started yawning. up this morning as well. sam bank man not freed that's good. the hearing in the bahamas we'll tell you what comes next. plus, tesla shares have been dropping tesla's major shareholder is calling for shock therapy for the stock in the form of a buyback wednesday, december 14th, 2022, and "squawk box" begins right now ♪ good morning, everybody. welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's take a look at the u.s. equity futures first up, talking about what happened yesterday, the inflation numbers that were softer than anticipated came in

and sent futures soaring we were talking about the futures up over 900 points on a knee-jerk reaction, gets a lot of gains, probably on the expectation that chairman fed -- fed chairman powell may say something today that reverses some of the market's initial thoughts we'll see what happens, but that is the big news coming up today ahead of that. dow futures up 16 points, the nasdaq is flat the ten year is back to below 3% >> we've got news out of washington top negotiators announcing they've reached a rough agreement on a full government funding package. lawmakers did not reveal how much they agreed on. senator richard shelby said he and his fellow negotiators should be able to finish that package by next friday, hours

after they removed a spending measure to avoid a partial shutdown that would have begun this friday. so you think crisis averted? >> crisis averted? >> how tired are we of these little ridiculous things yeah, hopefully. i assume so. i assume so. we can focus on not self-inflicted crisis. sbf, we have to start calling him bankman not freed. kate rooney joins us >> the magistrate judge there in the bhachls citing heightened flight risk, the former ftx ceo will remain in jamil until his

next hearing bankman-fried was first taken into custody in the bahamas late on monday before he was set to testify here in washington, guys he faces eight criminal charges out of the southern district of new york with authorities alleging he defrauded investors by funnel ling funds behind ther backs. there were also filed parallel civil lawsuits yesterday in a statement his lawyers said bankman-fried is reviewing charges with his legal team and reviewing all of his legal options. the new ceo, john ray, who led enron after its collapse did appear before congress yesterday and ripped into bankman-fried's managementment. >> this is really old-fashioned embezzlement this is just taking money from customers and using it for oyour own purpose.

not sophisticated at all just plain old embezzlement. >> the senate plans to hear testimony later today. back to you. >> that's a lot of money we've talked about it more on show you can't spend $7 million there must be trading off. or it's somewhere. is it somewhere, and do we have any hope that customers are made half whole a third whole? >> they're using investigators to track this. one of the hardest things about this, there's a lot of talk about it being easily traceable. it's ironic it's a crypto company and one investor i talked to said it sort of looks like a blob. you can't track it internally. they're having a hard time

tracking what happened to it at ftx, following the money trail john ray revealed they're open to a deal. you don't have a lot of answers as to exactly where it went. there were calls from regulators, lawmakers to learn the money. if you're either a politician or a company that's taken funding from ftx saying that really belonged to customers. get in touch with the southern district of new york to return it, but it's not clear if customers could be made whole and at what point snit could be years. >> you can give a lot, but you can't give billions. >> he was using other people's names. >> you're not even at $10 million there. the real estate is not more -- some of this had to go to money heavenen. >> i think so. i think he lost it it's gone. >> some of it was fake money

that was never there it's customer funds you have to worry about. >> kate, i was going to ask you about the timing of the extradition process, whether you imagine that sam bankman-fried is going to object to the extradition or if he may at some point, could simply just plead guilty t he's going torque you know, contest it. >> so based on what we heard out of court yesterday by his legal team, he wants to delay extradition at least until february, which is the next date to talk about extradition. if he fights it, that could push back any sort of arraignment i was talking to some white collar lawyers yesterday usually there's an arraignment, plea, guilty or not guilty, and then the wheels are set in motion in this case t extradition is going to pad on monthed if not a

year there is a way to delay things here but until he is in jail, he's a flight risk. his legal team seems to want to fight it not clear of the reasoning behind it and the advantage, but if anything they're kicking the can down the road here. >> my guess is they use it as a negotiating tactic at some point. he's saying he wanted out of jail bus of his vegan dial and he's a.d.d. >> he's a vegan. the wheels of justice turn very slowly. >> it's not a nice looking prison or jail in the bahamas. >> you can't arraign anyone -- it's december 14th i'm talking about february 8th you've got no days available between now and then >> it's time to prepare. >> i know, but it just -- >> again, it's not like --

>> elizabeth holmes, when's her ap appeal she's still out. i bet it goes quickly to those heading to the big house. >> by the way, he's sitting in custody. >> you say it doesn't look nice. >> i saw it yesterday. >> it's not an ocean view. >> no. >> so you have to decide the bahamian prison or rikers? where would it be? >> where the door slams. >> boston's is worse. >> maybe it depends where you are. i don't know. in the meantime deposits are returning and things seem to have stabilized at binance, at least according to the ceo, cz he said yet on twitter it's not the highest. now deposits are coming back in.

sam bankman-fried was making a lot of comments about how everything was fine there two. those comments came after there was a temporary pause on withdrawal yesterday the selloff resulted in approximately $1.14 billion being withdrawn from our platform in a 12-hour period, which was managed with ease. we passed this extreme stress test because we run a very simple business model. hold assets in custody and generate revenue from transaction fees regardless of whether the price of bitcoin goes to $1 or $1 million, users' assets will always be held safely in custody through the moment they decide a lot of the statements were made by sam bankman-fried. that's not to say binance was doing anything like what was going on at ftx, but a lot of the issues and the focus around

it have certainly created investor concerns about what hans if you're investors offshore you are putting your trust in these people and sometimes it's warranted and sometimes it may not be. >> i think we should start calling him by his full name he should probably insist on that unless you're following directly in the foot ssteps of ftx. >> this is what they're saying at this point and we'll take him at his word. all of that language was used by sam bankman-fried in the ftx issues, even in tweets he posted and later removed and mentioned in the s.e.c. filing >> so he's supposedly still worth $17.4 billion. do you think that's real >> depends on what binance's position is. >> the binance token.

>> which is supporting binance. >> is it zimbabwe, $17 million? that's like $4 million, maybe less just conjecture at this point. he's not coming here any time soon we could invite him on the set do you think he would confer, decline? >> we should talk to him about it. >> ask him. when we come back, it's fed day. steve liesman is going to tell you. later we'll hear from author and economist judy shelton you're watching "squawk box," and this is cnbc >> announcer: this cnbc program is sponsored by charles swab own your tomorrow. charging something like a hundred bucks a window

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good until it's back the fact stocks are trading the way they are is really disappointing. i think there are concerns about a recession. >> clearly the market is getting religion around inflation expect just look around. this digital age we're living in, it's pretty unbelievable. problem is, not everyone's fully living in it. nobody should have to take a class or fill out a medical form on public wifi with a screen the size of your hand. home internet shouldn't be a luxury. everyone should have it and now a lot more people can. so let's go. the digital age is waiting.

on today's squawk planner, coming up at 7:00 a.m. eastern, we'll be getting weekly mortgage applications from the mortgage bankers association. that will be followed by november import/export prices coming at 8:30 a.m home builder lennar and chinese travel site trip.com are reporting earnings after the close today. but, of course, the main event, the fed decision, is coming at 2:00 p.m. eastern time, and jay powell's news conference at 2:30

p.m. let's get right to steve liesman on what we can expect and the tracing of the quick gains after we saw the inflation number. >> i'm not saying what the numbers came out to be. >> but you told us. >> i told you anyway here's what we can expect. whether the fed is just a little closer to completing its rate hikes, investors are going to listen closely to fed chair powell and whether they consider the low peak funds rate. take a look at to 10-year and 2-year the expected peak rate fell to 4.82 this morning. that's for the may '23 contract. there's betting that it could be done as soon as mafrmt after hiking it to the new 4.5 to 4.75 they expect to be done by march.

that will leash you with a 51% probability that the fed goes 52-48. that's the debate in the market. the fed is expected to raise its own forecast we get those projections today to near 5% fed chair powell, he's been as focused the tight labor market as he has been on high inflation numbers, jpmorgan reporting this morning we believe that persistent labor market strength means a majority on the fomc is still likely to be more concerned about doing too little than too much. >> there's a limit to how dovish a fed or fed chair is going to be, becky, with those kinds of numbers. >> i'm trying to figure out what he could possibly say, steve,

that would come as a shock or a surprise i moon i feel like i'm ready for anything. >> i think he's going to say they're good numbers, encouraging enough, two in a row. that's not enough. it's too early to pivot. i think he's going to do his best, becky, to maybe jump on those numbers a little higher, but he has to take into account the drift of the data. i think what's going to happen is he's going to lean on the jobs in the labor market as being the bump of his concern over inflation he's just not ready to give up the fed is always going to be late theirtown market in these sorts of things. the market has to anticipate, wants to get this right. obviously there's money to be made at the end of the day powell has to get inflation right. he's got to get policy right and he's going to hang in there with his kind of hawkish talk, acknowledging the better data, until he feels like he can truly

pivot and announce that pivot. >> do you still think, steve, we're in reverse fed mode. do you think he sees the s&p above 4,000? would he prefer it was 3,600 >> i've been a little concept skeptical on the fed put thing. >> does he not like the wealth -- does he think that makes it harder for him to do his job >> i don't think he has any more disinflationary juice to be wrung from the market. i think when the market was really high, i think he had a sense that there was some element of that that was pushing inflation. i think the fed chair focused on yields the by proct is focused on yields i don't think that these levels that he's thinking, oh, if i could get the stockmarket down, i could really solve the inflation prop i think he sees it as the major

conduit of policies, and at these levels, he's not really exercised about the stockmarket. yesterday i was on a bench and i was putting my sneakers on, and i did this -- in my sick mind -- >> not too much information, joe, just what i need to know. >> no. that was a swivel. a swivel is 90 degrees a swivel is -- a pivot is -- >> you're going to get caught. >> i know. a pivot is 180 degrees. >> try it, go ahead. >> huh >> try it go, ahead. >> i did it. swivel is drn. >> you're going to yank your microphone wires >> what's 35 degrees, joe? >> you think we need a word for 35 >> i think he's going to meet us partway. what do you call it? a swivet >> that might be good. >> a swivet.

>> that's not even a turn. >> a turn is not 90 degrees. that's just -- >> a turn is an angular amount. >> is a pivot when they actually cut or when they stop raising? >> well, i think the market has now defined pivot as a reduction in the rate of increase. >> that's it now we have to go back to cal calculus, so it's a second degree. >> whatever you do, joe, don't hurt your back or neck in this process. >> >> it doesn't take much i used to do something and i would regret whenever i did things because it's very easy. coming up -- thanks, steve we'll talk later. coming up, twitter co-founder jack dorsey is weighing in on the twitter files and the country's senn soreship. and later the ceo of delta is going to talk to "squawk box. he's going to be here right here on set in the 7:00 hour with

lebeau so it's those two guys 's going to be crowded on the set. we're good at that we'll be right back. >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back.

box. jack dorsey speaking out about twitter when he was the ceo. he's adding his voice to the discussion around the twitter files. new ceo elon musk started releasing just the last month. dorsey has come to three principals

it must withstand korpt and government control two, the author is the only person who can remove content they produce, he said the twitter he led and twitter of today do not meet any of those principles he said he personally abandoned pushing the company in the right direction after the asset manager elliot got involved with the company more than two years ago. dorsey says he believes there was no ill will or hidden agendas. i take him at his word, but i have three thoughts. i didn't really understand the blaming elliott management as -- i understand that's why he wanted to leave the company, but the idea that that was the reason that he was like unable to actually do the things he wanted to, that -- because -- this goes back much longer than 2020 two t idea of moderation, if you believe nene form of moderation,

self moderation is not you moderating what's on the system. you are supposed to moderate what you see it's sort of actually a very hard responsibility to put onto others i understand the rationale if you're trying to have a platform. >> like wikipedia? >> i think what he's suggesting is you're going to follow people and if you don't like what they right, you can block them or unfollow them. can say you'd like a g-rated version of twitter where they won't send you certain thing and if you want to be in the brawl, you go participate in that version of twitter but, again, i think it's very hard to put the -- look, it's complicated on all sides it's hard to prevent a person from speaking. you don't necessarily want that on one side. but the person on the receiving end is somehow going to be the moderator of it all is also just

a form of -- from a very practical perspective -- very hard to do. >> my take on it, jack was running two companies for a very long time. there was a question whether he could be an effective ceo of both of them and maybe that answers the question. >> there's another guy running about six companies. >> that's when jack kind of took himself out in a lot of these discussions. >> not having thought it through, i thought twitter was a simple little thing, we do this. i never realized the number of far-reaching implications and consequences to it. >> agreed. >> you're basically publishing -- you're self-publishing stuff. you know, there has to be -- i mean it's not just anything goes it can't be. but then again you want to get as close to anything goes as you can. >> though it's uncomfortable.

>> you definitely don't want totally one-sided people, you know, controlling what it is that you're able to see. >> but i don't know if you want to see every vile thought that anyone's ever thought. >> if i look for one word of what twitter is, it's a cesspool i've said that for a long time. >> there's a great column -- i was trying to find it -- about twitter. it's actually worth reading. no matter what your view of it all s it will make you think in all sorts of pretty interesting ways. in the meantime when we come back, luke ellis from the man group will tell us where the firm is putting $138 billion to work that's next. and a later, what's weighing down shares of tesla, you ask. do you ask well, maybe if you own tesla, you do, actually stock is down 50% since elon musk made his offer for twitter back in april, and we're going to have a bull/bear debate twitter may have something to do with it.

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good morning and welcome back to "squawk box. live from the nasdaq market site at times square, the futures have turned into the red we were actually all green earlier. we obviously are waiting to hear on the most important news today. we'll see what jay powell does and says. >> we're going to talk to a smart guy about what he thinks he's going to hear from jay powell it came in cooler than expect. luke ellis is the ceo of man group with $138 billion the assets under management. it's nice to see you we haven't spoken in a while, luke. >> nice to see you, guys. >> what's the house view what's the ellis view of what we're going to hear later today and then maybe we'll get into how you position yourself >> i think steve was very

accurate ten minutes ago powell's got to be a little bit hard he's got to be policed with the fact that inflation is coming off. we're in the beginnings of a rundown on 4% inflation by the summer but he's not going to sound that dovish because i'm not sure 4% is enough, right >> if that's the case, how have you reset your partnership over the last six months with this in mind >> i think what's important for the markets is while you can beliefs about the long term, the path to get there is going to be very varied. you've seen all of the banks coming out with this idea that, you know, we're going to see a new low in the sort of 3200 sort of level, maybe 3400 we're also going to see a new high of 45 00. that's probably the range for next year, but the idea they can predict exactly the path seems

to us an unlikely thing. so you've got to remain nimble. >> what does that mean for you >> well, right now they want to drift three. there's an awful lot that has to clear the way. that should let us drift up. but equally we have somewhere in next year wshs e have some ugly earnings coming. even if we think inflation's going to come down to a 4, maybe a 3 angle, i also think you're going to see it down to 45 to 47 level, which say 50% cut-in earning somewhere. but the street is convinced it's going to be earnings in january, i suspect they're not going to be that negative in january, so we might roll up for a while until we start getting bad news. >> and -- but as a function of that, it sounds like you're

playing this meltup situation with an expectation that you're going to have to get defensive at a point later in the game >> yeah, look. i think it's really the next year we'll likely see a wide range, right that sort of 32 to 48 range is a sensible range that's really wide by historic standards. i don't think it's going to be a linear path. >> is there anything -- you're a long-term investor is there any sort of set it and forget it investment out there for you right now? >> no. it's the show version. you know, we all had it really easy from the financial crisis through the last year where basically you could hold onto anything and as much of it as possible and you made money over time i think in these higher inflation times, you get more economic volatility. that means markets move around a

lot more because there's a lot more uncertainty i think being nimble is really important. you know, i don't think there's anything that's a buy and hold at this point. >> just, real quick, how are you thinking internationally, meaning u.s. economy versus europe versus asia >> i think -- i always think the hardest job in the world is to be the european equity strategist who has to write a story every week for why finally this is the time for europe to outperform it doesn't feel like it yet. it's worse in the u.s. than europe asia is interesting. the more china opens up, that is going to create growth opportunities in the region. so i think you could see a situation where asia outperforms. that looks quite an attractive price to have things, but it's one way to see them

outperforming. >> we're going to leave it there, luke, it's always good to see you. happy holidays. >> have a good one, everybody. >> thank you jo when we come back, elon musk vowing that tesla shareholders will benefit from twitter long term we'll hear the bear and bull case for tesla. and later we'll talk to the carlyle group co-founder david rub enstein crypto, fed, and everything a reminder you can watch or listen to us any time on the cnbc app getrefunds.com can qy you for a payroll tax refund of up to $26,000 per employee, 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. but it's only available for a limited time. go to getrefunds.com powered by innovation refunds. ♪♪

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it's the morning of the fed meeting and we're watching the futures. at this hour things are relatively flat. red arrows, but they are modest declines the dow is down, the nasdaq off by about 20 points because again the market is just waiting to see what fed chairman jay powell has to say later this afternoon. let's take a look at crude oil prices we've been watching that pretty closely too. there has been pressure on crude for a while. this morning it's up by about 1%, $76.16 crypto prices were higher yesterday also after the inflation numbers came in, lighter than had been anticipated or cooler than had been anticipated you're now talking cryptoco 17,800. coming up, tesla has underperformed compared to the

traditional automaker since tesla took over twitter. and later with ee gore toung get reaction from this quote from new ceo john ray at yesterday's congressional hearing. >> this one is unusual and it's unusual in the sense that literally, you know, there's no record-keeping roy soefr it's the absence of record-keeping they would communicate by invoices and expenses on slack which is essentially, you know, a way of communicating through chat rooms they use quickbooks, a multi-billion-dollar company using quickbooks. >> quickbooks? >> quickbooks. nothing against quickbooks a very nice tool but not for a multi-billion-dollar company

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delta hosting its annual investor day this morning at the nyse there's a bullish forecast that's just crossing the wires delta guiding fourth quarter earnings per share of $1.30 to $1.40. the airline also guiding for '23 and '24. for next year, earnings per share of $3.07 to 3 to 12 and in '24 they're looking for $5 to $6 a share. as for margin next year, 10% to 12%. for 2024, 13% to 15% free cash flow for next year, $2 billion plus and for 2024, over $24 billion delta has a tentative agreement with its pilots, but the question is will it go through we're going to get the chance to

talk to delta ceo ed bastian that's exclusive coming up at 10:00 a.m. we'll be talking about the bullish guidance, holiday demand, and the pilot contract a lot of things to get through with ed bastian. that's coming up a little later. >> it's up 5%. >> big move. big one. >> yep. tesla continues to face pressure after reports of production slowdowns tesla's market cap has continued its downfall, briefly falling below $5 million for the first time since november 2020 it prompted the shareholders to ask for shock therapy. musk tweeted last night, i'll make sure tesla shareholders benefit from twitter long term joining us now is gene munster, and gordon johnson, research founder and ceo. gene, i guess i'll start with you. tesla, we've compared it to -- i

don't know if it makes any sense -- but how the other automakers have performed if you ever compared tesla over the past five or ten years t how the other automakers performed, it looks funny. to start comparing them now doesn't make much sense. it's a tech stock more than an auto stock. >> that's my view. to fill in some of the blanks there, they've been growing on average 50% to 75% in terms of deliveries, better than the rest of the auto industry, so it has been a very distinct -- that curve is really defined by evs, but obviously tesla has been a big part of that that's not what's gotten us down to this 60% factor, if i may, and i think that, you know, beyond all that outperformance, why we're here today is two factors. tesla is discounting their products they've discounted in the u.s. by 7%. similar discounts in the month of december in china, and

separately, i think some of the things elon is doing on twitter is potentially causing some long-term damage to the brand, and that causes this downturn. but in terms of my perspective longer term, which i think is most important, but i think both of those factors, even some of the brand damage will fade, and ultimately i think that the delivery numbers will impress investors not only for the december quarter and just to finish my thought before i turn it over to gordon, is that delivery numbers -- china as a -- china car passenger association gives out the registrations for the month of october it with us up 32%. it was up 90% for the month of november compare that to, for example, nissan and toyota, which were down 50% in china in that month. i think that these price cuts have really shocked/increased

the delivery numbers, and we'll see that in the december numbers. >> i'll get to gordon in a second, but it's quite staggering i can't think of anything this extraordinary, that the same group of people that would be attracted to buying tesla, environmentally conscious, the ev, are the same ones who are just mortified by what's with twitter it's like they're totally conflicted i even think of ron baron. i've kidded with him about it. it's like, oh, my god. >> i talked to somebody yesterday who was planning to buy tesla. >> because of this >> no. >> i know people who have texted me they want to buy a tesla because of this. >>ing i spoke to people who literally said i was planning to buy a tesla and i'm not buying anymore. >> i think there's people -- so, gene, the thing i want to ask you. tesla still in terms of engineering, i saw lucid advertised it goes 0 to 60 so fast, it's negative time. the latest thing

negative time for how long -- >> amazing. >> how much do those things cost those must be a couple hundred grand? if you want to be a climate conscious, you still buy tesla >> you know, there's a price factor there. >> i think what elon is doing is damaging last night i was at a holiday party and one of the persons there had commented i've opened be two teslas. i'm not going to buy a tesla again. there's some disconnect with what elon has said elon is tesla's brand. he needs to pull it together he's made these mistakes about running off at the mouth many times and he needs to tighten up

the message. >> is it serendipitous you look like a genius at least for the last six months, but not because of -- this isn't why you hated the shares or were negative on the shares you had a totally different thesis you can add these things to your reason now to be bearish on tesla. >> hey, thanks for having me, guys so, look, i think despite being valued next to the next four car makers, what we're finding out is tesla is just a run-of-the-mill car company that has built more capacity than they can sell. let me explain so despite inventory piling up in china, the u.s.a. and europe, tesla has engaged in margin-slashing price cuts in the u.s., europe and china this quarter and despite that fact, three times the u.s.a. and china right now are just one week

versus several months just a few months ago and it looks like their eu backlog is going to be completely gone by the end of this quarter, the end of the fourth quarter despite those facts, they're running two of their car factories at just 20% capacity and they're running shanghai below 100% we've gotten stories they're going to cut capacity at shanghai significantly later this quarter so, again, they built kcapacity they can't sell. we think they're going to sell about 400,000 cars in the fourth quarter which would put their saturation rate at about 1.6 million cars that's significantly below their current capacity and grossly below gene's assumption that they're going to build a new plant every six months and be sold out for the next ten years. listen, with respect to them being a technology company, we've said many times that is a big conception you have many competing cars with similar sflrp range, better

interiors, faster charging and better quality "consumer reports" racnks them second to the last in quality and among the least reliable cars in history. i don't think this is a twitter thing, i think it's a fundamental thing. 95% of their revenues from the cars, 95% from an energy position this is a car company and their growth is growing significantly. that's why the shares are coming under pressure that's why we think next year the stock will hit the price target of $23 per share zblr what are the top five evs if tesla is second to last. what's the top one >> so you're talking about ford, you're talking about bmw's new suite of evs you're talking about the mercedes eqc hyundai's ecotic gm's suite of evs. if you look at the valuation of

tesla. they sold just 4% of the cars of the top four car makers, not just evs they're going to sell 1.3, 1.4 million cars if ev incentives are ending in germany, the u.k., china and norway at the end of this year so their q4 sales are being boosted by demand. q1 is looking much tougher if you look at their valuation, bmw is currently selling 2.5 million cars a year. they're valued at 58 billion tesla is looking to get there. if tesla has a similar valuation, you're talking $16 a stock. we think there is more down side as it becomes clear this isn't a tech company, the shares come under increased pressure. >> gene, i've never seen gordon so excited he's got a bounce in his step. >> he should he's been spot on here. >> that does -- that would change my view i thought people, if you're

going to go ev, people wanted to buy tesla before if they can say, i can't believe it, but they're really going to say i'm going to go buy a ford ev instead they don't -- they're not jonesing for teslas anymore just because of twitter >> well, i think that they'll still -- i think tesla is going to outperform the rest of auto one of their pieces, even if i'm wrong, i would put this into the leaves versus the forest ultimately as the evs are growing, we know all of this if you look at tesla's numbers for next year, assuming they hit their 2024 revenue numbers, they'll have 3% of the total auto share this is still very early i think they have the best dollar for value when it comes to evs and i think they're going to do well. >> gene -- i'm sorry, gordon real quick you're a power user on twitter has your view of twitter changed at all do you think it's having an impact or will have any impact

on tesla >> andrew, thanks for bringing up that point. i wanted to make that point. there was a survey done on twitter. people asked would they buy a tesla car. 90% said no t. elon musk is doing significant brand damage if you are driving in a tesla, some people have said it's like wearing a maga hat keep in mind, elon musk core constituency have been liberals looking to save the world. i think he's done significant brand damage and that's why you're seeing lead times in the u.s. of just one week for their cars versus it being several months just in october, just a few months ago, a few weeks ago. i think there's big issues ahead and i think twitter is a big rain for that. >> the first amend bement, there's money and lining his own pockets or, you know, putting yourself up as a protector of the first amendment. a lot of people appreciate that. gene, thanks >> gordon, thank you. >> happy holidays, guys. coming up, delta's ceo ed

bastian is going to join us. the stock jumping on new ueapbt guidance "squawk" coming right back the rent-a-car industry is the definition of boring. and the reason can be found in the name itself. rent - a - car? you don't want a friend. you want the friend. you don't want a job. you want the job. the is always over a. that's why we don't offer a car. we offer the car. ( ♪♪ ) sixt. rent the car. ♪ at prudential we think you should say it when things go right too. like, when you score your dream job. sell your business. or discover she's smart... really smart. now what? here's what: you connect with prudential's rock-solid team serving over 50 million people.

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good morning investors awaiting the fed we're going do break down what the charts are saying ahead of their interest rates today sam bankman-fried denied bail at a hearing in the bahamas. the senate will take up a hearing on ftx senator pat toomey will join us live. plus, delta airlines updating the street with their outlook for 2023 we'll speak with the ceo ed bastian about their forecast and the state of the airlines. the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" right here on cnbc. we're live at the nasdaq market site at times square i'm andrew ross sorkin along with becky quick and joe kernen. the real hour is around 2:30 is when you're going to really

care dow jones up about 20 points right about now. s&p 500 up i'm calling that a bunch and treasury, 10-year note standing at just about -- well, we've at 3.503 27-year down 1. -- 4.1 89. sam bankman-fried will remain behind bars the judge denying him bail kate rooney joining us live from washington with more >> reporter: sam bankman-fried is at a correctional facility after his request for bail was denied the judge saying heightened flight risk for the former

ftx ceo. he'll remain in that jail until the next court appearance over arguments for extra digs scheduled for february 8th ban bankman-fried was taken into custody monday night that was the night before he was expected to testify. he faces eight criminal charges. authorities alleging he def defrauded investments by funneling investment money into his hedge fund of alameda. facing wire fraud, conspiracy to commit money laundering and campaign finance violations. the sec filed parallel suits in a statement his lawyer said bankman-fried is reviewing the charges with his legal team and considering all of his legal options. ftx's new ceo john ray who leadl led enron, he ripped noop ftx's

finances calling it embezzlement andrew, back to you. >> okay, kate. we will, of course, keep our eyes on this story as it continues. it's a soap opera. the soap opera the. >> we should let people know we're talking about how you charge your home. >> back to teslas? >> yes. >> we are. >> i may buy a plaid just to offset i may buy a couple of them. >> sam bankman-fried had a corolla. think about that >> but at home to do it overnight, can i just put -- run an extension cord out there from one of my outlets. >> technically you can but it's very slow. >> how slow? >> super slow. maybe not even -- >> so what do i need what if i want a half hour charging >> i think you have to pay serious.

>> how much? >> i don't know. i'm not an electrician you have to buy the -- >> how long do i have to wait for this played thing. >> with the help of an electrician you can have a model s, played or model x it will fully charge your tesla in 6 to 9 hours. >> i'm just telling you, people that i love and respect, they say model s is the greatest car they've ever had in their life >> now you're sielling teslas. >> buying one to offset the people that -- the woke snowflakes that aren't going to buy tesla. >> for years you would never buy a tesla, remember? >> yeah. >> up until just about a month ago. >> yeah. >> what happened >> the tan i like -- i don't think it has the technology -- >> gordon's description of it being a maga hat, that's what got you in >> the i'm not maga anymore. i'm anti-maga. i'm a florida guy. let's get to frank holland tim scott. tim scott. glenn youngkin

frank holland with a look at this morning's premarket mover back from atlanta. >> hey, guys how are you doing? segue, talking a little bit more about -- i'm glad to be back thanks for having me joe's selling tesla's. last week it was real human hair who knows what's next? tesla getting a downgrade and advocating for a more agnostic approach saying the stocks that power evs are a better way to play in the near term. shares are down 30% since the twitter deal closed. a lot of investors worried elon musk is distracted it was a trillion dollars back in march of this year. moderna moving higher in the pre-market the drug maker saw its stocks soar 20% after they issued promising data about the cancer treatment. they announced a melanoma treatment cut the recurrence of skin cancer 30r%. marriott though downgraded

by citi. the downgrade in travel. shares are down a percent and a half it came with a broader downgrade of the entire hotel sector in crypto check, the spf drama unfolding. a bit of a mixed picture we're seeing bitcoin up above the 17,000 mark. ether up all of these coins actually up for the week despite all of this drama with sbf being much arrested investors pulling $2 billion out of binance that wasn't one of the top five withdrawals. the company issuing a statement saying they passed a stress test a mixed picture of crypto. back over to you now the. >> kind of interesting i don't know i don't know about bitcoin, frank, because you never know the next shoe. i mean, we're talking about cz, use his initials, too. it's going up because we're sort of putting the sbf stuff hand

us what if there's cz stuff in front of us? i don't know i don't know >> there's a lot of questions about this space andrew is reporting. >> i always use that expression. the guiding -- the guy that's hitting his head against the wall because it fales so good when you stop. that doesn't always work long term. >> i've never heard that turn of phrase. >> yes, you have yes, you have. >> you might have made that one up you guys midtown atlanta, john o'brien said to say hello to all three of you i hope you're there next year. >> okay. i'd love an excuse to go i'll be in georgia in a couple of weeks. >> i saw one of your golf buddies, too >> right all right, frank holland see ya. >> see another atlanta guy coming up in a moment. >> that's right. we've got delta, ed bastian. he's going to join us. the company saying that it is expecting growth despite an uncertain economy. the ceo ed bastian joins us on set for a special interview. before we head to the break.

let's get a check on the markets this morning again, you're talking about markets that are hesitant to move too far one direction or the other ahead of jay powell's comments later this afternoon. right now the dow is up by 44 points nasdaq up 7.5. the s&p up by just over 4 points "squawk box" will be right back. i was born on the south side of chicago. it has been a long road, but now i'm working for schwab. i love to help people understand

the world through their lens and invest accordingly. you can call us christmas eve at four o'clock in the morning. we're gonna always make sure that you have all of the financial tools and support to secure your financial future. that means a lot for my community and for every community.

delta airlines holding its investor day before it begins, phil lebeau is here >> good morning. time to talk guidance. we're atthat time of year, not just for you guys but the entire industry that i think people are wondering do we see the strength that we saw this year accelerate into '23 and '24 you guys see really continuing both in terms of corporate as well as the leisure demand, right? >> yeah. we were here a year ago -- this week a year ago that we were here and we unveiled a three-year plan. it was our recovery plan >> right >> i'm thrilled to say while '22 was a crazy year we hit our targets slightly ahead our cash flow targets. we will be the most profitable airline in the industry. $2.6 billion worth of profit

this year. we're doubling our eps that we earned this year into next year which is already in accordance with plans we see strong, continued demand. we can talk about that we see the continued improvement of business travel into the next year we see international markets continuing to open in asia and latin america, other places. so we have a very healthy outlook. >> we were talking before we came on about trans atlantic, how strong it's been i asked you what you're seeing in asia. what we saw with trans atlantic and what it's opening up and the demand you're seeing in most of asia, obviously china is its own separate entity in terms of what it's happening there you're seeing the trans-pacific, correct? is. >> we are seeing the same human behaviors that we saw in this country in the spring when people felt it was time to start traveling and demand exploded in every country around the world doesn't matter whether it's japan, korea, australia, the uk. people are already to go and they're going. >> ed, how confident are you --

obviously fourth quarter, probably first and second quarter you have a lot of bookings you can see the demand that's there. >> yeah. >> trying to see what's going to happen in '24 seems like it would be a trickier picture with demand if we get a global recession in second half of '23 into '24, what would that do with demand are you still coming back so strongly from the post covid situation that it wouldn't be anything like what we've seen before what are the risks in terms of the demand. >> everybody says in travel and hospitality, people are trying to figure why we're defying the friends that you see several things, first of all, we've just been through our recession. the deepest recession in this industry's hundred year history. we're still coming out of that the second, the move between goods and experiences. the service economy is real. it's significant we talked about it a year ago when we presented our three-year plan, we thought it would happen, it's happened faster the third thing i'm going to spend time with our investors walking them through if you look at the relationship

of air travel demand to gdp in this country, it's at 1.3% and has been per year for the last 40 years you can go back the last 40 years. year in and year out it broke with 9/11 for maybe about a year but came right back on trend softened a little bit with the recession in 2008, '09 it overcorrected in 2011 the if you look at the pandemic period, the last three years, if you look at what the inherent demand would have been, should have been versus what it was, that gap is $300 billion for our industry. >> looking at it as years, for how long to work off this rebound from the pandemic. i think it's five years. >> it's going to be a lot longer. >> a higher plateau than even before. >> significantly. >> like the anti-peloton they were going to go forever. now they're gone basically not gone you're going to be the converse of that. the. >> i think you're right, joe if you look at 2019, how much

the economy has grown from 2019 to 2023, it's up 15 to 20%. >> do you like watching meta go down because no one is putting the goggles go on. >> everybody is on planes. business travelers are on planes international travelers are. the world's getting back together it's going to continue so if i was to kind of narrow down just to next year what that gap is, if we just get to 1 inpo point 3% in '23, that's $30 billion of additional revenue four our industry next year over this year. and that's with no catch up. >> what's going to happen to capacity over the next three years? part of the conundrum is there is great demand. great for you. but there's also not enough capacity anymore. >> capacity constraints are real listen, we're not holding it we tried the spring, you saw what happened. i mean, it broke we had to dial it back so it's still pretty fragile pilots are the biggest constraint the resources. that's going to be a resource

constraint not as much the big guys as us, but as you go down the chain the oems it was great to see the boeing order yesterday. good for boeing. it will take them a long time to get their supply chain and manufacturing processes. >> are you done putting the pods in on the long flights are you halfway through doing that >> yeah. >> you know what i'm talking about? what percentage are you talking about? it's expensive >> probably 80 to 90% complete. >> you are >> yeah. >> coast to coast how many are pods -- i got stuck on one that wasn't a pod i'm going coast to coast, where's my pod can you make a pod with a shower is that asking too much. >> pricey. that's pricey, mr. 1%. >> you have to go to dubai to get it. >> i'm not 1%. >> 1.1%. >> so are you. the private jet travel, wheels up, netjets or whatever, that's still expensive. >> yes. >> but if you're going to splurge and save up for it, you're doing pretty well, you

can maybe get on one of those pods that's your market. >> that's our market and that's -- >> especially going to europe. come on. >> that's the market that's been growing faster than anything private jet market growing the fastest. >> still, that's .1% or even a card is .01% >> but the thing that's different, joe, the planes we're taking, it's not just the pods, the beds, the showers, but it's the larger leg room in coach it's the business class domestic cabin. planes we're taking to the, 1/3 of the seats are in a premium category because that's where the market is. >> and you talked about the constraint being the pilots. you have the agreement in principle with your pilots, an increase over the life of the contract of about 34%. that's the kind of number that when the headline came out people said, whoa, i've never gotten a 34% increase in my pay, but it's important to mention, they didn't have a contract for the last four years so some of

this is catch up and then obviously the acceleration, if you will, in terms of pay. do you -- how confident are you that you get this worked out you obviously have an agreement in principle, but we've seen this before with a number of the airlines where there's an agreement and then the rank and file say, no, no, no, no, no le we want more. you have the me, too, clause in there saying delta pilots will make 1% more than american and united pilots. isn't there a chance we've got is pe 1% more here 1% more here and it goes on and on. >> it's great we got the deal done we had covid in the middle to get it negotiated. we have the best pilots. they deserve to be paid the best when you are the best, it takes time to be paid the best out of respect, i'm not going to talk about the process i hope this is going to be something that the industry can get. i think it's an overhang on our

industry, the open contracts, unrest and we need to continue to move forward. the pilot resources. we talk about labor being the biggest constraint in the country, cost of labor, access to labor pilots are the most constrained resource and highest paid resource in our country. it's most acute. >> is the pain point there within pilots overall, the training it's sort of -- you know, people at home i don't think understand you can't take a pilot and move them from one aircraft to another. does that continue to be one of the tough areas where there's only so much training ability you can do >> yeah. we have a fixed amount of simulators we have a lot of pilots retire during covid we've had to replace them. we replace pilots at the bottom. when you bring a new pilot in, there's training there's six or eight training cycles to each person you're bringing in. it's an expensive long-term process. we estimated at the height of the downterm it will take us about three years to get back and that's kind of what it's done. >> i want to ask an andrew

question, maybe you're going toss do the same thing do you think you should be saving for a rainy day with black swan events. here we are, happy days are hire again. you're only one pandemic, one horrific conflict in some part of the world that spreads. i mean, the travel industry can always fall off the cliff and then you'll be back with your hand out to the federal government again what should you do what should you do to try to prepare for things like that is that incumbent on you to -- >> i don't know how anyone saves for a pandemic, what i can tell you what we're not doing is we're not buying back stock, not doing a dividend our focus is getting our debt down >> what would you want them to do, andrew, so they don't need another -- more help from the government >> oh, goodness. if you were going to plan for a pandemic, you would have to save for a lot of money. >> you'd have to be a financial insz city tuesday after the

financial crisis you'd have to have hrp fortress balance sheets. >> strange insurance. >> shareholders won't benefit and growth will be impacted. >> you're not going to do anything with infrastructure, putting in new planes and stuff. >> that's what i mean. go full bore and hope for the best >> we've learned a lot, right, through this period of time. i think one of the things we've learned about in terms of financial wellness, we learned about health and wellness, people in our planes, cleanliness. there's a lot of good that's come out of this hard situation. but, no, i don't think you could ever financially put aside money to handle it. >> small but big jason question. you were talking about unions and the union that you deal with i'm not going to ask you questions about your own union but i am going to ask you about this there is a massive union movement, at least it appears that way in this country, whether it's amazon, starbucks, this or that a lot of companies are pushing back on that i'm very curious, when ceos call

you, if they do or don't, or if they call you, is it doable? is it preferable is it terrible no, no, honestly, i'm very curious -- >> be honest while you're negotiating. >> you work with unions every day. maybe you say, look, it's completely manageable. you should embrace it. there's a way to figure out how to do it or you should say, you're right, it makes it a lot more burdensome and it's not working. >> the pilots union are a unique union. they've been around since the dawn of aviation the regulatory aspect of piloting, the technical aspect, the safety aspect the union plays a very significant role and we work alongside them the other employee groups are not unionized as you know. my job is to take care of my people as a leader of the company, the more you pour into the people, the question is who do they work for? is and we do a great job delta's number one in the industry because we have the

best people. >> i thought you were going to say my job is to keep them on union. then you would be howard schultz or jeff bezos. and i would just say, okay, so we've gone from 40% unions to 7% and now we're hearing about -- we're back to 7.1% we're reading about it the rail strike but it's not back to -- >> when i came on set -- >> we're glad you're here. we're glad we can all be here together thanks for the update on the guide dance. you heard it, it's not slowing down '23, '24. >> going to be a big year. >> i didn't realize the numbers, 1.3 gdp. >> year in and year out. i'm going to show that it's an interesting time zbll no buy backs or dividends what do the investors say about that >> we've got to pay down our debt >> i like it black swans everywhere. >> thank you. >> coming up -- thanks thanks, phil thanks for getting here.

>> you know, just down the street >> you couldn't find times square can you direct me -- sam bankman-fried denied bail in the bahamas. new ftx ceo john ray telling the house finances committee that the company he took over committed old-fashioned embezzlement today the senate gets their term going to hear from banking committee ranking member senator pat toomey "squawk box" will be right back. >> announcer: tile -- time now for aflac's trivia question. name the states where these three u.s. landmarks are located, mt. rushmore, monument valley and cloud gate. the answer when cnbc "squawk box" continues for $1,200? ga-a-a-ap! did you say "gap"? yeah, he did. he's talking about expenses that health insurance doesn't cover. ga-a-a-ap! uh-uh. aflac! that's why there's aflac.

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ftx's new ceo john ray testified before congress how ftx was positioned to fail he called the dye mice of the crypto exchange old-fashioned

embezzlement. >> this is really old-fashioned embezzlement this is just taking money from customers and using it for your own purpose. not sophisticated at all sophisticated perhaps in the way they were able to hide it from people frankly, right in front of their eyes, but this isn't -- this isn't sophisticated whatsoever this is just plain old embezzlement >> later this morning the senate banking committee will continue that discussion on the ftx collapse and the impact on consumers. joining us right now is senator pat toomey he's the lead republican on the banking committee. senator toomey, welcome. yesterday john ray seemed like a very compelling witness. >> good morning, becky >> pretty thorough on things he took what a lot of people thought was going to be very complicated. he may not know where all of the money is, he very clearly laid

out what happened. what more do you think you can learn from him today >> well, certainly we had hoped to have sam bankman-fried himself. i understand he's unavoidably detained so he will not be joining us, but, you know, i do hope to learn maybe a little bit more about how this went down, what was going on. we have kevin o'leary, who you've had on your show, he was an investor. the department of justice charges and the sec charges do allege fraud committed against investors. kevin also is in regular communication with sam bankman-fried so i do hope to learn some more about the specifics of what happened we're inevitably going to have a big conversation about where we go from here i think the testimony yesterday under scores a very, very important point. this really looks like garden variety fraud that has happened in the past with -- usually with

dollars or securities of a conventional sort. here it happened with crypto it is not an indictment against crypto, it's an indictment against the guys who used it we should make the distinction and congress should finally pass the legislation that i've been urging us to pass which would provide the regulatory clarity so that we don't have this ambiguity as to who's got the authority here, who doesn't and how does it get regulated. we need to eliminate that regularity then we would have business flowing to prudent, sensible, well-regulated american exchanges and that's what we all should want. >> do you have any confidence in the other exchanges that exist there have been a lot of questions about binance, cz, cheng jjaz r -- zblr it reads

similarly to what sam bankman-fried was tweeting that's not to say that binance is anything like ftx we don't know. is this a buyer beware situation for anything that's an unregulated off shore entity >> that's probably fair. an off shore entity operated by people who are not providing complete transparency, we don't know i wouldn't want to speculate about the condition of those we've got other exchanges. coin base is a publicly traded company, totally different category yeah, this is where the actual activity of issuing a token, the disclosure requirements need to be defined we should have a clear regulatory regime. the secondary trading of tokens. we have no obvious regulator on this

i know chairman gensler at the sec claims jurisdiction. as you heard harvey just yesterday, that's a dubious proposition. let's end the ambiguity. stable coins, the heart of that is disclosing the assets that are backing the stable coins full requirement that they be backed disclosed. audited. that solves a lot of problems. and that's where we should be going. >> senator, aren't there times where investigators look forward to letting someone testify in front of a house hearing under oath because they're going to say a lot of things they might not say before the authorities are actually called in there's a huge uproar that the doj -- the day before it was going to happen they decided to move i don't know what would have come out about political contributions or anything else, but is there anything -- does it smell weird? is there anything going on when they're ready -- the grand

jury met on, what was it -- >> the 9th. >> they were ready to go, i why understand that. one more day, would that have made a difference if you let this guy come on and just -- knowing him he would have said a bunch of stuff that could have been used later that would have been very valuable. >> yeah. i'm not going to second guess at this point their timing decision, joe. i don't know what was driving that, but it is shocking the kind of interviews sam bankman-fried has given. i can't believe he's got a lawyer anywhere near him who's saying that that's a good idea honestly, i was expecting he would probably plead the fifth repeatedly at a congressional hearing. the. >> senator, what do you think about the speculation that the doj thought that he could ultimately taint a jury, that maybe he would actually be so successful, frankly, at arguing

his case or making himself look like a naive something or other, that that would actually help his case, not hurt it and that they were trying to get ahead of that >> yeah, andrew, you know, i don't want to speculate about what they were thinking and how they were evaluating this and to what extent that drove their timing i think it's going to be a very, very difficult thing for him to spin his way out of this ment it really looks -- look, we don't know all the facts yet, but based on the allegations, based on what is publicly known, based on some things he has said and now the charges against him, i think he's in a heap of trouble. >> senator, what do you think would have been different if this was regulated again, this was just old-fashioned embezzlement as john ray laid out yesterday, fraud. those things have happened even in rec gu lated arenas

>> sure. mf global. >> mf global you can think of a lot of different situations where it happens. would it have happened fp this was an area that was regulated >> it is certainly still possible to commit fraud even if you have, say, a regulated securities exchange. you could still commit fraud it's a lot harder because there's a lot more transparency. there are people looking around and another factor that i think we should consider is if we had a well-defined regulatory regime that was properly enforced in the united states, i think that's where the business would go i'm not sure how much business sam bankman-fried would be doing off shore unsupervised because people would recognize that, hey, the regulated exchange probably has to follow rules about segregating customer accounts, execution, probably they can't front run customers the kind of things we take for granted in trading platforms would probably be applied if we

had this sensible regulatory regime and that's where business would gravitate, i think. >> that makes sense. that deals with the co-mingling of funds aspect of it. the what about the idea of the marks on some of these coins that are kind of made up coins are kind of outrageous, too. if you look back we don't know all the details but we've heard enough from, you know, people like anthony scaramucci and others who have done deals with sam bankman-fried where they were required to take some of the money that was given to them and use it to buy the tokens from those very exchanges, from the ftc token from ftx you are deciding to mark it as whatever you want and say here's how much everything is worth do we get to the point where some of the bs around that gets blown out of the way >> tough question.

>> tough question. >> very, very tough question we -- >> we may be able to get him back we may be able to get an answer on this. >> talking about trials. >> fraud. >> painting trials coming up, we're going to talk technicals with fairley's strategy katie stockton. up next, the irs being sued by a big-time hedge fund manager. robert frank joins us with a report is he big sniem i want to be big time but he's not. >> escalating the battle over the irs and pro publa.ic it's ken griffin suing the irs we'll have details of that when we return.

welcome back to "squawk box. billionaire hedge fund titan ken griffin is taking uncle sam, if you can believe it, usually it's the other way around he's suing the irs for leaking his tax information. what a story, robert. >> reporter: yeah, andrew, you're right usually it is the other way around ken griffin said the irs

illegally disclosed his tax returns. the suit stems from that pro publica article which used tax returns from an anonymous source to expose the low taxes paid by billionaires griffin is saying the irs, quote, willfully failed to establish adequate administrative, technical, and physical safeguards for the irs's data and then unlawfully disclosed those materials to propublica he was not exposed for paying little or no taxes he actually earned an average of $1.7 billion a year according to that story between 2013 and 2018 and they say he paid an average tax rate of over 28% that's high and that made him the second highest taxpayer in the country during those years propublica focused on his campaign to defeat a state tax increase in illinois that's why he was mentioned in the stories. the irs inspector and justice

have been investigating this house republicans have been frustrated on the lack of reports, updates or charges. griffin in his statement saying, quote, the irs deliberately stole the confidential tax returns of several hundred successful american business leaders. guys, no comment from the irs or treasury, at least not yet >> let's talk this through it's an unusual case because it raises all sorts of questions about how you even process discovery in a public environment. the it raises questions about how you could i would say prosecute the case it's not a criminal prosecution, per se, but historic clip it's been very hard to get judges to subpoena journalists, for example, in terms of, you know, whether you'd want to start subpoenaing the reporters at propublica how do you see this whole thing playing out? >> reporter: well, andrew, we

should first say the republicans have made the irs a chief target or source of concern and debate when they take over the house in january. we should also add that ken griffin was the second largest donor to the republican party in the mid-terms. so it's all of a piece against sort of questioning the credibility and the management of the irs in terms of prosecuting this, you know, the lawsuit details years and years of mismanagement at the irs, their inability to really protect taxpayer data we've seen even leaks since this or at least improper disclosures of taxpayer data since the propublica that has nothing to do with the press. i think the case will show a pattern and a lack of resources and management at the irs to safeguard this data. >> and in terms of how this plays out over time and what do you think the real goal is here in terms of what ken griffin is

seeking? >> reporter: well, if you talk to ken, his goal is to make sure that taxpayer data is kept private and that this doesn't happen again again, he was put in a fairly flattering light in this article in that he had an effective tax rate of over 28%, which you compare to bezos, soros and others was much lower. so his point is i'm standing up for the americans so this doesn't happen again as to how it plays out in court and then how you prove this leak, how you find out the source, i mean, again, justice is trying to do this themselves, or at least they say they are. we haven't got jenny updates we don't know how far they've gotten there haven't been any charges or justice found anything about the leaks. could have been a contractor or somebody had a computer that was left on and somebody accessed. >> have we heard anything from the irs about changing processes? for example, it seems crazy to me that somehow anybody could walk out of the building --

somebody could walk out of the building not with just one, two tax returns but hundreds, for example. >> reporter: yeah. there are very strict rules about the people who can do that and the access that is allowed and the tracking system that makes sure that they know who had those tax returns and when they left. janet yellen has said publicly many times, they take this very seriously. they're looking into any potential breaches to make sure they don't happen again. again, we don't have the details of what those breaches might have been and what she's doing >> and they've never come out with a statement or anything saying, look, we actually -- this is a problem and we're fixing it by doing, x, y, z. we're not there yet. >> reporter: well, they have acknowledged a lack of funding and a lack of protections in the entire data and technology system, which they say they need funding to fix they recognize there's a problem but they haven't identified this specific source of the leak.

>> okay. robert frank fascinating story this morning appreciate it. still to come this morning, what the charts are saying about where this market could be headed we have technician katie stockton joining us. a lot of that market lot of thab in response to what fed chair says this afternoon. let's take a look at the futures this hour ahead of that. things have been really flat the dow down by 8 points, the nasdaq off 11, the s&p down by less than four points. "squawk box" will be right back. s for the golfer on your list. like tour balls from the best brands. and top-of-the-line irons and drivers from callaway, taylormade and titleist. a golf bag is always a great gift. when you shop online, you can find even more great gifts. one-hour pickup is always an option. and the hottest styles from calia, footjoy, walter hagen, and travismathew are a win. all from dick's sporting goods and golf galaxy.

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our next guest says the s&p 500 is at risk for a downdraft for more on what the charts are showing, let's bring in katie stockton, founder and managing partner of fair lead strategies, also a cnbc contributor. how did you like that move yesterday? did that look like an exhaustion when we were up about 900 points we didn't hold, markets headed the other way, and people call it a capitulation and a buying opportunity. was yesterday a good selling opportunity? >> yeah, so the title of our morning note yesterday was the sell the news. it felt very extended to us. there was a gap hire at the open and a gap hire following a relief rally, tends to be exhaustive in nature we're looking at yesterday as a knee jerk reaction

we also think there's similar action likely at some point today. we have no edge, very short-term, of course, but we suspect that this relief rally has essentially matured. yesterday we did receive a cell signal from one of our short-term counter trend gauges, that's specifically the demark indicators we haven't seen a sell signal of that nature since december of '21. it's not a long-term signal. it suggests we'll see a several week retracement here, so we think risk is heightened there might be some positive seasonal influences that help the market avoid that downdraft until perhaps january but we do think there's risk here. >> you know, we've got jay powell, god knows what he's going to say are you ever surprised or shocked or bemused when you say something technically, and powell could play right into your hands today if he was

particularly hawkish, and it's almost like the charts know how the fundamentals are going to play out that happens all the time. i guess you write it off the intelligence of crowds or something. >> i mean, every decision is baked into prices, right, so if it comes down to a buy or sell so the market is currently reflecting all known information. market sentiment is obviously manifested in it, and we track the volatility behind the market as a way to gauge sentiment as well as you know, volatility had been contracting according to the vix for several weeks. unfortunately that shows that perhaps there's a little bit of complacency out there. i think we felt that yesterday morning, and we saw it recently clear the 20-day moving average, a similar set up to what we had after the summer time relief rally. that analog is holding there, and the 200-day moving average in line for the s&p 500, which

has resistance around 4,100 based on one of our models it does face real challenges here we have seen some incremental improvement and momentum that momentum would deteriorate quickly if we got retracement adds indicated by that counter trend signal. >> should we be watching the ten h -year or the two-year. >> i'm watching the ten -year coming into today. we have secondary support also around 3 1/4 i think within that zone we'll see this corrective phase mature the momentum is to the downside behind treasury yields and yet the long-term trend is higher. we suspect that that higher trend will lose some momentum maybe become a bit more gradual, but we want to defer to it, the longer term gauges is higher behind yields. we're assuming this corrective

phase, which is now intermediate based on our measures will mature this month and give way to another up move. >> bitcoin has had its own dynamic with all of the news, obviously, with ftx, and i don't know, the whole arena. does that look ripe for profit taking to you as well and what was the last one you said, 13,500 is the next stopping point. >> here's what i found . >> that was not katie stockton that was siri. >> oh, my god. >> what are you searching, alternate evs to buy right now go ahead, katie. >> yeah, i mean, listen, i don't think there's any profit taking g going on outright selling for bitcoin, people who have been stuck in the bear market cycle. i would say it's eerily coiled up considering how bad the news

has gone we have a drip of bad news out there and there's additional downside risk. >> thanks, katie >> of course. >> quick tease. >> the ipad had frozen, and usually it's off my dad was a hard worker. he used to do side jobs installing windows, charging something like a hundred bucks a window when other guys were charging four to five-hundred bucks. he just didn't wanna do that. he was proud of the price he was charging. ♪♪ my dad instilled in me, always put the people before the money. be proud of offering a good product at a fair price. i think he'd be extremely proud of me, yeah. ♪♪ we're told that success is all about making it on your own. the truth is... need some help? c,mon, get in. nothing

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the fed is expected to slow the pace of interest rate hikes. are we near the end of the line. we're speaking with david rubenstein and judy shelton this hour sam bankman-fried being held in the bahamas after he was arrested a judge denying him bail we're going to bring the latest on the ftx collapse. shares of delta taking flight this morning. the airline out with new guidance above analyst estimates. we'll bring you the details straight ahead as the final hour of "squawk box" begins right now. good morning, and welcome to "squawk box" here oncap cnbc lie

from the nasdaq, i'm joe kernen with becky quick and andrew ross sorkin up three on the tdow. >> it's christmas. red and green. >> jay powell, two words, jay powell, three words, four, and the fed, five. treasury >> how about one, grinch >> could be. could be the grinch or i'm expecting a lump of coal and a switch that's what my mother always threatened me with treasury yields take a quick look, 3.50 we heard katie stockton say still may see yields rise. you wouldn't think so we're at a core of 6% i don't know where fed funds would have to go to handle a core of six unless it comes down quickly. we've got the latest on the collapse of ftx.

former ceo sam bankman-fried denied bail in the bahamas who cited a heightened flight risk the judge said bankman-fried should be remanded to custody until early february bankman-fried said he would fight extradition to the united states the bail was denied hours after u.s. prosecutors filed eight charges against bankman-fried including wire fraud and illegal campaign contributions misappropriating funds to his hedge fund alameda research. the ftc has also filed suit. there were ftx revelations on capitol hill the firm's ceo john ray answered questions from the house financial services committee here he is offering his take on ft x's conduct >> this is really old fashioned embezzlement this is taking money from

customers, and using it for your own purpose. not sophisticated at all sophisticated perhaps in the way they were able to sort of hide it from people frankly, right in front of their eyes, but this isn't, you know, sophisticated whatsoever this is just plain old embezzlement >> the senate will take a look at ftx today and a hearing of the banking committee there. we'll be talking much more about the story throughout the hour with david rubenstein and j circle's jeremy olare. upbeat 2023 outlook. delta expects adjusted earnings to double. that's above analyst estimates, and the company's ceo ed bastian joins us in the show at the table in the last hour

here's what he had to say about the company's three-year recovery plan unveiled a year ago. >> i'm thrilled to say while '22 was a crazy year that we hit our first year targets our cash flow targets, we will be the most profitable airline in the industry, $2.6 billion of profit this year, and we're going to be doubling next year our eps that we earned this year into next year which is in accordance with plan we have a very healthy outlook >> okay. delta also forecast a 20% jump in revenue next year, instea free cash flow will rise from $2 billion to more than $4 billion in 2024 so experiences are still the win. >> stocks up by 4 1/2% let's get back to the broader markets. our very own mike santoli joins us with what he's watching yo, mike, what's up? >> we have a bit of an

indecisive market. yesterday's early pop on that better than expected cpi number. most of that rally fizzling. maybe a little bit too much to anx ask the s&p to hold a gain what it did do is kept the market from proving that it was able with a real strong broad push to get above this whole down trend line that we have been watching all year the high yesterday was exactly 41 4,100. that was also the high from november 30th. you had the low in the market around october 13th. a worst than expected cpi. the market rushed lower in the morning and recovered. you had the opposite type of reversal yesterday you got to keep an eye on it banks, pretty conspicuous under performers lately. they were lagging a bit behind now, this obviously, they're in the way of whatever economic concerns are now coming to the fore, now that the market seems to think we're past peek

inflation and perhaps approaching peek fed tightening. we did also have these other sloppy periods for banks earlier when they under performed. it didn't necessarily mean that everything was going straight. you can see there definitely under performing i know katie stockton mentioned the u.s. dollar index. that's backing off we're at levels we have last seen in may of this year it seems as if, again, this represents the market saying we're no longer upping the ante on what the fed is going to do the fed is going to come out today, and the market has to be at below trend growth for some x amount of time, with restricted policy, in order to make sure inflation is under control i think we're now decidedly focused on what it means for the u.s. economy, and earnings into next year, and look, we've had these recession scares, becky, multiple times this year it hasn't come on time, and we see things like delta air lines seeing spending to travel. we got to watch it.

>> you look at the banks, and it's just such an interesting series of events, interesting time normally financials have been doing well because we're raising rates. it's odd to be raising rates when you're talking about a recession, and tightening in such a big way. >> exactly right they're caught in the fix, and by the way, even if raising rates were your bull case for banks in terms of wider net income, that effect is peaking on a year over year basis. that doesn't help in terms of next year being better than this year a lot of folks are saying if you don't get a recession, they're all of a sudden looking cheap. >> let's get your best guess as to what happens around the fed i know this is a dangerous game to try and play and wade into. we saw things off to the races yesterday with the markets when you got that cooler inflation number it turned around quickly, and i have to think that is because people were worried that jay powell was going to poke a hole in the balloon with his comments

today. now that we're back at this even level, it seems like a less clear situation about which way the market is primed. >> much less clear you know, what usually happens and what's probably going to happen is there's going to be a, you know, a whip saw so you're going to get a wrong way move and then the right one, as i said, i think powell is going to have no incentive to all of a sudden make, you know, overtly friendly noises about the market but not push back on it, say look, we've told you here, we're going to be higher on rates, might be getting to tour destination. the fed funds might peak under 5% high into the range, you know, is going to be, what, 4 1/2. we're kind of there. it's just about, you know, what economic pain he believes is necessary and what we're going to have to see come through the system there is a chance. the market is not broken down. there's a chance if we get as expected from the fed, it can clear the way to the seasonal strength that usually kicks in in the latter part of december

so i realize that was a completely unhelpful answer about what happens after the fed. but that's why we go into it with this balanced footing. >> mike, thanks, we'll see you later! he just said, depends on if we get what's expected and hear what's expected. the count down is on to this afternoon's fed rate decision. investors will get the news at 2:00 p.m. eastern time, and jay powell's news conference at 2:30 steve liesman joins us with what we should expect he kind of indicated 50 basis points is likely there was that cool number yesterday. i bet you the speech hasn't changed that he was going to give last week if he had it written from what happened yesterday. >> i think that's a really good bet, joe, and i'm going to go through why that's the case. there's too many questions that surround the fed today where it's expected to hike by 50 basis points does the fed embrace the market's increasing call for an

earlier end to rate hikes. do the fed and fed chair powell embrace the loosening of financial conditions at the last meeting. let's look at the early stuff here, the near term stuff. along with the sharp declines in the 10-year and 2-year yields. the expected funds rate fell to 4.82 this morning for the may 23 contract, and an increasing bet that the fed could be done as soon as march. all of this is well and good if the fed and fed chair are comfortable with the dovish drift in the outlook that has loosened financial conditions since the last meeting we did the math so you don't have to. ten-year treasury done 60 basis points junk bundles and 30-year mortgage, the dow stocks are down up 6.3%. average hourly earnings took a pop, and they're up 0.6% if the fed didn't intend for financial conditions to loosen and has a problem with market

levels, the fed chair could redirect the tension to the continued fight against inflation. that's what j.p. morgan thinks is going to happen a majority of the fomc is likely to be concerned about doing too little than too much, and jumping to 5% in the first quarter of 2023. before anyone gets too excited, even though it was better than expected, the annual inflation rate, 7.1% you're just not going to have t that dovish a fed chair if you have those inflation numbers. >> just what we were talking about, steve. >> yep and data dependent, but if they are, they're not going to talk about it, i think. i don't see any change at all, steve. so we get what we expect, what does the market do with that mike santoli said that may enable the market to continue its up trend, if it's just sort

of what is already built in. >> i have long argued there's two components to what fed is doing that have made it all a challenging environment for investors. the first is the aggressive rate hikes by the federal reserve, and that's one issue the other issue is the uncertainty about where things end up i think the market can rally and do well in part and part of the way, if it has a clear sense of where the fed's going to stop and pause. if you think about -- you talk to a cfo of a company. it's one thing to deal with higher rates it's another thing to deal with a rate that you don't know how high it's going. once that clarity comes in there's a piece of the market or a rally that can happen around that and then you have the idea, kw what happens to individual stocks, as a result of higher rates. i think the bigger story, joe,

for this afternoon is how far powell feels he has to go to redirect and claw back that loosening of financial conditions >> they're deliberately, and i would be too, but deliberately sort of the terminal rate we just don't know. how quickly we get there, they can tell us that, we may go, we may not go, but how would they know exactly what terminal rate is if we really don't know what labor market is going to give us in terms of inflation, what the new normal is for inflation? >> all good points, joe. >> thanks, steve gives us something to look forward to we have this a lot, don't we how often do we get, every -- >> six weeks. >> goes fast coming up, we've got a lot more this morning. we're going to talk about the collapse of ftx, sam bankman-fried's new spate of challenges and david rubenstein will join

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welcome back, everybody. our next guest has a lot to say on crypto and the collapse of ftx. joining us right now to talk about that, inflation and today's fed decision is david rubenstein the carlyle group's cofounder and cochairman david, welcome, it's good to see you. >> thank you for having me >> there's so many things to talk about today, but everybody's got sam bankman-fried front and center on their minds because of what's happening. it's not something you invested in, ftx, but you've interviewed sam bankman-fried and i wonder what you think about him, and what you see watching this collapse. >> i did interview him for my show i thought he was unusual his leg was shaking all the time he had kind of a nervous twitch or something, and an unusual dress. most people are dressed like me,

and he was dressed in a shorts and a tennis shirt leaving that aside, clearly a high iq, but you couldn't tell from a half hour interview that he was doing the kind of things we know he did it's going to be a tough situation there, and i think it will have impact on the crypto industry for sure. >> as an investor, you were pretty skeptical, you did not invest i don't think you even got close to looking at it, but some people in your home office did >> my family office looked at it when he came to make a presentation with the a lot of investors. my family office couldn't understand what the relationship was between ftx and alameda and they didn't invest it didn't come to me i didn't know about it but i'm glad they didn't do it. >> let's talk about what the fallout is i think people are questioning all kinds of things in crypto more broadly, and you'll have somebody like senator toomey who said regulation would fix all of this, make it better

other people say this is fraud, fraud can take place, old fashioned embezzlement and fraud can take place >> everybody is not committing fraud. there's legitimate business people who have legitimate bids and there's need there it's not going away in my view there are people who like crypto for whatever reason, and they're going to trade in it, invest in it, and i don't think it's going to go away the u.s. government will regulate it much more, and more toughly than they would have before i don't think the industry is going to go away the u.s. can't decide. a large part of the industry has nothing to do with the u.s it's all around the world. every industry when it gets off the ground is challenges, growing pains, this is obviously a big growing pain fraud is going to be a problem i don't think everybody is fraudulent in the industry. >> this is really about the investment industry which is to say in facts s.e.c. complaint was on fwbehalf of the venture

capitalists, not the customers who were defrauded in their own way. there's been a lot of finger pointing, finger wagging at the sequoias of the world, the paradigms of the world there's 90 plus investors in that space how much do you think they failed to govern this business and ask the right questions, and at some level we have talked about the business model venture, which is that 40 investments, their expectations 30 of them go to zero, may not matter, and there may not be the kind of diligence either on the front end or even as an owner that there might be potentially in a private equity context, or more hopefully in a public context. >> clearly had it been regulated there would have been more information. if they made one mistake here, that's not unusual to make one mistake or a small mistake

most people would be happy to be an investor in sequoia every investor makes a mistake warren buffet makes mistakes people didn't do enough due diligence. >> is it a black yieye, not a black cry. >> you do due diligence, and a decision on whether to invest, if you do group think, makes you question whether the success is following the crowd as certain things move. >> when you take a look at firms like sequoia, they have made staggering amounts for investors. >> you have to wonder how this happens. >> sometimes people make mistakes, didn't do as much due diligence, and take a look at their track record. >> there's mistakes, but then usually you would call a mistake on something you have considered you have considered the pros and cons it doesn't look like that was done here. >> in this case, a lot of mistakes were made some good investments were made

in the industry by some people i don't want to condemn the people that made a mistake joe, you must have made some mistakes in your investments othe over the years. >> we're not allowed to invest that's why i'm doing so well at cnbc they save me from myself >> if you had been an investor, you probably would have made some mistakes. >> hopefully after i figured out if it was a board or cfo. >> your family office figured it out quickly. >> they were unhappy with some things they learned, but they turn a lot of things down, and that's not unusual i don't want to say they're the smartest investors of all time >> the larger point i'm raising is, and sort of the group think becky and joe were alluding to is in this venture, especially v venture, maybe more than private equity how much do you think there is a sense of, oh, sequoia is in, if

they're in, and they probably did the work, i'm in, and somebody else sees they're in, they're in, then i'm in. and that's how it all sort of happens. >> it's group think in all parts of life. if sequoia and other great investment firms go n probably if you're a smaller firm, you don't have time to do due diligence, you probably would go along. that doesn't mean it's the right decision, and people did make mistakes, and probably other mistakes in the crypto industry. that doesn't mean the whole industry is going to fall apart in my view. >> u.s. regulation, if they were to regulate it, and again, this is senator toomey who joined us earlier this morning if there was a regulated area here where you could have exchanges that were in the u.s. and were regular latelied, do you think that would kill off some of the offshore businesses because investors would feel much more safe about investing with a company that was going through the u.s. standard? >> i think congress usually takes about a year to figure out how to regulate these things when these kind of scandals come about. after enron, it took a year to

come up with legislation and so forth. i think about a year for legislation to come forward. most likely the s.e.c. will be the main regulating body, and i think that's because people would say this is securities we're dealing with and not just commodities, and the s.e.c. is tough in this area, and i think they will probably do a good job. probably we should have had regulations sooner, but we didn't. >> carlisle does have some crypto investments, what are those investments? are they coins >> we're not a crypto investor i have not invested in cryptocurrency myself. >> but carlisle, do they have any investments related back to crypto >> carlisle is not a crypto investor, they're not an investor in that area. my family office is invested in some companies that service the industry. >> okay. of crypto. service the industry but they're not selling cryptocurrencies themselves. >> how do you feel about those investments watching just the headlines? the headlines scare people >> the investments they have made, my team thinks they're pretty good.

but everybody tells you the investments are good until they're not good so i've been around long enough to know that some investments turn out to be better than you think, and some turn out to be worse than you think i'm happy with the investments we made. i haven't invested in cryptocurrency, i don't know enough about it, and it oscillates to me on the other hand, things in the service industry can do well, and some are well financed i don't think you're going to see a lot of bankruptcies coming about as a result of ftx debacle. >> what do you think about the fed today? are we nearing a point where we're getting towards the beginning of the end of the fed raising rates or not >> the fed does a wonderful job under jay powell telegraphing what it's going to do. paul walker would do something, tell you what he was going to do the world has changed. jay powell tells you what he's going to do in eng llish, not in

fed speak. the markets would be shocked if it's anything other than 50 basis points if it's 75 basis points as people thought it would be a couple of months ago, that would be a shock in the market if it was 0, that would be shocking as well 50 points, and i think the fed will pause and say let's see what happens the last couple ocf months, 3% inflation. the fed will wait a few more meetings before they decide whether they're going to do more than 50 points we see today. inflation takes a long time to get out of the system, than it takes to get in the system they made mistakes, by thinking it was transitory but now i think they have made real progress, and i think inflation is coming down. >> are you bullish over a ten-year period. is 31 trillion a lot will that hurt gdp growth, 31 trillion in debt that we have now? are you bullish? unfunded liabilities, social

security, medicare, over the next ten years. >> it's very difficult to predict ten years in advance. >> are you bullish long-term >> the most important thing is to tlive ten more years. >> you look good. >> i had the physical yesterday, the guy said you might make it ten more years, you never know. >> you need a new doctor. >> one of the problems in the federal government is we have ten-year budgeting you can play a lot of games but you can say the revenue is going to come in years eight, nine and ten. ten-year budgeting has been a big problem. our debt is $31 trillion i mean, when i was in government, when i was left government in the carter years, we had under $1 trillion of debt it's 31 trillion you should be upset about it. >> your doctor gave you six months, and he said, you got a year >> i don't know about that. >> i heard one yesterday, my wife said she wants to be cremated, i said how is tuesday. that's bad >> i got one for david, think

about this, you join twitter in 2021 you were a little late to the game but very curious what you think now. >> i have to be honest, i am not on any social media. >> you got people. >> i have a person. >> a team. >> who does twitter things for me, but i don't want to be on twitter. i didn't want to be on twitter because i didn't want to say kim kardashian has 127 million people and i have 5. it would be embarrassing i didn't want to say how few people itch following me, and i didn't want to go on twitter now somebody is doing some twitter things for me. >> what do you think about what's happening on twitter? >> that's a whole different situation. i did not invest in twitter. >> were you asked to invest in twitter. >> it wasn't that hard to invest in that. they were raising money for sure i didn't invest in it because i thought it was very high priced among other things i think it's a big challenge right now to do that deal and make it work well but obviously

he's a smart guy, a lot smarter than me and richer than me maybe he can figure it out it's a big problem. >> your blood pressure good? >> you said something fascinating, do you think smarter and richer are connected? >> in some parts of the world it can be, bill gates is very smart. he's made a lot of money it doesn't necessarily a lot of smart people are not wealthy and there's some dumb people that are pretty wealthy too. it doesn't always matter. >> if you were a tree, what tree would you be >> i'm sorry >> that was like your question someone asked that question, it's a famous question that has no answer. >> i think i would like to be a mighty oak. >> would you be happier if you were richer or not >> i've been both. richer is better >> richer is better. >> comfortable >> i won't dispute that. richer is better, 100% >> maybe it isn't. the richest people you know, are

they happier than people -- >> that's a different question. >> maybe rich isn't so great a lot of people that are rich are not that happy >> commercial or private, i like private, it's better. >> are you happy >> for being jewish, i'm pretty happy, yes, i am i'm reasonably happy. >> we got to go. >> did reneiavubstn, thank you very much. >> you're a mench. >> thanks a lot for having me. >> cholesterol

coming up next, former federal reserve board nominee, judy shelton is going to join us we're going to talk about the potential impact of policy makers, and the big fed decision on the way this afternoon. stay tuned, you're watching "squawk," and this is cnbc

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the fed still expected to hike interest rates 50 basis points today, even after yesterday's cooler than expected inflation. it's not a completely given, and now there's even more uncertainty about the next rate decision joining us now is judy shelton, former federal reserve board nominee. currently a senior fellow at the independent institute, and judy, in la lot of our interviews, we look back at some of the things that have been done that might have been mistakes, and we try to figure out and maybe give

some advice or counsel to the current fed on how to manage through the situation. because it still seems kind of okay gdp wise in terms of the employment picture there are still hopes that maybe we can handle inflation and not go into a deep, long-lasting recession. are you optimistic that we can steer down that very difficult path, but it could be successful >> it could be successful. and you talk about giving advice to the fed chairman. if i put myself in chair powell's position, i would be asking myself what is the most critical piece of information i need right now to do my job. and i think the answer to that is i need to know what is the real rate of interest. what is the -- if it were market

determined, what would be the interest rate on loanable capital, and the reason that's important is because i've set up my whole strategy of flighting inflation on the basis that we need to raise the policy target rate to a level sufficiently restrictive to subdue growth, to decrease demand and spending and to raise unemployment. so what i would be thinking of doing now is i go ahead, i do 4.4 by this afternoon, the rate the fed pays on reserve balances it will be 4.3 on reverse repos. that's how you set the fed fund rate what i need to know is that sufficiently restrictive i need to know is that higher than what real rate would be because some people might say 10% inflation, we still have a negative interest rate at 4.4.

so i think that what i would be talking about is saying now is the time to pause in terms of setting those administered rates and start listening to the market we need to fine tune now maybe we are close to that sufficiently restrictive rate. let's engage in open market operations let's step up telling off that 8.6 trillion portfolio that we built up during covid, and let price signaling help us gear toward that soft landing let's start selling into market demand across the spectrum we have 5.5 trillion in treasury securities, 2.6 in mortgage-backed securities and another half trillion in other assets let's not try to manipulate the yield curve. let's try to listen to the market and get a sense of how close we're getting to having the right interest rate because i think the aggregate wisdom of the people who are actually in

the market is more reliable than my army of economists working here at the fed. >> all right when was the last time you think we were getting completely accurate signals, price discovery signals. we had the financial crisis. we had the pandemic. have we had any accurate price discovery for the last 15 years? >> i think we started losing that in october of 2008, when as part of an emergency packet after the global financial crisis, the federal reserve started paying interest on reserve balances, cash deposits, the bank is required to keep with the fed that number now, it used to be banks kept just a minuscule amount because they wanted to be loaned out now that's the best deal in town if you add up the 3.1 trillion

that banks keep in overnight reserve balances, cash account, risk free government protected, so you're getting cash on basically what used to be a treasury security. now it's going to be moving toward 5%, it looked like, and then they had to add the repurchase, reverse repurchase agreement, so you're paying another 2.6 to money market mutual funds the fed is paying all of that return interest money, losing money while the fed is doing it on 5.6 trillion in cash, and the problem for me is, and this is why i would start going back to open market operations, you want that money to be more stable it's on a hair trigger now let's say in the future, the fed says, we're going to pause and that money says we want more we like this we let it earn money on cash, and it's extremely liquid. so they don't like what the fed is doing, they can reverse all the good the fed thinks it has

been doing by cutting economic activity all of that money is free to go elsewhere if they don't like the return they're getting from the fed. i would rather do it the paul volker way and have that liquidity soaked up by firms saying, you know, it looks like those treasures are a good deal. and they can loft them in at various maturities, the treasuries, those yields would start telling us something about the real state of the economy, the real cost of borrowing and what the appropriate rate on loanable funds should be, and again, i would trust the premarket determination of price signals on the most important price in our economy, cwhich is the cost of capital. i would go that route. that would be a good time for the fed to start moving away from setting administered rates and rely on market signals. >> you wonder how much damage has already been cause bidd by .

if it really was 15 years, and if there's no governor on what the fed does, and therefore there's no governor on what fiscal side and the government side does, we've got -- we could have 15 years of misallocation of where capital should have been >> misallocated capital, that's right, and pricing. >> it doesn't sound like it will end well, and some of the people that are, you know, talking about the mother of all bubbles popping, and i usually don't give much credence to some of these people, but there are people worried that we have built something that's going to be tough to extricate ourself from somehow we got to go good thinking about all of these things i don't know we may never live in a perfect world where it operates the way you would like it to there are things called financial crises and pandemics and sometimes we're just trying to do our best, i guess, but great having you on as always. >> thanks for having me. i appreciate it. bye bye. coming up, jim cramer's

first take on the trading day ahead, then we've got a top crypto, jeremy allaire from circle we want to talk to him about what he thinks needs to change in the industry following the collapse of ftx, and we'll talk about his stable coin anmidst al his consternation. you're watching "squawk box" and this is cnbc power e*trade's easy-to-use tools like dynamic charting and risk-reward analysis help make trading feel effortless and its customizable scans with social sentiment help you find and unlock opportunities in the market with powerful, easy-to-use tools power e*trade makes complex trading easier react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity

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still to come this morning, we will talk crypto, and fall of the ftx with circle ceo jeremy

allaire. right now, the dow is up by about 17 points. s&p is down by less than 2 points nasdaq off by eight points stay tuned you're watching "squawk box," and this is cnbc lily! welcome to our third bark-ery.

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let's get down to the new york stock exchange. jim cramer is standing by. i'm torn about what to ask you about today, do you want to talk about the fed which is going to be much of in the cryptosphere >> well, i do think that when binance assures us that everything's fine, it makes me realize that, once again, gary gensler, the chairman of the s.e.c., is going to have to -- he's saying, everybody's going to have to comply by the rules he doesn't care where you are. he actually would like to know where you are. but i'd like to see binance have the same finances as bank of america. until we see something like that, i think these outfits are in trouble i don't think these outfits understand that they do fall under the purview of the government they're so proud of themselves, they think that blockchain makes them immune, as if everyone is

using blockchain at alphabet and amazon, which they're not. i think it's time for binance to say, we're going to comply with what gary gensler says, same thing with tether, and then you'll know that we're legit until then, it's not so good i see coinbase is going up they've got about 200 coins kind of unregulated again, gensler doesn't really approve of that. there were people in the s.e.c. who did approve of it, because it's innovation, but those people have been intellectually blown out, because they were on intellectual vacations to begin with they could be on permanent vacations. >> yeah, show me the money sort of scenario right now. >> oh, yeah. >> right >> i mean, look, gensler said, we we want regulation there's coinbase they don't have regulation they have stock, so they're reviewed, but the 200 coins that they have, i don't think that gensler's into that. he's not into that

>> yeah. >> lot of really interesting coins. we put some funny coins up on our lower right-hand corner that are really good. you can really take them right to the bank, except for i can't figure out what bank >> i'm not sure either jim, i'm eager to hear more of what the senate hearings are going to pull out today, but i think you're right, and i think, you know, the skepticism is rising pretty quickly about all of these things, and it is going to be difficult to tamp that down >> we need to out the congressmen who were backed by this guy and the ones that were owned by him >> $40 million is a lot of money to get passed around i feel like we're only hearing about $2,000 here or $3,000 there, but $40 million is a lot of money >> apparently a lot of people in the s.e.c. commission, they really weren't in favor -- they're very pro-innovation. that's what they say to themselves pro-innovation maybe they were into fungible tokens or even ones that were

not fungible kind of a tough market for that too. we got to find out who really backed this stuff, becky, because they need to be -- their names need to be called out so when they go to the supermarket and they're testing the grapefruits, we say, hey, were you the clown that cost us a fortune? that's the way it goes in life >> jim, can i ask a question >> andrew. >> i hate money in politics as much as the next person. i think it's terrible, terrible, terrible and i'm not going to defend it for even a heartbeat, but i'm sort of not of the view -- and maybe i'm wrong on this -- that -- i would not have expected one of these con congresspeople or senators who took lobbying money to have somehow discovered the fraud >> no, they probably weren't -- the question is, andrew, is it worse to have known it or to actually believed in it? >> totally >> right >> yes >> i believe in you.

i believe in you right? >> i believe in you. >> you never said that this -- well, you never said, like you just said, like, look, this is a really innovative way to do business it's not you knew there were people, their mind share was bought. we've got to out them, andrew. we should. why not out them they're like bad coaches in the nfl. >> i'm happy to out them we got to talk to german air in just a minute, jim >> you know there are a lot of people who are shaking that we're going to find out their names, and they're going to lose their -- they'll be gerrymandered out of existence, and we should just find them, not just because it's fun, but because it's our job >> well, we should we should out what's happened here there's no question. >> there were guys in the s.e.c. commission who believed in this stuff. uh-oh. you're going away from me.

>> love you, jim, we do need to get to germany, and we have a whole bunch of questions we're tracking the fallout, the volatility of the crypto market after the arrest of sbf, sam bankman-fried, yesterday morning. the ceo of binance saying the platform had seen more than a billion dollars in net withdrawals, but he called that business as usual for us yesterday, he tweeted, "things seem to have stabilized. yesterday was not the highest withdrawal day not even top five. we processed more than during luna and the ftx crashes." also binance pausing withdrawals of usd stablecoin due to what he called the token swap. joining us to talk about this is circle's ceo circle is the company behind usdc let's say it straight up how safe is usdc at this moment, jeremy >> usdc is very safe anyone can go and look at the reserves

they can look at the serial numbers of the treasury bills, which are all three months or less with a major accounting firm at a station and actually the majority of that reserve, you can now look on a daily basis at those -- those through the government money fund we set up at blackrock to manage those reserves so, it is very safe. it is regulated. it is why we've seen a huge surge in usdc net issuance over the past 24 hours, increasing almost $2.5 billion while binance usd declined by over $3 billion so, we've certainly seen -- >> help me with this usdc, you know, everyone talks about it being one-to-one, and yet obviously, there are some firms that have been paying huge and very high interest rates on that, and the question, of course, is, how are they doing that >> well, the key thing to remember is, if you go to a bank

and you give a bank a million dollars, they then actually take that million dollars and lend it eight times over to other people so, you have a demand deposit, but actually, it's been lent out, and that's where they're generating the interest that they'll pay you or whatever that interest might be. commercial finance, what have you. people who take stablecoins as deposits, these so-called crypto banks, like the bankrupt voyager, celsius, you know, blockfi, people could provide them stablecoins the stablecoins themselves are all full reserve, regulated, electronic money instruments in the u.s. but then they were relending those out to people who were high-risk hedge funds or others, as we've learned, extraordinarily weak controls or risk management or leverage or other things so, essentially, they were taking that full reserve dollar form of money and lending it to people who were then off, you

know, taking extraordinary risk with it and couldn't return that stablecoin back to that lender >> straight-up, this may be -- i don't know if this is a difficult question to answer or not. if you had money on binance, would you leave it there >> it's a really interesting question i think, like, right now, it's a moment where everyone is trying to ask, you know, what are safe places to hold your crypto there's obviously the, be your own bank, store your own digital assets, keep your own keys, and that will certainly work for some people. i think increasingly, people want to see regulated firms that have major global accounting firms that are providing public company levels of audit. this is why it's so important for more companies to become s.e.c. registered and regulated. >> what is the allaire family doing? are you all on cold storage or

binance or some other platform >> what i can say is, the allaire family has a mixture of cold storage and qualified regulated custodians that are regulated inside the united states so, that's my view on that >> finally, weigh in on this, because we were just talking to jim cramer, you probably heard us, about the political donations that have been made to so many during this process. do you hold them accountable for this >> specific politicians or what have you i heard your comment about whether -- is it their job to detect the fraud i think there is an interesting question here, which is, you know, the disconnect between a firm that so clearly was operating an offshore platform that, by any comparison to american policy rules, was doing a lot of really difficult things, and reconciling that with the kind of positioning that they had in washington.

so, i think more skepticism is certainly warranted, and so, i think there is a little bit of looking oneself in the mirror on that >> jeremy, we want to thank you for joining us it is a longer conversation, we hope to continue to having it with you join us tomorrow "squawk on the street" begins right now. ♪ good morning, welcome to "squawk on the street," i'm carl quintanilla with jim cramer and david faber, live at post nine of the new york stock exchange futures steady as we count down to the fed decision and press conference this afternoon. plenty to watch in the meantime as delta raises guidance and we track the continued collapse of ftx. our road map begins with decision day for the fed many investors hoping for the beginning of some slower rate hikes. plus, tesla shares extend what have been significant losses recently. goldman-sachs cuts its price