presidential election last night at mar-a-lago. it's wednesday, november 16th, 2022 "squawk box" begins right here ♪ good morning, everybody. welcome to "squawk box" on cnbc. we're live at the market from times square i'm becky quick along with joe kernen and andrew ross sorkin. you will see green dow up by 56 points, the nasdaq up by 6 and the s&p by 6 the ppi numbers show there was less inflation than expect and than sent things off to the races with the markets later we heard reporting about the two missiles falling in

poland and that cooled things off. you still saw all three of the major averages finish high fehrer the day if you look at the treasury market you'll see at this point it look like the 10-year is yielding 1.788%. missiles fell within the country's border near ukraine killing two people in an explosion overnight. at the g20 summit, the president spoke with the leaders about that incident. he said he thought it was unlikely that the missile that hit poland was fired from russia. >> there's preliminary information that contests that i don't want to say that until we completely investigate, but it is -- it's unlikely in the minds of the trajectory that it was fired from russia, but we'll see.

>> now, the "associated press" reporting that the preliminary u.s. assessment suggests that ukraine fired the missiles as part of an air defense system. meantime biden criticized russia for firing on ukraine as world leaders were coming together to try to urge de-escalation. meantime forter president trump officially launched his bid for the 2024 race. he painted a picture of what he believes america can expect if he reclaims the presidency >> i am running because i believe the world has not yet seen the true glory of what this nation can be. we have not reached that pinnacle, believe it or not. in fact, we can go very far. we're going to have to go far. first we have to get out of this ditch. and once we're out, you'll see things that nobody imagined for any country. >> the former president criticized his success elf

president biden for his handling of the economy and what he called the weaponization of the justice department and the fbi of course, there circulate been allegations he weaponized it himself. they're investigating trump's handling of documents in his role in an effort to overturn the 2020 election results. it was expected. we all knew this was coming. >> he went ahead with it. >> he went ahead with it i read the national review this morning. >> journal >> right. >> chris christie's speech yesterday. >> two letters was the headline. "no. ". >> chris christie's speech was, i don't know, a raucous applause from all the governors. >> he's sick of losing >> yeah. everybody's been saying it for me, the georgia from last year was just the -- you know, that was the straw that broke the camel's back i mean think if that had gone differently. june one with david perdue who was already an incumbent and won

in the original and then in the rehn-off didn't win because trump went down there and said the voting -- it doesn't matter if you vote because it's not going to count i don't know he just didn't tell republicans to go out and vote in georgia and the rest is history. none of that would have happened in a 51-49 senate. so then you can argue whether it was good or bad. but, you know, if you're of one political persuasion or the other, you may have wished that the senate had not fallen. >> i think other people have other issues beyond that one. >> i know, but that was before the other ones that happened before -- and then you can take it from there if you want i -- you know, i've never been a ne never-trumper, but i think there are solid alternatives you know, president biden, if he were to win re-election, the day that he took office, he would be 82 it's his birthday on sunday.

i think he probably would be re-elected but i think that might be the only person that he might be at this point. >> we will see we will see. >> we will see. >> we've got two years i imagine it will be a raucous debate. >> but it's all going to go very smoothly on "squawk box. i don't know whether you saw -- >> your horoscope? >> your horoscope? because that's the first thing we do in the morning is check your horoscope by the way, maybe we should. >> you don't you think reagan was a good president? listen you may have serious differences with an employer or colleague but you can and must find ways to heal this rift so you can work together successfully remember, you don't have to like him to be part of the same effective team. >> i always thought management should buy the horse. >> you're a pisces. >> i'm a pisces.

>> oh, this is not you you may be in a friendly mood and willing to chat with all sorts of people, each strangers. >> yeah, thank you. >> this is totally fos be careful about what you reveal about yourself one small and seemingly unimportant detail could in a rival's hands cause you a great deal of trouble. >> cnbc management has effectively taken over the horoscope. well done. >> i'm excited about lowe's. i want to get the hell out of this. >> tell me why. >> yesterday it tracked -- home depot was amazing to watch yesterday. up $5. down 5 then back up then there was the missiles or whatever hit poland. then back down and then it ended up closing higher there you can see. is that yesterday and today because this morning these numbers are pretty solid once again and what we're going to talk about if we -- once again, the two of us -- were to go and do some home improvement, we might do better at lowe's.

we still wouldn't do that well, i don't think. >> you think they would help us a little more at lowe's? >> it's supposedly easier for people like us that are not part of it. >> we know becky can do all of that. >> i can change a light bulb. >> could you put in a sink >> if she put her mind to it -- >> i wouldn't take it on matt has, yeah. >> see >> see, that's -- you have someone at your -- you have circulat schneider. if your drain isn't working, you call schneider in. do you remember that show? >> what was it called? >> "three's company. >> no. bonnie franklin. >> oh. "one day at a time." >> "one day at a time. we're really aging ourselves >> i had been working for 20 years when that show was on. the first number for lowe's was

like, whoa, what has happened. you factor it out, it's $3.27. that's well above $3.10. also a good sales number 3.5. a billion, 3.1 is what was expected comp stores not as good as lowe's u.s. same-store sales up 2.2%. and then we need to look into all the things that we were talking about yesterday. inflation obviously people have traded down with walmart and buying -- you know, and companies are trying to hold the line, but not really as much as they can to try to maintain some margins, but trying to get market share as well. >> guide answer is important too. they do say their comp store sales, they see them for a full year down. so you're talking declining comp store sales. they also see, though, full year gross margin rate up slightly compared to a year ago numbers on this. they're raising their guidance,

but it looks like it's taking into effect the 7 cents. the street was already at $3.54. if you take 3.54 and add 17, it's 3.71. >> the sales number is higher. 97 to 98 -- well, 96.96. 97 is more in line joining us now is brian nagel, research analyst at oppenheimer. what's the difference in the same-store sales the comp sales why is home depot lower than lowe's, and is that a good number, 3% >> good morning. i'll answer your second question first. that is a good number.

once again we've seen this has been a trend for a very long time home depot outcomps lowe's there's a lot of factors in there. home depot has better store locations and better merchants, et cetera. in and of itself, that 3% number is a good comp number for lowe's. >> that's the u.s., 3% so the total is 2.2. you say the expectation is zero for two. that's actually outperforming. how about the effect of inflation that we saw with home depot yesterday where people were spending more because things cost more, but fewer visits or transactions. >> we spent a lot of time on the home depot conference call and i spoke with the manager afterward. that's a trend that's been in place for a while.

you can look at it as a positive or negative. on the positive side, what it suggests is home depot continues to suggestively strategically pass along the higher costs to the consumers. the other factor at play here, and this gets lost in these numbers, these companies, both of them, home depot and lowe's are generally speaking selling more bigger ticket items so that also drives up that ticket, so to say, while traffic to the stores is down modestly year over year i tend to see that as more of a positive. >> in terms of -- yesterday we saw the ppi, which was a little cooler than expects. do you need to see mortgage rates ease or are these still stocks that are immune to when the housing market is bad? do people remodel when they don't move is that what we're supposed to think with lowe's as well as we do with home depot

>> look. i think that's exactly the situation. we were talking about this yesterday. i believe that right in this environment, we're in this interesting dynamic where, yes, mortgage rates have climbed significantly. that's impacted demand for new homes. but on the other side of this, despite all of these concerns right now about a weakening consumer generally speaking consumer confidence still remains quite good some of what you're seeing right now is as consumers, homeowners are less like to to invest in a new home, but they're likely to put money back into their existing homes. we saw that in lowe's numbers and home depot's numbers yesterday. that could change, but right now the shares are down from a fair amount from the highs, 263 or something from lowe's.

they bought back $4 billion worth of stock in the quarter and they're actually boosting their share to purchase 13 from 12 is this a good time to do that, do you think >> i like both of these names. to the extent that, a, we don't get that, or, b, we move through that relatively quickly, i think that's how the stocks work in the case of the buybacks, one of the big positives of lowe's and home depot is the amount of cash they generate they're very popular and they continue to buy back their stock aggressively, which i think is a positive too. >> yesterday we had a discussion can someone make lumber? someone said you can't god makes timber, and then man produces lumber. so you can do that can you make lumber? are there lumber makers? i guess that was not wrong

yesterday. and i see you did wear wear a -- made more of a statement with your jacket today too. we appreciate that. >> a little more me now. i feel better. i have no idea whatsoever. >> it's semantics. lumber maker is fine lumber producer. god makes timber thanks, brian. we'll see you in like three months because this is going to happen again, i think. >> we'll see you you've got it. >> that can happen four times a year. >> mark your calendar. >> clockwork. >> it's good to have certainties in life. >> right, especially for a capricorn. >> why >> very ocd. you haven't seen me with -- >> i didn't know it was a capricorn thing. >> oh, yeah. >> oh, boy this is going to be a fun morning.

>> aren't you married to a capricorn? >> i am. i don't think he's ocd i think i'm more ocd than he is. >> it's not just capricorns. >> you are a man of habit. you're a creature of habit. >> i don't think so. >> how are you not a creatureo habit when you're on a schedule. all of us are. >> i don't think ocd is right. >> you don't think -- anyway. >> when we come back. >> we'll discuss it on commercial break. >> -- reports say there are job cuts expected at amazon. we've got the details after the break. the stock is up by 6 cents if you are watching the futures, the dow is up, but only by 18 points versus the 50 we we were watching before. nasdaq is turning anyboditive by 12 points. s&p 500 is up by less than a point. you're watching "squawk box" and this is cnbc

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welcome back, everyone amazon began laying off employees yesterday. the company notified workers in several divisions including the alexia and luma cloud gaming unit this they were being let go according to a post on linkedin. a source told cnbc as of midday yesterday amazon had not sent

out any wide communications regarding the layoffs. that frustrated some employees amazon declined to comment on this and the stock is up by 1 cent this morning. >> in the meantime apple is set to shift its stral strategy of sourcing chips according to bloom beagle, the company is going to be getting semis from a plant in arizona. that company is expected to come online in 2024 the report adds cook revealed the move in an internal meeting in germany adding that apple would buy more european chips as well that's a company that has a lot of its sourcing issues in china. meantime u.s. lawmakers are calling for more regulators in the crypto industry. among those sounding the alarms senator bob menendez and cindy lummis and pat toomey says it's pushed cryptos into foreign districts this comes as blockfi now

reportedly weighing a bankruptcy filing of its own. this is after the exposure of the bankruptcy of ftx. coming up, elon musk's plans to update the llofroout the verification plan. and taylor swift and ticketmaster we'll explain after this. >> announcer: this cnbc program sponsored by baird visit bairdifference.com opportunity is using data to create a competitive advantage. ♪ ♪ it's raising capital that helps companies change the world. it's making complicated financial concepts seem simple. opportunity is making the dream of home ownership a reality... ♪ ♪

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welcome back to "squawk box. elon musk offer as new date for the rollout of twig're's revamped subscription service tweeting twitter blue will roll

out november 29th, making sure it's, quote, rock solid. this new date comes after twitter paused the rollout over a wave of people impersonating brands, celebrities, and other high-profile accounts. the other thing he said yesterday, guys, in a couple of months you'll have to pay for the blue check mark or said blue check mark will disappear. for some of us, we're root for the platform think a lot of people use the blue checkmark not just for the status of it, but it's a good way to filter and see, okay, this is likely to get more amplified. >> this is somebody i want to connect with. >> what he alluded to is something i had tweeted about a couple of days ago, but doing it this way, which i was sort of excited that they might try to do it like this, is based on a follower account, you'll be able to filter people so the blue checkmark, if you can buy a blue checkmark and

someone has 50 followers, that's one thing. if somebody has 10 million followersings being able to filter by follower accounts. i know some may not be real. i know he has to deal with the bots but it's an interesting way to deal with. we'll see. >> moontime ticket master feeling the wrath of swifties. they overwhelmed the website there were crashes and other issues the company is owned by livenation, saying it will modify future rollouts roorks e scheduling ticket releases i think it's in may coming to metlife stadium for those of us in the new york area. coming up, target's report as we head to break, here's a look at yesterday's s&p 500's winners and losers >> announcer: expectation tissue edge is sponsored by at&t business

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good morning and welcome

back to "squawk box. we're live take a look at futures, though, this morning let's show you where the dow stands dow jones up as well as nasdaq and s&p. inflation jumping to a 41-year high of 11.1% in ctober. this exceeded expectations of 10.7%. the biggest gains came from higher energy costs. the office said for statistics on average households paid more. the cost of food and non-colic beverages was up year over year. becky? >> we've got numbers just out from target. these are the numbers we were waiting for this morning -on-the bottom line, the numbers are not good you're talking earnings of $1.54. the street was looking for $2.13. now, revenue did come in better than expected. it was 26.5.

the street was looking for 26.38 billion. comp store sales were also better than expected versus the consensus estimate target is talking about some very concerning trending they have seen in the store starting in october they just say basically the consumer changed and changed drastically starting in october. i spoke with brian cornell yesterday and he pointed out that in october, consumers were really starting to feel the pressure from inflation. and it showed up in the stores and what they were buying. food and beverage was very strong things like beauty, very strong, but think saw weakness when it came to apparel, home, toys, and electronics. that is something that's definitely impacted their markets as well. they've had to offer things on sale, brian cornell telling us it's a situation where consumers are waiting to see a sale. when they do, they'll come in. that's obviously impacting their markets too. right now things that you can see. brian cornell says this could be

a much softer holiday season than we were anticipating. as a result, the company is actually lowering its top line and bottom line expectations for the fourth quarter if you look at the numbers on this, they say they're looking now for the low single digit to decline in comp store sales. they say that's consistent with the recent trends that started in the beginning of october and that worsened as the month moved on they're planning for a wide range centered around 3% the company also says, target says it's going to be taking an enterprise-wide earth to try to lower costs over the next three years. they think they can save a total of $2 billion to $3 billion with that work. part of it is because the company's grown so rapidly during the pandemic. revenue up by 20% over the that time period. they think they can change things they say they're not planning on mass layoffs like you've seen with target. they also said the benefits they're offering employees are not going to change, but take a

look at the stock reaction it's down by 13% people had been anticipating this was going to be the cleanup core, that they had gotten rid of a lot of the inventories. right now we want to bring in stephanie link, hightower strategist, cnbc contributor, and owns shares of target. stephanie, we want to get reaction to this news. >> good morning. first this is a show-me story headed into the print. it absolutely was because they negatively announced two quarters last quarter they missed earnings but they actually reiterated second half guidance. so the big question headed into this quarter were two. would they cut 4 q, which we just got, and how do inventories look and, of course, you know, the stock, becky, has actually rallied quite substantially from the june lows. 25% since the june lows. 14% just last week alone so expectations were they would probably cut that would be the cleansing

events and then you move on clearly the commentary, though, in terms of october is disa disappointing. you know what's really disappointing. cornell spoke in october, on october 17th at a conference, and he sounded pretty upbeat, which is one of the reasons the stock has rallied. so this is a giveback. it's disappointing clearly there's bloweded inventories everywhere walmart is handling it better than target for now. but that also has to do with the mix because consumables at target is about 43%. discretionary is 57% they're seeing problems on the discretionary side in terms of where they saw the strain, food and beauty, that's exactly what walmart said and i think that's going to be the theme across the board for a lot of retailers. >> are you willing to continue to give them grace and time to rebuild some of these things or has your patience run thin >> my patience is definitely

running thin, but we do try to buy low, right unfortunately the stock keeps going lower, but i think the fiscal '23 is -- or 2023 year, actually the setup, is better because if you lower the margins, you clear the inventory, and you are seeing better -- i mean they did see better revenues and better comps, right, so the demand is there. it's spotty. so i think the setup for '23 is better, and we'll just have to see where the numbers shake out because, you know, the stock is not expensive here atthese levels >> let me talk about an mdp that rolled out year over year when it came to general merchandise in october it was lower, down 5% year over year it was down 14% in the first week of november i will say some small retailers i heard from are seeing things like that where things really fall off a cliff i don't know if walmart is the exception to the rule.

lowe's and home depot may be, too, but what do you think is happening with the consumer right now? >> well, i think the consumer's definitely feeling the heat from higher inflation so i know the cpi and the ppi reports that we got in the past week, people were applauding it because numbers had come down quite -- you know, different than expectations, but they're still really high, becky, right? cpi at 7.7%, ppi at 8%, that's really still very, very high, and i think the consumer, even though they're getting paid more, wages are going higher inflation is just much more so so i think they're being picky they're being choosey. i would have thought going back to target, i would have thought they would have done better because they have a higher end consumer that shops at their stores that's what walmart told us. they did see that trend. so this is -- you know, we've got to sort out all the moving pieces, but it's just a challenging environment, and i think you have to be very

selective in the space. >> some bright points for the company. these are things they're talking about. traffic up 1.4%. basket increase, 3.3% year over year they say they had unit gains over all five of their merchant categories some of they're not losing market share. that company grew really, really quickly and tried to expand and maybe there is the need to curb and to cull. >> well, and, you know, so here's the thing, right? inventories, that's the real problem for them inventories were up 66% in the first quarter. they were up 34% in the last quarter. i haven't seen the number today, but i do want to see where that shakes out it's still going to be too high obviously, and that's what they're telling you. they're going to continue to clear out the inventory, and they're in that process. so it takes longer i t . >> inventory was 24.7% versus

28.8% from a year ago. they had high winds of sales as guests moved away from purchases. consumers are waiting for sales. i'm hearing that from every retailer also theft in stores -- we call it shrinkage they're calling it shortage. we usually call it shrinkage he said it doubled since prepandemic. you're talking $3 billion it's going to cost the company this year versus $1.5 billion from the year before. i asked if it was urban areas. he said it was organized crime rings that moved out from the urban areas. it's a national problem and something that is $3 billion and it's really going to take a hit out of the company's bottom line >> it's huge but, you know, we're hearing that from others as well best buy said it a couple of quarters ago it's a shame they shouldn't have to have to deal with this in terms of the

quantity and the size, but it is what it is they are addressing it that's the thing the company -- they have all of the -- this is such a challenging year they have all of these issues. i think they're going to come away i think now that they've lowered numbers, hopefully this is kitchen singer, becky. i think i want to hear what the company has to say in terms of really where they expect for '23 what margins look like i do think it's an interesting margin recovery story. but it's going to take time. >> you know, target stock right now down by 12.8%. obviously it's taking a big hit. walmart is down 1.6% amazon is down 1.5%. lowe's is down best buy down by 3.4% too. what are the things you potentially like in retail, stephanie? >> well, what i like, the kind of companies that i own -- of course i own target obviously,

but i do like star buck's. i think that's a turnaround story and i like the new ceo who starts in april. when he was at wreck it, the company had turned it up they did reiterate a lot of good things when they reported. nike is also, i think, an interesting story. they have a lot of inventory too. remember they had 44% inventory growth in their quarter last quarter, but i think as supply chains get fixed, i think you can actually see that story start to work, especially as they go more dtc, which is a margin enhancement story as well so those are the two that i like as i say, i also own target. i do like estee lauder that stock got hit on the quarter, and the very next day as there were rumors that china was reopening, they grew 10ch. all three, nice, starbucks, and

estee lauder are chinese reopen names and fundamental improvements i expect in 2023. >> let me tell you one more issue on inventories at target, since you're asking about that they said the big factor was the early arrival of seasonal inventory ruling in higher storage and operational costs. they say that resulted in cost pressures but they're always going to do what's right, they say, to deliver an on trend seasonal assortment. they say their goal is to finish the quarter with minimal inventory liabilities. it's a goal. you have to give this on faith you sound like you're not sure what you're going to do at this point. would you buy more with the stock off 14% or would you need to wait to hear in the conference call? >> i'd like to hear the conference call and the tone as well again, as i mentioned, cornell was out there on the 17th of october talking positively about trends i want to hear what happened

with october ander november trends i think at the end of the day, i believe this is a margin recovery story as they fix the inventory situation. they'll get it fixed eventually. it's just taking longer than expected and as you mentioned, i mean, the demand is. there same-storesales is there ticket is there. traffic is there they're not losing market share. if they were to lose market share, i would be changing my mind for sure, but they're not this is just an industrywide problem. their mix is more challenging than walmart's because as i mentioned they've got more discretionary products versus consumables. consumables is what people want. we're going from, you know, these -- this -- from things, goods, to services, right? and so in that trend they're kind of getting wrapped up with that and they have more goods stuff at the moment. we'll see as they change the mix and see what happens in terms of the overall inventory, the levels that's going to be important i mean, walmart yesterday, their

inventories rose 13% but that was versus 26% in the prior quarter and in the 30s in the prior quarter. they did a good job, but that's tied to mix, boy sailed. >> wthey decelerated to just under 1% in october. they say the results in the back half of october were much softer than the front half, and the mix of their sales tilted much more heavily toward promotions in the back half too. >> yeah, i mean, it just doesn't surprise me at all, it really doesn't. i guess the magnitude of the decline when it comes to comps. >> especially when it's at 14%. >> of course i mentioned the stock is up 25% from the june lows, so it's a had a nice little bounce it's not good. there's no way to paint a positive spin on the results, but i do think at least they lowered the numbers, and hopefully they're lowering the

barlow enough so this is how we can model going forward. >> all right stephanie, thank you very much good to see you. >> thank you. coming up on the other side of this break, easing the pain of the collapse in crypto prices we have a few steps you should be thinking about. later, don't miss our interview with the royal caribbean ceo ma aerl berty, talking trave dendft covid "squawk box" is coming back right after this what if “just an idea” could become a family tradition? this is financial security. and lincoln financial solutions will help you get there. as you plan, protect and retire. ♪ vo: palantir software. as you plan, protect and retire. empowers scuderia ferrari

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welcome back to "squawk box. even before the collapse of the high-employee file crypto exchange ftx investors had a steep loss cnbc's financial expert is with us now how to ease some of the financial pain how do you do this >> that's what people want to know. >> a tax story >> you'll see. investors have faced steep losses in many assets this year including crypto, and bitcoin has nose-dived over 16% so far this year, more than 75% from its all-time high, but there's a way to ease the financial pain many have experienced in that slide. now, if you bought bitcoin before it really tumbled and you sold it or plan to sell it before the end of the your, you could use the losses to offset

capital gains you realized from a house sale or selling stocks and securities if you have more losses left over, you can use them to offset up to $3,000 of this year's ordinary income and then carry forward extra losses in future years. now, as cnbc financial adviser council member douglas boneparth points out is this. >> there's no wash sale rule that means you can buy back right into crypto or bitcoin and not lose that loss you cannot do that with a particular stock. >> so, for example, you can't buy microsoft and then sell it at a loss and buy it back the next day the irs won't let you claim that as a loss because of what's known as the wash sale rule which says the same or substantially identical security sold at a loss and repurchased within 30 days, you can't claim that as a los on your taxes. that rule applies to stocks but

not to crypto because the irs views current cryptocurrency as a property and not a security. >> that's crazy. the only problem is bitcoin is so correlated with everything else -- >> i know, i know. you've got to figure it out. >> -- you've got too many gains to offset with the losses. >> i do think it's trrkt. >> look at it market to market. >> then you have to use it this year to offset the gains. >> it's a challenge. >> or you have to carry it forward with some 3,000 -- >> yeah, yeah, but at least you can keep carrying it forward. >> regulation hasn't caught up with new and developing assets. >> that's amazing. sell it and buy it back five minutes later. >> the wash sale rule. >> that's so different but it could be $3,000 different five minutes later we know what a great currency is it. >> while you're waiting to try and sell it and have it go through. one of the fallouts may have seen crypto as a long-term investment we'll ask you about that and what are the options. >> one of the things they should know is when your crypto is on

the exchange like ftx, you only have access to the exchange if they can give it to you. there's another option folks have been talking about, which is called holding it offline in a wallet you'll get a key, you got to remember that pass code or key, but that backup code let's you know that you can get in there and have the sole custody of your assets. people want that they don't want to necessarily have it on the exchange. >> let's say you're an ftx customer and can't get access to your money can you claim it as a loss now -- >> reading your mind >> even if you don't know there's a possibility that you might get some of it hopefully back later. >> can you sell it >> how does that work from an accounting perspective >> you have to be able to sell an asset to claim that loss? if you don't have access to it you're not able to claim that

loss the irs has guidance on different ways to do this if you're a victim of fraud, irs.gov, go there. they're talking about what happens when it's a ponzi scheme with stocks and security they haven't offered the guidance on crypto. >> they haven't called it that yet. >> exactly. >> interesting sharon epperson, always educating, thank you. >> my pleasure. steve liesman has the story on cooling inflation next. we're coming right back. >> announcer: squawk coin is sponsored by bitwise the world's leader in crypto index funds.

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better than expected inflation numbers this week may be putting the end of fed rate hikesin sight. senior economics reporter steve liesman joins us with what the road to a pause could look like.

we're going to talk about this a lot in the coming weeks. we have been already, steve. and then you get a couple of data points like this week and last week and we're in full conjecture mode about what it means. i think they still talk tough. they don't have to do anything as long as they still talk tough. >> i'm not sure they want us to be having this conversation now, joe. >> maybe. >> this is not the conversation they want us to have but do me a favor, for this presentation here, joe, take out your calendar, i want you to write down some dates. the inflation report this week puts an end to possible rate hikes into view. a chance of a pause after the first meeting of 2023 rests on continuously improving inflation. on december 13th, we get the november cpi report. that's the same day as the day one as the next fmoc meeting

january 12th, cpi report the fed meets on february 1st where the market is priced in for another 25 could see another 75 a lot has to go right here let's look at the probabilities for the march meeting. it shows the market debate over where the fed could stop so you have right now a 21% chance of 462. that's 75 basis points from now. that means they would have finished at that february meeting i showed you 4.88, 50% probability. and then there is still some possibility out there, though, that has diminished. the fed gets up to 513

as we report third-ds week they could prevail after january if the data cooperate, but the hawks still get their way because the fed is going to maintain a level for many months to come, joe. >> i still have a lot of trouble when you say data will -- it's so hard to be singular instead -- plural instead of singular i struggle with that you do it well it sounds weird in my head you do it on purpose you like to do that, don't you, to sound smart >> it doesn't sound right to me when i make it singular. >> the data is >> i say the data is. >> data are. >> it's like indexes vsuers indices. >> it all goes back to transitory

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good morning lowe's reporting results those number of times coming in better than expected the stock is up. the ceo joins us first on cnbc we will talk to him about what he sees in terms of customer demand in the wake of the ftx collapse and bankruptcy, u.s. officials weigh the extradition of sam bankman-fried back to the

yi united states. and former president trump launching his 2024 run for the white house. we'll take a look at what it could mean for wall street as the second hour of "squawk box" begins right now. good morning welcome back to "squawk box" right here on cnbc i'm andrew ross sorkin along with becky quick and joe kernen. take a look at u.s. equity futures at this hour we have lowe's earnings pouring in now things have turned the dow off 12 points. nasdaq off 12 points, the s&p 500 looking to open down about 2 points the ten year at 3.779.

the wti crude, down marginally this morning and then crypto, which we've been watching for the past couple of weeks now, in the wake of the failure of ftx, now what looks like to be the bankruptcy of blockfy looking at bitcoin down >> let's get to dom chu. i hope you picked some good ones. >> we have some. the big one, the biggest retail and earnings story of the morning so far has to be what's happening with target. that stock is down sharply hid hard, down about 12, 13% right now. over 180 though shares of trading volume this morning. the earnings fell well shy of analysts estimates on sales that were slightly better than expectations store sales came in better than expected as well, but target did cut its fourth quarter outlook

after seeing signs of a sales slowdown in late october they plan to cut $3 billion in total costs over the next three years. it's leading to a 13% drop in target shares. then you got shares of restaurant brands international. burger king, tim horton's said it's hired patrick doyle as it new executive chairman he'll look to help them kick-start its growth and brand portfolios doyle has been credited with helping dominos and growing digital sales there. restaurant brands up 1.5%. we're going to end with u.s.-listed china tech stocks. u.s. regulators had gained good access in their accounting practices, that's according to sources familiar in the reuters report they added that oversight work was still ongoing. no decision could be made about whether the disputes could be

resolved and considered over netease shares up about 3.5% alibaba up 2% and a mixed trade for some of the other names. this all comes amid a big stock surge yesterday for many of these names. i'll send things back over to you. >> could use a weekly chart of target versus walmart. interesting. what's the deal? >> not just that i think a lot of folks out there -- we talked to some analysts over the last couple of weeks about the execution of one versus the other and how much of this is a company-specific story to what's happening with target and walmart. that kind of divergence was taking place and target shares getting crushed. >> sufficient market hypothesis

doesn't work >> information is flowing freely. another big retailer reporting earnings lowe's out with numbers just about an hour ago. the earnings came in at $3.27 a share. that was much better than the $3.10 the street was expecting analysts had been looking for 23.13 billion and comparable store shares, better across the board. the stock up by 2.25% this morning. and joining us right now is marvin ellison >> it's great to be here >> it looked like every metric that i could find you all did better than the street was anticipating do you see any weakness when it comes to the consumer right now? >> you know, home improvement is a little unique and the demand drivers are different than the demand drivers for let's say home building. so when i look at lowe's, the

three highest correlating factors to demand are home price appreciation and the u.s. average home has $330,000 in equity the age of housing stock is another one and the average u.s. home is roughly 40 years old and also personal disposal income although economic times are challenging, we still have roughly 1.2 trillion in access savings versus prepandemic so when you look at all of those factors, those things bode well for home improvement and we feel really good about our current trends >> you had strength coming from contractors and professional builders and from the do it yourself crowd do it yourself is 75% of your revenue. what did the consumer hang in there? you didn't see any slowness towards the end of the quarter i'm asking this because home depot, they were talking about how they were getting mixed signals. it doesn't seem like you are. >> what i can tell you is that

for the entire year, we really had strength in the prosegment of our consumer base, but in the third quarter, we saw the do it yourself customers start to come back so we had actually the best diy performance of the year in the third quarter. when you look at the specific categories throughout what we sell, you know, there's a little bit of mixed bag, but overall, we see customers trading up. so you always hear the phenomenon that people are trading down that's not happening in our space. we introduce a maytag washer specifically to deal with pet hair, one of the most expensive washers we sell, and the response was positive. we're seeing customers trade up for innovation anddiscretionar items. our current christmas tree trends are reflective of

prepandemic trends which is exactly what we anticipated. so we're not seeing a slowdown we're not seeing customers trade down or pull back. and i just think that the definition or the redefinition of the home is something that we're still living with coming out of the pandemic. i don't think any of us can view our homes the same way as we did three years ago and i think the home improvement sector is just a benefactor of those trend shifts. >> there's a lot of pet hair on clothing, the washer gets it out? i watched someone clean a jackets using tape and trying it, and that didn't work we can't find a vacuum cleaner strong enough to pick up the hair from two german shepherds, marvin but that's not what i want to ask you. let's not gloss over that. what i did want to ask you, housing prices go up, people feel good about their house, they got equity to do

improvements housing prices go down, they don't think about selling, so they stay home and do an improvement. which is more powerful a factor for youand home depot, when people are stuck in their houses because the housing market is weak or people are able to sell their houses and move somewhere else i just can't -- i think it would be -- do well in both scenarios. >> that's true if you go back to the 1990s, is really the last time we had a situation where interest rates were going up and we had some degree of inflation. what we saw is home improvement demands stay strong. let me give you a couple of factors. we still in the u.s. have roughly 1 1/2 to 2 million homes on the current demand. we still have a shortage roughly 90% have a low fixed mortgage rate or they own their

home outright. it's not impacting homeowners with a fixed rate or who own their home it's not directly impacting how they feel about their most important access and our data tells us, through 2025, we're going to see 250,000 millennial buyers in a year enter the market i remember many people thought millennials would move away from owning and be permanent renters and that's been the opposite some of our strongest home improvement and home-buying trends are coming from millennial customers all of the things work for us. the fact that homes are getting holder and when homes get older, there are things you have to get fixed. two-thirds of what we sell is nondiscretionary if your roof is leaking or you have an appliance that breaks down, you can't ignore it. that support our business trends. >> i just got this -- literally this message from a viewer as we were on the air here

it says here, i run a small midsized construction company in arizona. we're still running through our customer project backlog from covid days we have at least 12-plus months of project backlog the demand at the stores probably won't change for awhile demand is softening, we think, for 2024 what do you think of that? >> andrew, we do an annual survey of professional customers and we did it recently 75% of those customers said that their 2023 business will be stronger than their 2022 business relative to the number of projects they have backlogged and on their book of business. i can't give you visibility into 2024 what i can tell you is every single metric, survey, every conversation will formally and informally we have with our professional customers tell us

that 2023 is going to be equally if not greater in strength and demand for them as what we're seeing. >> that's fascinating. a lot of people thought it would slow down, especially if costs -- as we keep talking about inflation and costs getting higher, no >> well, look, at the end of the day if you have equity in your home, your home is appreciating in price, you have confidence that you can invest in that home it comes down to that simple fact as i mentioned earlier, the average u.s. home has roughly $330,000 in equity in it and that just gives consumers confidence even if home prices start to come down and we have markets in the country where home prices grew exponentially during the pandemic and now they're coming down, the sales in those markets are still strong relative to other markets around the country. so we don't see a correlating factor between home prices declining and home improvement sales declining. i just think we're in a unique environment.

home improvement is a unique space. home prices have gone up there's a shortage of homes. homes are getting older and all of those factors bode well for our demand trends. >> yesterday, we saw a softer than expected ppi. last week we got a weaker than expected consumer price index. do you think inflation has peaked yet what do you see in terms of what your suppliers are telling you and trying to charge you >> for us, you know, we work in a business where we deal with commodity prices specifically in lumber and building materials. we're seeing deflation trends occur, specifically in lumber. we have more sophisticated tools than when i arrived four years ago. we're spending time with all of our suppliers trying to understand where do -- those commodity costs went up and

those component costs went up, we took prices up and we increased our cost now we're having conversations on how do you extract that so we can give that value back to the consumer now, it's hard to predict what's going to happen relative to inflation and deflation. what i can tell you is that we're starting to see the trend bend down, specifically on our commodity-related categories >> which makes you think what in terms of what the fed is doing right now? that they've done their work, it's working, is more needed >> it's really hard to say the one thing i can be very specific on, i can talk with a lot of confidence and expertise on home improvement. but i'm not going to get into chairman powell's head or determine if the fed has reached that point where inflation starts to come down relative to the actions they've taken on rates. i'm hoping that we're going to see the trends continue to come down so the fed can ease up. but i think that's yet to be determined >> i want to thank you for your

time it's really an interesting story. you've given us insight into what's happening with a very important segment of the american consumer. thanks for joining us today. >> thank you for having me >> coming up this morning, rostin behnam is going to join us and we're going to talk to the ceo of royal caribbean, jason liberty will be with us to talk about the industry, postpandemic surge in avtrel and so much more as "squawk" rolls on >> announcer: this is cnbc program is sponsored by baird. visit bairddifference.com.

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>> announcer: now the answer to today's aflac trivia question. in honor of national fast food day, what year did

merriam-webster dictionary first recognize the term fast food the answer, 1951 former president trump formally announced his 2024 presidential bid last night and here's more. this is not a hacking story or anything, you're back on this beat >> that's right, joe some things are old and new again and that includes donald trump announcing last night. the former president who inspired a violent insurrection against congress in an attempt to maintain a grip on the presidency back in early 2021 announced last night in mar-a-lago, florida, that he will be come paging for that office again in 2024 here's how the former president described his new campaign effort. >> the journey ahead of us will not be easy. anyone who truly seeks to take

on this rigged and corrupt system will be faced with a storm of fire that only a few could understand >> the biden white house which has attempted to really distance itself from trump, joe biden declining oftentimes to speak trump's name in public, although in the all the time, they responded last night even though the president is traveling overseas with a tweet in which joe biden said that donald trump had failed america the biden tweet including a video criticizing trump's term in office. so the biden team responding very quickly to this, clearly sensing a potential opportunity here to frame donald trump's campaign and this comes as the former president's daughter, ivanka trump, who was a senior white house official in the first administration, said she won't be participating in politics this time around it comes amid all sorts of

questions here regarding trump's role in the party. many trump-bancked candidates di not fair well during the midterms i want to flag for you guys a report from axios that just crossed within the past couple of moments they're reporting that the chairman, ceo and co-founder of private equity giant blackstone says in a statement, he's defecting from former president trump. he's not going to back the former president he says america does better when its leaders are rooted in today and tomorrow not today and yesterday. that's a statement there big question here as to whether the big republican donors will be around trump this time around >> interesting piece it's summarizing what is swirling around is that 30% is not going to elect a president but 30% can make sure another

person does not get elected. so the piece in the journal is, there's got to be some way to keep trump's base, for whom the eventual candidate is if it's not trump. and whether the former president after seeing that he's not going is to get the nomination, would he say, okay, i understand that this is not going to happen, i want america to thrive under what i will perceive to be republican policies, so i'm going to back whomever it is and i'm going to tell my people to get out and vote would that day come, or would it be a third -- >> that's the concern for the republican party right now. >> that's what i mean. >> will trump burn down the republican party if he can't be the nominee? >> exactly. >> that's what republicans are asking themselves this morning and you're exactly right putting your finger on the challenge how do you motivate the trump voters if you don't have trump

himself. if you're ron desantis, you might be able to campaign effectively across the country, cite your successes in florida, but can you get those trump voters if you have a grumpy donald trump sitting on the sidelines throwing pot shots at you. that's the problem for republicans right now, how can they move on past trump. you saw mitt romney earlier calling trump an albatross around the neck of the republican party and it's a real challenge for them if trump doesn't get this nomination, what will he do? that's a total unknown at this point. >> this was an amazing quote that i saw about, you know, ron desantis, you're not ready, wait until 2028 he could only serve one more term and the shakespeare quote, there's a tide in the affairs of men which taken at the flood leads on fortune if you don't do it at that point, the voyage of your life is bound and shallows and miseries and they're talking about chris christie

remember, when he said i'm not doing it now waited if you don't -- >> waiting is always a bad idea. >> it's a bad idea >> if there's a moment to run, history shows you should run look at barack obama everybody said he wasn't ready >> they knew -- shakespeare, there might have been more than one person he may have been more than one person no one could have been that brilliant. >> the fault is not in our stars, it's against ourselves. we could do this all morning >> still to come -- crypto regulation and the impact of the ftx fallout. plus the ceo of royal caribbean talks travel danafemd ter covid. you're watching "squawk box" and this is cnbc get decision tech from fidelity.

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welcome back to "squawk box. our next guest says that the fall of the crypto exchange ftx is one example why his agency needs more power to oversee

trading. joining us now is rostin behnam. we're grateful to have you here, especially during this sort of slew of headlines as we make sense of the ftx fallout let's start with this, do you think -- do you think that regulation unto itself could have prevented this? because it appears that there's multiple issues here there's a custody issue, potentially, mixing of customer money, but there's also potentially even just valuation issues in terms of what they actually had -- what their balance sheet really was. >> so, you know, if you think about it, a lot is to be determined as you point out with the bankruptcy and what we're going to see over the next couple weeks and months, probably as you said, i've called for more authority, i did it on this show a month ago and if you think about the principles of market structure and there's some legislative packages floating around the hill right now, you think about

comingling customer money and house money, eliminating conflicts of interest. a single entity can't be your trading platform, your broker, l lender and custodian books and records. something for regulators to examine on a regular basis having custodians who are independent so we know where customer money is and segregated if you think about those core market structure principles, i can't predict whether it would have happened, but certainly, i think it would have been mitigated pretty significantly. >> the complicated part is, they're based in the bahamas so many of these exchanges are not in the u.s and i -- the question is, what you would have to do to make the regulatory environment so friendly so that people would want to keep -- to actually move their exchanges here, right? >> well, i think -- i think there's an opportunity --

regulated markets in the u.s. are the strongest because we have rule of law and clear rule sets that people can comply with i've heard this from investors some of dabble into the crypto space but a lot of institutional money has stayed on the sidelines because there's no regulatory structure i'm looking about transparency, about customer protections and making sure customer money is where it needs to be but from a market's perspective in terms of scaling the market and seeing the marketsucceed, i'm sure a lot of institutional investors were saying, let's wait and see what the u.s. does. if there is a regulatory structure similar to our commodities laws, maybe they would have started allocating -- >> are we going -- i feel like we've been going round and round and round and round -- >> i said this earlier this week, this should just absolutely elevate the urgency for congressional action my hands are tied from a commodities perspective. and i think waiting right now

and anyone saying we should wait or pause, that's a recipe of waiting for the next disaster. >> i was just going to say, there's been a lot of speculation about sam bankman-fried as a donor to the democratic party i don't know if you believe it's real i don't know if you believe these are conspiracy theories -- not about the donations themselves but about whatever influence he may or may not have had over this regulatory discussion or debate and whether you think whatever that is, he was a beneficiary of >> right i can't speak to campaign contributions and what he was doing with elected officials but i can tell you in my conversation with policymakers, those who overlook the cftc, this narrative or idea that he was constructive or influential in drafting bills, that's not true i know that's not true because i was a part of that drafting process. i worked with senators and members on the house to think about what we need to bring

transparency to the market so the bills that are out there are quite comprehensive and address many, if not all of the issues on the market side. >> have you met with him gary gensler did meet with him did you meet with him. >> i meet with him, but the reason specifically, he has a registered derivatives platform with the cftc. it's operational it's not in bankruptcy about a year ago in december of 2021, ftx came in and submitted an application to amend their existing license so for the past 10 or 11 months, sam and his senior leadership team has been coming in a lot to advocate for the amendment to get it passed. >> what did you think of him he knows markets at least he tries to suggest that and he wanted to really aggressively have this amendment passed we very much focused on just the application and the registered

entity with the cftc that was the intersection i had with him -- >> to do what? >> so the current -- the license platform is a fully paid for derivatives platform that's not intermediated. the amendment they were trying to propose, instead of fully paid for, margined >> he was trying to margin that too? >> and this goes -- if you think about it in retropspect with his robinhood -- >> he was trying to margin that so that could have been at risk if he hat gotten the permission to do it. >> we did not take action. it is a very tricky issue from a risk perspective, as you point out, becky we had to -- the agency staff was reviewing it over the course of 11 months, essentially. >> let me ask you a question we asked gary gensler you are a cop on the beat,

right? he's a cop on the beat this happened on the beat. it's hard to say, look, i know what's on my beat, but my hands are tied, so i can't do anything about it do you think that there's a responsibility for regulators to somehow -- even if they don't have all the tools to raise their hand and say, there's a bigger problem here? >> so i feel like i did that i have jurisdiction over di derivatives markets. it's like me going into a cash sale -- i can't regulate that. so i had to focus on the derivatives markets. and the cftc has been closely tied to the crypto space it meemerged in our markets goig back to 2024 we've been very observant of what's going on and that's why i was very strongly advocating and continue to for more authority but there's literally no legal authority -- >> this battle, it feels like

there's a battle, is that -- has that slowed whatever was supposed to happen from a regulatory perspective. >> gary and i have shared interests. we care about transparency, customer protections and we understand the unregulated crypto space presents risk to customers and market stability the issue that really regulated is about security versus commodity. i think what's going on in the past week should dismisses that as an issue that's going to create inertia to get something done we can figure that out. >> is there going to be an extradition. do you think this could be an innocent -- bad judgment or is there or in your view do you think there's some criminal -- >> joe, i don't want to -- i don't want to assume -- >> how about just as you, ross, not as the cftc guy. >> a lot of what's been reported right now suggests there's going

to be more than just some market manipulation >> let me ask you just about all of these -- i'm not talking about bitcoin, eitthereum. what about the made up coins they gave money to turn around and buy those stupid coins so they could mark them up on their books and the buyers of those coins, serious companies who now have a situation wheith all of this what do you do with all of the dumb made-up coins. >> i think a vast majority of these coins are securities the tokens seems to have the characteristics of a security. it's not about who gets what it's about creating a transparency regulatory framework so there's disclosures and there's information to investors so that, you know, we know how to allocate -- >> what do you do about the marketing systems?

what are the balance sheets of these exchanges look a lot, to the degree that they're made-up tokens or have -- or have such a tiny float are being inflated almost artificially through these sort of various networks of people, what do you do about that and who regulates that piece of it? >> i think that's all tied into a larger regulatory structure where you have disclosures, you have audited financials, you have information about the financial asset which then creates a market -- the ability for the market to price the asset. right now -- >> they had an accounting firm i don't know if it's the accounting firm you want them to have the question is, who is supposed to do that, who is supposed to sign off on it and are there rules and regulations that we could have in the u.s. that would protect against an exchange that's operating abroad that's the other piece of this as long as this is a global business and we have these

tokens operating in other places, no matter what to some degree, it's going to rebound and redound to us. >> it's a huge issue gary and i participate in a lot of multilateral organizations with other jurisdictions and crypto and crypto regulation has been a high priority for several years now. you're right this sort of borderless nature of the technology makes it harder than traditional financial markets, whether it's on the securities side or d derivative sides but there has to be coordination among the regulators ultimately, though, having a regulatory structure within the u.s. would then prevent by law both on the civil side and criminal side of having these issuers, exchanges, offering services to u.s. customers >> fair enough thank you. appreciate it. nice to see you. talk to you soon thanks >> when we come back, the ceo of

royal caribbean joins us just ahead of the company's investor day. in the next hour, kyle bass will join us to talk markets, the fed, china and much more a quick market stat for you, the dow did eke out a gain yesterday for its third positive session out of the last four the most positive impact on the dow among all the dow components was walmart. it accounted for a gain of 60 points the most negative came from united health. that accounted for aoss lof 70 points from the index. "squawk box" will be right back.

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welcome back to "squawk box" this morning take a look at futures right now we are in the red, dow down four points the nasdaq up about three, and the s&p 500 up just marginally we've got two big earnings reports to note this morning lowe's reporting $3.27 per share compared to $3.10. analysts have been predicting revenue 23.13. and target reporting $1.54 share came in below $2.13. revenue came in at 26.5. that beat the street's forecast. that stock, though, is down big

this morning helping drag stuff down as well. coming up, the ceo of royal caribbean is going to join us ahead of the company's investor e atofda thste the cruise industry, all of it after the break. once he's all on his own? this is financial security. and lincoln financial solutions will help you get there. as you plan, protect and retire. ♪ the holiday season is in full swing. and dick's sporting goods and golf galaxy have the best holiday gifts for the golfer on your list. like tour balls from the best brands. and top-of-the-line irons and drivers from callaway, taylormade and titleist. a golf bag is always a great gift. when you shop online, you can find even more great gifts. one-hour pickup is always an option. and the hottest styles from calia, footjoy, walter hagen, and travismathew are a win. all from dick's sporting goods and golf galaxy.

well, we fell in love through gaming. but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem?

we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about. cruise stocks setting sail after the market downturn as pent-up demand increases bookings royal caribbean is 95% off its

yearly lows. norwegian, 78%, carnival, 83%. joining us now is jason liberty, ceo of royal caribbean most overused expression ever, i guess, is something's demise was greatly exaggerated. not even you could have foreseen this kind of bounceback, could you? >> i think in terms of our expectations coming back is we saw -- in our survey data, that customers wants to come back and experience things on cruises i don't think we expected a pandemic to go on as long as it did. we saw in our bookings that our guests were -- are ready to come back and have great vacations. >> and it was almost like we just got to get through this and it's going to be happy days are here again i'm surprised that there's no

res residual angst or fear the pent-up demand is so great, that it's better than it was before even though with cruise, i think there was specific things that had people kind of -- being trapped on their and not being able -- all the -- norovirus, any of the previous things that previous things that happens in a closed system when you're with other people. >> people are trading stuff for experience we're in the experience business we deliver these multigenerational vacation memories and people are very focused on it and you see in our booking activity. >> pricing premium now or you still have to induce people with -- >> no, our pricing is up our volumes are up. >> to where it was previous? >> prepandemic, but we're still trading on a pretty significant discount to land-based vacation, so there is a very large value proposition for us to gain. >> you've gone back to not pricing, but margins have come down because of inflation. >> inflation, right. one thing we did during the

pandemic, i kind of describe as we got back into our wedding weight, we had really kind of focused on our cost structure, which aloud us to absorb a lot of the inflationary elements that came into play and that are now starting to begin to abate. >> you don't have to worry about remote work, i'm not coming back to work. is it hard to get people >> it was -- our hardest issue was we historically brought three ships a year, new ships. we had to bring up 64 ships in one year so getting all of our crew back and trained on to our ships was a challenge. >> people want to work on cruise ships. >> they want to work they love it it is their -- by the way, our average tenure on our ship is 11 years. >> what about pay? >> pay has -- shore side pay increased. on the ship side it has increased as well. we haven't had to increase it that much in order for us to get the talent our crew members come from all

over the world >> you're hiring people from other countries. >> that's right. we always have always have. >> how much has it increased, your pay for people working on the ships? >> on the ships, low single digits in order to entice them to come on it is a very kind of large gratuity based system as well. they get a lot of gratuities a bump in that as well as the consumer appreciates more the experience. >> what happened to cash g gratuities versus venmo and p paypal and people not walking around with cash anymore. >> they get cash payments. it is very rare that you see people walking around on our ships giving our crew members venmo payments or zele payments. >> plenty of cap cap on a cruise ship that's a big job. >> huge job. >> big job not the stuff we saw recently they had to make decisions on, but you are making life or death decisions all the time

that's not overstating what these guys -- the responsibility they have. >> it is a large responsibility with a very large system of controls that exist on the ship as well as on shore. and so it is an incredible responsibility on to them and on to their teams but there is a lot of -- >> what does a captain get >> salary-wise >> yeah. >> probably between $250,000 to $300,000 a year. >> can i gamble on every boat? >> you can gamble on almost all of our ships our silver sea brand, our ultra luxury brand and the sexpedition side tend to not have casinos or very small casinos >> are there places you won't sail to now? are there differences just in how you have to go about things? >> i think there is two kind of current changes. one -- we're not going to st. petersburg so we're staying away from that kind of part of the baltic sea and markets like china are

currently not on so, yesterday japan has opened up to tourism. so we'll be back in japan, but outside of that, you know, there is over 1,000 different destinations that our ships go to around the world. >> the east coast of africa too? >> every so often. every so often more as we reposition the ships. >> breakfast, post breakfast, brunch, prelunch, lunch, 11:30, 1 12:00, you have 12 meals a day and all include lobster. >> if you're hungry. >> and mimosas at 7:00 a.m. >> there is the ability to snack. >> snack, drink, broadway shows, zip lining go cart racing >> water slides. it's -- >> your attention -- >> these dead head cruises, though, where you're going from -- he's repositioning the boat >> i thought you meant a

grateful dead. >> that would be a whole different stuff you would have to provide on a dead head cruise, i would think. >> territorial water. >> we do a lot of themed cruises, but that type of stuff doesn't happen on the ship >> okay. >> it is option. >> what is really hot? i would imagine anything around sicily and capri is still -- >> certainly the european -- >> malta >> european cruises are -- europe's kind of a travel playground so that's always very hot. >> mexico, probably. >> mexico, the caribbean is very hot. alaska is doing exceptionally well americans have tuned into all the vastness and amazing wildlife you can experience in alaska we see strong demand. >> do you contract out, you get off the boat and go on a sea plane in alaska, right >> you can sea plane, helicopters.

>> the purser would arrange all that for you >> our short excursion group will arrange that for you. >> they're not employed by you, right? >> they are. the sea plane and the helicopters and so forth are third party. >> i got one final question. a little bit of a relitigation question, i'm curious, do you think in the end the covid restrictions were wrong? >> it is a great question. i think that what was wrong was that the cruise industry was treated differently than everybody else in society. so i do think that was wrong when you look at our protocols, which aren't that different than what we were doing pre-covid, you know, they work. our ability to make sure that the environment is the safest place on earth is the bar that we set for ourselves. >> just watching the people who got locked into the ships for weeks at a time -- >> it was also very early days we didn't know a lot about the disease and so forth >> jason liberty, what are you thinking >> very curious how he's thought

about it we had two years of perspective to try to understand it all. >> science really wasn't the science, we thought it was the science. >> that's right. >> thank you for coming in. >> my pleasure great to be here >> good to have you on. >> when we come back, kyle bass will join us to talk u.s./china relations after president biden and president xi's meeting at the g20. as we head to a quick break, look at the futures. you'll see the dow turned negative too, down by 13 points. s&p off by a point the naaq osdff by 6. "squawk box" will be right back. ♪♪ ♪♪ be ready for any market with a liquid etf. get in and out with dia.

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good morning big day for retail earnings. target and lowe's both out with quarterly results. lowe's shares trading higher target going the other way and donald trump announcing he's running for president again. has sentiment in the gop trended too far towards other choices? and a new era in space flight. >> three, two, one, boosters ignition and liftoff of artemis i. >> the mammoth rocket on the way to the moon. we'll bring you the details about the launch and what the mission means for the next generation of business in space. the final hour of "squawk box" begins right now

good morning and welcome to "squawk box" here on cnbc, live from the nasdaq market site in times square i'm joe concern wkernen with be and andrew ross sorkin >> faber wrote a blog about watching the rocket launch and that's what popped into my head this morning when we talked about this. >> he wrote a blog it was good. it was -- it was a kiss, keep it simple, i won't say stupid, but people love rocket launches. we do. u.s. equity -- >> i can't believe you said that >> i can't believe i did either. we need to get to that 14-point drop in the dow. u.s. equity futures are down about 15 points this morning

nasdaq down 6 and change and you can see the s&p down a little over a point. let's take a quick look at treasury yields as well, which have been well behaved 376 on the ten-year, two weeks ago, if you said 376, we would have said, wait, what what would have to happen for that? >> bad things. >> bad things you would think. >> i would guess that before -- >> except when it is stagflation. it is, like, both of those are bad. anything that shows less inflation is going to be a good thing. if we can get lower yields from that, it would be nice instead of getting lower yields from -- >> but yet if you were showing that ten-year and said -- >> 3.76. >> you would have never guessed inflation. we did hear that from lowe's, the ceo saying he -- you can't say what's going to happen in the future, but they have seen a turn the retail earnings are in the spotlight. target first, shares are plunging in the premarket after the company badly missed earnings estimates and projected a surprise drop in holiday season sales

target also cut its operating margin forecast for the current quarter in half, and said that it would launch a cost-cutting plan designed to save up to $3 billion over the next two to three years. target didn't provide an outlook behind the holiday quarter, but expects to continue to face tough conditions the condition's cfo said it had higher than expected markdowns in the final weeks of the third quarter. they said consumers are waiting for bargains and having to offer these deals to get them in that is hurting margins the company says it is also seeing higher levels of shoplifting. the ceo brian cornell told me he has seen roughly a 50% year over year increase. i think it is 50% actually since the prepandemic. and that has been denting operating marriage tons the tune of more than $400 million this fiscal year. i think it is $3 billion that they are seeing annually in shri shrinkage. that's compared to 1.5 billion they saw prepandemic that stock down by 14%

lowe's shares are higher after the home improvement retailer beat topline and bottom line estimates for the latest quarter. they reported better than expected same store sales. we spoke with lowe's ceo marvin ellison earlier in the show. here's what he had to say. >> you look at the specific categories throughout what we sell, you know, there is a little bit of a mixed bag, but overall we see customers trading up you always hear the phenomenon that people are trading down that's not happening in our space. >> the company's professional segment was a standout for lowe's, saying the business group, 19%, but the really interesting part is that the do it yourself consumer which makes up 75% of revenue at lowe's was also doing better. a lot of demand they have seen there. ellison told he's not seen any customer slowdown, hasn't seen pulling back that stock is up by 1.5%. >> back to the broader markets, over to cnbc's mike santoli for a look at what he's watching ahead of this morning's opening bell good morning, mike.

>> really the steadiness seems to be the story. that's not just this morning, but also in the past few days. the stock market hanging on to this gain this bounce for a month and two days ago and the cpi number up 14% in the s&p 500 since then it is very interesting, essentially we're flat on the six-month basis, that was the same point in the month of may we were trading at this 4,000 level. we traded above 4,000 for each of the last few days, never really solidly stayed above there, that's the way the market would behave if it were sort of topping out after a rally. also if it just consolidated, we're getting a little stretched in the short-term, but so far handling things like the target disappointment, relatively well, yesterday, wobbled on the initial reports of that missile in poland and then recovered most of it take a look, though, at the s&p over the past six months and the groups out and underperforming over that period of time you see the s&p here, you know, down .4 of 1%. what is up industrials and financials

you got some of those cyclical bellwether type groups that gathered themselves and outperformed and nasdaq 100 has continued to be the drag on the overall indexes. financial conditions have eased up that's part of the story for this equity rally. look at the u.s. dollar index this is a one-year chart of the dollar showing it really rolling pretty hard off of those highs we saw just a few weeks ago. this -- keep in mind, we're going back to the point in december of last year when the fed was -- we're not really even thinking about rate hikes, maybe one in 2022. and then in late november, they said actually we got a really hustle and the tightening campaign priced in hard in the dollar index and that's rolled over hard to say exactly how much downside momentum here, looking a little bit oversold for the short-term but helps it is well off the highs. >> okay. mike, thank you. appreciate it. we will see how things end the day today. thanks >> nasa's new moon rocket lifting off early this morning morgan brennan joins us now on

the long and much delayed flight hey, morgan. >> so fourth time's the charm, joe. 1:47 eastern time this morning nasa's mega moon rocket blasted off from kennedy space center. >> three, two, one, boosters ignition and liftoff of artemis 1 we rise together, back to the moon and beyond. >> the historic launch ushering in a new era of american space exploration, kicking off nasa's artemis program. 50 years after that final apollo moon landing, the artemis 1 marks the debut of the agency's space launch system, sls, now the most powerful rocket ever flown. it launched the orion deep space capsule, which will embark on a 25-day journey around the moon before splashing down in the pacific ocean next month it is undergoing tests before astronauts climb on board. first in 2024 and then if all

goes according to plan, again in 2025 to actually land on the lunar surface. so, check these out. we got the first images from orion of earth, and of space this morning as that capsule begins its journey around the moon and artemis is a major program for nasa it is also big for the space sector the agency's inspector general estimates $40 billion has been spent so far and that that will total $93 billion to achieve that 2025 landing. contractors involved include boeing, which is a prime for the sls, lockheed martin, which makes orion, northrop grumman, jacobs, airbus, just yesterday spacex received a follow on contract for starship, which is being developed as the lunar lander even amazon and cisco have tech on board orion right now that's being tested and, joe, i will tell you from our producer jodie

groundic on the ground at kennedy space center overnight, she said the liftoff was so powerful, it triggered car alarms in the parking lot. and just for a little bit of context, that parking lot is a couple of miles away from the launchpad. >> great i thought you were going to say triggered tears or chills. >> that too! it is an amazing, amazing moment it is an amazing moment for america. it is an amazing moment for space exploration. >> sheer power of -- it is great. >> morgan, i have a question i thought i heard earlier that it takes two hours to get there. maybe that's just into deep space orbit, but takes 25 days to go around the moon? do they get to go around it a bunch of times >> it is going to be more complicated trajectory they are going to go around several times. there is -- the way nasa administrator bill nelson described it this morning, he basically said so far that this launch is an a-plus, he gives it an a-plus, but they're going to stress and test the rocket and

orion in a much more rigorous way than they ever would with people on board. that's because it is the first test flight and to make sure the hardware will be up to snuff when the government astronauts do climb aboard, hopefully in 2024 >> just thinking about to apollo, some of the stuff they did with it, a lot faster. morgan, thanks really good stuff. we'll see you later. when we come back, we have an interview you don't want to miss on the unraveling of ftx, what the co-founder of the collapsed crypto hedge fund three arrows capital next, kyle bass will join us live on the latest developments in the russia-ukraine war and relations with china following president biden's meeting with xi jpi stay tuned "squawk box" will be right back. e you'd think retirement would be the last thing on my mind. hey mom, can i go play video games? sure, after homework. thankfully, voya provides comprehensive solutions and shows me how to get the most out of my workplace benefits. what's the wifi password again? here you go.

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but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about. a lot of what's been reported right now suggests that there is going to be more than just some market manipulation. >> that was commodities futures trading commission chair rostin behnam. let's talk to kyle bass, hayman capital founder, cio, ready to talk, i'm sure we can talk about

more than just crypto, kyle, but i know you have some thoughts about what has transpired in the last couple of weeks so take it away. >> i've stayed quiet on crypto, but i think that what we're seeing here is just the beginning of the unraveling of the whole idea that there is a better currency out there than the hegemonic positions of the world. i think what happened at ftx i think is, again, just a harbinger of things to come. you see there are going to be many others that file for bankruptcy, and, you know, i heard the cftc chair talk about regulation and, you know, one of the things you have to think about is when you regulate something, you almost add legitimacy to what you're regulating. i think the law enforcement officials should be going -- diving in head first to the fraud and to what's happening to u.s. investors here. but as you know, this market place is a market place of just riverboat gambling, people

looking to make 50% a month, and move themselves off of one of the best currencies in the world. the u.s. dollar, and whether it is u.s. or g7 currency, there is really no room in the world for any other currency i know i'm going to -- i'm going to probably endure some attacks here, but it is just the way the world works. >> the future of crypto at this point, kyle? >> i mean, the question is what is tether? what is this $66 billion behemoth that has its headquarters in a small bank in the bahamas that is literally a hop, skip and jump from sam bankman-fried's lairs in albany? you go see this building, i've actually walked into this building, and, you know, i saw a guy eating a sandwich. i said this is where 8 $0 billion is

i've spoken with the top head traders of fixed income at the largest security firms in the world who tell me we never have done one trade with tether and if you look at their balance sheet, they say there is repost, treasuries, this and that on their balance sheet and they also own precious metals and secured loans. if there sis an $80 billion institution trading retos and treasuries, you would think someone would find them. i didn't talk to every single dealer in the world. maybe there is a dealer out there that will claim they do business with tether, but i haven't been able to find one. i just wonder why. like what is the purpose of the stable coin when you have g7 currencys? the only purpose of a stable coin in my opinion is to be able to jump outside of u.s. and let's say irs jurisdiction and lever yourself in trade and not report your earnings there is no other rational for owning a stable coin

>> exactly so, we always hear about unfettered capitalism and guardrails what kind of guardrails do we need to put in place here and we have obviously regulators are grappling with this right now, i'm sure, and a lot of different federal agencies, with different purviews how do you keep it, you know, defy, called defy for a reason, decentralized, that's why it is attractive how do you let it grow and mature but make sure that stuff like this isn't so easy to do? >> i think the regulatory bodies and the politicians in the u.s. have decided to kind of let all of the crypto speculation eat itself and then if it was criminality involved, go in and investigate that criminality i actually think that's a pretty good -- that's a pretty good tact to take going forward, i think this is

just a warmup for the central bank digital currencies of the world. there are 90 some odd central banks exploring one way or another central bank digital currencies and china being the biggest. when you think about defy and decentralized currency in this hope that we can get to a better currency when really everybody was just speculating and trying to gamble, when you think about central bank digital currencies like the chinese currency, that's the largest threat to the west i say that because that gives -- you have to download things on your phones. we have to pay for the currency with real g7 currency ourselves if we're going to transact in it then they know where you are, they know what your spending proclivities are, they can get straight to you without any kind of regulatory oversight. imagine if the chinese government could bribe people directly in the united states

where we would be. this is a diabolical thing coming and i believe we should ban all of these things and that may sound draconian, but that's where i come out on this. >> how concerned are you about knock gone effects in terms of prop trading, firms that are exposed to ftx and derivative firms exposed to those firms in terms of not necessarily a massive systemic crisis of sorts, but more dominos to fall here >> when i think about the global financial crisis, andrew, we all knew, i guess in the end, that u.s. banks and european banks were inextricably linked through their agreements and through the various derivatives, counterparty facing agreements they had in this world, the crypto world is -- i don't want to say it is contained, but a lot of the big, as you know, our primary financial institutions have very little to nothing to do with crypto and so you have this scenario where there are a number of

firms out there that may fail. there are a number of firms out there that will probably garner the balance of the business once the fraud and overleveraging plays out. but in the end, what is left why do these firms exist i'm not sure other than, you know, the technology and the blockchain is something that will live forever. and the web3 and i'm not a technologist, but when i look at the blockchain, there is so many practical applications of the blockchain, but, you know, cryptocurrency and leveraged trading and having deposits at institutions that have no fdic insurance i think people are getting what they deserve and they're getting wiped out. >> let's shift gears if we could a little bit, kyle we can maybe return to this. but your view of the next couple of years in our relationship with china after the president met -- after the two presidents met. what did you think the takeaway

was from what happened last week >> as you know, these meetings are basically exchanging platitudes, and, you know, just so that the viewership here can understand the ridiculousness of the chinese platitudes, xi jinping and the official press release post this meeting says the chinese message says xi jinping pointed out that freedom and democracy and human rights, pursuit, common pursuit of mankind and the consistent pursuit of the chinese communist party, i mean, he couldn't have said anything more ridiculous than that. and, you know, the communique is probably 2 1/2 pages long, its platitudes that go in one ear and out the other, we all know they're not true and then you go listen to, if you remember the press conference, you just indicted the 13 chinese nationals for various crimes in the united states, you listen to the fbi director christopher wray and u.s. attorney general garland, merrick garland, merrick garland

sid the government of china seeks to interfere with the rights and freedoms of individuals in the united states to undermine our judicial system, that protects those rights the fbi director wray says we open a new case on china every 12 hours so you have the platitudes in these meetings where xi jinping and the chinese government says just ridiculous things, and then you have the real truth behind the evil of their government and so, if you read the section on taiwan, xi jinping says taiwan is our -- our basically situation to deal with, and anyone else that interferes with that will be dealt with harshly. so we have this red line, we have a red line, and in the end, you know, our military, if you listen to our admirals recently, is preparing for a chinese invasion of taiwan xi jinping's telling you that he's going to move on taiwan and we should stay out, so i think the ukraine/russia conflict is a

lead-in to a chinese/taiwan conflict and i think that's coming in the next couple of years. >> are you surprised that the big investment warren buffett made in tsm, taiwan semi. >> taiwan semi is vitally important to the functioning of the world from a chip perspective. they produce about 90% of let's call it the high end chips needed for everything from military hardware to advanced -- to electric cars and everything that we need to operate at the highest ends of technology tsmc makes two nanometer chips in taiwan and just to put things into perspective, intel can make a seven nanometer chip today the facilities that we heard tim cook is going to buy chips from in arizona that is taiwan semi facilities, those are going to make five nanometer chips. those are going to make the last

generation chips so i think that taiwan semi is vital to the operations of the world. it is vital to u.s. national security and when you look at asml in holland and tsmc, those are the two most important chip companies in the world and i think buffett probably figured that out how we deal with an invasion of taiwan, who ends up controlling taiwan semi's fab in taiwan is another story. >> that's what i mean. why wouldn't that be -- must have had some type of calculus go into that decision. how would -- what would happen if it is in two years, do you sell it before then? >> it is a great question to ask warren buffett it is a -- a decision fraught with let's say geopolitical considerations and he must think that either china's not going to invade taiwan and not take over tsmc, but tsmc's operations around the

world, especially the u.s., will live on and i think as you know we determine that our national security was threatened in 2016. we put in a special plan to cut through all of the red tape and get things built in phoenix, arizona, as fast as we can the problem is these things take five or six years to build these buildings are $14 billion buildings. if you google taiwan semi and arizona, and look at the images, you never have seen more cranes in one place before. so i think it is important to note that we are working day in and day out to try to attain chip self-sufficiency and that goes into my calculus as to when china is going to move every day that goes by, we get one step closer to self-sufficiency their tactical advantage to move on taiwan is sooner rather than later. >> very good i know those bottles are just for decoration behind you, kyle,

but -- >> if they wait, it is going to be less of an issue and less of something that would draw the united states in. >> yeah, yeah. >> all right as i said, thanks, kyle. coming up, we're going to talk more crypto we have an interview coming up with the co-founder of three arrows capital he says ftx and its trading arm were involved in triggering his own hedge fu'snd bankruptcy. we'll speak with him about all of it. don't go anywhere. "squawk box" coming back after this space. the boundary of human achievement. the new frontier.

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coming up, we have breaking economic data. october retail sales coming up next when "squawk box" returns

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welcome back to "squawk box. breaking news, our october read on retail sales up 1.3%. that is definitely better than expected you have to go all the way back to february to find a better month over month change of stripout autos, still up these are multiples of what we expected in the control group to be inputted in higher up the food chain economic releases, well, that number is up .7%. up .7% that's the best level since june, it was up at 1.1%, very solid. let's switch gears, shall we, to october input prices month over month, down .2, which

means that down .2 is the 1, 2, 3, 4th negative month in the row, smallest and less than expected we're expecting the number closer to down .4% so down .2 strip out petroleum, it is also down .2. if we look at import prices, on a year over year basis, they were up 4.2% that's darn close to expectations and if we look at import prices on year over year basis with respect to any revisions, don't see any, and the last look it was up 6%. high water mark was up 13% in march. big progress export price on a month over month basis, down .3% as expected a bit of a revision, though, in the rear view mirror from only down .8 to down double that at 1.5 in the rear view mirror and export prices on year over year basis, expected to be over 7%

are under 7% at 6.9% and last month's 9.5% is downgraded to 9.2% high water mark there, 18.6% in both may and june. so pretty good progress. here is the issue, if you look at ten-year note yields, they pop a little bit before the release of the numbers so whisker shy of 3.79%. as you can see, basically hovered there, so after a prenumber pop of a basis point or two to the upside it remains rather tame. we are all looking at the psychological area of 3.75%. and, of course, we know the high water mark is still right around 4.25 on closing yield basis. and that is a far cry from some of the 5% handles many have been nervous about. becky, back to you >> rick, thank you let's bring in steve liesman, he's got more on this right now. what do you think? >> this is a stunning report for

an economy that is supposed to be going into recession for a consumer that is supposed to be weakening. and otherwise being at the edge of their skis here when i look at this report, i see nothing but positives, becky, when i look down the list there is a couple negative numbers out there. but let's just go through it because it is really fascinating. furniture and home furnishings stores, we were supposed to have a real estate problem. up 1. -- sorry, up 1.1% and i think diana olick is going to talk about people remodeling their homes instead of moving. autos up 1.3%. we talked a lot about this the auto sector is supposed to be one of the most interest rate sensitive sectors. remember, we came into this period of time here being below where we should have been when it came to car sales because of the chip shortage. so now we have a rebuilding auto sales sector here at a time when the economy is supposed to be slowing. it is not in that regard

and all of this happening while the consumer spent 4.1% more for gasoline station sales i don't know if this is just a rebound from the goose eggs we got in september, but this is positive and it is positive on an inflation adjusted basis as well if you use the october cpi to deflate the numbers by. hard to see too much stress. we did get some sense of stress yesterday in the new york fed survey of household debt and did see people buying more on credit cards to make purchases. that is something to watch this number is going to flatter fourth quarter gdp and moves us further away from any sort of perceived slowing of the consumer doing this well, becky. >> okay. steve, thank you watching the dow and that is down by 42 points. joe? >> the crypto industry trying to pick up the pieces following the collapse of sam bankman-fried's ftx. kate rooney joins us now with a

special guest and interview. hey, kate. >> good morning. three arrows capital is one of the most controversial names in crypto the now bankrupt hedge fund was borrowing billions from crypto lenders and as a result played a central role in this summer's price meltdown as one of its biggest bets collapsed, three arrows defaulted on those loans and faced cascading margin calls unable to pay those, they filed for bankruptcy this summer joining us now is kyle davies, the co-founder of three arrows kyle, we appreciate your time today. >> yeah, thank you for having me >> so before we get to ftx, we have to talk about what's going on here with your fund, so three arrows liquidators claim you and your co-founder haven't been cooperating, lawyers have said earlier this summer that your physical whereabouts were unknown, ahead of certain court hearings where are you now and what are you doing to get your investors' money back >> well, i mean, first of all, i'm in bali. second of all, we have been contacted by the liquidator and

the entire time. every call, every email, every video, we have attended with them so, i mean, frankly we have been cooperating the whole way. just as -- one point to that, the first thing we actually did is in the first two weeks there was a major position, which needed to be exercised, a warrants position, reminded the liquidator three times, they didn't exercise it so in my mind i think there is a -- like, you know, a process that needs to be done, but we're here we're cooperating. we're with some of the biggest creditors ourselves. >> your firm filed bankruptcy back in july you haven't publicly mentioned ftx until this week. why are we only hearing about the allegations now? >> we have mentioned it, many times. but frankly no one wanted to

hear it. if you recall, the -- one of the biggest critics of us right after our collapse was sam bankman-fried himself of ftx and we now know as things are coming out that he was probably covering up a lot of things on his side and it is also coming out that he hunted our positions. so, i think it is one of those things that in the trueness of time we'll find out the truth, and we're looking forward to justice. >> and, kyle, so explain that to us, you say ftx colluded to trade against clients, your positions were hunted and liquidated as you put it walk us through that, and what evidence do you have >> so the -- everything is coming out now, which is why we're being a little bit more public but fkx and alameda are two separate firms ftx is an exchange alameda say trading firm

they have similar ownership, it is coming out that they, you know, shared information and that they sat in the same room, and that i've got ex-employees or recent employees of ftx which are bragging about hunting and liquidating our position so, this is not the way in noncrypto companies, this is just not the way it is done. there is a clear segregation between an exchange and any kind of proprietary trading firms which is apparently not the case >> andrew, it is becky i take it you're not in bali because of the g20 are you there because indonesia is one of seven kun thcountriest won't extradite you back to the united states? >> no. well, for one, i haven't lived in the united states for, like, a decade i've been in asia.

but for two, no. it is just a good place to be. >> and, kyle, we have a statement from san bankman-fried on your allegations, he says i'm shocked. he's saying that, 100% disagree, it is extremely disappointing and irresponsible, i'll sad about what happened with ftx over the past few weeks and i'm trying to do what i can to address that he says i don't want to minimize that but this is completely different and he says there is no truth to their allegations here your response to that and question on why he would want to take down one of his biggest clients, eventually that led to the demise of a lot of other big players in the industry, and eventually his own failure >> he, for sure, misjudged the situation, right i think from the early days we were their biggest critic. i didn't even trade on their exchange the first year and a half but for -- as they got bigger and bigger and we saw their backers, we assumed they cleaned up their act

and we were just wrong we -- apparently they were still sharing information, still trading against clients, and they completely misjudged the situation. it was indeed after they took us down, there was a giant credit squeeze across the industry and as lenders recalled all their loans, that's what revealed the hole in his balance sheet and led to his downfall as well. >> and ftx may have been one issue, but you also took out billions in leveraged positions of more than $3 billion in debt and you were the chief risk officer. how were you comfortable with that amount of leverage using cryptocurrencies >> well, you have to understand that we're a trading firm, right. we're first of all paid to take risks. but for two, we take all kinds of risks we take gross -- we take spread risk, gross, directional risk.

and after the collapse, everything unfolded extremely quickly. every major position that we had went against us, all spreads, all discounted trades, all directional trades, everything and that was in part because everyone had on similar positions, but also in part because there was a credit squeeze and everyone had to unwind at the same time. so, there is a lot of pain going through the crypto industry. it is not just our firm. it is many firms that are going into bankruptcy at this point. and many of them had on similar traits >> so we have some news this morning, genesis saying that -- one of your biggest creditors -- said it is temporarily suspending lending operations. what would you tell creditors and those who are still on the line for those billions of dollars that you owe them? what should their expectation be of getting their money back? >> it does look like they may be

next i think their largest creditors are us, ftx, and others. there has been a cascade of -- across the whole market and a revision of what it means to have credit. especially in the crypto markets. so we're looking -- we want to see in the trueness of time, we want to see the truth, we want to see justice. >> do you feel responsible for that a lot of people lost a lot of money. >> the person that lost the most amount of money was my family followed by my partner's family, followed by our creditor list. so, yes, we absolutely feel the pain and we're in the same situation. >> kyle, there have been rumors you're trying to raise a new fund is that why you're being so public about this? are you looking for a second act for yourself and su zhu, your co-founder >> it is not my main focus right now. for now i want to see the truth. >> are there any lessons to be

learned for this for global regulators or investors? what have you taken from this whole experience and what would you say to people out there still in the industry and investing in this asset class? >> i don't think this is a reflection on the underlying asset or the underlying technology i think the technology is here to stay and there is going to be tremendous growth. i think this is a reflection on credit markets, and we have seen in other asset classes how credit markets have developed. in crypto, it is a relatively new industry and it's going through its, you know, first major pain point so, there is going to be probably new regulation coming in, probably new ways to solve this ultimately, i mean, the beauty of crypto would be in a decentralized way that you don't need to rely on people, it would be the could code would be there

itself to do credit minimalization, right? but, yeah, this is the lesson that everyone is learning right now. >> and, kyle, you said something earlier about not using ftx in the beginning. you didn't trust them necessarily. what changed your mind and were there red flags that you feel like you ignored in hindsight? >> there were many the first time i met sam was when he was selling 15% interest loans that had, and i quote, no risk, you can't lose money under u.s. law that was his first deck. we then saw him launch ftt in a very aggressive way to raise money for the exchange and we said we can't trade on this this is untenable. so for first year and a half we ignored it as they grew bigger and bigger and we saw some of the big vcs come in from silicon valley and respected in the space, sovereign wealth funds, pension

funds, we saw all them come in, we thought surely these guys have done the due diligence, surely they have seen the inside workings and cleaned up the act. i wouldn't have been able to see those, but i trusted their judgment and i was wrong, and there are probably other flags alon the way as well, but at the end of the day, that's what got us. >> kyle, we have to leave it there. kyle davies, co-founder of three arrows capital appreciate your time and andrew, back to you in the studio. >> kate rooney, thank you so much for that great interview. appreciate it very, very much. on the other side, we'll talk to jim cramer, get his take on the trading day ahead and in the 10:00 hour, don't miss this, an exclusive interview with san francisco fed president mary daly. we're right back after thi s.

all right, let's go to the new york stock exchange. jim cramer joins us. jim, let's talk retail earnings. lowe's better than expected. target, quite a bit worse. and i heard you talking about it yesterday, just your suspicion that target might fare worse than walmart did because of the focus on apparel and other issues. >> yeah. i mean, it is a little disconcerting because of the cadence, the october was a very weak month in our country. and it was difficult to tell from walmart exactly how weak it was. marvin ellison didn't seem to indicate there is much weakness at all but that's housing. i'm willing to bet what happened is that if the consumer has slowed, which is very different from the retail sales numbers we

got, then a company that is a little bit more expensive than walmart, target, could get hurt. at the same time, the note, the amount of stealing at target is a little disconcerting too i think brian cornell can weather this but, but just got the good contract. but it is interesting to see it's been a bad november too i'm trying to reconcile the numbers we got from the government today about retail, maybe you can say that home depot didn't pick up share, lowe's did, that walmart did better than target but it's very hard to consider exactly what happened here because it's so -- it's so varied, becky. it really varied but it does come out to being that october was a weak month. i just -- there isn't anyone who really disputes that >> the october government retail sales number was really pretty incredibly strong. i was looking at some mpd data, the industry data that suggested

that u.s. general merchandise sales dropped by 14% in the first week of november now, obviously, that's not october. but it was weak in the last two weeks of october according to this mpd note. it's just weird that you don't see it at all at lowe's. trying to figure out what's happening to the consumer right now, what this is going to mean for the holiday season is a really big question. >> yeah. i mean, look, there's electronics is a little better furniture, a little worse. food and beverage going out. we know grocery stores, we're not in control health and beauty, slowing down a little bit but these are numbers that are not as hot as we would have expected, say, three weeks ago, but were certainly not in keeping with what we have been getting from the retail store. sometimes i wonder if the aggregate simply is not as good as where people shop, and i think where people shop is a

better case than what i get from these aggregate numbers but the bond market is reacting to the aggregate numbers, not reacting to what brian cornell says >> yeah. jim, thank you it's a mystery we're going to figure it out >> it is a mystery >> we'll see you in just a few minutes. "squawk box" will be right back with what you need to watch ahead of the opening bell on wall street.

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we're now a little more than a half hour away from the opening bell on wall street. joining us now is cameron davis, chief investment officer at new edge wealth. we're looking at red arrows. we got some news on the economy in the past half hour, plus news from lowe's and others maybe things are holding up better, but that may be bad for the fed. >> the immediate reaction in the bond market to these strong retail sales numbers was that yields started to move higher, and bets that the fed would reach a terminal rate of closer to 5% also started to move higher, because post-that light cpi print last week, we saw that terminal rate bet start to move lower, but now with strong retail sales, there's this expectation that the fed will

have to remain very hawkish and really deliver on all the tightening that it said it will, and this is a pressure for markets as they have rebounded so robustly coming out of october lows >> which data point do you look at for the last two weeks, we had ppi, we had cpi, everyone said, look, it's plateauing, coming down, this is great. then we get the news this morning, and people say, maybe not. >> well, i think that when we think about the cpi and the ppi, one data point is not enough to actually cause this fed to pivot, and our view is that a pause is very different than a pivot. lighter inflation might allow -- let the fed to not have to keep ratcheting up its hawkishness but it's not enough to start a rate cutting cycle in the very near future, which the bond market is still pricing in so, i think that the stronger data still puts pressure on the fed from retail sales because it

says that their efforts in tightening have not yet worked to bend the demand curve down, and it could speak to higher inflation numbers in select parts of the economy continuing. >> if that's the case, a, do you own equities, and what do you want to own? >> we wouldn't be chasing equities here. we do want to own equities because we are long-term investors, because we are tax sensitive, but if we think about deploying cash today, given where we're trading at the current valuation, if we think that earnings come in closer to flat next year, which we think is an optimistic scenario, we're trading at nearly 18.5 times today. that's not a very attractive valuation or a risk-reward so, our preference then in deploying cash is looking into shorter term bond market opportunities where yields are high and then instead of chasing rallies within the equity markets, we're more inclined to buy weakness, which we think could happen as the reality of high valuations and an earnings

revision down cycle really start to -- >> when you're buying on that weakness, though, what kind of things are you buying? >> so, we continue to favor quality, and that is our key focus. >> what is quality that's in the eye of the beholder >> so, we define quality as names that have high return on invested capital, high free cash flow generation, strong balance sheets that give them lots of flexibility, and it really is across sectors so it's looking for those best in class names that we consider crown jewels in every sector we have been avoiding those very defensive sectors, things like staples and utilities where valuations are far too high, instead focusing on areas like healthcare, energy, and even selectively within consumer discretionary and even industrials, more cyclical areas where names have been beaten up a lot. the one area we noticed that, yes, there are pockets of opportunity within tech, but the relative trends within that sector continue to break down so it's an area we've been avoiding

instead of having to have big overweights there. >> no crypto for you >> no. no so, we think that crypto is a liquidity sensitive asset, at the end of the day, and it was thriving in a world of very abundant liquidity and is collapsing in a world of tightening liquidity we're about 75% down from the peak within bitcoin. that compares to 83% down during the last tightening cycle, again, when liquidity was tight back in 2018 >> okay. we want to thank you we appreciate your time, your perspective on all of us, and we will be watching these markets thanks >> thank you >> check out the shares of micron, low on a warning it said the market outlook for 2023 has weakened we wanted to bring you that. target is obviously something to behold, and if you recall, it was like the last quarter, the stock was up near 200, fell to about 150.

rebounded all the way to 180 and now this is happening again. it's made the round trip, and i don't know what you want to glean from what target said, but that is a huge haircut, and it's almost identical to the one -- there are similar factors to the last quarter remember the last quarter when it happened? >> bunch of inventory. >> we got to go. >> sorry >> bye >> make sure you join us tomorrow, please ♪ good wednesday morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber at the new york stock exchange futures are looking for direction after target miss and warns on holiday spend but october retail sales come in nearly double the estimate, x autos, two-year yield bounces. our road map begins with that target tumble. the retailer deliver