it is 5:00 a.m. in new york. here is your top "five@5." coming off the worst week in months as goldman sachs expects stocks to fall next year it is all about inflation. we get the inflation number this week and fed meeting we will set you up. covid omicron strain the same risk as the flu you may not believe what the chinese health official is saying as the country tries to reopen. the bank of america is out

with the opening this year call it the anti-faang. and microsoft with the deal with the biggest exchange operations in the world. it is all happening on monday, december 12th. this is "worldwide exchange. good morning, good afternoon, good evening. welcome from wherever in the world you may be watching. i'm a guy named brian sullivan it is great to be back on "worldwide exchange" for this week and kick off your day or end it if you are a friend watching from the other side of the planet welcome. enough chitchat. let's jump in with monday money. stocks are in the green. higher this comes after what was a very rough week for most of the major averages snapping a two-week lose streak. dow up 40. the benchmark bond yield at

3.57%. in energy, oil continues to fall excuse me, folks so you know, i have a nasty cold i'm here in my home studio i'll be here if i cough a little bit, i apologize. in oil, we could break below $70 a barrel this despite sky high demand from india we have a guest in a few minutes why it keeps falling in cryptocurrency, bitcoin and ethereum is not moving a lot ftx saga has a long way to go. we will see what happens bitcoin at 16,900. in hong kong, falling more than 2% overnight. a lot of red on the screen it is just getting under way in europe let's see what is happening where i picked up this cold. most of the major averages are lower. more on the markets and your money in a moment. let's get to the headlines happening right now and eye

opening comments from china's chief medical officer. kristina partsinevelos is here with those good morning brian, amgen closed a deal for $20 billion. the deal would mark the largest health care transaction since astrazeneca. it would give amgen the deal for drugs for immune diseases. and over the weekend, china's advisors saying the fatality rate from the omicron variant is in line with the flu with the infection rarely reaching the lungs it is meant to downplay the severity of the rules since the pandemic began three years ago. and twitter is launching a revamped version of the twitter

blue editable tweets and blue check mark verification. it will cost $8 a month. it will cost $11 for you using it through the apple app store it launched twitter blue in november, but forced to shut it down over the explosion of fake accounts and misinformation. i know everyone will have a blue check mark, brian. >> i think everybody has been waiting for editable tweets for a long time. i like the chargers and then you can go back and say dolphins >> we are journalists. we have blue check marks do we have to pay to get that? i already have a blue check mark >> maybe it is different colors. i'll get the gold check mark or oil color. >> i'll get the gold one >> good monday morning

to the markets we lead with the stat that could be a mini rbi. this is from the lpl research. it goes to market valuations lpl notes that bottom line for s&p dropped 5.6% since late september. what does that mean? well, lpl says it is the biggest decrease in the earnings estimates in the first two months of the quarter since the pandemic hit that means stock prices may have to come down as well to get sense of it, we have a cnbc contributor with us delano sapuro is with us i wonder are those earnings already built in is that what happened to the market last week >> some of that is what happened last week. i think it was also what we see in the data on the producer

price index. the fed may be more hawkish when we get into the meeting this week when you look at it, prices have to come down a little bit. we see that companies with inflation and might be deterioration of demanded in some sectors and companies are looking at the numbers and saying are we sure we priced everything in and not so sure we have if you look at valuations, especially the tech sector, they have come down from the crazy valuation of 2021. we may have a little bit more to go, brian. >> the numbers are coming down quick. the market has been in a af terrible year. do you think earnings estimates could get worse from here on out or the worst for the macro markets as already been priced in >> i think, you know, what i look at and still in q1, we have

a little bit to go we still could see deterioration. that is why you see the revision down respects in the first quarter three is pointing to the outlook in the next three-to-six months could be cloudy. i think once you get past that and start looking at what could happen with consumers have gone through the worst and the consumers which have gone through higher unemployment rate and still potentially keep the personal balance sheet somewhat strong and rebound from that and you see demand come back a lot of the policies enacted. especially in the housing sector and that is still lagging. i still think we will get to that and see how we react and that is big with the markets and what recovers faster which is crypto and equities and we go from there >> obviously wall street strategist on cnbc all the time. some of them are our colleagues and contributors

we are not knocking them, delano every strategist got this year spectacularly wrong. the low estimate on the s&p was up to 4,300 and down to 3,200. we are not close to that now we're starting to see 2023 forecasts come in, delano. goldman sachs sees the stock market declining we see a lot of negative tanks on 2023. how do you read the macro environment right now? >> i was definitely wrong. i saw less than double digit gains. i was in the range on the s&p 500. from what i see, a lot of us got that wrong we can take the contrary review. i think the first two quarters will be rough. i think everyone is showing bea bearish. i like to go the other way in

that respect i think we potentially will see a better year than 2022. i do think after the first half of the year, we get to a place where we see rates moderate and pause and go down. you see where that is stronger and earnings start to go up for companies. then potentially have a positive year for 2023. >> yeah, that's it it feels like it is decidedly bearish take for the first half of the year. we will see what strategists can do in 2023 delano, thank you. have a great day we will see you soon >> you, too. we have a lot to do on this monday coming up, a story in energy that could be one of, if not the, greatest energy breakthroughs of the modern era. how is that for a tease? former vice chair roger ferguson is here to talk rates

and details on what some are calling bank of america anti-faang trade for next year that is all ahead as "wex" rolls on with gold bond... you can age on your own terms. new retinol overnight means the smoothing benefits of retinol are

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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. quwelcome back let's get a flash on rivian. the stock is down in pre-market. the company says it is pausing the joint are venture with mercedes-benz to make electric vans in europe

one that both companies agreed to three months ago. rivian says it will instead focus on consumer and existing commercial businesses as it tries to become cash flow positive in the u.s., rivian stock is down 3.5%. it is time now, early, for the morning rbi. the most random but interesting thing you will hear all day. it follows nicely on the rivian story. you will find out why in a minute let's talk about how it is that time of year again the holidays the beginning of what i call panic shopping season. that is not all. it is also the time of year when indexes add new stocks and drop others this can move stocks in either direction. if you add to the index, you go up if you are dropped, stock may go down if you are going shopping for stocks, you are a 6 and look to put under your tree and 7 then add to the coal pile nasdaq is making changes to the nasdaq 100

they are adding six and dropping seven. these go ahead next monday the 19th let's start with those tossed from the index out of the nasdaq 100. they are verisign. skyworks splunk baidu and docusign the last stock is netease. previous lockdown favorites in there. along with other stocks on the covid train as well. really tough performers kickrd out -- kicked out of the index. let's go to the six stocks, he said, that are added to the index. here we go i'll read them that is global foundrys, gfs,

warner bros., the parent company of cnn costar group electric truck maker rivian, see how it flows the last two parties are the anti-electric truck play nasdaq also adding two oil and gas names. baker hughes and diamondback energy both oil and gas stocks. ask when is the last time you saw an oil and gas stock added to any major index i can't think of it in years they normally get tossed oil and gas in the tech heavy nasdaq 100 maybe big returns this year and renewed investor interest is making them attractive again oil and gas stocks in an index known for technology that, i think, is random but interesting. also stocks certainly to keep an eye on.

still on deck, treasury secretary janet yellen talking recession and inflation and the real street impact of the central bank policy then and now. that is when "worldwide exchange" returns. >> thousands of people were being laid off you tried to remind everybody that this is not about statistics >> i think i said they'r [ bleep ] people i wanted people that worked for me to take seriously the harm and misery that was being experienced by all too many americans.

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cool. introducing elevance health. where health can go. welcome back hope you are having a good start to your monday let's talk oil nearly on the surface, nearly everything is pointing to oil prices going up. china trying on reopen india buying everything they can. russia saying they could cut oil production and the keystone pipeline spill in kangcanada the prices have not only gone up, but they have now fallen now $75.56 they can break below $70 today. this is wti and brent falling to the lowest level in a year let's find out with victor katona at kipler

victor, good to have out the program. you get my point every sign seems to point to higher prices. all they keep doing is going down do we have any idea why? >> absolutely. just feel as the oil market had the equivalent of writers block. there is no confidence and it reflects the market reality. the big explanation is everyone is afraid of recession and no one wants to invest. the smaller explanation is december and december is the down trading season. not a lot of people want to put money into a profitable 2020 and mess up the profits. those two combined get to a picture where people don't want to get into the markets and liquidity is thin. in the end, a clear bullish

signal the keystone pipeline. you have opec plus countries, many actually, whose production is smaller than the capacity of the pipeline we don't know when the pipeline will come back there is no actual end result of that happening it is really, really weird this is what happens if the market grows to a really thin layer of liquidity as we have seen. >> for viewers that may not have heard, a big spill in the pipeline keystone that was keystone xl we will see when the keystone pipeline gets back up and running. let's talk about india how much oil is india buying right now? >> it's a lot. the overall assumption with the russian oil price cap was that the effect would be almost immediate. something would be felt by the market one thing that i think many of

us, myself included, really anticipate is how strong indian buying of russian oil would be i actually counted the first decade of russian loadings for the europe-bound cargo 18 of 22 cargos went to india. almost every single the cargo loaded in december is going to india from the european ports of russia it is huge it is so huge that month to month, the loading levels are almost double what they used to be in november it is quite big which also means the oil price cap on rush nsia never really had the price disruption >> to be fair, victor, that price cap just kicked in all the ships on the water right now with russian oil or whatever and getting stopped for a bit

last week checking insurance documents, those ships were loaded before the price cap kicked in. there may be a lag effect there. russia says interet may cut production if china reopens, it could take a while before we see meaningful flows to china, could it not it will not flip a switch and happen overnight >> absolutely. from what we have seen so far in terms of buying and purchasing activity, it is still relatively weak with china, you have two problems the efficienfirst is an easin restrictions which should be a bearish signal point number two is trust is not the same after november and december everyone was anticipating easing restrictions and bam, all-time high in covid cases and lockdowns. the market doesn't want to trust

china that much right now. it wants to wait out what happens and see if cases go down and easing of resdtrictions doesn't lead to another catastrophe in cases and once they are in the clear and confidence, only then will it react. right now, there is no trust >> that's it lack of trust. who can blame them so many starts and stops there in china viktor katona, thank you you do great rwork thank you. >> thank you. speaking of energy a potentially massive story in energy to report today financial times are reporting that american sicientists have made one of the greatest breakthroughs of all time. fusion power it is creating power from other pow power. in this case, a laysser.

a so-called net gain now an simplistic sense because we do not pretend to be experts on this topic. it would create a manmade sun power. it would be a big deal manmade fusion has been called the holy grail of clean are energy it is carbon emission free and limitless. it is not hyperbole to say if this works, it could change the way we power the entire planet not for a while, but a long way down the road. in fact, the former department of energy official texted me last night and said if this works as being are reported, it could, again, a long way down the road, effectively end almost all of the current major electrical generating power sources. gas, coal, wind, solar all gone

fusion would replace all of that and be carbon free it is a reason to hope there is still a lot we do not know the department of energy will hold a press event on this tomorrow at the lawrence livermore lab where they found this keep in mind, fusion power like this has been the dream of energy scientists for decades and a subject to a lot of debate about the viability. still, this is fascinating story and we are going to bring you more as we learn it if it works. it could literally change mankind. straight ahead, former vice chair of the fed roger ferguson is here reading the tea leaves with the interest rate call from the federal reserve. if you haven't done already, it has been five years, follow our podcast. if you miss "wex," you can

listen anytime you want. we're back after this. >> announcer: today's big number 11%. that's the share of all single family home construction that's built exclusively for the rental market according to the national association of home builders that's nearly four times the average over the past few decades. hello, world. or is it goodbye? you know, it seems like hope and trust are in short supply. [clap] now, as businesses we can blame and shame. or... [whistles] we can make a change. [clap] we can make work, work for our communities. create more equal opportunities. [clap] it's time for business to show its true worth. because it's not goodbye, world.

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inflation and the federal reserve topping the investors

minds. former vice chair roger ferguson is laying out what the fed is likely to do this week her here we go again congress facing another deal to get the federal government funded. and the treasury secretary and the prospects for the american economy coming to a halt next year as covid stimulus n finally wears off. it is monday, december 12th, 2022 this is "worldwide exchange" on cnbc welcome or welcome back. good morning i am back. i'm brian sullivan good to be here and get up thank you very much for joining us on this busy monday let's get to see how the markets and your money are shaping up off a lousy week last week that is futures which are eh mixed to slightly higher as well we are not seeing a huge move in

futures. we have the fed meeting this week and an interest rate decision that will determine where everything goes. let's talk about market setups we are starting to get research notes of what is likely to happen next year you know, price targets and things like that we have a big one from goldman sachs. goldman sachs and the team led by david kostin saying next year, we expect zero earnings growth will result in zero appreciation for the s&p 500 they continue based on the conversations with clients in recent weeks most investors have a more bearish outlook than we do yikes. zero appreciation for the sa&p next year. and among the key strategies for that and the one that caught our

eye is number eight on the list. that is too short or bet against u.s. technologies. the sector is still over-owned and the era of qe. bank of america adding risk is worrying bank of america and goldman sachs, one saying tech and the other saying no appreciation for the market next year we have more notes coming out. everybody was wrong about the mood this year and is very downbeat going into next year. let's get a check of the top stories outside of the market or in it. kristina partsinevelos is back with us. >> brian, let's talk about shares of the london stock exchange popping in overseas trading. microsoft is taking a 4% stake in the exchange operator and ten-year partnership

the pair says it involves data analytics and cloud solutions. juul p labs is paying up to $1.7 billion over accusations that the company targeted un underage users the settlement will resolve the legal liability that pushed juul to the brink of bankruptcy. and janet yellen is out with an interview ahead of the cpi report y yellen noted the risk of recession. >> the economy is prone to shocks we have a very healthy banking system we have very the healthy business and household sector. >> you said this

you do not believe there will be a recession next year? >> there's a risk of recession, but it certainly isn't, in my view, something that is necessary to bring inflation down >> economic growth is slowing substantially after a stretch of substantial growth after the worst in the pandemic. some positive. some negative. everybody is guessing right now, right? >> it is classic yellen. we could get a recession we may not if we did, we could have one maybe there's a chance we might not have one if we did have one, it would be bad. >> you said it perfectly >> i couldn't do it again if i tried. kristina partsinevelos thank you. sticking with the economy. a busy week ahead for central bankers and investors when the fed kicks things off on wednesday with the final policy

decision of the year wall street putting the odds of 75% chance we get .50 and smaller chance of .75. you have the ecb decision shortly after. joining us now is former fed vice chairman and contributor roger ferguson roger, thank you for getting up for us what is your expectation from your friends at the fed on wednesday? >> i think the market has it right. they are likely to tighten by another 50 basis points. the real news is going to be the so-c so-called dot plot the question is what do they now think the terminal rate will be

and what does it imply about the next few meetings? >> it is early a lot of viewers may have heard terminal rate bandied about. roger, can you explain it and why do we care about it? >> the terminal rate i the fed expectation to see how high inflation has could tomorrow under control the thinking right now, the last time the fed think how high the rate would have to go is slightly above 4%. i think after that discussion, chair powell talked about having to tighten rates higher than that now the question is are they thinking they have to take their rate up to 5% and some in the markets think 5.25%. i think people expressed the possibility is higher. the terminal rate discussion is

how many more tightening is over the next two or three meetings that is very important to the market >> what is potentially more important, roger is it ultimately that terminal rate or is it how long we stay at some of the rates before they start to come down again is it amount or duration >> obviously both are important. at this stage, i think it is more duration. that seems to be the place where the market and the fed may be at odds the market thinks that the fed is going to be cutting rates by the end of next year and the fed itself, at least thus far, has not signalled that i think that is a place where the disconnect with the market and fed might be most important and that might influence how equity markets perform once we understand how long the fed

keeps rates at the relatively elevated level >> do you think we'll get a recession in the american economy next year, roger >> i do. i've said that for several months i think starting back in march or april i think recession is practically inev inevitable i think the issue is it will be relatively short or shallow. in a sense, that could be seen as a good outcome. for me, recession is far more likely than not. i'm thinking short and shallow >> you know, should that 2% inflation targeting re-thought, roger? wage inflation should be sticky. once you give people pay increase or hire at a certain wage, it is unlikely you will reduce that pay unless you want them to leave. that's got to be playing a huge

role in the economy in the overall number how do you fight that with an interest rate increase >> well, you know, what the fed is saying is that what they hope to do is cool the labor market by reducing the number of job openings for every unemployed person they are hoping by doing that that they can avoid a hard landing. i think to answer your first question, it would be unwise now to change the 2% inflation target the think the fed's credibility would be at stake and there would be confusion if it is not 2% target, what is the target if you change it once, how do i know you don't change it again that has risk implications becoming unanchored, as it is called it is unwise to change the 2% target at this stage let's get back to 2% and see what happens after that.

changing the 2% target would un undercut the fed's credibility >> you don't change the game, per se, in the middle of it. you wonder about wages we will see what happens roger ferguson, thank you for getting up with us. coming up, countdown to a potential shutdown ylan mui is here with more on keeping your government funded and the hurdles from lawmakers reaching a deal. if you feel you have hrd teahis story before, you have "worldwide exchange" is back in a moment

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quelwelcome back we are showing you the asian markets overnight. down 2% for hang seng. all inflation fears and recession risk the hang seng bounced nicely off the november lows, but still well down on the year. falling another 2% overnight overall of the talk if china will reopen. that is dominating the discussion there we will see. from asia to washington and the latest from d.c. and the race by congress to once again strike a deal to keep the

federal government funded and operating. leaders are set to return to the capitol today to hopefully reach a spending bill before the friday deadline. revisions are expected ylan mui is joining us now ylan, what are the major sticking points they will try to hammer out >> reporter: brian, lawmakers are still trying to pass the sweeping government spending bill during the lame duck session of congress. republicans and democrats are at logger heads over how much to spend on discretionary items the total is expected to top $1.5 trillion. as of the end of last week, the two sides were $25 billion apart. a senate democratic aide told me progress was made over the weekend and the senator leading the talks, patrick leahy from vermont is leading the spending

bill one sticking point is the law the democrats passed over the summer republicans argue democrats got money for priorities like clean energy and healthcare. democrats say the law is fully paid for and shouldn't count against the comprehensive bill. the white house weighed in as well looking for $38 billion for ukraine. president biden spoke with president volodymyr zelenskyy last night and reaffirmed the u.s. commitment to providing security and economic and humanitarian assistance. brian, this is the make-or-break week because the government runs out of money midnight on friday. neither side wants a shutdown, but there's no solution just yet. >> so, dare i ask, what happens if they do not reach a deal? what are the options for averting a shutdown if they can't come to a deal >> reporter: so republicans and

democrats are floating a couple of different ideas the problem is they are different ideas. democrats say if this big omnibus spending bill falls through, they will introduce a one-year continuing resolution that lasts through the end of fiscal 2023. it would keep government spending levels flat republicans say that is a bad idea and hurt the military and never been done before instead, they want to see a short-term funding measure to last through the beginning of 2023 when, of course, republicans take control of the house and presumably have more leverage in negotiations as we see the talks over the spending bill go on, we see side negotiations over what the plan b should be. brian, there is a plan c wrapped up in all this as well if no one can reach a deal by the end of the week, perhaps there could be a one-week very short stop-gap spending measure

through christmas and hopefully give them time to get through the mess >> maybe a plan d? that is the grade most americans would give the congress members over the handling of the issue ylan, i have a suspicion we will see you more this week over this topic. thank you very much. on deck, everyone gearing up for a big week inflation data coming out. fed theral reserve rate call sam stovall will layouwht at is happening for him. we are glad you are up with us we are back after this

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it is the top six as we near the 6:00 hour. six at 6:00. shares of rivian falling on the news the company will pause the joint venture with mercedes-benz. rivian will focus on consumer and existing commercial business. twitter launching twitter blue service today amongmong the new features is editable tweets. and amgen with the takeover of horizon therapeutics. it will have access to immune therapeutic drugs. and carnival is increasing the stabss in snap and warner bros. and baker hughes

toyota set to outline adjustments to suppliers according to reuters the automaker will offer insight to the plan next year. story number six, the oldest pair of jeans selling for $114,000 at auction. the denim was pulled from 1857 shipwreck off the coast of north carolina. you ready? we are gearing up for a busy trading week ahead earnings from oracle and coupa software the monthly oil report and the consumer price index the cpi number will be huge. house financial services committee holding a hearing on the collapse of ftx. sam bankman-fried is scheduled to testify likely remotely. we will see. on wednesday, the fed with the final rate decision of the year and the jay powell news conference

on thursday, november retail sales numbers are out. we have the latest on rate calls from bank of england and european central bank. then we are not done on friday a bankruptcy court hearing for ftx. congress faces the deadline to pass the spending bill to fund the government the s.e.c. will vote on sweeping sets of changes to market structure. maybe we should all go back to bed. who better to help us parse through it all than sam stovall at cfra. sam, i'm exhausted just going through that week. it is almost like too much what are you focused on? >> i think it is no surprise to say i'm most focused on the fed meeting on wednesday, but precursor to that is the tuesday cpi data i think everybody pretty much knows the fed will raise rates by 50 basis points at the same time, ecb and the

bank of england will raise rates by possibly a similar amount what is unknown is what tone will be taken with the fed statement combined with the press conference from chair powell on the day of the press conference, the market has risen an average of 3% in that single day. we could get a big surprise again this week as well. >> what would the surprises look like in other words, we go 75 basis points no indication of a slowdown and the markets tank layo out the scenario. >> we had all sizes in the s&p in negative territory along with 96% of the near 150 something industries you have a lot of people bailing out in anticipation of the meeting. i think a lot of negative news has already built in if the fed comes out and pretty

much tells us what we know, the investors will breathe a sigh of relief i think we will get dot plots that come up to about the 5% terminal rate from the lower middle 4% area that is probably not going to be a surprise either. i think if we get some sort of statement that implies a recession is around the corner and we don't care how deep it's going to be, we will bring inflation down to 2% that could end up causing more concern than anticipated >> does the tuesday cpi number matter or do you think the federal reserve has made up its mind >> certainly last week's ppi number marttered it will matter to investors. it probably won't matter to the fed voting members because they probably had advance notice of the information. they are also looking at forward data our expectation is they raise by

50 basis points and february and then 25 in march and then think about the pause button before mo communicating the easing process. >> you are kind of singing to me, sam. we might have a federal reserve that goes on the radar for half a year is this christmas early? >> that's right. you are tired. you are exhausted. i'm singing to you you will fall asleep before the show is over could be a lullaby from the fed saying we have done our job. we don't want to overdo it because the target we're aiming at is on the other side of the h horizon. we don't want to overdo it i think the fed will press the pause button after the march retightening and take a wait and see attitude >> why is everybody negative for next year?

your competitors and others are rolling out their forecasts. i have not seen anybody bullish next year. >> our target is 4,575 that is an advance from where we are today. i come up with that number based on technicals as well as the cap weighted target differential by cfra analysts. we covered all of the stocks in the s&p 500. our belief is a lot of people are forecasting recentcy we are down double digit this year twice since world war ii in bear marke markets did we have that second year in 1973 and 1974 the market averages a year after the double digit decline

too many people are forecasting and saying next year is the same as this year it will if we fall in a negative meltdown bear market >> that may be the most bullish forecast i have heard for next year it is good somebody being bullish. bringing the heat. sam stovall, thank you for getting up early have a great day >> thanks. all right. folks, good to be back on "worldwide exchange. i'll be back as well tomorrow and the rest of the week tune in. i'll cough less and smile more that does it for us on "worldwidexcng f mda ehae"orony. see you tomorrow "squawk" and the gang picking up coverage next. have a great one even if you got ppp. and all it takes is eight minutes to find out. then we'll work with you to fill out your forms and submit the application. that easy. getrefunds.com has helped businesses like yours claim over $1 billion in payroll tax refunds.

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good morning stock futures are higher as investors await key inflation

data and the latest interest rate decision from the fed we get you ready for the week ahead. elon musk is relaunching twitter blue the blue check mark subscription service. if you buy it on your iphone, it costs an extra $3 a month. the latest wrinkle in the collapse of ftx. the massive unpaid tab at jimmy buffett's margaritaville resort. they are related >> distantly >> it is monday, december 12th, 2022 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are