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 target on the stock as investors

continue to express concerns about elon musk's focus on twitter. and it's another day on capitol hill we'll have more hearings on ftx after its new ceo told lawyers yesterday that the company engaged in old-fashioned embezzlement under sam bankman-fried. as we said, futures are muted this morning as investors await the fed's latest interest rate hike decision in its effort to crush inflation federal chairman jay powell will speak at 2:30 eastern given further clues about the road ahead for 2023 one topic and discussion today is duration. duration of how long do we hold? >> look, i think you can do that i think that one of the things that's going to happen is tomorrow we're going to come in, and we're going to say, what now? it's like, well, nothing we're okay i mean, maybe he says something that is harsher about wages. i think you do that. but this is it between now and the holidays and david, you know, if there's nothing to trade off of, other

than the entire of sam bankman-fried, i mean, we don't have any you know this is the last day that we have something of any significance a significance >> yeah, news will be harder to come by in the next couple weeks. >> are you saying, never short a bull market? >> i'm going to say, unless we have someone who comes on air and says they know of something that we didn't know, you might have -- you might be doing okay here i mean, we don't have any -- if nothing's said, this market has a benign feel to it. especially because, like, we are starting to see even the enterprise software, which i have regarded as the achilles heel of this market. enterprise software. all the guys love it i was reading sequoia. interesting bio of sam bankman-fried there. i can send you the link. >> so, you weren't discouraged by the failure to punch through 41 >> no, i hated that.

apparently, there are people who said they had the number ahead of time. the cpi is not the issue the ppi is not the issue it's what's keeping the cpi up >> what i -- >> i'm talking >> oh, really? interrupting somebody while they're talking on our show. let me think about that for a second we were up 3% yesterday and we ended up barely. what kind of price -- the price action yesterday doesn't say something to you, that perhaps is -- >> yeah, there's really stupid people who pay up. they look at the s&p they don't realize that two-thirds of the s&p is actually not positive, based on that number. but they don't care because it's the s&p. they think that they're, you know, powerhouses, masters of the universe >> is it just algorithmic trading early on >> no, it's really stupid people early on >> it's the really stupid people >> have you, in your life, not met -- you were a "jeopardy!" host >> yes >> were there not -- other than mac in new haven -- were there not people that you marvelled at how stupid they were they may be the futures traders.

david probably saw a hundred people who were stupid as plywood. >> jim, we were moving up nicely for the first hour, hour and a half you're just saying that was a result of stupid people? >> well, because you try to look at the stocks and the s&p, they were up. and you don't have a story for them being up. >> okay. >> i mean, healthcare was weaker yesterday, other than moderna. >> hlet's take a look. does it give us a road map at all for today's trading? >> some clown may jump again because people want to do it okay, so, let's just -- let's run the tape back, bullwinkle. the 2:00 statement last time it's really -- oh, he's going to be a dove. what is that they got the bird completely wrong, ornothologists. they read the 2:00 and made a

judgment >> and then things reversed entirely >> sometimes you're with your kids and their judgment's poor and you have to correct their judgment that's like the people too they're children >> so, it's a good piece of advice, as we wait today >> i think we put too much weight on people who make moves who don't know what they're doing. the s&p 500, which is made up, by the way, of 500 stocks, it has a lot of stocks in it that do poorly if there's a pullback in inflation all the enterprise software companies, they need inflation some of them were rescued yesterday because the unstoppable mongodb, which is back today by a data dog upgrade. >> yes >> so, it's just time to recommend stuff that we all hate but you know what i'm saying the s&p should not -- it's too hard to buy a future based on a cpi number when many of the companies don't do well in a high -- in a lower-cpi environment. >> right >> they need price increases >> that said, jim, for the longer term, the courshorus thai

continue to hear from asset allocators and the hedge fund guys i tend to speak to, is not a positive one for next year >> i disagree. >> i know you do there are so many out there who think next year is going to be an equally difficult year. >> why >> because we're going to get close to 5%. >> and then the fed's -- >> we're not going to budge off it and it's going to be a challenging year corporate america has yet to fully -- we're going to have a recession. maybe it will be soft, but nonetheless -- >> i go, and i look at the companies that make up the index. i had a fellow by the name of david gibbs on last night. he's young >> yum brands. >> pizza hut, okay that's kfc it's taco bell he said to me that after many months, he now can fill all the jobs, that people want the jobs. there's more people wanting the jobs at yum than there are jobs. and managers aren't leaving anymore. now, yum is not a tiny company

>> no, it's a -- so, what does that say to you? >> it says that the labor's starting to ease, and that's the powell victory >> that's interesting. they did have -- they were going on a bit of offense yesterday, talking about uni growth, taking on breakfast, saying, why shouldn't we have as many units as our peers >> putting up a couple units every couple hours i think this is a demonstrable different market where they don't have labor problems, and that matters >> you put delta in that box today on this new guide? >> yeah. yeah i just think that we're starting, one by one, to see companies that have no problems that are not like the old days people come back wages are the issue with powell. >> you've been saying that all along. okay, but now it's been the argument to rebutting what i was telling you i hear from not all but many people who continue to be negative -- >> maybe these people are warner

bros. discovery. >> many of them don't have great performance, it's absolutely true and many of them have gotten it wrong, but they're not willing to commit cash to this market as yet, because they think next year is going to be equally difficult. >> okay, so, by this point next year, do you not think everyone will have had covid in china >> all right, but i'll make an argument that says china opening up is potentially inflationary, right? >> well, it's commodity inflation. it could be wage pressure. wage pressure. look, i don't think he's going to say anything soft today that doesn't help him. but i think that we have to be -- wages are everything ask every ceo that comes on, can you still not find people? and when you have a guy who has -- look, it's not like when you work at taco bell, it's like working at -- it's not google. but wait until google -- someone said today that google doesn't have to rationalize their

unemployment that's a great set-up for a 10% move on google tomorrow when google does it >> we've got to get 20% more efficient. >> i know. by the way, if you fire everyone at twitter, is it better if everyone goes stop paying rent stop doing everything. >> we'll know the answer >> well, i mean, but think about it if nobody works there -- >> they're not paying rent on the building, according to some reports. >> isn't musk right? >> well, the musk -- and we're going to talk about tesla in a moment -- but the musk experiment at twitter is being watched closely, because, jim, there is an argument that if he's successful in terms of cutting that many people, what does it say for every other software company by the way, twitter has more needs that are outside of the typical software company, so to speak, because of trust and safety, because of so many other things, but if he's successful in that, does that say that your friend, mr. benioff, should be cutting half the staff at crm? >> i don't think half, but i think there's probably too many

people twitter is maybe a one-off thing in that the people he's firing, many of them -- by the way, some of the people he's firing are people he brought in i go as far to say that he's demonstrating some erratic behavior >> well, it's one reason for this chorus of investors in tesla this morning expressing some frustration with musk's role at twitter growing louder gary black, managing partner of the future fund, owns roughly $50 million worth of twitter, tweets, "there is no tesla ceo today. he followed up, "i have the utmost respect for elon musk as a manager, leader, and visionary. just wish he'd hire someone to fix twitter and focus on tesla as ceo." musk trying to address those concerns, tweeting, "tesla will be great long-term but doesn't control macroeconomic tides," adding, "i will make sure tesla stockholders benefit long-term." >> almost 61% down that's going to be the biggest in history >> i know, and gary black is a

very serious manager he was always a very serious analyst. so, i mean, he's not a -- he's a guy -- david, he's not a yahoo >> no, not at all. >> he's really good. >> and his concerns are obviously echoed by many others. you can make an argument that both tesla and spacex, there's a product road map they're on and that whether elon is in the building or not is not going to impact the plan that they have at the same time, we talked a great deal about the distraction this is introducing. but guys, i also wonder about whether he's ostracizing potential tesla customers with his continued tweets and statements coming -- i mean, why would you try to ostracize any of your potential customers? >> what about twitter? there are people who want to put ads with twitter who are now, like, thinking, geez, i don't know maybe this is not a good idea. look, i was speaking with someone late last night who just

said, why aren't you more focused on the crumbling aspects of this man? and i said, because i have had too much faith in him. but maybe it's too late to be as faithful >> well, today, morgan stanley says the brakes are screeching on ev demand, and jonas revises down his long-term ev penetration forecast for fiscal year '30 at the same time, jim, he does make tesla a top pick for next year, because, in his words, "they're the only company able to sell evs at ice-like margins. >> can we just get farley on the phone, please? because farley would tell you that's -- from ford -- totally untrue now, adam jonas has -- erratic no dramatic but the idea that you can say this and farley could call right now and tell you, this is completely untrue, is bothersome to me. >> ford just added a third shift

as of yesterday on their f-150 >> "motortrend" truck of the year when you speak to -- over and over again, jim has said, we're making a lot of money per everything we make why is that ignored by mr. i had a sell on ford the whole time jonas? he went home i think it's unfair. >> it also goes to the argument that there is more competition that competition is building every day, and that's going to make the world a bit of a different place for tesla. >> the number of cars and trucks that farley's talking about building >> that said, gwe got goldman-sachs, which is lowering its estimates in terms of how many vehicle deliveries tesla will have, 420,000 in the fourth quarter, 440,000 had been the prior estimate 1.5 million units in 2023 from

1.9. >> they were at $305 they go to $235. is it a new pe base target >> no, but one of david's absolute favorites just gets savaged that report. qua quantumscape >> we had an interview with him two and a half years ago back when we were 40 feet away from each other in a headquarters in inglewood. >> we were trying to give each other covid, and they wouldn't let us >> i do one interview and he's my guy >> he's your guy i was on a fireside chat with jonas, and i think he really had a fire behind him. and he had jack on, and he just said, i think this is going to be huge and terrible you know, jonas says that kind of stuff what do you think taylor swift does jonas, swift you tweeted that yesterday

>> which one what >> national lincoln -- what's her name swift. >> taylor swift? the singer >> lincoln, swift, you know, people who have no enemies >> taylor swift can do no wrong. >> swift has no natural enemy. >> she's like the deer now >> birthday girl yesterday >> i mean, she would be a strong buy by every single firm every firm >> your point is i'm sorry, i lost the track here >> i had no track. >> there is no track >> just wanted to make sure. every so often, i like to make sure that everybody understands that he has no idea where he is either >> when we return, senate banking this time preparing to dig into the collapse of ftx on capitol hill we'll get into that. of course, after a lot of news yesterday, futures in a range this morning as we await the presser and the statement later this afternoon don't go away. power e*trade's award-winning trading app makes trading easier. with its customizable options chain,

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ftx in focus again on capitol hill this time, the senate banking committee holding a hearing. yesterday, ftx's new ceo testified before house financial services he said, ftx committed "old-fashioned embezzlement." >> enron was really a different company. it was -- crimes that were committed there were highly

orchestrated financial machinations by highly sophisticated people to keep transactions off balance sheets. 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 is perhaps in the way they were able to sort of hide it from people. frankly, right in front of their eyes >> meantime, bankman-fried denied bail as a flight risk and remanded to jail until february. >> they're approaching this, we have to admit, with some real seriousness. that gentleman was just fantastic. i thought he was great, because when you say that it's just embezzlement, it's right in front. what that says is, look out. there could be others that are like that. >> yeah. i agree with you

listening to mr. ray yesterday was surprising, actually, how compelling it was, and i think i'm not alone in thinking these well-known venture capital firms or firms that made investments in ftx, significant equity investments, what were they doing in terms of -- there was no -- you have an investment committee, nobody asks for any form of credibility in terms of, all right, can we see some numbers, pieces of paper can we -- there was the due diligence for a firm that was using quickbooks and slack as its form of accounting for financial -- >> i understand that i found that, at my 18-fable bar, quickbooks was often inadequate so, i get that it night not have been good for a $34 billion outfit but i have to tell you, david, if you go back and read the sequoia piece, and i happen to

like sequoia -- >> yes, one of the investors >> it does sound like -- i'll send you the link if you like. i wanted to invest with them after i read it. he was the brightest star on the horizon. >> it just makes you wonder what level, if any, due diligence, given what mr. ray was saying about the internal controls of the company, what was being asked? >> nothing you were lucky to get in >> you were lucky. it just makes you wonder how much, just, zero percent interest rates, cheap money, data and momentum was all this was about for that two years, three years. >> so it was just all part and parcel of the roaring 2020s. but when i read sequoia, i said, i want to give money to this guy. maybe it's not too late. that's how great it sounded. >> did they have an investment committee meeting and say, all right, what do the financials look like? do we have any audited financials >> he worked at jane street, david, was the best there was. it's like getting the guy from

oxford who was top of his class. you don't ask questions. you just give it to him. >> just give him the money >> this is what happened i'm not -- people think i'm joking around. no >> it's true we'll talk about the lack of controls all day long. >> see that guy's shorts give him the money he's got to be a genius. >> quickbooks. >> look at those shorts. >> quickbooks is better than by hand i found that >> we'll get the opening bell in about eight minutes, take a look at futures here. ildoarar, 3.51% and the ll stl hovering close to a six-month low. don't go away. good luck. td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back.

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all right, let's get a "mad dash" and then an opening bell a little more than two minutes from now caterpillar is a name you enjoy talking about. >> very much so. by the way, allison transmission is ringing the bell. i'm not baas bearish in 2023, a one of them is because this piece in morgan stanley, 2023 outlook, don't discount industrial resiliency. i'm looking at caterpillar jim came in and decided he's going to return money to shareholders, not unlike what the oil companies have done. look another this. this is a company that you short at your own peril. this is a company that typically in a recession, you just put it out there, every two points, sell a hundred thousand shares no, not this time. and i think this piece, which raises price target, but much too negative $174 goes to $190. this is the industrial renaissance that we have been waiting, aided by the fact that

president biden has put through money that anybody can get something, like a plug power >> the infrastructure bill would seem to be helpful and then -- >> right, and then the i.r.a >> the i.r.a. as well. >> which is going to reduce debt substantially. oh, sorry. it's really a climate control bill >> it's not aptly named. >> the caterpillar number is undervalued. the analysts are going to have to play catch-up with one of the great industrials of the world by the way, all this construction money ain't going to komatsu it's not you're going to see komatsu on the back of those earth movers >> made in america >> and so i think caterpillar's principal beneficiary and people are ig nnoring it. i think this is it and i think he's going to be a hero >> let's get to the opening bell here this morning and the cnbc realtime exchange.

at the big board, it is allison transmission celebrating its tenth listing anniversary. and at the nasdaq, precision optics, maker of advanced optical instruments. so, jim, we could go plenty of places this morning. >> i mean, alsen transmags, they have a giant plant in mexico no one talks about them because they all want to talk about data dog and diva, and they want to talk about media everybody wants to talk about enterprise software. real company real companies that make things. not enterprise software, not companies that analyze data and then analyze it again and then send it to snowflake for more analysis >> jim's referring to this oppenheimer upgrade of data dog. they go to outperform, target $105 you don't like the call? >> i don't like the group. the group is just -- it's so

tired out. we're -- unless you're making the big pivot, unless you're doing the pivot, mongo did do the pivot, but unless you're doing the pivot which says, you know what? and this was started by -- this really was started by palo alto. he said, you know what we're going to give people growth, but we're also going to make money and if you were not in that camp mongodb is, then i can't like you. because you're just going to fall apart on me and by the way, fintech, i mean, david, fintech, kiss of death, fintech. >> fintech >> fintech >> yes buy now, pay later also. >> yeah. buy now, pay later there's an idea. remember jamie dimon, who i love, rep jamimember jamie dimon buy now, pay later, he said they've had that since jpmorgan. >> upstart klarna you're going to love it

>> well, a stripe. you know how about square people like square now, why >> why >> why why like square? i mean, what -- i think analysts should put out pieces and say, this stock is not liked right now, but we'll come back later when it's liked. >> how about that? guys, i got to get to an evolving story in the market in terms of at least the price loss charter communications and an impact on our parent company, comcast. >> i knew you were going to go there. >> comcast, man, just starting to get a little momentum >> there's been a couple bullish calls this week. >> i know, but -- >> what a buzz kill. >> charter held an analyst meeting, its first with its new ceo, chris winfrey, he's only been in the job for a couple of weeks, taking over -- >> i bet you've met him. >> i have not yet met mr. winfrey. tom rutledge stepping down yeah, an analyst meeting yesterday at charter take a look at the stock you see what it's doing to

comcast because it does seem to be related to that charter is getting crushed why? they're going to spend a lot more on capex than had been anticipated. got mixed reactions from the analyst communitt me share gold because they may give you a sense, at least, as to why there's such a negative reaction charter's capex over the next few years, 2023 to2025, may nonetheless, they say, be higher than investors had expected, driven by increases investment in footprint expansion i'm reading from something we had prepared but unfortunately doesn't seem to be appearing >> what do you mean? >> meaning that i had this written out so that our viewers could follow along with us but they're not. okay >> go ahead. >> he went on to say -- thank you. thank you. okay at the bottom here "charter having only capex guidance for '22 and '23,

investors may remain uncertain as to how much capex to model for 2024 and 2025 and therefore lack clarity on the medium-term outlook for buybacks, free cash flow per share." listen, yesterday, ceo winfrey basically said, you know, we're going to change and pivot our strategy to a certain extent from home video broadband, selling that, to connectivity. broadband and wireless charter has become a major player in wireless >> wireless. >> but that's going to cost more money. it's going to require higher capital investment, and so they invest incrementally in three areas. network evolution, network expansion, and go to market customer experience systems and it's more than people had anticipated. and so you're getting a very -- well, mixed reviews from the analysts, jim, but negative reviews from investors who had not -- >> how many theme parks does charter have >> charter has no theme parks. they are purely a connectivity company.

>> no "harry potter" >> stock had been creeping up along with our own parent company, comcast, which had been doing quite well carl mentioned a couple of positive comments. but it's getting carried down today. only news i see is charter so i don't believe it's comcast-specific >> comcast has so much more going for it, but that wireless -- the wireless, you keep coming back to the quireless, and it's hard to get around >> yeah. yep. so, that ramped guidance for '23, $10.5 billion to $10.8 billion in capex is really what does seem to be pressuring those shares, guys mr. winfrey setting sort of a new strategy with increased capex that, again, at least investors had not been anticipated that high a number >> but comcast hasn't been buying back that much stock. >> no. one of the key arguments for comcast has been that because it is unlevered, at least very many of its peers, that there is an opportunity to buy back more stock if mr. roberts, brian

roberts, doesn't pursue some sort of other -- >> what would the head of the ftc allow? i find she might project a merger with dole pineapple honestly i mean, you know, comcast gets together with kansas city southern, blocked by her, and they go -- i'm being very facetious, but let me just say that everybody's in a box who has capital and wants to buy, and the box is that they're going to shoot down, i believe, kroger >> listen, i mean, when i interviewed malone a few weeks ago, he said, comcast and charter, getting together, don't rule it out. i go, i think i can rule that out. well, you never know >> in 2024, you have new elections. that's why you can't rule it out. >> exactly >> but that's what -- there are a lot of people i have been talking to who say, wait until 2024 i say, can we get through 2023

i posit that question to them, and they're like -- they think i'm a short-term thinker >> only thinking 24 months ahead. >> i have this investment meeting tomorrow with jeff marks and we like to think of ourselves as 6 to 12 months, but the really big thinkers are thinking out hundreds of years >> hundreds? that's going real well for masa >> in short-term, we'll all be dead long-term, we're fine. we'll all go to heaven i'm reading jim stewart's new book >> it's not available to anybody other than you i have not read jim stewart's book >> he talks about his poor behavior, and he says, i'm going to hell anyway what's it matter >> some did seem to think he might live forever i'll never forget when he said, david, i really like you, and i will be at your funeral, i promise. thanks he always said that to me. >> really? >> he did.

he was wrong >> yes >> yes >> but i will tell you, the book is not out yet my wife would say, what are you doing? it's 12:30 turn the light off i said, no this is it this is the book that we've all been waiting for sumner doesn't come out as well as he might have wanted. >> i can't wait. much shorter term, delta's guidance for q4 is pretty interesting. sees revenue up 7 to 8%, prior, 5 to 9%. eps, 135 to 140. prior, 100 to 125. >> jetblue was -- i mean, well, they have some problems, but jetblue set us all -- i think delta, again, should be higher, but the market's problematic out of the fed but jetblue, no. delta, yes bastion, oh. he's a bastion of strength, bastion. >> he's on "squawk" this morning. talked about next year relative to this past year. take a listen. >> i'm thrilled to say while '22 was a crazy year, we hit our

first-year targets, our profitability targets have been slightly ahead of plan on that 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 next year into this year, which is already in accordance with plan. so we have a very healthy outlook. >> you know, phil lebeau asks every tough question and i keep thinking that bastian is going to have an answer that's not what i want. it's just box check, box check, box check. i've never really been a big fan of the airlines, in part because of what happened in the pandemic, but i'm a big fan of bastian. he's the man he is the man. >> you've been talking a lot about companies where headwinds, in this case, oil prices, turn into tailwinds, at least from a margin perspective >> this is a great example of why i'm bullish on 2023. here you have a terrific executive. everything's going his way there was a downgrade of marriott today, which people

question travel, but i just think that you had that plain order yesterday from united, a hundred planes you have bastian saying good things now, i don't know if the consumer has to cancel all of his things before powell lets up, but i don't think so there's health in an industry that does matter there's health in the rails. the rails are doing well not a lot of health yet in fedex and u.p.s. that could be related to how the holidays are going >> well, how are the holidays going? we haven't really -- you don't really hear a lot about -- >> mixed very mixed >> yeah. >> it's mixed. >> all right does that point to the strength or lack thereof of the consumer right now? should that be a concern >> consumer is beleaguered by the fact that every time you turn the tv on, there's someone saying, hunker down, there's a recession. most people i talk to believe they should hunker down because there's a recession. they're saving more, spending less, not taking the vacations you thought they'd be taking, they're doing things that are more conservative.

that's why i love the brian moynihan interview with sara, because brian was saying, it is business as usual. but other people, i think, have frightened us, and frightened us to the point where we're not taking the vacations we thought we were going to take. and we're not spending and it's a -- another way -- it's an etsy christmas at our house. etsy >> remember chuck robbins, i think, was one of the earliest to say, we're in danger of talking ourselves into a recession? >> i think chuck is dead right i was out to dinner with chuck, and you know, i didn't order the appetizer. >> is that what you do for the coming recession you cut back on the apps >> i didn't order an appetizer, because the bill comes, and these wines, there's this 1858 done by the son of camus for 30 bucks. you wouldn't be able to tell the difference and that's what i'm doing. i'm not buying the $60 bottle. i'm buy the $30. there's not been a person who's known the difference >> will you spend me the name of

that >> 1858. they have it at total. >> okay. >> you have to -- total wine $5.5 billion company but i'm not kidding. i think that when you hear -- i don't want to pick too much on jamie dimon, because he's a great banker, but you know, you hear people immediately pick up on this. >> you were on this last week. it's not just jamie. it's david solomon, jeff bezos >> how many did david solomon lay off today? the seventh day, he rests. no david, these people scare you. i'm -- i talk about it >> again, we come back to, they're seal eing datasets. you think they're doing it purposefully to scare people >> no, i'm saying they think money's run out from the pandemic credit card debt is going up they're looking at the mortgages and realizing that people can't really -- i know there was an upgrade today, a bunch of home companies, but people can't afford the new homes, and they're saying, listen, it's not

as halcyon time, jim like, i'll say, i see good things, and they almost always try to talk me out of saying good things thi >> you're right about barclay's, go to 116 from 85. they upgrade powellty. >> they got a gun to their head on that lennar >> ten-month high yesterday. >> they report after the close today. it does have one of the best charts in the book i know, david, i always refer to the charts with david, because he has no interest whatsoever in them, but i think that lennar, that is -- why would you do that unless you really felt great conviction that stuart miller, the executive chairman, who starts the conference call and kbif gives you the overview of the industry, he's going to say positive things. >> you've mentioned his calls a few times. >> our conference calls that must be read and he started -- it will take you three minutes. like in the "wall street

journal," it's a two-minute read three-minute read, stuart miller >> is that your best soft landing chart? >> that is a company that's going to do fine there's not a lot of new homes being built. mortgages are high, but if you listen to toll brothers, what, a quarter of them paid full cash >> yardeni argues we've deflated cryptos, memes, spacs and bonds. >> that deflation piece was very strong >> and yet 60/40 is down 15% for the year >> i was skeptical of deflation, but yeah do you know that non -- the nonfungibles are down 99%? david, the fungibles must be minus 103. >> your tweets on this have been hilarious. >> that's because we have a fantastic comedian who also mics us up and does things, and he was the one who told me, look, that's how he started his act. he said, hey, did you know the nonfungibles are doing bad i didn't know what fungible was. >> fungibles are even worse.

there he is. >> great line. where are you appearing this week >> he's off camera nobody can see him >> where >> bill -- >> that guy is hilarious he gave me that joke i've now used it four times. everybody thought it was fantastic. i stole it from stretch >> i got a laugh out of it this time >> i said it three times before. >> it's all about the delivery >> it's the timing >> it was a danny thomas thing you did a spit take. people don't even realize. you don't even know what a spit take is. >> yes, i do >> dow is up 70 as we await the fed. let's get to bob pisani. >> flattish open as we await what the fed has to say, but we do see some groups moving here energy is rallying again today oil was $70 a week ago, we're at $77 almost on oil, so energy stocks are moving up again industrial is getting a boost. the airlines are up. the railroads. transports are up. you guys have been covering what was going on with delta, kind of going against what jetblue was saying yesterday

metals and mining, the china play is kind of played out here. that was a big, big mover, and it's essentially stopped going up now semiconductors broke out intraday yesterday and they're on an uptrend. ark innovation has been flattish for the last month or so not a lot of big, strong trends here one thing very interesting, on the s&p 500, we keep going right up against 4,100 and failing the reason that's important is because if you break over 4,100, you break the down trend that we have been in all throughout the year, lower lows, lower highs. and that would be big. we can't do it why can't we do it everybody, david was talking about this, is really gloomy about 2023, particularly the strategists. the strategists are the topdown people who analyze the stock market in terms of how the macroeconomy is doing. analysts, which are bottoms-up guys, they do individual companies, they're very bullish still, up 5% is their estimate for 2023 for the s&p 500 but they're always usually more

optimistic than the strategists. the strategists now expect a mild earnings recession. look at that the strategists, i'm talking about the 20 or so that really matter, expecting earnings to be down about 6.5% as a group for 2023, and this has been coming down for several weeks now not only is that coming down, but if you look at the price targets, 17 top strategists, the average price target for the end of 2023 right now is 4,000 hey, guess what, folks we're at 4,000 essentially, most of the strategists are anticipating no gains next year, so think about this earnings decline about 6%. no big gains at all in prices. that's what you call an earnings recession. now, 6% decline is a mild earnings recession in a serious earnings recession, you could be down 20% or more. what i'm telling you is strategists on the street are expecting next year to be flat to down with earnings slightly to the downside, and i think that's probably pretty much where the consensus is right now. so, the risk here definitely is to the upside.

if we get anything less than a mild recession, if we get a soft landing, the market's definitely going to be higher finally, we've been talking about gary gensler and his big agendas all year he's got a big one coming up today. no, it's not on ftx. he's going to finally float his proposals on payment for order flow so, essentially, remember, he's been very unhappy about payment for order flow this is the process whereby the brokers like schwab and etrade, robin hood, route to brokers they says payment for overflow may not be giving investors the best prices. he's proposing an auction process that might have to be done ahead of payment for order flow this is very controversial he's got other proposals that are being floated. what's interesting, and rather ironic here, guys, is that the companies that were most at the center of all of this have ironically not done very well at all.

we've sort of moved on remember gamestop? oh, yeah gamestop was $21 yesterday that is the lowest level since going back many, many months and essentially, is very close to a two-year low so, essentially, almost everybody, not everybody, but almost everybody who bought this in the last two years has lost money, is under water at this point, i should say, and robin hood, is other one at the center of all this payment for order flow, also down about 45% or so a year so, carl, essentially, what's happened is the world's moved on there's not so much obsession about gamestop and what happened back then. there's more obsession about sam bankman-fried. but still, these proposals are being floated today. i'll follow that let you know what happens. >> can't lose sight of it. thanks, bob pisani quick reminder, you can get in on the cnbc investing club with jim. he mentioned it a couple moments ago. sign up and find out more at cnbc.com/jointheclub or use the qr code on your screen we'll check bonds on our way out here before a short break. most of the curve, a little bit

lower today. dollar, still sub-104. watching this commensurate spike in oil as well back in a minute

not quite to yesterday intraday high, but awfully close. anthony noto buys almost 5 million, 1.1 million shares between friday and yesterday we'll keep an eye on that. early session highs, dow up 142. "stop trading" with jim is up next

jim, what's on "mad" tonight? >> let's just call it on lightning round, someone called a super micro computer, smci i didn't know it very expensive stock we'll take a hard look at it tomorrow we've got an investor club meeting you never know what we're going to recommend but we have something. >> we do >> yes it makes money it does things that's what we've been looking for. >> we'll see you tonight, jim.

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good wednesday morning welcome to another hour of squooet. i'm carl can't nia live with morgan brennan we await the federal reserve statement and press conference this afternoon not too bad an action to start the morning. dow up 150 almost. s&p still holding. >> here are three big movers we're watching this morning. starting with delta. the passenger airline raising current quarter forecast and issuing an up deet 2023 outlook setting robust travel demand juxtaposition from what we heard from jetblue yesterday delta up 2% this morning retailer best buy in focus, getting a downgrade at bank of america. positive catalyst may be illusive for some time those shares down 2.5%

finally, a mega cap name that's shed nearly half its value in the last three months, down almost 50% tesla down again today, down 1%. goldman sachs cutting the price target to 235 per share from 305 even as morgan stanley's overweight rating, aggressively expanding its user base. david? >> that's a continued decline in those shares we're watching closely. we're also watching ftx closely. the continued fallout of the bankruptcy of that company former ceo sam bankman-fried has been denied bail in the bahamas. the new ceo saying the company committed old-fashioned 'em beszaliment. kate rooney is in d.c. with the latest. >> good morning. the second day of hearings on capitol hill today the senate holding its own

ftx hearing kicking off as we speak. there are no ftx employees or representatives testifying there are four industry experts. kevin o'leary, former ftx spokesperson and investor is among the witnesses. we'll bring you headlines from that in the meantime, sam bankman-fried is in a corrections facility in the bahamas after his request for bail was denied yesterday. the judge in the bahamas citing heightened flight risk for the former ceo he'll remain in that jail until the next court appearance. that will be for arguments over extradition scheduled for february 8th he was taken into custody on monday late in the bahamas that was the night before he was set to testify before the house financial services committee in washington, facing eight criminal charges out of the southern district of new york for funneling ftx customer money into his hedge fund al media, also facing wire fraud and

conspiracy to commit money laundering as well as campaign finance violations yesterday in a statement his lawyers say bankman-fried is reviewing the charges with his legal team and considering all of his legal options ftx's new ceo, john ray who led enron through bankruptcy after its collapse did appear before congress yesterday and ripped into bankman-fried's management style. >> this is really old-fashioned embezzlement this is just taking money from customers and using it for your own purpose. not sophisticated at all this is plain old 'em beszaliment. >> you heard him plain old embezzlement back to you. >> kate, looking for some signs of stability in the space. batching comments from by nance

chief of the bumpy road ahead. >> that's the big thing people are watching binance is by far the largest global exchange trying to shore up confidence as part of the issue that even if there is no real issue with binance, which they said there isn't, to be clear, the ceo has come out publicly trying to get ahead of that the trust factor here is what people are worried about, the idea that any of these centralized exchanges could be a risk we heard sam bankman-fried before ftx went under say everything is fine people are really worried about ev every ceo in the industry. they put out proof of reserves last week that some have been questioning. it releases the snapshots. the bar is a lot higher from any of the crypto platforms to prove they're safe it's the right place for someone to store their money you've seen record withdraws from every crypto exchange, not just binance, even coinbase

which is regulated and publicly-traded in the u.s investors in general looking to store their money in a much safer way because of what happened to ftx. >> definitely a hot stove dynamic. we'll talk soon. kate rooney in d.c let's talk about this afternoon's fed decision our senior economics reporter steve leisman is in washington and has more on what we can expect. >> good morning, carl. too many questions today surrounding the fed meeting. it is expected to hike by 50 basis points does the fed embrace the call for earlier than expect ped end to rate hikes or push back against the loosening of financial conditions since the last fed meeting look what happened to the peak funds rate, along with sharp declines in the ten-year and two-year after that inflation report the rate fell from 4.99, now 4.81 for the may '23 contract. there's some betting the fed

could be done as soon as a .25 point hike in march. this is good if the fed and jay powell are comfortable with this dovish drift in the outlook that's loosening financial conditions since the last meeting. the ten-year down about 60 basis points junk bonds and 30-year mortgages down about 75 basis points since the earlier meeting. if the fed didn't intend for financial conditions to loosen and has a problem with market levels, the fed share today could attempt to redirect the fight for inflation. the market sees the fed hike in 48 the but'sing by almost 50 basis points that wasn't a problem when the easing was far off in the future adds it gets closer, the gap between a more meaningful fed that says it will hike and cold in a market that expects rate

cuts, that becomes more meaningful. luke crandall says he thinks powell is going to be hawkish but not stride dent. he doesn't want to introduce new volatility because we're nearing that critical year-end funding time amid what some say is a liquidity strain. >> to refresh for people and focus on the day itself, it's not that long ago we had the statement which sent things one way and the press conference that sent them the of sit way. has the fed thought through in terms of communication anything from that event that would color how today goes >> i think so, david if i can amend your question a little bit there was also the kind of curious brooksings speech a week ago, the market took that in a

very dovish way and backtracked. i think the fed has a problem with saying things that he thinks are hawkish and then this loosening of financial conditions to so extent they threw up their hands and they said the market is going to react and hear what they want to hear. there's not much they can do about it you can imagine powell saying, yeah, we loosened it, but doesn't mean we're going lower, indicating ha the fed is likely to hold and stay at a restrictive rate for a while the market may rally on that the market has been hearing what it wants to hear you feel it, david this market seems to want to go higher it's waiting for anything that resembles a green light from the fed. even if it's not a green light. >> a yellow light maybe. >> any kind of light. >> steve leisman, thank you. for more on what the fed's next move means, let's bring in cross mark ceo bob dahl.

bob, is that your sense, too, that the market is looking -- at least the equity market is looking for any reason or any sort of little inklings from the fed or powell to springboard from. >> no question the market seems to want to go higher, that's part of the year-end seasonal strength look at yesterday. after we got the cpi number, it looked like we solved the cancer problem in the world the market took off, gave most of it back and then the underlying technicals were not great. i think the market is tired. it's got up a lot in a short period of time yes, the fed matters chair powell has to come out and say we're making some progress he also has to come out and say, you know, it's 7.1 on a trailing 12, no longer 7.3. that's progress in the right direction. it's a long way from -- >> that's right. it raises the question is the narrative changing?

what i mean by that is, from an inveflter standpoint is it changing from ones with concerns about inflation to the possibility of an earnings recession or an economic recession next year? not so much what the fed is going to do, but what the fed has already done >> this now depends on what the fed really wants if they insist on two, my view is they have a lot of work to do and we will not avoid a recession. conversely, if they quietly say, you know, maybe three is okay and four is close enough to three and they acquiesce, then maybe we get a soft landing. there's a lot of work to do and a lot of language to speak over the next few months for the market to figure it out. either way earnings estimates i think are too high. >> are you a believer, bob, long term that they do sort of readjust their target higher than two, blanchard wrote a piece about that in the ft

earlier in the week. what's the impact on the dollar if, in fact, they went that way? >> carl, i think you're right. the two world we had for some time as the inflation was really zero to two has now changed. service inflation, the wage picture we talked about, the decline in globalization, all that points to we're not going to be a two. three is probably more realistic which obviously does have implications for the dollar depending on what other central banks do as well it also has implications for the multiple on the market i'm not sure an 18 pe is consistent with three with inflation if that's where the fed ends up going. >> that's right. probably not consistent if history is any indicator, if we go into a recession, from a valuation standpoint which raises the question, bob, what does an investor do right now? do you take monthey off the tabe do you put money to work in

value oriented opportunities something else what do you do right now. >> consistent in what we've been trying to say for most of the year, at least the second half, buy the dips, trim -- i'm not against doing some trimming, more defensiveness in the portfolio, seen what next year's earnings levels are going to bring. i'd be a little on the cautious side here, in the 4,000s. >> finally to bring this full circle to the fed, we don't talk about it enough, but that's quantitative tightening. even if you see the fed pause on rate hikes at some point early next year, qt is likely to continue on, right what kind of impact is that going to have on the market? do we even know? >> thanks for bringing that up we talked about the rate this balance sheet is a conundrum. we've not done it before at this size it is a negative as they have to deal with it obviously nobody has a gun to their head that says they have

to release the balance sheet they can stop with their own risk consequences. you can't imagine good news coming from the fed on winding its balance sheet even slowly. >> bob doll, thanks for kicking off the hour with us. >> thank you. as we head to break, here is our roadmap for the rest of the hour including stifling crypto misuse the ceo of stifel -- i see what we're doing, speaking with lawmakers on regulating the crypto market. >> home for the holidays, we'll look at who is actually back in the office while breaking down the latest for what it costs to rent a home. finally, citadel's ken griffin suing the irs saying they leaked his tas.xe that's coming up later this hour as "squawk on the street" continues. [clap] now, as businesses we can blame and shame. or... [whistles] we can make a change.

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describing an existing sec rule that could have prevented customer assets from being misused. i appreciate my constituent, ron kruszewski for his thouft comments i associate myself with those and would like those entered into the representative. >> that was yesterday at the ftx hearing before the house financial services committee sharing her opinion on crypto regulation partially formed

after speaking with stifel's chairman ron kruszewski. ron, fun hearing your name yesterday. first of all, tell us what you told the congresswoman and then we'll take it from there what did you kind of impress upon her and/or help when she was trying to form an opinion on this >> first of all, i started with the fact that she shouldn't be spending too much time trying to necessarily figure out what happened what happened is as old as charles ponzi. you can go through history and the same thing happens a company, in this case ftx, took customer funds. they then said they had an asset that was worth something, the token. it wasn't worth anything they took customer funds and misused them that's classic, simple 'em beszaliment. we don't need five weeks to try to keep telling that story over and over again on the other hand, i said to her

what's most important as we sit here today is that we apply rules that are already on the books to this industry, specifically the crypto industry that's the customer protection rule it's been on the book since 1970, so 50 years ago. it specifically prohibits and has ways that you have to comply that you do not comingle customer cash or customer securities so that was the basis of what i was saying it's pretty simple i don't know why anyone made this so complex. >> it's not overly complex in this case there was the fraud. as you said, it goes back a long way, ponzi fraud by its very nature is hard to detect. even if you did have the customer protection rule in place, ron, nothing says you would have been able to stop this, does it? >> well, i tell you, it's a lot harder enron was a very sophisticated fraud with very smart people

most firms have to comply with this rule. here at stiep el, people have to sign certifications that they're complying with the rule under criminal penalties if they signed it incorrect. you put in this infrastructure that makes it hard for some guy in a t-shirt with a bad haircut sitting on a computer moving money around, which is exactly what happened here i would say you can -- people who want to steal money are going to steal it. the customer protection rule makes it a lot harder. i have another recommendation for you if you want to hear it >> yes let's hear it. >> sure. give it to us. >> i'll tell you, i think what has to happen today, i think the media, cnbc, you're a great organization, we need to -- there's a lot of confusion a lot of people are scared

you need to call the heads of industry of crypto, so binance and crypto.com and kraken, get all the ceos tell them to come on at 3:00 and ask them a simple question, do you segregate customer funds under the customer protection rule it's a very simple question with a very simple answer it's either yes, no ori i don't know we don't have to wait for congress let's ask. anyone that's legitimate in this business -- i think there are many legitimate players, can answer that question they can answer it today you guys should be inviting them on and asking that question. >> they've certainly been on in recent weeks that question has been asked we can happily do that again to your point, it is worth the repetition, especially in light of what we've seen in terms of fears around crypto contagion

and more money pulled from exchanges like binance in recent days ron, just to get back to a piece of what you said earlier, the sec. we saw the sec bring forth this suit yesterday it kind of raises questions about what the sec can regulate as it stands right now in cryptocurrencies you can argue the suit is going to test that and set a legal precedent around that. is that enough to basically, even if congress can't do it, create more rules of the road and essentially enforce what you're proposing here on our air right now? >> i'm not sure there's really a need for that many more rules of the road if we're going to get technical, we have to recognize in today's environment that international firms can market in the kbrats via the internet we'll have to tackle that. the ftc has the tools to

regulate the problem is that crypto firms do not need to register as a regulated entity if you're not registered as an entity, it's hard for the regulatory body can say they regulate them. by the way, i haven't seen that question posed of major firms. i'll look for it on clips. the other question you could ask, same thing, would you mind if the sec came in to look at your books to see that you're properly segregating customer assets that's a question. i could in one day walk into the firms and tell you whether they're doing it and so can the sec. i'm sort of -- let's get to the point here and ask some simple questions so that there can be some confidence brought back to the investing public which right now there's very little. >> i have a text here from someone watching, ron. they say if someone is misusing customer funds, they aren't going to admit it on tv because you ask them anyone that takes comfort from

that would be silly. >> it would be silly, but it's an admission if you get on television and say, of course i'm not using customer funds, and then it turns out that you are, that's fraud on national television that will be a nice exhibit in any trial. of course someone is not going to admit it. but you're talking about ceos here, the head of an industry. every ceo that wants this to be a legitimate industry wants to say that we do not comingle customer funds. >> understood. understood. >> i cannot imagine them saying anything different. >> yep listen, it's a story we're following closely. we'll continue to particularly as well the sec and that question of jurisdiction ron, thanks for taking time this morning. appreciate it. >> thank you forgiving me the

time later this hour evercore's roger altman is with us. more on why he says the fed has, quote, backed itself into a quk t srn "sawonhetreet" is back in a moment with the s&p and dow trading higher

welcome back to "squawk on the street." take a look at the ishares u.s. home ticker itb as we see a slowdown in the housing market amid higher interest rates, they've lost a quarter of its value this year. barclay's says the recent decline is a buying opportunity. lennar can reduce construction costs in tandem. you can read more on cnbc.com/pro shares of lennar trading up 1% after the earnings today as we go to a quick programming note, virtual summit today, we'll be providing actual advice to assist on printers and navigating what's a rocky road

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welcome back to "squawk on the street." i'm bertha coombs with your cnbc news update. severe storms have hammered parts of louisiana, texas and oklahoma forecasters say more bad weather is on the way. in northern louisiana, a tornado leveled a neighborhood injuring 25, some critically. just south of shreveport police say a boy was found dead more than a half a mile from his home the boy's mother was found dead one street over from that home. ukraine says it successfully shot down all 13 russian drones out of the sky over keverly this morning. local officials say five buildings were damaged, but no injuries have been reported.

china is further limiting its reporting on covid outbreak, even as new infections rise. the government will no longer release numbers of asymptomatic covid cases saying they've become impossible to track now that mass testing is no longer required. the head of the world health organization says he's hopeful some time next year covid will no longer be a public health emergency. he called on china to share data to help understand how the pandemic began carl. >> bertha, thanks. markets fairly tepid this morning as investors await the potential rate hike, predicting a further slowdown in the economy and the stock market vanguard says energy supply and demand concerns combined with trade volumes mean they'll likely enter a recession in the coming year. morgan stanley's mike wilson

doubling down this week saying the driving forces behind higher valuations have run out of steam. evercore founder and chair roger altman is with us. always good to have you. >> thank you >> jpmorgan said the strengthened labor market saying a majority of the fmoc concerned about doing too little than too much sounds like that's the case. >> i think we'll see the equivalent of a steady as she goes message today from chairman powell don't think they'll be a real signal on a pause or a pivot because that would be premature. we'll see a 50 basis point hike. i think we'll see early next year one or two more, 25 basis point hikes. the one thing the fed cannot afford to do, because it's had a tough year, it's sent mixed signals. one thing it can't afford to do is ease off too early, declare

victory and find that victory is not at hand. it's not just not in the fed's interest to signal the job is almost done, we're almost there. i don't think we'll see that. >> the street is primed to look for changes in words like on going rate increases to further rate increases or some rate increases. do you think they're wary of that as well, of being so granular that the street is going to take any sign of a hall pass >> i wouldn't like to be jay powell today because he can't win. what i'm sure he'd like to do is a version of jackson hole. you read a statement, don't take any questions, get off the stage. the format now the fed has with the press conference doesn't allow that i think there's a tremendous tug of war going within markets in the following sense. we're in a period -- we've been in a period for three or four months where bad news economically has been good news for equities because investors see the bad news and they say, wow, the fed won't have to be higher for longer as bad as we

thought. so let's buy that i think still pertains today. i worry that sometime soon we'll get into a phase where bad news economically actually is bad news for markets because the recession risks are rising i think they're quite high myself earnings are going to be under pressure next year valuations seem high to me in relation to what may be earnings flow next year we may transition soon into a market where bad news actually is bad news. >> you're saying those things, roger, and i'm thinking about the role i know you typically play in terms of advising companies, whether on a deal or just in general. is that what you're hearing from a lot of ceos. do they expect earnings to come down next year are they being particularly cautious as they approach '23? >> of course every business is different, and you have some companies whose business remains very strong. for example, in the food and beverage sector, consumer food and bev ranl

most ceos say the following, business is still okay, but i think it's going to get worse. that's the message i hear most often. they don't usually translate that all the way because they don't know themselves into saying earnings will be down 11.4% or something like that they don't know themselves i think this is just a widespread expectation you see it in the surveys. evercordes surveys of investors. other firms do regular surveys of ceos, they both show, as you know, almost 100% agreement on the likelihood of a recession which would mean lower earnings. it doesn't mean they're right. but the expectation of weaker business conditions next year is universal. >> in light of that, what are you hearing, how are you advising in terms of navigating things like m&a, where to put investments to work, especially in terms of the near shoring and reshoring and supply chain

diversification, hirings versus firings. >> you've got several questions there, morgan. i think ceos are a lot like investors in the sense of the tug of war i mentioned someone said on this network earlier today, i was watching, markets want to go up. ceos want to think that business conditions won't be terrible they may get a little worse, but they won't get that bad. it's just human nature in that spirit, you can see that, even though m&a volumes are down a lot versus last year, compared to pre-covid levels, like 2019, they're really not bad. even this week, deals continue to be done because there's a lot of pent-up interest on the part of decision makers in business combinations i would say one big uncertainty, though, that's new is the antitrust environment. a lot of people are waking up to realize there's been a sea change in the global -- global

antitrust environment. it's real little changed the ftc suit earlier this week or announcement of a suit against microsoft deal illustrates that the leaders have already deterred a lot of deals that would have otherwise gone forward. i can see that very vividly. >> i hear from your peers as well, roger, they're surprised there is a level of activity where a ceo has their eye on a particular company, the price has always been too high suddenly it's down substantially. they say here is an opportunity. maybe i'll inquire as to whether they're interested. >> on any given day or week or month, probably only 10% of possible deals are facing regulatory uncertainty if you look at some of the deals in bio pharma, they don't -- generally speaking -- i don't

want to be a blanket here, blanket statement, they don't generally raise those risks. at the margin the new regulators have deterred a lot of deals because you have two types of buyers, if i can put it this way, or three types. number one, people who don't want to take the risk of being challenged they say i'm not going to put it on now number two, those who will try it and get it announced, but if they're sued won't litigate. it's going to take too long, it's going to freeze my company. third, those prepared to go all the way like at&t did on time warner and microsoft is going to do on activision there are a lot of people in those two categories >> finally ftx, is it specific enough it has little meaning or little bearing on overall financial activity, or is it serious in your view >> i think it is serious i happen to think it's a sad

story. i'm not referring to mr. bankman-fried, but i'm referring to a lot of people who believed in various crypto-related instruments, maybe because other people next to them believed in the moment and have lost ftx itself is an incredible drama. it could be a great miniseries. >> i'm sure it will be. >> it's got everything i think there's tremendous public interest in it, way beyond just folks like us. i think a lot of people have been burned here, and i think that's really a shame. >> just to wrap this up, i think about the warren buffett comment that when the tide goes out you see who is swimming naked. the tide is going out. we're talking about the fed. that's where we started this conversation are there more areas of the market where folks could potentially be swimming naked or there's excess still to be rung

out? >> if you believe we're going to have much weaker economic conditions next year and, therefore, earnings will be disappointing and maybe the current valuations don't look quite right, they could have a lot of people who are too far out on the belief scale. we could talk about crypto in that regard, but that story is being told everywhere. i don't have anything to add to that a lot of people were believers and now aren't next year i think could be a tough year i personally think recession risk is quite high if you look at the whole industry sector, you look at truckers, look at all kinds of freight rates, it's really getting weaker it's true that the labor market hasn't weakened yet and the fed can't ease off until it sees

softening in the labor market, otherwise it can't hit the target, even if it's 3% and not 2% i think next year could be a tough year. >> plenty of chances to talk about it in the next few weeks, roger. thank you. roger altman. in the next hour on "techcheck," goldman names meta one of the topics. we'll talk to the analyst behind that call. the ce ofrmts of cloudflare will be with us in about 20 minutes don't go anywhere.

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welcome back to "squawk on the street." i'm dominic chu. stocks are mostly higher, fractionally sue near session highs for the s&p 500. it's a iks phd picture with regard to the discretionary sector overall caesar's entertainment is a notable lagarde in that group after analysts at bank of america downgraded that stock to a neutral rating and cut the

target to 55 bucks they cited declining visits profile and competitive online betting environment. that stock is down some 45% so far this year which would be its biggest annual decline since 2008 watch discretionary. there's way more stuff coming ay st with us on "squawk on the street." we'll be back after this commercial break esg is responsible investing. who's responsible for building esg into your investments?

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welcome back new york city's rental market continues to climb the average rent $5,200 a month, right as office occupancy is about 50% throughout the metropolitan area. bill root ten is ceo of one of the largest real estate companies operating in our city. good to have you back. >> happy to be here live and in person i was here about six months ago. thanks for having me. >> i want to start with the juxtaposition of two things. unquenchable desire to live in new york they don't go to the office. i can't understand the two

how do you explain it? >> first of all, the trend of peep coming back to the office, particularly since labor day but even before that, our buildings, the class a build deposition we own, some 70%, 80%, some 90% blackstone, blackrock. >> of course, financial service. they're not anywhere near occupancy prepandemic. >> i just left a mayor where the mayor and the governor spoke an organization my dad started in the '70s, first time a mayor and governor were working at this breakfast together, talking about a new vision, the new new york plan which part of their 150-page recommendation talks about conversions of obsolete office buildings to residential, to be able to walk to work we have a housing shortage we've proven it downtown the proof of concept has been done in lower manhattan.

30 years ago there were 10,000 people living here in the mid '90s, the city and state allowed conversions. there's 70,000 people living i walked over here, no doubt >> i still wonder how do you in your mind -- in other words, higher clearly there's demand, for whatever reason people want to live here. are you surprised that so few of them seem interested in going to the office every day >> again, as i said before, the trend is changing. we've just made a huge announcement with citadel and our partners at vernato to create .7 million foot buildin near where jpmorgan is building their new headquarters they want all their employees together we just signed a lease in our building in times square, pandora is moving from baltimore getting 30,000 feet of square

space in times square. >> you own residential and commercial >> yes >> would you rather own residential than commercial? is commercial a more challenging environment? >> it's a challenge, but if you have the right infrastructure, amenities. ceos tell us to get employees back, you have to have the wellness, food, the sustainable components those are all key components to getting people back. we're seeing people respond. almost 30 million square feet of leases will be signed through this -- the end of this year that's a damn good number for a tough economic environment >> you mentioned the citadel deal tell us more about it. it's going to be years potentially, but he wants to build a giant new headquarters in midtown manhattan >> they just moved into a new building on park avenue. they have other spaces they want to have their people together in one location, that's the driver of this, and to be able to design a building from

the start and put all the components in that are critical for their future and growth in the city which continues to seem substantial. >> i saw a report that new york is burning through its cash pile, it's raising questions about the idea of shared office space in general given that there is that weakness there that we're having this conversation about, do you think that's a type of business model that actually starts to go away now in a more meaningful way? >> everybody -- every business goes through different cycles. i think shared work environment is here to stay. i think it addresses some of the issues that we just talked about before, where companies, you know, may not want to make long-term commitments and have the ability to have flexible work environment they're doing what companies do when the economy slows down. they try to reimagine themselves i personally think that we wwork

and those companies are here to stay, are they as large as before maybe not. if you ask the ceo of wework in europe, they're at 70%, 80%, 90% occupancy. in the united states, you start off that conversation about people being back to work. that's why you have to create the right environment. the culture of the company, the collaboration, the connectivity is so critical i think for companies to grow. >> this morning, wells had a note, they say two things. work from home, hybrid is a main stay now the other is the prospect of layoffs could precipitate the shedding of space in '23 does that make sense to you? >> particularly in the class "b" buildings, that's where the issue is, that's why the mayor and governor's plan addresses that issue in terms of taking some inventory off 30 years ago, there was 30% vacancy in lower manhattan 30 million square feet so, midtown, the class "b" buildings are in the 25% vacancy

rate yes, that's why we have to look forward and create new visions, new opportunities, and i think the city and the state are on the right track. the private sector will follow there's plenty of capital out there for these conversions. larry silverstein, who we just made a deal with for a building around the block to convert to residential, he's trying to raise $1 billion other people will be coming forward if this plan is passed in a very proactive way. >> good day to have you, bill. obviously it would be lovely to have more parks, more residencies in midtown we'll check in with you next year to see how things are going. >> i'll be happy to be back. happy holidays to all of you >> and to you. >> as my dad always said, don't bet against new york we're going to keep doing what we're doing and the city will, i think, really continue to move in a positive way. >> there he is big new york cheerleader, bill rudin. going to check on the markets.

close to session highs dow's up 185 stay with us

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citadel's ken griffin, he is suing the irs over the unlawful disclosure of his tacks. robert frank has that story. >> good morninging ken griffin's lawsuit claims the irs and treasury illegally disclosed his tax returns and failed to safeguard taxpayer data the suit stems from a secret irs files, those used tax returns from an anonymous source to expose the low taxes paid by billionaires griffin saying the irs willfully fail failed to establish adequate safeguards for the data and unlawfully disclosed those materials to propublica. griffin earned roughly $1.7 billion a year between 2013 and

2018 and paid an average tax rate of over 28%, that made him the second highest taxpayer in the country. the main focus on griffin was his campaign to defeat its state tax increase in illinois the irs inspector general and justice department had been investigating the potential irs leak for over a year, but house republicans are frustrated at the lack of reports or updates on those investigations. griffin saying in a statement, the irs deliberately stole the confidential tax returns of several hundred successful american business leaders. guys, no comment from the irs or treasury >> you have to wonder if other business leaders might follow suit that raises the question, have we seen anything like this in the past >> it's rare to see a lawsuit against the irs. they happen sometimes. sometimes people win, but they're rare, even rare for a high-profile billionaire to do it so, so far he's the only one of

the hundreds of people whose returns were exposed and who were written up in that series we'll see if anyone else follows suit >> robert, thank you robert frank we talk a lot about ken griffin. that will do it for "squawk on the street." "techcheck" starts now good wednesday morning welcome to "techcheck. today, more on what to do with big tech just hours away from another fomc meeting and potentially higher rates ahead and tesla on pace for its worst year ever as elon musk's twitter obligations come into question we'll discuss it don't miss the ceo of cloud flare talking about his outlook for cloud spend amid a big week of results and deals >> a volatile week for the nasdaq ahead of what many expect another fed rate hike this afternoon. mike san