's really the network optimization changes we put in place. the demand trends are very different than they were precovid things like reducing tuesday and wednesday traffic, the shoulder periods of the day, the very early and late flights, putting the flights where the demand is, those adjustments are large r in place in march and then in the summer, i expect to see an inflection point in march in terms of profitability, and

again, looking at the first quarter, it's early, our demand is very strong bookings in place are strong bookings in place for march are actually ahead of typical norms. i do expect an inflection point in our profitability here in march as the network adjustments come to fruition. >> wonderful hey, bob, thank you very much for joining us next quarter i'm with you there in dallas. bob jordan, ceo of southwest airlines. >> great we expect you back. >> this morning, thanks. >> i will be there guys, send it back to you at the mothership. >> great when nice guys do really well. just really nice guy. >> phil, thanks so much. before we go to break let's check bonds. it's been a busy day not just with our own gdp print but the ecb did hold steady. pce on the way tomorrow. 2s and 10s back to 20 basis points dow is up 130 and we'll wait for the data point headline of the

week tomorrow. be right back.

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it's time for stop trading. >> we got to mention some of the industrials here rabbit out of the hat, unbelievable quarter, going to be better, came in hot december. january is better. tremendous confidence in the dividend can go up, buyback is great. terrific executive we did not mention the rails there were people who said csx didn't do a good job, he's won the next quarter an amazing job and watch out coal still going union pacific. three industrial companies with amazing numbers and we should applaud them because it's not really the time for them to do very well. >> yeah. some of the operating ratio numbers weren't as strong as some thought, and by the way, wells cut dupont and there's been other - >> dupont was terrible, okay dow did to the do as bad as

dupont i have to tell you i like the industrials that come through at a time when we've had a tightening that is supposed to destroy them dow should have been destroyed the old dow losing money this dow making a lot of money by the way, i was always worried about the unfunded pension take that off the table. they're using -- there's a noncatch charge which makes the quarter not look that good it lowers dramatically the unfunded pension jim is excellent ceo excellent. >> what are you going to tackle tonight? >> i have resmed glp-1 is it attacked by them or doing fine good numbers i can't wait i sent you a picture of a prague museum i went to, i'm not sure it will make it this quarter, but you'll see it next quarter i think will be for david's segue, and, david, i think you're going to want to call, this is a tv term, call for this picture when you see. >> can't make it out of there. oh i see what it is

it's a peacock. >> the most beautiful peacock i've seen. it's up 50% from when i was doing -- >> 50%. >> long tail that peacock. >> long tail. >> you'll see it next time. >> we need our 31 million peacocks we need that - >> the prague exhibit was incredible. >> did he sign up to watch the chiefs game? >> yeah. and didn't cancel like a lot of jokers did. >> "mad money" tonight when we come back more reaction to tesla's miss, stock at a six month low. back to 189. we're back in a minute how am i going to find a doctor when i'm hallucinating? what about zocdoc? so many options.

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good thursday morning. welcome to another hour of "squawk on the street. i'm sara eisen with carl quintanilla and david faber, live for you as always from post nine of the new york stock exchange take a look at stocks in the early action all up after another record close yesterday. we continue to push higher the s&p 500 up almost 0.5% real estate leading along with utilities, some of the defensive groups and communication services

what's weaker, health care, humana part of that story, and consumer discretionary weaker as well and tesla is a part of that one. taking a look at treasury yields right now after we have stronger data, yields back off, the 10-year at 4.13%, 2-year note moves south and the ecb. we'll talk about that in a second 30 minutes into the trading session. here are movers we're watching starting with tesla, shares dropping after the company warned of a slowdown this year the ev maker sales volume growth in 2024 may be notably lower much more on tesla's future this hour ibm biggest gainer in the dow beating profit expectations, highlighting an uptick in demand for ai free cash flow rose more than expected an the gross margin was the widest since 1999. more color on that report as well a number of airlines out with earnings today american, rallying on a profit beat and upbeat outlook. southwest beating system but seeing higher costs ahead and alaska topping estimates but

saying the grounding of the boeing 737 max 9 will cost the carrier $150 million a busy week for data new home sales let's get to rick santelli. >> good morning, carl. yes, this is the last read for 2023 it's december. it's single family new home sales, expecting a number right in the zip code of 650,000 seasonally adjusted annualized units, and it comes in a bit better, 664,000. now, i would have said normally that would be down a little over 12% from last month's 590,000, which by the way, was the lowest rate since november '22 but that was upgraded to 615,000. but guess what it's still the weakest rate since november of 2022 but changed the dynamics and puts us down about 8%, about 8%, and it isn't a bad number, 664,000. we're starting to get right in that zone, kind of 550 to 650,

that we were precovid. we all know new home sales have had its challenges with interest rates, but there are some builders that can ameliorate some of those issues sara, back to you. >> rick santelli, thank you very much. other big data points to talk about today, gdp, how about that number, 3.3% in the quarter. that was way better than anticipated. consensus around 2%. and the good news for the economy is that all the components added to growth yes, it was built on the consumer and consumer spending, but also upside surprises in investment, fixed investment, government spending, trade was a surprise higher and inventories all led to that better than expected gdp report. it comes after the pop that we got in the third quarter up 4.9%, as you can see in the chart there. we're going into 2024 with good momentum and the cherry on top is that the pce, the inflation read, as part of this gdp, was

lower. 2.8% if you look at core 2%, which is right where the fed wants it to be the initial response, david, to this gdp report, might be some concern at the fed that the economy is not cooling down enough to cole down inflation, but because we got the pricing and we'll get more details and more granular data on pce tomorrow on the income and spending report, but that's good news this is goldilocks immaculate disinflation, soft landing as it gets. >> i listen as i know you do to jon gray from blackstone a quest on "squawk box," as he often is virtually every quarter when blackstone reports earnings. not much to say about the quarter there, but they have visibility into a lot of different businesses, again again, the portfolio in private equity they have in addition to real estate take a listen to greg on his view in terms of the fed and how much cover they have to potentially lower rates.

>> the fed has a lot of their cover to cover rates to lower rates. we've seen inflation coming down in our portfolio we see it in input costs we see wage pressures easing we poll our ceos it's easier to higher today than it was 12 months ago, 24 months ago. we see pressure on rents the cpi data we think will continue to be positive for the fed. >> it's real the disinflation is real. >> at least according to him pressure on rents. cpi data continues to be positive that plays into what you were discussing. >> what does the fed say about it >> christine lagarde was out this morning of the ecb on hold as well as all the central banks are in wait and see mode right now and there was some expectation she would push back on the market getting aggressively pricing the cuts this year. here's what she said about the prospect of rate cuts. >> consensus around the table of the governing council was that

it was premature to discuss rate cuts one other thing which was very much the consensus around the table was that we had to continue to be data dependent. so rather than being fixated on any kind of particular calendar, which would be being date dependent, we reaffirmed our data dependency. >> so it wasn't as tough talk as maybe the market anticipated as a result, the euro is weakening, bonds are getting bid up and putting pressure on our treasury yields as well. she stood by her comments last week in davos where she did talk about more summer, looking at the summer, toward cutting rates and that's where the market has gone to, june, for the first ecb rate cut it will be interesting to see how powell talks about the improvement in inflation, which can't deny and we can continue to get good news on that, and their willingness and readiness

to cut interest rates with the economy doing so well. >> fitch is already out. the fed will likely not be in a hurry to cut rates if the data continues to come in this hot, although others point to here's capital economics. it was not all rainbows and sparkles inventories ended up being a huge contributor the three threes exaggerated a bit. >> some give back on inventories, but i think it was pretty good and the s consumptionence in and the fiscal spending is adding to the economy. when we talk about the infrastructure and chips act and how much the government is spending that's showing up. >> the president is in wisconsin with another $5 billion of rollouts in infrastructure projects. >> it's still boosting our economy and you see it in the gdp numbers no question about it we also got a lot of corporate color, guys, because it's earnings season on what's happening with the economy i always go there to get a read and it's really mixed depending on what industry or what kind of company you're looking at. dow the chemical company as we

enter 2024 we expect near term demand to remain pressured by elevated inflation, high interest rates and geopolitical tension in building construction and durable goods and markets. that's not the booming economy that we're seeing in some of these numbers. i think the industrial sector has been weak. mccormick ceo, the consumers are exhibiting even more value seeking behavior it's a consistent theme we've seen the paint company, in our architectural business, commercial and residential repaint were the strongest performers while diy remained challenging. flavor into what's working american airlines demand remains strong we have seen robust bookings to start the year as travel trends have begun to normalize across entities kind of mixed depending on where you sit, but i think it's consistent with an economy that is cooling down a little bit but nothing dramatically jobless claims ticked up a

little kind of disappointing to see it go up, but still, historically very low and doesn't speak to any major stress in the labor market which is underpinning this whole recovery story and consumer story. >> not to mention, obviously, strength in the stock market, which continues. with the s&p up about 2.5% this year the nasdaq a better performer. one important component of the nasdaq is tesla but the shares have been down as much as 10%. we should point out almost 5% is the loss for this year this morning the company, after the bell yesterday, warned about volume growth, competition from china. let's get over to phil lebeau and find out what he's thinking when it comes to this earnings report i can't imagine it's particularly good, phil? >> no. and basically it's what everybody else is thinking not just reporters but analysts. everybody says the same thing. where is the guidance? it's vague in terms of what you're expecting next year you give people vague guidance, you get the stock reaction that you have today

here are the takeaways from tesla's earnings report last night. very scant in terms of details so if you're sitting there saying well i'm expecting this, hard to hang your hat on anything 24 deliveries, didn't give a number, notably lower growth than in 2023 and did say they expect to begin production on the next generation, this is the lower priced model in the second half of 2025 that's a goal not written in stone elon musk had this warning. >> the chinese car companies are the most competitive in the world. i think they will have significant success outside of china depending on what kind of tariffs or trade barriers are established. if there are not trade barriers established they will demolish most other car companies in the

world. they're extremely good all right. so what do we expect for deliveries from tesla this year? remember they delivered 1.8 million vehicles last year that was a 24% increase. the consensus is 2.1 million the consensus before the call last night curious what we're going to see as analysts bring it down. you don't know from this conference call. take a look at shares of tesla we're showing you a six-month chart. the shares trading at levels we saw back in may of last year one other note from the call, elon musk asked about his push to have a stake in tesla essentially he said look, i think it's in the best interest of everybody because you never know if an activist shareholder gets in and wants to push for changes. i am the stability you're looking for in terms of the

future at tesla and that was probably one of the more interesting things from the call last night in terms of the auto business, you didn't get a whole lot. >> you didn't get a lot of specifics for sure or granularity as the analysts like to point out. >> yes. >> he's always optimistic, that being elon musk in terms of when things will arrive obviously, full self-driving we're still waiting for, promising for years. he says i'm often more optimistic than i should be. what do you think about him saying our current schedule starts the new platform in 2025? >> i have more confidence in that than anything in full self-driving because i've been listening to his calls since the company started, and he says the same thing about full self-driving the technology is improving but level two driver assist. not level 5 autonomous technology at this point with regard to the next

generation vehicle, they have said you have to bring the cost down if you bring the cost down it opens up a host of possibilities not only can you be more competitive with internal combustion engines selling for $30,000, but you potentially, if you can get full self-driving developed, potentially, you could open up a robotaxi market years down the road. i wouldn't be surprised if we see something close to this next generation vehicle by the second half of next year. that said you hit the nail on the head you never know with the targets that elon throws out there, broad vague targets like second half of next year. >> a quick one you mentioned you did the quote about the chinese ev makers, is anybody talking about trade barriers on them and i wonder if he is putting this squarely on the agenda as, you know, trump gains momentum, we know that he's - >> we have one -

>> but expanding that. >> the u.s. has one. >> the threat that musk made. >> the u.s. has a 25% trade -- look, this has long been a debate about automakers why europe has not come out stronger the chinese are flooding europe with their models and that is putting pressure on the european automakers and there are more than a few ceos of the european automakers who have said, we need a little bit of help here because europe is where you're going to seat biggest impact for the chinese automakers in terms of other countries if they don't have auto manufacturing there, their attitude is if you can bring it in at a lower cost from china brirngs it in. we don't have manufacturing we're protecting here. i'm not sure that we're going to see much movement there. europe is the main focus. >> phil lebeau. >> as we head to break our road map for the hour microsoft's market cap topping apple, crossing $3 trillion. plus, semis surging to start the

year and ibm rallies the state of tech. >> csx also reporting its earnings and had a drop. the railroad company's ceo will join us in an exclusive with his outlook. a lot more on tesla. a number of firms cutting their price targets. we've got a bull/bear debate when "squawk on the street" comes right back ♪ you were always so dedicated... ♪ we worked hard to build up the shop, save for college and our retirement. but we got there, thanks to our advisor and vanguard. now i see who all that hard work was for... it was always for you. seeing you carry on our legacy— i'm so proud. at vanguard, you're more than just an investor, you're an owner. setting up the future for the ones you love. that's the value of ownership.

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♪ ♪ welcome back to "squawk on the street." microsoft officially joins the $3 trillion club after a rally this year. a number of other tech names on the move

dom chu tracking tech trade. >> sara, microsoft again as we showed in positive territory moving kind of back and forth over that $3 trillion market cap mark hitting another, by the way, record high intraday in the process. the company is telling employees, by the way, it will lay off roughly 9% of its work force in its gaming division which includes the activision blizzard team. those layoffs by the way amount to around 1900 employees all in all, three quarter percent gain for microsoft also, alphabet, amazon, nvidia among the tech mega cap communication services names hitting 52-week highs. apple in the top position in terms of megaarket cap, but it' the only so-called name in the magnificent seven that hasn't notched a high so far in 2024. trading just over 2% away from that level, by the way we'll end on shares of ibm hitting their highest levels since 2013 the company topping analyst

system on earnings and revenues along a stronger outlook for revenue growth ibm, older tech name, still up 12% in trading today 38% over the last year i'll send things back over to you. >> older tech name forget about it up 40% in three months had a run up into earnings thank you, dom chu. a little more color on ibm and what investors are potentially excited here guy, spoke to a person familiar with the matter over there and i can tell you ai, ai is the business now, and ai business doubled between q3 and q4. ibm is stating that. it's helping a lot of the different forms of their business for instance, their consulting business, 6% growth outperformed the industry why? there's a focus there on ai, for instance ibm sees ai potentially changing their enterprise customers' businesses they gave citi as an example citi has been focused on efficiency and taking out costs. they see it in helping businesses in three ways,

digital labor, augmenting people's jobs, coding and customer service and that's how it's helping transform their own business as well as far as what ibm sees for the year ahead they're looking at 2024 similarly to 2023 in terms of the macro strength in markets like japan and the uae and saudi arabia and india. china is a tougher story for ibm but that's not new the u.s., as far as enterprise behavior and spending they're not really seeing anything different. we know that ibm is doing restructuring, too, which maybe the market is -- feels excited about. it's similar in order to what they did in 2023 low single percentage 1 to 2% of the overall workforce affected over the course of the year and it's about, like so many other companies, guys, pivoting the company towards ai, rescaling, taking out certain jobs that are unnecessary as the focus of client spending becomes all about how they're incorporating

generative ai. ibm having an 11.5% move i don't think they've seen a jump like that since covid days. >> bofa points out one of the biggest underweights street not warm to them over the story over time. >> back to 2013 to find a stock price this high. >> the forecast at $12 billion up from $10 billion this year proves that has been working it's got to be a positive. >> we're going to watch that when we come back an exclusive with the ceo of csx. one of the nation's biggest transportation players, his outlook for the company and state of freight as meso of those numbers come in ahead. don't miss it.

oh no, a rash. maybe it'll go away. awww, how am i going to find a doctor i'll actually like? is that a qr code? dr. stafford makes you feel at ease. thanks rash! you've got more options than you know. book now. csx with modest upside on q4 earnings and revenue morgan brennan joins us with the ceo. >> carl, that's right. joining me or us i should say, joe henriks of csx great to have you on post earnings thanks for being here.

all right. we're working on audio i will jump in q4 revenue down, volume is up for 2024, though, you're forecasting revenue growth and volume to grow as well how does that speak to the timing and magnitude of a freight recovery this year >> yeah. we're feeling optimistic actually what we saw in december was interesting. chemicals, forest products, international intermodal all year long were down until december autos, coal, metals and minerals positive all year and we're feeling good about what we're seeing on the demand side right now. >> on ta we're getting our first fourth quarter gdp reading it's coming in 3.3%, stronger than everybody expected that sounds about right to you >> it does we saw domestic intermodal pick up the last seven or eight months sequentially every month, autos, metals, chemicals, plastic ixs tied to consumers see an inflection in december. the arctic weather didn't help

us in the last couple weeks but we're feeling good about what we're seeing on the demand side. >> interesting to hear you say that because we know railroads are tied to the industrial part of the economy there's been a lot of soft macro data around the industrial side of the economy we've had some cautious i'll call it commentary from companies in this earnings so far. do you think we're seeing stabilization and a bottom as we head into 2024 and how much are fiscal tailwinds from infrastructure, inflation reduction act, chips act, actually as those materialize this year, how much will those contribute >> i think they will contribute. if you look at last year, things like cement and rocks and minerals tied to construction were up. we see that continuing very strong for us here in the southeast. if you think about other parts of the business, industrial production was flat last year. our merchandise volume was up. our service gains were seeing that if we can get chemicals and some of the forest products like housing related, to see

inflection positive that can contribute to what we're seeing. if you look at the last couple months we're seeing some strength. >> i want to get to the service piece of this. one more macro question, that is on the intermodal side which tends to be consumer skewed part of the business, what are you expecting this year in terms of i guess i'll call it a normalization of inventories for retailers and as we've seen east coast ports, which are tied to, take some of the market share from the west coast, does that continue >> yeah. i think you'll see the east coast ports continue to see volume growth. they've been investing heavily in their infrastructure to be able to support that if you look at our fourth quarter it was the first quarter of the year where we had intermodal volume flat year over year and the previous three quarters was down. a lot had to do with international modal. that came back in december we'll be lapping easier comps but looks like international modal could show growth and domestic intermodal has shown strength for a number of months. we see that continuing in 2024

>> do you see any impact or ripple effects from what's happening in the red sea and the attacks on the cargo ships there and any major disruptions in terms of shipping and delay into the u.s. >> we haven't seen it yet. we're talking to all our customers. we see more activity going, you know, south of africa now, but it will play out as it gets here if more things end up going into the ports west or east, it will help us, actually, on the rail side because the population center of the united states is in our territory if things come to the west coast it will ship over on rail and comes in the east ports depending, it may go on rail longer a possibility it could help us we haven't seen much yet. >> so this past year we saw operating ratio creep higher but also saw your service metrics improving, industrial leading service at csx how does that contribute to market share gains this year and what does that mean in terms of your ability to continue commanding pricing >> yeah.

our thesis all along has been if we can get to levels of customer service, new levels, that our customers haven't seen before, we can talk our customers into having the conversation with us again about growing volume with us so much volume has moved to truck over the last 10, 20 years as we know, and it comes down to providing reliable, repeatable service to our customers we're trying to lead in that way. that should lead to continued market share gains and volume opportunities for us we saw that last year and gained share in key areas like metals and autos and coal and we should see more of that play out in 2024 we believe that's foundational to what we're doing. our staffing levels now are levels we've been targeting after four years of being short and feel good about our operating performance to support that going forward. >> joe henriks, csx president and ceo, thanks for joining us. >> thanks. >> they've had a nice run, right? >> yeah. >> morgan, thank you. still to come on the show, tesla shares tumbling on its latest results and outlook

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join the millions of people taking back their privacy by downloading duckduckgo on all your devices today. welcome back i'm silvana henao with your cnbc news update. donald trump is expected to hit the witness stand today in his defamation damages trial with writer e. jean carroll she is seeking $10 million from trump after a judge found the former president libel for defaming her after she came forward accusing him of sexual abuse. alabama is set to carry out the first u.s. execution by nitrogen gas today an appeals court rejected a last-minute attempt to pause the planned execution using the untested method yesterday. lawyers for convicted murderer kenneth smith argued the method violated the constitutional ban on cruel and unusual punishment.

and a new york city graduate journalism program is going twu wigs free. the journalism school announced a $10 million gift from craig list founder craig newmar today and the school plans to fund raise and use that donation to make the graduate program tuition free by 2026 carl, good news. >> silvana henao, thanks so much tesla remains the stock story of the day shares under pressure here about a 6 month low as the company warns about a slow down in growth. a number of firms cut the targets on the back of comments and earnings joining us this morning, bernstein's tony sag knock ki, underperform 150 target, ben calllo, analyst with baird, outperform with a $300 target. great to see you both. i thought about you last night because your skepticism has been well telegraphed and a long time ago, you told us in the end oems

tend to get legacy multiples is that what's happening here? >> certainly i think more investors are questioning whether tesla is a technology company or a car company this quarter's revenue grew 3%, margins are similar to other car companies, and so, i do think investors are increasingly questioning that now the stock is still trading at, you know, 75 times our earnings projection, 150 times cash flow, so clearly investors aren't all the way there, and i don't expect them to go there. i do think tesla has ev technologies and they could play out and manifest themselves in higher margins longer term, but i think for now, investors are really questioning the kinds of multiples and the kinds of extrapolated growth rates that

they had afforded tesla in prior periods. >> but do i hear a hint in there, tony, you won't necessarily wait for 150 to rerate >> no. you know, we've been objective in how we set our price target we've had our 150 price target for a couple years now it's based on running out our forecast of 2050 if we have to change our forecast and the price changes, we will, and vice versa. i think look, if tesla traded at, you know, ten times earnings it would be a $30 stock and we certainly don't think it's going there. >> ben, you've been -- i'm sorry you've liked it more, at $300 target are you feel more skeptical now? >> you know, thanks for having me on. i think, you know, this year i think it is actually a good setup for what they did last night. you know, they talked about volumes growing at that 50%

substantially lower i think was the terminology. the street is somewhat below 20% growth rate. we're down 16% that gives them room to actually beat numbers this year i think, you know, growth for companies it's not all linear and this is a year they called it a transition year until we get, you know, the next model 2 on the road there. at the same time the energy business is humming. this is something that we went back seven years ago, it now has a good margin, arguably better margin going forward than the auto business, growing at a faster clip. then, you know, you start getting into ai. lots of skepticism around that that's good to be contrarian around that. tony has said in the past that, you know, how do you get the volumes with just the models out there. he was right about that. he has a call maybe a year ago, but i do think that for patient

investors there's upside when we start getting to the next model which will be, you know, mass market vehicle and really what tesla has been working towards, you know, since it was founded. >> yeah. although it's a long time between now and then i mean musk on the call said, hey, i'm overly optimistic sometimes and he's still talking about the end of '25 a long way between now and then. what happens to the stock price? >> you know, between here and there, i do think it will be the conversation plan. i was surprised when on a lot of the call was discussing ai optimists, but we still haven't ironed out where elon is within all of that conversation plan. i do think once that gets settled, if it does have the different milestones than the last two conversation plans have had, that will be a catalyst and give investors and us something

to track by the way, last two packages, no one thought they would hit all those targets and they hit them ahead of schedule it shows how quickly they built the company and how quickly they - >> the journal piece raises the question of why the cybertruck was given priority to a lower cost model, the likes of which you find in china. does that make sense was there vanity at play why do you think it tended to cut in line? >> yeah. i mean f i try and retrace some of the challenges that tesla faces today, i think they made a significant miscalculation in estimating what they thought model 3 and model y could do so a couple years ago they believed model 3 and y could be 3 to 4 million units per year at the 50 to $60,000 price point that they had. that was completely out of whack with the addressable markets for

those market sizes and i think tesla felt, hey, we can keep growing thr through '22, '23, '24 because we think we can get to 3 or 4 million units and so i think that was the fundamental miscalculation i think the second was, they got enamored with doing something different, which you the cybertruck, which has proven more difficult to do that has further pushed out the road map because there's been so much attention trying to ramp cybertruck it pushed out the low cost offering. it was a combination of both one was a fundamental miscalculation about how big 3 and y could be, and the second was, taking on a very difficult project which, you know, they had hoped to launch in 2021 and only launched in 2023, which is

further compounded the challenge and now pushed out the model 2 to likely 2026. >> two points on that quickly. >> sure, yes. >> i think it's analogous the model x. you know they over engineered. that helped them with the model 3 and y. also, to manufacture the next generation of vehicle, they need to toefl the manufacturing tools that they use on the cybertruck to get to this next level. so that was a stepping stone into getting to the next model. >> right not wasted time in your view we'll see. certainly the debate fascinates the street like few other names. tony and ben, thank you, guys. >> thank you, guys. >> i feel like it's increasing around 2025, and not 2024 when it comes there stocks are rallying to start the year after record highs. a number of record closes. the credit market is kicking off 2024 with a bang our next guest says investment grade credit companies are

issuing debt at a record pace. why the rush what does it say about sentiment? we'll talk to gomas adf ldn'he o corporate credit when we come back

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as stocks have rallyinged to start the year the credit market kicking off 2024 with a bang our next guest is in charge of capital investments and companies are issuing debt at a record pace to start the year. what does it say about corporate sentiment and raising the money for and what does it say about the economy? johnny fine joins us goldman sachs, here at post nine welcome. >> thank you great to be on. >> talk about the kind of activity you've seen lately. >> very robust this year $170 billion of investment grade supply to kick off the year. that's the fastest start that we've ever had suggestions being great, all the metrics we look at around execution, over subscription levels, the stickiness of demand when we adjust prices lower, all the things point to to a healthy market the majority of the financing

we're seeing is short dated when the market wants longer duration it's significantly financial in nature when the market wants corporate. in addition to that, so much is simply refi and so much of it is simply just new issuance replacing debt maturities that the net issuance itself is very modest. >> is it because rates have rallied? what's the driver? >> so i think it's really because of the spread environment. the spread environment as it stands right now for investment grade overall, we're in the best we've seen over the last 20 years. in the long end of the market, we're seeing levels that we haven't seen since the 1990s spreads are extremely attractive yesterday in the market procter & gamble printed a 10-year financing. the printed the lowest spread we've seen since before google was invented we're seeing some extraordinary environments play out from a spread perspective from a yield perspective, it's

less so. we had a nice rally in treasury yields in q4 but still a long way away from 10-year averages and corporates are looking at the market saying, love the spread environment don't really love the yield environment. when we do issue we'll continue to fund in relatively short duration. >> why spreads so narrow right now? what is that a reflection of overall confidence or is it more reflection simply of demand? >> i think they're intertwined the confidence and the demand are driven by a robust economy that's been resilient toward the rate hikes we've seen, a really favorable credit environment where we saw 525 basis points of rate hikes, the ratios of upgrades out of high yield into investment grade was 4.25 times the amount of downgrades we saw from investment grade into high yields. >> so very favorable for credit and safe place for people to think about puttingtheir money in overall the run up in stocks has aided

pension fund rebalancing as they look at the opportunity with pension funding status at 15-year highs. that's an opportunity for pension funds to move out of stocks into bonds, effectively insulate their portfolios. >> what does it do to the hand wringing about maturity walls in corporate america? does it alleviate that somewhat? >> there's no real maturity wall in investment grade. there's more in high yield that market has bounced back nicely as well three deals with a triple c rating get done this year. there were seven all of last year a seven-month hiatus with no issuance at all in the triple c market and those deals getting done mid 7, mid 8, reasonable yields overall, so i think the health as that flows down into broader risk markets is good for the high yield market and good for the equity capital markets >> you're in investment grade but sometimes we look to sniff out trouble in the credit market as far as the overall economy

but doesn't sound like you're seeing much? >> there's really no warning signs in credit overall. very robust levels of demand again, i think the market is providing to investors not exactly the kind of supply that they want, but nonetheless investors are buying whatever comes out and that's creating i think a very favorable environment for issuers. >> at the end of last year sara and i would talk about treasury supply, interest costs for the overall budget we're not talking about it as much right now i'm curious whether you think that is a short-term phenomena and we will be again >> i think we will i think there's two or three things in any one given year of really important macro i think last year it was recession risk, obviously, what happened in the regional banking sector, and this year we think about things that will move around a pendulum. treasury issuance and supply the market doesn't care phase. we're going to shift back to the market deeply caring

it was only october where the market was intently focused on refunding, intently focused on the split of treasuries treasury would be issuing we saw significant moves higher in yields in treasuries. i think the pendulum will swing back at some point this market t again, even with the two likely presumption presidential candidates not running on anything -- >> is that cycle seasonal? is it about fiscal year-end or why would it -- just thinking about october as opposed to now. >> i think it's just when the market -- when it hits the mood of the market. we'll see -- we'll see a treasury auction t will have a long tail and people won't be happy with it. that will ignite fears and that will become topical again. i don't think there's any specific dates as to when these type of topics become relevant again. i think it will move with the mood of the market. >> the last time it was flaring up around the time inflation was looking stickier and we saw yields rise a little bit

we were wondering about the higher for longer. thank you. good to talk to you, as always, and get that color johnny fine from goldman sachs. coming up next hour, macy's rejecting that deal to take it private. next hour on "money movers," they'll defe tndhe move. "squawk on the street" is back

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humana shares getting crushed, down 13% after what were difficult results, difficult guidance it follows last week's warnings as well. let's get over to bertha coombs to fill us in. >> david, they didn't get all the bad news out last week humana hitting a two-year low. reporting a fourth quarter loss of 11 cents a share. that was in line with its warning last week. on top of, that the company is now lowering 2024 guidance and also dropping its prior outlook for 2025 right now all of the insurers are trying to figure out what their rates will be for next year with new reimbursement rules coming from medicare the big headwind continues to be high medical costs for in-patient stays and elective surgeries among seniors. humana now seize 2024 medical

loss ratio at 90%. that's how much they'll spend from every dollar they get had a premium on medical costs that's two points higher than originally forecast and well above competitors like lvance and united health, which reported last week the news is weighing on the entire medicare advantage space on the earnings call today cfo says one of the biggest internal debates they had at humana is trying to get a handle on whether the big spike they saw at the end of the year was going to continue this year preside at the end of the day, they think this is going to be the post-pandemic normal and they are contending with how they're going to price for that for next year david? >> yeah, you know, a number of investors, at least one i spoke to this morning, thanks the 16 will be higher again, you're not talking anywhere what had been anticipated. they bought back $400 million of stock in the first two weeks of the year you wouldn't do that if you thought you had really bad news

coming did this take them by surprise >> that is one of the things they were trying to get at -- analysts were trying to get at on the conference call it appears it did, although bruce broussard saying at least one of the things is they're going to continue to be very disciplined. they priced conservatively they weren't looking to gain market share, and they didn't. they said, you know, one big competitor that did price very advantageously to attract new members, well, that member and that insurer might feel more of a pinch now that we're seeing this higher rate of medical usage. >> yeah. which may continue they said it wasn't necessarily rsv, it wasn't respiratory related. i guess, what was it >> they didn't talk about exactly what it was. they said they're seeing short in-patient stays which makes you think it was more of knee replacement, heart valve replacements that's what we heard a lot of.

j&j had strong results when it came to the heart valve replacements and those devices that they make so, the device makers are the ones likely rebounding from all of this news interesting. bertha, thank you. bertha coombs on humana. that stock down sharply for the second week in a row overall, though, stocks having a pretty good day. nasdaq up 1% and s&p up 0.3 of a percent. [♪♪] 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.

good thursday morning. welcome to "money movers." i'm carl quintanilla with sara eisen live on the floor of the new york stock exchange. today the first of the mag 7 to report tesla is down big as elon musk and co warn of a slowdown. we'll get into how you might want to trade that with guggenheim analyst. gdp, jobless claims and more how this morning's economic data could impact the rally the s&p 500 on pace for its fifth straight record close. jpmorgan's chief economist is with us. and macy's rejecting this $5.8 billion take private bid citing some financing concerns one of