superstition, and i think this is as well i think people will be surprised. >> time will tell. let's not count your chickens before they're hatched there >> greg, time will tell, and we are running out of it. we have a hard break, got to get to our friends on "squawk on the street" in just a couple, well, frankly, seconds thank you again. we'll see you very soon. see what jay powell has to say in the meantime, join us tomorrow "squawk on the street" begins right now. >> good monday morning, welcome to "squawk on the street." setting the table for the last big macro week of the year, fed decision, ecb, cpi, retail sales, and today, biggest merger monday in a while. more than $50 billion worth of deals. road map begins with a key week for the economy. cautious trading ahead of cpi on tuesday. that fed rate decision and yellen saying that inflation

headwinds are set to ease. >> plus, as you just heard from carl, double dose of deals horizon therapeutic shares are up sharply and omabravo buying coupa. we'll also discuss why one key analyst is saying it's time to short u.s. technology. >> thank you thank you for that >> but we will start with that double dose of deals on merger monday, which we haven't seen in a while. but a decent pace of deal-making, and we saw it this time last year as well, if you recall of course, when we got activision-microsoft was around the holidays a deal we knew might be coming because under irish takeover law, you get a lot more information, horizon therapeutics rare disease company, its key drug infused by a ophthalmologist for thyroid eye disease. it's a big drug.

over $2 billion or $4 billion, perhaps, peak sales estimates. a amgen steps up and does the buying here. i am told santa fe, which as you look in the background, was probably around 110, let's call it, just to give the stock was, stils strengthen what you would say amgen's rare disease portfolio. really makes amgen just another big pharma company, it seems like, willing to pay 20 years' worth of cash flow, lever up their balance sheet to about three and a half times, 3.6 times, for drugs that are winners, that clearly have already won. there not a lot of risk here, but at the same time, this is a company that we can remember was at the front of innovation but now may be considered more of just another good old-fashioned big pharma

>> they bought revenue growth, but i think what's wrong with amgen is it's run by a banker. you want to see these companies invent new drugs, and they have a decent cancer franchise, but j&j passed on this one of the reasons j&j passed on this is because, frankly, it's just old nothing -- i mean, maybe they can take it to $4 billion. >> right they've got the -- obviously, the eye drug and then the other company they bought that had a gout drug they've been able to get going. >> this is a shopped company and i always expect better from amgen. >> you do? >> yeah, i do. because i think amgen has great science, but they don't seem to make it across the finish line >> clearly not if they're willing to do this and willing to do it at a price that was above, let's call it, $6 or $7 above where the cover bid came in from sanofi

>> the stock went up when we realized the fed was going to slow the economy i don't want to say amgen is a second-rate company. that would be too harsh. but i always thought this was a great growth company, and then they have to go buy a company that conceivably could be peaking in growth. >> i mean, i don't know. >> and they pushed the balance sheet a little bit >> exactly i don't like that. why did j&j pass i think j&j passed because they have a pharmaceutical group that's growing faster. carl, i find some of these deals to be done, like the bravo deal that we were talking about these deals are kind of done because these companies -- bravo wants to put together some sort of giant franchise, but amgen's kind of tapped out that's what the deal says to me. i didn't think amgen was tapped out until i saw the deal >> it's an interesting take, and it's one that i have heard from a couple of other people as well >> i was disappointed. >> between that and coupa, you think it's a low-quality merger monday >> coupa is -- toma bravo is

putting together some specialized group of expensive stocks that would have gone much lower, and that is just really a joy to watch >> repeat that for me. what was that? >> they're putting together a lot of very over-valued companies. it's a joy to watch. it's like sqequoia if you scroll down, you see sam bankman-fried. every one of these companies wants to burn cash rather than cut trees down, they're burning cash >> from their perspective, tomabravo raised an enormous fund >> maybe that counts more than what they do with it >> sees value at 81 bucks a share here for this company. now, i always am interested in the financing. >> right >> piece of these deals timothy, given we talk so often about the noninvestment grade financing market being a tough one because

this is, you know, over -- roughly $6 billion equity, let's call it what they're talking about it being a total $8 billion deal almost >> bernstein had it at 150 i used to have them on the show all the time it's a good company. software as a service procurement. >> abu dhabi has given them a good amount of money they're saying it was a significant minority investment from abu dhabi because again, the equity check plus abu dhabi, then you got leverage, direct lenders. we'll find out everybody involved here. don't have all of that now but always interesting to see, jim. to your point, vista was there, but lower. not sure where they ended up been trying to figurethat out. maybe high 70s, maybe mid to upper 70s? but clearly, they did not see the value up to $81 for coupa. >> the game ended. i mean, the game ended, buying these companies that are losing money. the game ended a long time ago and yet, these guys can still do

it because they're not a public company, thoma bravo, and they can go to the bankers afterwards and jam it, cost the public a fortune, make good money for thoma bravo, make good money for the bankers, and everybody ends up happy, except for the public. >> the public is happy today if they bought the stock any time recently if you bought it over the past few months >> yeah, they really timed it right. they got in there at the bottom. >> this was a $340 stock >> i do like them very much. they just got the big procter contract really fantastic >> when it comes to the company's business, are you -- >> i like the business, but i think that the price, if you just waited, would go even lower. because those stocks are so out of favor i mean, they're just, you know, look these things will go on their own weight if you don't bid for

them >> you think weber is more in line with what you're talking about? >> weber, they come public, cut the size of the deal, bring it in at 14 in august, goes to 16, and then down here now, there were a couple of other -- traeger came up at the same time. weber was one of those deals, they had ceo issues. >> we should point out, by the way, weber has agreed to be purchased by ddt, which was the majority owner of the company. >> tremendous short. they didn't -- >> byron trot -- >> byron, i love >> so, they came back in and said, all right, we'll start over it's a redo. we'll get a redo >> the fact is that this was, again, a pandemic play i mean, we had a weber we bought for the pandemic, and it was super we split this really cool fireman kind of verizon suits where you sit out there. it was just one of those things. there's so much that was done wrong during the pandemic.

what, what traeger? >> no, in general, all of these stocks fell to a level at which there was a buyer willing to say, you know what i see value. in the case of horizon, it was sanofi -- and by the way, it's been on amgen's radar too. we think this is an interesting company, but it's trading too high, and then you watched it fall to a level where they said, all right, let's take a shot same thing with coupa. clearly, it fell to a level, at least, and we've talked about, by the way, vista, which did not end up owning this, but nonetheless looking at the public markets, lately, because it sees more value in the public markets as opposed to the private market valuations. >> it should, because the ftc will not block that. what, they don't care about that >> and even weber falls. so, i mean, there is something to be said for a market that may be discounting too much. >> weber's a real company. >> and the ability to step in. >> you buy weber, traeger, blackstone, a bunch of guys in

the grill business, but the fact is that they can -- i remember doing that deal when it haopene and all i could think was, they need a really big wave of covid to come back weber must be killing it in china. >> even if that had happened, jim, the replacement cycle for grills is many years >> one of the things i loved about weber when i bought it was you never have to buy another weber and i was thinking, that's bad for the stock. don't you need a weber every year weber should have made portable fire pits, which my wife saw today. i bought it to wrap it up, and she came to the bdoor and said, someone bought me a fire pit >> don't need those fire pits anymore. >> it's a portable fire pit. >> i have a nice one too >> over at your house. >> i went through three of them because none of them really worked well. >> that's what you want to own a fire pit company >> they were just smoke pits >> walk back into the house

reeking of smoke >> come on over, we'll stand by the fire pit >> that was a great era for a lot of companies do you think someone buys zoom video or docusign to complete their idiocy >> i mean, back to the point, there are -- >> there's a price for everything >> there's a price for everything, and there are buyers for everything >> you're right. i got to tell you -- >> this is the positive takeaway the prices for these companies fell to a level where they were on somebody's list, and they said, hey, wait a second, let's take a look. let's send a letter. >> they could all be brilliant i don't disagree carnival's come down a lot, david. maybe it's time. >> you and me together >> doesn't matter. as long as we're not public, we can do whatever we want. abu dhabi. how about gutter i mean, they have some good matches. >> they've been in the news, that's for sure, this week >> holy cow. >> when we come back, why one strategist says you should short u.s. tech in the coming year tons of calls, including ones on qualcomm, apple, under armour.

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recession. the economy remains prone to shocks but look, we have a very healthy banking system we have very healthy business and household sector >> so, you have said this. you do not believe there will be a recession next year. >> there's a risk of a recession, but it certainly isn't, in my view, something that is necessary to bring inflation down >> certainly, jim, on oil, got almost to a six handle this morning. >> i think oil goes to $65 and then at that point -- i thought that oil could stable -- once it broke through, then the charters took over. russia flooding the world. india can't really mop it up i thought janet yellen was -- yeah, i mean, there's a risk i think we all could do -- i think there's a risk of recession, but things are good, and inflation will peak. those are what i would say is, what, everyone thinks?

right? >> consensus >> david, i'm looking for something that's revelatory. >> you're not going to find it there. >> someone had something good to say about amazon wells fargo says it could reaccelerate i mean, hey. come on, man that's a change of view. >> that's what they say about comcast too. so, there you go that's revelatory. >> that was a kind of -- we covered this universe. here's the best one in the universe >> morgan stanley today, comcast, top 23 pick in cable satellite. >> there you go. love to hear that. >> why this discount to the s&p? >> these companies make a lot of money. >> they do >> and i think that low multiple -- they actually have a low multiple it's pretty amazing. >> fairly low multiple comcast is not particularly levered either >> why aren't they buying more stock? >> maybe they will >> we work for them. >> yes, we do.

so, is it "they" or "we" >> that's a good question. >> yesterday, i'm at the eagles-giants game, and i said, boy, we look good. my wife said, i don't see you on the bench there. so, i mean, the question is, who works for whom right? >> well, i think we do we actually -- >> are you a -- >> we work for comcast and i would add, we are contributing to significant cash flows at said parent company right here right now >> there you go. >> ring the cash register. >> i went to a fantastic place in vienna, and it was a peacock park >> a park full of peacocks >> yeah. it was beautiful >> that's awesome. >> wondering where you were going with that. was it losing a lot of money >> no. the opposite right before i asked my wife to marry me it was just a -- it was on the verge of the breakout. >> speaking of this, morgan stanley, they do cut disney to $115 but they reiterate the

overweight >> that's one of those where they put a fiscal year 2023 number good, but the last line of that is, '25 is the year. 2025 in the year 2025, we'll all be -- i mean, why? these are one of these pieces. i say, in 2027, these guys are -- what are we supposed to do with that >> isn't your buddy david kostin saying stuff like that too now zero earnings growth next year that's 2023. >> how many times have we gotten together outside the office? >> there it is, next year. >> can i just use your buddy when we've actually had, like, even a cocktail outside the office >> all right, but you do that to me constantly. >> that's mocking you. >> exactly i'm not allowed to mock you? c kostin is -- he loves you. you know that. >> i love kostin i wish he'd go for a drink with me i think he's -- >> he says he's less negative than a lot of their clients,

even though he's not positive. >> he's snubbing me, kostin. he comes by here, shakes my hand, shows me his research. >> he probably assumes you're busy, i think. >> i'm not busy for kostin i'm ready for kostin look at that weber fly what do you think that's about, david? weber. >> $8.05 a share >> you'll never need another weber again. >> keeping him focused today is even more difficult than your. he's all over the place. peacocks in vienna and kostin is snubbing him >> jassy came to town. >> amazon ceo. >> he's a big jagiants fan that pretty much says it all >> all right okay >> yeah. >> it's good for the commanders. >> i don't know what you're talking about. >> this is good. we're going to continue to try to wrangle jim in a minute, we'll get to a bunch of the other calls and count down to the opening bell we'll get cramer's "mad dash" on this monday. it's goingo auson tbe by e.

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eight minutes before we get started with trading here for the week at the new york stock exchange let's get to our first "mad dash" as well. we got a goldman call on some down-and-out retailers >> i thought it was significant because some of them are going to be very right they like burlington, which i think is very good they like tapestry, which is doing well i think that makes a lot of sense. most importantly, david, they like app stores. now, gap stores sequencely strengthening. >> it's been moving higher

lately >> it's been moving higher, and i have to tell you that, sell vf corp., it's a shambles, but i don't know if i want to get rid of that stock with agaiben comig in new ceo. >> ben odor, interim ceo >> clorox, very successful there. it's time to really focus on bank first, because i have done no work on it. i have no fundamental reason to buy it >> it looks really good. >> what a chart. >> wow >> this is incredible. what happened here, david. >> there's vf corps. >> oh. oh anyway, it would be like this. it could be like bank first. >> back to the call on gap >> the reason why i like the call on gap is because -- and tapestry -- is that people just hate retail, okay? they hate all retail i mean, look at what they did to lulu on friday lulu's quarter was fine. it was down 50 they don't want to do spending,

and i think the consumer is stronger than people think, and the consumer will go to the mall and buy presents >> all right >> except for they will buy them at more traditional places i also think they'll go to etsy. i bought something on etsy this weekend. i was looking for something that wasn't in the mall but gap is cheap, and banana republic looks really good they had to stop the stealing. that's key none of these -- by the way, there is no store that admits there's a lot of pilferage, but when you go on amazon, you find a lot of their stuff at really discounted prices. it's just by fencing >> the retailers call it shrinkage. >> don't you think you should have a company that just does fencing? do you think thoma bravo would buy it any they might that's it for him for a couple minutes. >> by the way, you can catch us any time, anywhere, follow the llodstk on the street" opening wee ck 'rba after this.

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among them, shorting u.s. tech a note from strategist michael hartnett says, "the old leadership, still overowned era of qe is no longer, era of globalization no longer, plus peak penetration and regulation risks. long gold, long china, long industrials. >> very contrary i liked it gold was more of a store value but has more of a fear of inflation than actual inflation performance. thank you, michael, from jpmorgan on that i think that -- i did a piece last night for club members, which just said that the source of funds and the donors remain these tech stocks. as much as, at this point, to get out, and i think, doesn't make that much sense i do like the industrials because i don't think it's g going -- like secretary yellen, i don't think it's going to be that bad of a recession. but yeah, i think there's a lot

of tech that is very 2000. forget it. >> beyond enterprise squoftware? >> yeah, enterprise software is a disaster >> for example, this downgrade of qualcomm today out of wells >> my travel trust owns qualcomm it's clearly a mistake i listened to christian, i got very bowled up by what he had to say. i like what he said about auto i believe there was a pretty good chance at that point you could see some value in cell phones, and i was wrong. i listened, and you know, sometimes you listen to ceos, david. and they're terrific and they're great. and they're wrong? well, you pay the price. >> yeah. >> sometimes it's better just to stand in a room and listen to no one and just do your work. and i think that's probably, in my case, when i do my best work. >> not listening to ceos that's revelatory. >> yeah. you have a drink with a ceo, and usually you can tell >> we do our jobs. we want to listen to what they have to say. but they can typically be

somewhat promotional >> yeah. >> and they have to be positive. that's part of their job >> well, i mean, i'm trying to figure out -- >> they can't sit here saying the world is ending. >> i'll tell you who's been very good if you go out with a railroad executive, those guys are no -- those guys got it. they are good. >> that's the opening bell cnbc realtime exchange, at the big board, graystone housing, celebrating its recent transfer to the nyse. and at the nasdaq, cannabis company, canopy growth >> owned by constellation. constellation has had good numbers, which is modelo and corona still selling very well. there was not as much heat out west that usually determines whether there's a lot of upside. i still like the beer business because it does better in a recession than not there you go david? in a recession, than not, we

like beer. >> i forget where you are on the possibility of a recession >> i think that it's a mild downturn i just think that the fed's doing a good job, and they've really -- i think you're going to see a couple cpi numbers that are very weak. i also think that you can get -- that there are, let's say, fewer job openings >> couple of cpi numbers that are weak will probably get the market going a bit >> i think so. i think it's a christmas rally >> well, that's one of the key questions about wednesday's presser, isn't it? what he's going to say about not just the easing financial conditions but the hopes that we're getting a cut next year. does he push back on that? >> i think he doesn't need to talk about that at all that would be a mistake to talk about. what i think he should talk about is that there -- it is easier to get a job. supply chain issues are diminishing. i don't know a company that i talk to that still thinks supply chain is a big issue, and i urge people to go over the costco conference call where they talk

about how they returned the fleet that they had, simply because look, there's not a lot of problems. costco's -- is going to do, it's just a matter of when, when they're going to do the special dividend i like the stock very much stock went down on the good news >> yeah, lulu's ceo was on friday also, supply chain has stopped being -- i don't want to -- it's no longer a key issue. >> right >> how much do you think that has played a role in inflation and there are the cessation of supply chain issues? >> i think it's very good for powell i think powell has to play for time i think it's just a matter of time before some of these good things flow through. i want to see -- i mean, you notice that new cars are still scarce because they still don't have enough of these old-fashioned stupid chips that they need. by stupid, i mean, dumb chips, they call them when autos finally roll over -- and david a, a lot of people cae to me this weekend and said, is it really possible that blackstone could have so many

homes that it could put pressure on homes or go to rental i thought the jonathan gray -- made me feel like, look, unless you feel that language means nothing, you should back ray but at the same time, housing, there's a lot of homes we have lennar this week >> i was going say >> they know how to build a home at an inexpensive price, but so does toll. but i just don't think that these levels of mortgages, it's a great buy to buy a house it's just not. >> what you're talking about autos, and we should note tesla is down another 2.6% >> does it ever end, david >> i don't know, jim i guess i'll put it back to you. the stock is down 50 full percentage points. still $549 billion market value but cut in half now over the last -- since the year began >> you think twitter was ill advised? that buy

>> yes at this point, purchase of twitter of $44 billion by the way, it's still elon musk he's doing so many different things we talk about this so often. you can't bet against him, given his incredible track record of success. that said, if you want to equate the two and just point out the losses that have taken place in tesla since the twitter deal closed, it hasn't gone particularly well so far >> no, and the blue check, you have to pay for it, but you don't have to pay for it you can get rid of it, but you can keep it, and it sounds very definitive >> i have a blue check do you still do we keep them? do we have to pay for them >> i've been publishing things that are kind of benign, like pictures of dogs, but most people hate my dogs. they're the only dogs that are hated in the whole world does putin have a dog? >> we're not paying for that >> i like that it's free. >> to our point about tesla sentiment, the video of elon getting booed at the concert,

how many other auto executives get actively booed >> i'll tell you, jim farley is cheered when he goes to things stock's at 13, so it's not like farley is being cheered for stock prices, nor mary barr is not being cheered for her stock prices >> no. >> formula one is cheered. >> i don't think they're booed or cheered most of the time, nobody's going to have a clue who they are, as opposed to elon musk, who obviously is very outspoken on twitter these days and is taking positions that are certainly arousing people's passions one way or the other >> that's a good way to put it it's just another stock that should have never gone as high as it did. >> which stock tesla? >> no, well, yeah, i'll take tesla too. but i think that twitter was probably a 20. you know what i do i'm going to be less cynical about something. >> he was the guy who agreed to a deal >> i think pinterest is real i think if you can combine e-commerce and pinterest, kind of like -- if somehow etsy would

merge. i look at pinterest and i say, wow, i want to buy that. trying to do some shopping for my wife. and he said, oh, i got to go this site, that site, this site. all of that. i went and bought labels for my wife she doesn't watch the show i'm okay >> labels? >> for her sauce i'm always claiming it's my sauce. >> you bought labels to put on the jar. >> are you getting into the packaged food business >> you bet i am, and that is a good business now that my supply chain is better. my supply chain was really screwed up by ball corp. >> to get bottles out of mexico, my supply chain, it's been horrendous but i fixed my supply chain, so i might lower my price no >> you fixed your fly chain? >> conagra books good. >> actually, a couple of the calls this morning, stifel upping under armour to buy >> wasn't that something >> yeah. goldman upping best buy. >> now, that has been right.

this is one -- that was a great quarter for heaven's sake. yielding 5%, selling 11 times earnings cory barrett doing a great job but gaming, pcs, in other words, stay away? i don't know they went for good prices. there was -- nothing -- there was no research of any value no research of any value because nobody really -- you know, people are trying to make their picks for next year. >> yeah. >> and they tend to be the things that they like going into this there was nobody who -- the goldman, i mean, that was a very interesting tapestry no one's been buying tapestries. and gm >> you do have, for example, boeing's a good one. jpmorgan goes to 200 they argue the 737 max price is exiting that these orders, we keep waiting, united >> orders keep landing, but boeing's been doing quite well,

even in spite of itself. how about deutsche bank lowering micron they're cogent, right? cogent see, it was at $98 but there's nothing like downgrading to $53 at 1.2 times the call. helpful? >> no, not really. >> it's so quiet here. >> we heard this bell ringing over and over again in my head >> if you do have a good quarter and you're in this high multiple because you did the pivot for profitability, you get a mongodb situation. now, mongodb is a -- you had -- >> talked to them last week. >> he was fantastic, dev look at what he did. he decided to do the pivot, go for earnings, and it's been up, up, up, and i just think that that's how you create value. that's how you do it that's it. that was a great interview and he clearly sensed that, you know what? we got to start making money we can't just lose money forever. that's what i like >> right >> he was so good.

>> what others would you put in that basket? sienna, broadcom >> yes >> salesforce? >> i think that marc benioff is starting to realize, yes, with layoffs, and he did a really good job but i'll tell you, palo alto networks was the pivot of all pivots that was the pivoteer. salesforce is making changes >> starting, as you said starting it's a long process, potentially. >> well, you know, they had so many great customers when i was out there. i was seeing what they're doing with ford at $13 again i mentioned that >> yes >> with the f-150 and streamlining your business it's good. it's good. we haven't talked anything involving crypto yet today >> we're going to talk a lot more starting tomorrow at this house hearing. >> this silvergate, it's too early to buy silvergate. nvidia, there was a positive note today and yet, that -- >> cowen goes to $220. >> did not really get the stock motivated because the stock has

had a very big move ahead of that see that chart of silvergate >> that's suboptimal >> yes you took the words right out of my mouth >> you're welcome. >> no problem. >> did want to take a look at amgen, because it's not down hardly at all. >> well. >> so, the market responding >> bought some growth. >> relatively well to the amgen deal to buy horizon. it's one of the larger deals we've seen this year paying $116.50, above the price sanofi was willing to pay, which they essentially put in play by making a number of offers. >> you can raise your cash flow. >> the deal will be accretive in 2024, not long after close >> that's not bad. >> it's not bad. >> it's just that i wanted more. >> they're paying 20 years of cash flow for the company. >> that's a lot. >> it's a lot, but at the same time, they're getting drugs that are proven drugs that are probably not threatened. >> we want unproven drugs that could be great >> we do, but rare disease drugs

have good advocacy groups. it helps with the payers margins are good and protected. >> go buy biomaran >> there are those who think of amgen as an innovative company, and this is not that it's more the playbook of big pharma >> i think they should buy biomaran they've got a hemophilia drug and they're doing incredibly well i put that right on the list with jj bieniemy something positive, something happy. something delightful something for everyone >> something for everyone. >> nice. >> yes >> what is it tonight? >> scaesar not sid caesar, who apparently was just a wild man. i never read that one. he was a gun nut

>> he was a wild man >> but mine is "something on the way to the forum." >> comedy tonight. >> i'm trying to keep up >> you got this. >> thank you >> you mentioned ford. couple of other auto stories rivian pausing talks with mercedes to build a joint factory in europe. >> talks started three months ago. >> and gm, u.s. finalizing this loan to get their joint venture with lg batteries going as the battery belt continues to expand >> i think that mary barr is doing more to be able to secure supply chain than anybody else, other than mr. twitter >> mr. twitter being elon musk >> yeah. yeah i have a twitter mug i was going to reach for it today when i made my coffee, and i thought it might be bad luck, so i went for another one. i just didn't want to have a twitter mug to start monday. >> yeah. >> with the blue check is it good or bad to have a blue check?

>> i don't know. "the journal" has some data on ad traffic not encouraging. and there's been some high-profile defections in the last week, elton john, whatever. >> i still -- instagram, at the risk of saying anything even remotely positive about metaverse -- instagram continues to be a place to generate business >> it does and you know, i'd continue to focus people on tiktok and the possibility of a ban in the u.s., because that will be a day that certainly you would see a very strong response in names such as meta and/or snap >> does meta have a lot of mind share in congress? >> i don't know. >> i don't think so. >> i don't know. >> i always think that's -- one thing's for certain. they're united but left and right. >> of course, we could then spend a lot of time talking about the mental health of our younger people in this country and what seems to be a crisis and what role social media has played in that >> well, when my daughter was a counselor for child youth -- >> talk to educators, mental

health professionals, man, there's a big problem. >> just take it away they'll break right into a safe if you take away their -- with troubled youth >> we think of meta, you think of regulatory, i guess, risk is one way to put it. microsoft, i know you were watching this deal with the london stock exchange, jim, to take a small stake, do a ten-year strategic partnership >> well, i thought that that was buying business. >> it's for their cloud. >> yeah. because a lot of people are worried about alphabet google cloud >> right >> this way, they locked up something. it's good. i mean, microsoft needed some part of the narrative that would be good, and they got something, other than that nfl people will use their pc microsoft needed this. microsoft actually has a good-looking chart, as shocking as that is >> that's a good-looking child support? why? >> because you got a developing head and shoulders there,

reverse head and shoulders that's good, david are you a pantene guy? >> i am. how'd you know >> are you pantene i save a fortune on shampoo. >> it's what we use. you do >> well, i don't -- >> oh, i thought maybe you'd figured out your supply chain issues with shampoo. >> by the way, the one other thing that crossed our mines over the weekend was the anniversary of "wall street. premiered this past day or two in 1987. take a look. >> you wonder why fund managers can't beat the s&p 500 because they're sheep. and sheep get slaughtered. i been in this business since '69. most of these harvard mba types, they don't add up to dog [ bleep ]. give me guys that are poor, smart, and hungry. and no feelings. you win a few, you lose a few, but you keep on fighting and if you need a friend, get a dog.

>> no feeling, jim >> it's just the best. what a great movie >> meanwhile, they're still not beating the s&p 500, all these guys i mean, michael douglas was so right, and 35 years later, take a look how many years have they beaten the s&p 500? hardly any >> there was a spirited bidding for teldar >> that's right. >> but who had -- there were a couple good stocks that were mentioned on the trading desk. right? >> bunny has a good nose >> blue horseshoe? it was great i remember my takeaway was, at one point, michael douglas says, you see this suit? it's from sills. i went to sills and i got some suits. >> that began your longstanding love affair with clothes >> there you go. people said, you look really good i said, sills, you ought to go there. i love michael douglas so much he's the greatest. >> there's a look at s&p over 35 years. >> thank you >> since '69

>> quick reminder this morning, you can get in on the investing club with jim. sign up at cnbc.com/jointheclub or point your phone at the qr code on the screen, takes you right there. as we go to break, watch bonds today. bostic is scheduled to speak at noon, even though technically we're in a bit of a fed blackout window also a ten-year note auction later on today right now, ten-year, 3.53% we're back in a moment

ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term

policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com. good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation.

do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back. you're puss in boots? td ameritrade. no habla english. habla espanol? i don't speak spanish either. who is this guy? i'm puss's therapy dog. wanna rub my belly. no, hard pass. puss in boots. rated pg. it's as serious as it can get. we hope it can go away the danger of this war is extraordinary. it can go on for years this oil and gas thing looks like, you know, the europeans will get through it this winter, but this oil and gas problem is going to go on for years you know, if i was in the government or anywhere else, i would say, i have to prepare for

getting much worse i hope it doesn't, but i would definitely be preparing for it to get much worse. >> that's jamie dimon on "face the nation" yesterday. he raised this a couple of times in terms of downside scenarios for 2023. >> i think it's important if you have to talk about things that could go wrong someone from the military this weekend said, if you give ukraine long-range missiles and they hit moscow, the world changes. you don't want your kids to go there or you to go there i think, david, the idea that oil could go up from it is the other way. i just don't see that happening. >> right mr. dimon's point is, okay, this winter they've probably got enough in storage and they've done a good job, but it's not done cutting off all supply from russia for the likes of germany, which has happened, and for europe, it's going to take years to sort of replace and figure out different ways to get the energy. >> i think there's more ingenuity than that. i think it's a two-year issue

because we have so much here. >> a lot of lng coming from here. >> getting tested because of the weather blowing through on the west coast. >> and the -- all the analysts hate oil and gas, the trend followers. when they love it, they're all going, great when they hate them, they hate them so badly. >> exxon on still up 70% last time if you said, i want a little energy -- >> chevron has widened its gap significantly this year in terms of its performance >> here we go. what street did rockefeller live on >> what street did rockefeller live on in cleveland >> euclid. >> and you apparently could have bought his house $98,000 wouldn't that be something house of rockefeller. >> it would be >> i like these trivia contests you pose. >> i've got a lot of them that are really worthless and mean nothing. >> look forward to that.

>> we'll get "stop trading" with jim in men dow's up 100

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let's get to jim and "stop

trading r trading". >> a bunch of people cut rates for restoration hardware now is want the time to exit gary friedman had negative commentary if things get better in 2023, you'll say, why didn't i buy this stock down here it's probably a little early because it's still 10, but -- eight times earning, still a good company if everybody hates it now, probably too late. >> his earnings call last week, does powell and his team know what to do or just tinkering around they haven't seen this before? >> i know. >> he went -- he went off. >> he went off i tried to get him to not go off. i think he just said, look, i think next year could be better. >> sounded a little like they have no idea. >> well, i just -- i think gary is an emotional good person and this call was reflective of his current state, but i look at his work and i look at what he's got and the excitement he's got, including for traveling.

and i just think, you know what, you start buying a little bit here, buy lower, know gary took it down. but when things get good, gary will stop talking about the federal reserve. >> how about tonight >> i've consolation, the energy company. i like both consolations i like the beer kind and the energy kind. it's constellation of constellations the deals are important to buy growth but i like deals that are homegrown. >> we're buckling up for a busy week "mad money" 6:00 p.m. eastern. dow is up 120 to start the week don't go anywhere.

good monday morning. welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brennan and david faber at new york stock exchange. decent week as we get set for a busy period of central bank decisions and ecobank data some green and tech as we watch mergers. vix a high.

>> over 30 months -- 30 minutes into the trading session here are big movers we're watching on this merger monday, including three deals, amgen buying horizon therapeutics and weber taken private. weber closed at $6.50 on friday. trading above 8. we'll have more on all these names in a minute. one deal not getting done, rivian that paused talks with mercedes-benz on a joint venture to build electric vans in europe as the ev maker tries to be more conservative with their cash. an analyst call to discuss brinker international is lower after goldman downgrades to sell goldman argues the macro back drop presents questions for pricing trends and pricing power. those shares are also down 2%. investors and the market are awaiting more inflation data this week. we have cpi released tomorrow. plus the fed is kicking off a

two-day meeting. cnbc is also out with a new fed survey ahead of that meeting and our senior economics reporter, steve liesman, has the results for us steve? >> good morning. respondents expect the fed to hike by 50 basis points and another 75 through early next year there's a suggestion in this survey that the worst may already be priced in to stocks and bonds. the s&p is seen closing the year around the current level and rising next year to 4418 that's a pretty optimistic outlook amid more rate hikes the important part of the result may be respondents haven't meaningfully marked down their outlook. can you see that in our cnbc risk/reward ratio. we ask about 10% increase or decrease in stocks the next six months the ratio fell mostly because respondents don't see a chance of upside surprise they only raised the by the way of odds of sharp decline from 48% to 51%

respondents also don't expect much movement in the ten-year with rates rising only 367 to finish up the year from the current level of around 356. ending next year where it was 3.60 91% of those surveyed believe inflation has peaked the problem facing the fed is not believed to be getting at least worse from here. the main question is whether the fed's fight against inflation ends up in a recession the probability of recession in the next year put it 61%, about where it's been. but there is a small group forecasting a soft landing it's not the base case in the survey the good news is that the base case hasn't gotten worse obviously, guys, the inflation report could change all of this. >> yes it's going to be such a busy week, steve. in light of the fact the fed and chair powell, in particular, has continued to be very hawkish and continues to hammer home this message of higher rates for

longer versus the fact the market seems to be pricing in rate cuts next year. what would it actually take for the fed to make a move like that in this environment? >> i think it would take a lot by the way, we have a survey in this question, i'll be talking about this in the 1:00 hour, the results are that the respondents do not see the fed responding to a moderate recession if inflation remains high i think that's a key part of what powell wants the markets and forecasters to understand. it's a big part of their forward guidance they are not going to flinch by a moderate downturn in the economy, assuming inflation remains high if you still have high inflation and you have negative growth, the expectation is that the fed won't raise any more, but that it's not going to cut. when you think about the outlook for stocks and the economy, that's a pretty negative mark

right there, that the fed will not be coming to the rescue of an economy that's contracting if inflation is still a problem >> big implications for next year, steve. thanks talk soon. as we said, markets continue to edge higher this hour. our next guest is pretty bullish on enterprise software, saying there's value hidden in some companies like amazon and alphabet tony joins us with some of those picks. good morning, tony good to see you. >> good morning. great to see you >> we got you on a good day because people are talking about, at least value in software, specifically enterprise i wonder if these deals this morning have caught your eye and feed your overall thesis >> they do these are cash buyers hoping for a double-digit return for their investors. we view that as a good check on valuations at oakmark we've been using private valuations as part of our triangulation of value for

companies for some time. if you look at the coupa deal, for instance, and compare it to a company like amazon, of course, they're very different, but the cloud business, you know, coupa is a cloud software company and amazon powers these cloud software companies coupa was bought eight times forward earnings if you put that on amazon web services which is more profitable and growing faster than coupa, that gets you to roughly $850 million amazon's enterprise today is only $900 million. so you're paying next to nothing for the retail operations. >> when you look at -- i know you've long held alphabet. you're watching crm and amazon what about the notion that they need to cut a lot of fat before they start to get into next year they're essentially bloated because of the buildup they got from covid. >> that's a great point. a lot of the expense growth these two companies was related

to the enormous growth they had coming out of the covid recession. part of it is also very company-specific at amazon the controversy is retail margins they doubled their fulfillment capacity over the last three years. they did this ten years ago. we owned it to develop second-day prime delivery. now they're working on same-day delivery in both cases we think these are smart investments and the right thing to do, but they're going to have to lever these investments. google grew 40% in 2021. and with that came a lot more spending some of it may have been huberhu huberous, some might have been related to that growth both companies seem committed to getting margins back up. it's not rocket science and these companies have plenty of brain power. >> whether it's tech or whether it's financials, which i know you have a lot of those names in the fund as well, is the value

still there if we go into recession next year? >> at oakmark we don't try to predict where the macro is going. we look at it like if you and i, morgan, owned a business together we wouldn't think it's going to be worth a lot less if we were going to go into recession next year or in year three. that's just the normal ebbs and flows of things. real business owners wouldn't think of it that way and we don't at oakmark >> tony, i want to come back to alphabet for a minute. i could have gone back a year, two years. it's always seemingly cheap, at least versus it's growth rate. i'd jik luis to understand the catalyst i know you guys have owned it for quite some time. is it because you do think they'll have more of a focus on cost that's going to increase margins? what is the catalyst here that you see, because, again, you could have said it's cheap a year ago or two years ago and obviously you would have been right sometimes but you wouldn't have been right over the last year. >> that's exactly right. that's part of the reason, david, it's been a good stock is that it's looked reasonably

valued and the fundamentals have been good. over the last year, this sort of company has been falling out of favor. there's been this tech rack and the fundamentals are lapping some very large growth and the market doesn't like slowing growth rates that's my best guess as to why amazon is down -- sorry, google is down. i don't know what the at catalyt is going to be at oakmark. in the case of google, you know, it's looking like it's selling at a market multiple on forward earnings but the growth is much higher. when you peel back the onion, you net out the cash on the balance sheet, the other bets losses and the google cloud investment you value google cloud where it's a public company and you're paying 10, 11 times for the core search group in google that's a terrific value. >> what about the notion that the -- the bear thesis that inflation, cpi, we can wring our hands about it a lot but it's really in the past what's going to happen now is a

come to jesus moment on eshings for next year, and in some -- in the view of some, that's going to lead us to maybe fresh lows on the s&p i know you're company specific but does that argument hold water to you >> if the fundamentals are much worse than people expect at large, that's probably not good for equities at oakmark, we don't spend too much time thinking about that because we don't believe we have an edge outguessing people and things like that we believe our edge is estimating business value not guessing where stock prices are going. >> tony, appreciate it great to talk to you again talk soon. as we go to break, take a look at the road map for the rest of the hour, including what janet yellen says about inflation. and we'll give you an update on the current m&a landscape. nasa completing its first artemis moon mission we have the highlights from the nearly 26-day spaceflight.

"squawk on the street" will be rit ck ghba

welcome back it is merger monday. we'll make it official we have two fairly large deals in fact, one quite large deal and another in enterprise software that is to take private. let's start with amgen's announcement of its acquisition of horizon therapeutics. it's over $26 billion deal

they're paying $116.50 a share in cash. they had been joined by a couple of other companies in seeking this rare disease company. s santifi had been there started off in an auction process by seeking horizon i'm told it, perhaps, topped out somewhere around $110. amgen decided to go for full, let's call it, 20 years worth of cash flow at the company right now. that's what it's roughly paying. it will lever up the balance sheet to 3.6 times, which is not an insignificant amount of leverage for a company like this some people, including jim cramer earlier saying, we think of amgen at innovator but here you're buying established drugs. by the way, these are drugs that have won in the market that will have fairly long life span in terms of their robust sales. nonetheless, it's not really

innovation it's more like a big pharma playbook you can see it expected to generate $10 billion combined cash flow over the next 12 months and expect to have everything done, by let's call it, the middle of next year. for amgen. as for the ordeal, coupa, this is a company stock that had been higher than the $81 per share takeout price but significantly lower than that price not long ago. it was bloomberg a while back that reported on interest, vista, the other large private equity firm with a focus on enterprise software. vista was there, but at a lower price. ultimately auctioned here, went bravo's wear vista came in, perhaps, 3, 4 bucks below. they brought in abu dhabi. orlando bravo, brought in direct

lenders to finance an $8 billion takeover 81 bucks a share the positive overall, when you see deals, it points to the fact that the prices of either of these companies, and we also have a deal for weber, fell to a level prospective buyers who may be looking for some time, waiting, saw the opportunity and took it. >> it's really interesting to me to your point, there's a price for everything the fact you had multiple bidders leading up to this news this morning, sort of speaks to the fact that there's still an appetite i just wonder, and this probably doesn't necessarily pertain to the deals we're talking about this morning, but i wonder about the regulatory environment to get deals done looking at microsoft and activision, and albertsons and kr kroger, some of the ordeals we've talked about this year and the fact it does seem to be a much more discerning environment in terms of what actually makes it across the finish line from

that standpoint. >> you know it when you see it typically with take deal that's going to have real regulatory scrutiny obviously, big mega cap tech is always going to have an issue potentially. and then as we know, this ftc in particular, but the doj also looking at deals we typically would not think of, so-called vertical integration, which has not received as much scrutiny as you mentioned, microsoft/activision it's a big issue in the market where there's the possibility of recession as well, what i hear is price ends up being the more difficult negating issue, beyond worries of regulatory. let's move on and get more on that amgen/horizon therapeutics deal. let's bring in senior tech analyst saleem first off, your overall take on the deal some say it points to the fact that amgen should be considered a big pharma company instead of

what may be considered, as we u.s. said, a biotech company, so to speak, with a lot of innovation >> thanks for having me, david we're neutral rated on the name overall. when it comes to this deal specifically, we think it makes strategic and financial sense for amgen. one of the biggest problems amgen is currently facing is their top line when you look at 2022 revenues, which is about $25 billion, about 40% of that is exposed -- exposed to getting lost by 2030. when you buy a company the size of horizon therapeutics could have a top line of $5 to $6 billion, it fills some of that void there should be some synergies given overlap in portfolio but we don't think there's anything blocking it from a regulatory perspective. overlaps not so direct as to block. and i think the piece that hasn't really been talked about too much, and we didn't really

hear too much from amgen management this morning on this, tax given horizon is based in ireland and potentially some tax advantages that can come with it >> amgen is pushing its balance sheet. it's going to be levered, 3.5, 6 times. is that at all a concern >> so, when we first saw the headlines of this a couple weeks ago, we weren't sure if this would be too big of a nut for amgen to pull off. but i think when you lump in the free cash flows that horizon therapeutics already generates, what we're calculating in our model post-deal is something like three times -- three times debt to free cash flow number. our typical threshold for where we start to get concerned is if it goes over four times. we're still okay, but we have to use both amgen's cash flows and horizon therapeutics in order to feel comfortable with that. >> when i hear you use the word

okay, it sounds like your rating is neutral on amgen. what would it take to end that >> we like the company, morgan, and we like the management team. the big issue for us, and i think for a lot of the biotech specialists we speak to is valuation. we saw the stock go from the low 200s to about 280 on phase one obesity data i get obesity is a large opportunity for the company, but putting in an implied $10 billion into amgen for phase one asset seems a little overdone. so, what we really need here is for valuation to come down but we like the company overall. we like the management team. it's just a valuation issue for us at this point that kind of makes us a little more uncomfortable >> do you think this spurs other companies to find ordeals in this environment right now or is this more of a one-off >> well, look, i think this has

always been a big theme for biotech, people wanted to see that this year horizon therapeutics was one of the deals -- one of the companies that showed up in our investor surveys last year a potential takeout. normally you don't really see that when it comes up in investor survey, it's usually the one that doesn't get taken out this time it is the one that gets taken out when we look at the space overall, still 25% of companies across the biotech tape. they're currently still 1,000 publicly tradedbiotech companies trading at negative evs or enterprise values there's still a lot of cash being held by the larger cap we think this trend continues as we move into '23 it's definitely something biotech specialists and general investors are looking for. there's a good deal -- there's a good amount of rationale as to why this could still occur. >> any thoughts at all about the likes of j&j or sanaphi?

i know you cover them, but not going to a price necessary to get the deal done for them >> i don't cover them so i don't have anything, perhaps, too insightful to say there. but what i would say here is amgen didn't really -- when we look at the 50% premium they're paying here, some people are like, did they bid against themselves, et cetera. this is actually not that bad when we look at where deals occurred this year pfizer/biohaven was in that same ballpark, 50%. that was another large deal in the biotech space. the smaller deals we saw, amgen/centrics deal, et cetera some of these were at 100% pre premium. the price amgen is paying here isn't hitting the horizon therapeutic's 52-week high or all-time high. i don't know exactly why j&j and

s sanafi bowed out, i don't know if there's more tax. this deal definitely seems to make sense for us overall from the amgen side >> the stock's not getting hit too badly either thank you for your team. appreciate it. >> thanks so much. coming up next, we'll get to some calls in the retail sector, including gap d deanunr armour a bunch of them today. stay with us rms. new retinol overnight means the smoothing benefits of retinol are now for your whole body. plus, fast-working crepe corrector diminishes wrinkled skin in just two days. gold bond. champion your skin.

welcome back to "squawk on the street." as inflation begins to moderate, analysts suggesting what's in their carts. spdr retail ticker xrt has declined 30% this year but rallied 10% over the past two months it's down slightly this morning. goredman stiffle thinking it's time to shop upgrading gap and tapestry to buy as consumers become more selective. both of those stocks are slightly higher.

stiffle upgrading under armour from hold to buy saying they have better margin certainty you can see those shares are jumping 5.5% of course, we know, carl, that a name like under armour, also gap, these are names that have been beaten down. >> tapestry as well. interesting the number of names they cut levi, brinker, ri, cake. a lot will sell or neutral so they took an axe to at least parts of the space. >> price sensitivity and inventory management seem to be the two themes emerging this holiday season where the consumer is concerned. even as we do have this conversation, david, about inflation ahead of that cpi report tomorrow and maybe peak inflation is in. but still elevated levels. >> as we also mentioned, supply chain issues have ceased to be as large a problem as they were for quite some time. we heard that from lulu on

friday. coming up after the break, as we showed you earlier, the treasury secretary janet yellen weighing in on the chance of recession. we'll get to that when "squawk on the street" continues this thing, it's making me get an ice bath again. what do you mean? these straps are mind-blowing! they collect hundreds of data points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an investor...in invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay. i promise - as an independent advisor - to put the financial well-being of you and your family first. i promise to serve, not sell. i promise our relationship will be one of partnership and trust. i am a fiduciary, not just some of the time,

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welcome back let's get a news update with contessa brewer. >> hi there, david it's beginning to look a lot like christmas the storm system that dropped feet of snow in parts of the sierra nevada mountains is moving towards the rockies blizzard like conditions expected in parts of the northern plains and more than 50 million people are in this storm's path snow is also blanketing parts of britain. some 25% of flights are delayed at london's heathrow airport and gatwick is suffering even worse delays, according to tracking

site flightaware. in kabul, afghanistan, gunmen open fire popular with chinese nationalists at least three attackers were killed by security forces. a local hospital reports it received 21 casualties, including three people who were dead when they got there carl >> thanks so much. we're about an hour into trading this morning obviously, a very busy week ahead between central banks, eco data and earnings. let's bring in cnbc senior markets commentator mike santoli for more on what he's watching people talking about elevated volatility and the vix points to that today. >> starting to clench up ahead of these known events. it's been unusually stable we're trading right now where we were in mid-may. also where we were the day we

got that softer than expecte cpi number on november 10th. you've kind can of heldin plac but it's not because people are confident about the outlook. it's almost like they're equally doubtful about whether we've seen really downward momentum in inflation. the recession call for next year is almost not happening quickly enough for people's satisfaction that the market can just get it over with and price in an earnings decline i think that's why you see sentiment among strategists, among professional investors going into next year is very cautious almost everyone feeling as if there's going to be another gut check. you'll see earnings give way maybe there's going to be this moment of recognition in january. it's really the leading indicators of recession giving people that thought as opposed to what we're seeing on the ground right now companies have a mixed message i think you got sentiment almost in the bullish category because it is very cautious. seasonals get better later in this week. but if we get an upside surprise to cpi, you know, we can kind of

sweep away those premises. >> to your point, we're having this conversation on monday. let's see where we are 24 hours from now this idea that recession or concerns around recession are supplanting concerns around inflation. how do you balance that against the fact we are starting to see more calls from more wall street firms that we could, in fact, see a soft landing, which keep in mind, history says are few and far between? >> they are. no doubt about it. it's this internal conflict about the outlook. it's because, i think, employment is just not giving way as quickly as people thought. the nominal growth levels are strong heading into next year. even if you wear down in the way of profit margins and it slows a bit, it's not cutting below the zero line on corporate revenues. that to me is why we get to that point. a lot of people want to explain away the message of the treasury yield curve. it's tough to do you can say it's mostly telling you inflation is coming down hard not telling you how it's going

to come down. >> meantime, people point to individual ceos commenting on the economy. jeff bezos, david solomon, elon musk talking about the fed hiking again, potentially driving the economy intod that s formalized in guidance come january. >> i think that that is -- it's a plausible case the view we have that view in january, when companies say, let's reset expectation lower. the reason that's a popular view, because it's plausible that's only way they become consensus. earning seasons, the last two quarters, have not been when the market has put in its downside it's been stronger during earnings reporting season. we've been waiting, overanticipating the bottoms to fall out of estimates. it's not as if they've been oblivious and staying in place. >> we have kostin saying next

year zero, and adam parker doesn't see any growth either. >> that's a trickier question. 23 to 24, if you're talking about three years of no earnings growth essentially or 2 1/2, that's a problem but i don't think the market is going to turn its attention to that just yet. for next year, the precedent is very strong for markets that can go up if earnings even go static in other words, it's not required in a given calendar year for them to go higher. >> thank you. investors are focused on inflation with the cpi janet yellen saying this weekend she expects a substantial decrease in inflation next year. take a listen. >> i believe by the end of next year you will see much lower inflation. if there's not an unanticipated shock. there are always risks of a recession. the economy remains prone to

shocks but, look, we have a very healthy banking system we have very healthy business and household sector. >> you have 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 >> joining us now to discuss, moody's chief economist mark zandi and brent shooti mark, your reaction to secretary yellen as it seems with inflation maybe starting to moderate or the peak that the focus for the fed is really going to be in the stickiness of the rise in labor costs. >> yeah, well, i'm in her camp i think she's got it right recession risks, obviously, are high given the high inflation and the fed on high alert. but i think there's a path

forward without going into recession. i think it goes back to the fact that inflation will moderate cpi, consumer price inflation year over year is 7% if you told me -- if you asked me a year from now, it's half that, 3, 3%, i would think that's right that assumes we don't see another spike in gasoline/oil prices the most likely scenario you're right, to get the inflation numbers back to the fed's target, which is 2% to 2.5% on the cpi, i think we need to see wage growth roll over that will be trickier. that will be more difficult. but i think very doable by summer of 2024 i think we can get through this reasonably gracefully. it's going to be uncomfortable at times but reasonably graceful without a recession. >> summer of 2024, just to pick up on that thread for a minute, why so long? and i ask that wondering whether -- at least, i'm having conversation with some ceos and

folks at companies about how quickly the layoffs are starting to happen, and yet we're not seeing it in the macro data. is there a lag effect much like we talk about lag effects around housing data >> yeah. it's going to take some time we're already seeing easing inflation because of stable oil prices down, and that will continue through mid next year then the next step in slowing of inflation will be this time next year when the cost of housing services roll over that goes to the weakening in rents we're experiencing right now. just takes about a year for that to flow through. the last part of it to get inflation back in is getting wage growth down and service price inflation with service companies are labor intensive. that will take some time and that's exactly -- that would be great if that happens that means the job market is throttling back but not so much that we're going into recession. i will say, morgan, i do think the labor market is probably weaker than the payroll employment numbers would

suggest. we got 250, 275,000 in monthly job gains. my sense is it's probably weaker than that. we're just not seeing it yet because there's been a lot of layoffs and folks are getting severance because these are tech workers and people working in financial services, white collar jobs get severance because of that it takes a little time for severance to run off and that to show up in statistics my sense is the labor market is easing quickly we'll get the wage growth down it will take some time it won't be next quarter or even next year. it will be some time in 2024. >> this view you turn your back on tech and start embracing industrials and even energy, small caps, china, gold. is that becoming too well understood how much more fuel is in that kind of trade? >> i guess i came as the contrarian view. i still think there's time in the trade. if you talk about the earnings

decline, you want to be in things that have a margin of safety against that. things like the u.s. s&p 600 or small caps trade at 2024 earnings marked down 14% already. that's where you want to be, especially if you think there will be a recession or shallow recession. the market on the other side of that will come out with small caps leading so we still want to be positioned there certainly those other parts of the market that were expensive coming into this year have seen the biggest price declines and look cheaper perhaps i'm not as emphatic as i was a year ago or so but still think there's opportunity in value there >> so, brent, we'll ask you the same question we just discussed with mike santoli. what is the bond market signaling from your standpoint >> the bond market is signaling recession. i think there's going to be recession, but i think it will be shallow maybe we should stop talking about soft landings and instead talk about soft recessions to me there's going to be a recession, but the good news is, it puts the final nail in had the coffin of the sticky inflation commentary along with

the home and rent price that will be turning in 2023. that's where i think there's room on the other side of this for the fed to pause and pivot especially with inflation expectations right now still anchored yes, a recession but mild and shallow with better days ahead on the other side of it. >> so, again, your position is to -- you mentioned some of those cheaper sort of midcap and small cap stocks, is that where you think the value's going to be >> yeah. we increased our bond exposure in october because we believe you're going to see the recession word come up more often. we had this inflation commentary which has driven us to lows. that bottomed in the s&p 500 the s&p 500 bottomed october 12th, one day before we saw core cpi peaked i think you're in this recessionary time period but it's going to be short and shallow. as i mentioned before, on the other side of this, you want to be in things that are more economically sensitive like u.s. midcaps and small caps that also have the benefit of being extremely cheap.

that's the areas we focused on dare i say international stocks after a decade of underperformance have a strong currency tailwind pushing forward, which i think will also elevate them in 2023 >> thank you for joining us. brent and mark with a mixed picture for stocks right now the dow up half a percent. coming up on "techcheck," a lot more on bravo's deal for coupa. keuryojolie deal on netfx. ma se u in us for that back in a moment

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on sunday at 12:40 p.m. eastern, nasa's orion completing the first artemis moon mission the pacific ocean landing by the lockheed martin made capsule returned at -- >> splashdown. >> there we go.

>> from the tranquil waters of the pacific, the latest chapter of nasa's journey to the moon comes to a close >> all right >> back on earth. >> back on earth it reached temperatures of 5,000 degrees fahrenheit in that trip back to earth. this was a crucial test before u.s. astronauts can fly in 2024. the 25-day artemis 1 mission spanned 1.4 million miles with lunar surface fly-byes the splashdown coming 50 years to the day after the final apollo moon landing and highlighting why there's a desire to go back. former nasa administrator, who rolled out the artemis program, says vast deposits of water ice means humans could live there and fuel could be made for travel to mars and beyond. plus, there are other resources. >> anything that impacted the moon billions of years ago is today right where it was billions of years ago.

we could find deposits of platinum metals on the moon surface. that could be transformational for commercial exploration and transformational for the balance of power on earth if the wrong people were to take advantage of that >> so, china's investing in lunar exploration, russia is restarting its own efforts, a number of other countries. stateside, the quote, extraordinarily successful mission, is good news for a nasa program that's cost $40 billion and counting so far. that's according to nasa's own auditor. it's good news for contractors, too. contractors like lockheed, north r northrup grumman and boeing which was just granted more to launch orion space launch landing yesterday, this is positioning that japanese startup to possibly become the first private company to land on the moon. so, you could call it an emerging moon market

and you can catch more of my conversation with jim briden stein on "manifest space" my podcast. that episode is out today. >> does he have more -- mining, is that what we're talking about, platinum based? >> mining. >> how far are we from that becoming a reality, do we know >> we got a little time, but that being said, there are startups and, of course, when you're talking about, you know, missions like this, governments that are setting their sights on this, a lot of people don't realize, rare earths, rare earth materials, are not from earth. they are asteroids that have impacted earth over many billions of years that now must be extracted you have those type of asteroid impacts on the moon as well, but you don't have the atmospheric pressure which means easier, much more cost effective method. >> than, say, going to somewhere where -- >> mining here on the earth's surface. so, these are the types of things that i don't think get

talked about very regularly. but i get asked the question a lot. like why are we going back to the moon there's an economic case for going back to the moon. >> right makes more sense than tourism, doesn't it >> yeah. rare earths. plus they don't weigh that much. you could -- >> you could bring them back home. >> bring them back home in a relatively small amount of space and it would still be a good amount of money. >> yeah. which is why the launch cost and having that portion of the equation come down so dramatically spacex with reusability, a big factor. >> that changed the game. >> yes, yes. >> pretty amazing. between that, chat, gpt and this nuclear fusion story, huge things happening in the world, don't you think? potentially good >> yeah. it's incredible. >> we could use a few things - >> fusion, that would be big. >> yeah yes. >> and talked about for a long time, so very promising. >> it was promising. >> yes get a check on the markets pretty stead action. dow's up 200 s&p up about 10. we're back in just a moment.

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gentlemen, jamie dimon yesterday way warning on imp florida cases from russia's war in ukraine crude you see rallying a lot this morning up over 4% on wti. a sector sort this morning with dom chu. >> carl, what we have now a mixed week, start tolt week at least. a few notable outperformers on

the day so for as stocks hover just around a quarter percent to the upside for the s&p industrial sector one of are those in the green now transports and logistics firms like expediters international, old dominion, j.d. hunt in positive territory so far. a lot of green on the screening a with fedex and u.p.s., shipping giants. boeing higher after analysts at jpmorgan reiterated overrating on its stock and priced $200 a share from a prior $170. boeing giving flight morgan, back to you at the new york stock exchange. >> i see what you did there, dom chu. after the break, mortgage rates and the fed. stay with us. >> announcer: sector nomices sponsored by --

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welcome back to "squawk on the street" as mortgage rates fall, you might think home purchases would be rising, but new data says it's not necessarily the case diana olick has that story for us. >> mortgage rates dropping since start of november but does not appear to be helping the housing

market much. 307-year rates fell nearly half a percentage point ending november 8.65% akoshding to black in night more than twice the rate of a year ago despite the drop, overall mortgage rate lockdowns dropped 21.5% in november from october, and were down 68% annually now, refis of course, tanking the last six months. barely 15% of all rate locks, when just a year ago were out-pacing home buyer mortgages. now home buyer loan buyer mortgages down, 20% for the month, 48% from a year ago higher interest rates and still higher home prices continue to hit buyers and the dollar volume of loan locks dropped an even heftier 37% over the past three months down more than 50% from a year ago that speaks to home prices easing up a little bit

also another sign of prices easing, adjustable rate mortgages with homearms surged when rates really started rising, well, they've pulled back from 10% in november from 13% in october lower interest rates but buyers are highly risk aversion, and once rates pull back a little, they ran back to the fix morgan >> makes sense diana, i wonder with home prices starting to slow or even begin to come down in some markets, if there's a sense you could actually see a recovery in some of that data around mortgages and locks as prices come down and people wait on sidelines for that to happen >> seens dribs and drabs of people, heard toll brothers ceo last conference call seeing "green shoots" for more people in showrooms and more demand and traffic on be websites like redfinn. has translated into mortgage rate locks perhaps people are waiting for

prices to ease up more on to see if the lower interest rate environment, i say a little lower than we saw a few months ago is going to hold on. >> yes your point, dramatically higher talking about interest rates versus a year ago. of course, a big component in cpi awaiting that data tomorrow morning. diana olick, thanks so much. s&p up one-third of 1% right now dow up about 200 points that does it for "squawk on the street." "techcheck" starts now. good monday morning. welcome to "techcheck" i'm carl quintanilla with jon fortt and deirdre bosa yet another tech name going pra private, thoma bravo buys coupa. and more on top picks from netflix to robinhood names the stwrreet is betting on econ data just crossing tapes. steve liesman? >> good morning. improvement in the federal

reserval inflation