good morning stock futures pointing to steep losses the day after the fed rose rates new details about the arrest of sam bankman-fried filing shows ftx co-ceo flagged potential fraud to regulators days before the firm filed bankruptcy. a new s.e.c. filing shows elon musk unloaded $3.6 billion of tesla shares this week. it is thursday, december 15th, 2022 "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from the nasdaq

market site in times square. i'm rebecca quick along with joe kernen and andrew ross sorkin. we have been watching the u.s. equities futures this hour things are not looking up. dow futures down 26262 points. those fell after the fed rose rates yesterday. the s&p was down .60%. off the lows you have seen in the session, but you see this carrying over to the futures if you have been watching the treasury market, this is interesting. jay powell put the tough comments to the market that higher rates are coming. the market from the treasury perspective is not listening not getting the message yet. 10-year treasury yielding 3.49%.

let's get to the take away from the fed decision with steve liesman. the question that remains today is will the market listen to what jay powell was saying that higher rates are coming? >> it doesn't seem like it today, becky as you know, the fed hiked 50 basis points yesterday stepping down from 75 still signals more rate hikes in the fight against inflation. the ongoing rate hikes would be appropriate. the median forecast for the funds rate next year rose to 5.15%. that was right in line with the forecast of the cnbc fed survey. that is up from 4.6% in the september outlook. it is also substantialsubstanti, increasingly above the market outlook for the year end of 2023 which is this morning at 4.38% that is a gap there. it is not a problem with the fed and market which is in agreement through the spring and the fed

will slowd down to the right level hiking down to 25 points here is what evercore wrote, by targeting a higher for longer peak rate but slowing down, the fed prepares for the adverse case while allowing time for the data to falsify its inflation. 17 rate decisions over 5%. 7 over 5.4%. one official said 5.63% through 2025 a couple below 5%. powell welcomed the recent than better expected inflation report he pointed out that inflation is still running at 7.5% year over year not a reason to be crazy dovish.

it would take more evidence to get confidence that inflation is moving toward the 2% target for the fed to ease back on rate hikes. becky, disagreement now with consequences down the road >> there is the old joke, where ships steaming ahead and another ship in the way radios out saying change your course. i'm headed your way. the other guy radios back says, no, change your course the first guy gets mad i'm officer of the aircraft carrier. the other guy says i'm a lighthouse you change your course is the fed the lighthouse or is the fed the ship >> i don't think either is a lighthouse i think they are both ships with the ability to change and move you know, it is interesting. we talked about this yesterday where i told you that i didn't think powell could get up there

and be very dovish given, in his own words, the core is three teams the target rate. it has to maintain the course to use your idea there and can't really change. what is more interesting is they sped up and i think what is interesting about your analogy, becky, if there is a crash coming if you look at the spring, not much outlook the may 2023 contract trading at 4.90%. let's say they do a couple more from here and that's okay. i guess it is okay for the fed to be long here and change course if the market ends up being right. the trouble is it is clear that

powell wants tighter financial conditions now to deal with inflation and he is not getting it if you look at what is happening with the goldman sachs index, it has eased a bit while the fed has hiked quite a bit. we will see if the chair and the fed and the economy don't get the tightening that is necessary to bring down inflation. the market has a different view of the outlook and path of the ship of the economy where inflation comes down with a recession or without one >> i feel like talking about this for another ten minutes i was thinking about that. there are people out there not watching us. they are watching other shows talking about -- i don't know -- what do they talk about? >> hot christmas items >> yeah. hot christmas items. >> hot christmas items >> that may be a problem i want -- i'm so interested in this i can't believe not everyone is. that's my point. this is a good one

>> their loss. >> it settis setting up a battle with the market which is being stubborn you can say what you want until you are blue in the face, chair powell, but we don't believe you. we think there is an imposter behind that paul volcker mask that you have on it's just going to be interesting to see who is right. one reason pointed out here. i was shocked. last december, the median forecast for this 2022 is .75 to 1. in june, 3.25 to 3.5 in september, 4.25 to 4.5. it is now 5. steve, that's crazy that everybody could have been so wrong. why try to make any forecast when it i is obviously you haven

idea one more thing and i'll let you go is there -- do you think -- although it was unanimous yesterday, do you think there is anyone there that is when they are meeting in closed doors saying, jay, i think we have gone -- i don't think we know about the effects of what we have already done. i think we should be slowing down is anyone saying that? they seem to say that in public a little bit or at least with body language. >> i don't think those ideas are mutually exclusive you have somebody saying we need to be careful here it is important to point out the statement itself with the concept of the fed being mindful of cumulative rate hikes today and lags of fed policy powell talked about that a lot it's a hard question to answer, joe. i'm sure that conversation is taking place i think those changes in the

outlook reflect changes in the data and economy it has gotten to be higher and stubborn than anybody on the fed expected and a lot of private sector economists as well. it has become an issue now we are at the place where the fed feels like tough medicine is necessary. we will say, joe, when i asked chair powell what do you do and he wasn't clear with the answer. there is a nuclear option here with the fed that is increase quantitative tightening if he comes forward and says we will up the pace of the balance sheet, that would get the market's attention put that to the side and know he has that in his pocket >> the riate hikes in my mess messaging?

i have a abobazooka in my pocket >> when i think of him having it in his pocket and not using it, i think he doesn't see this distance with the market outlook and the fed as that big a problem. if you look at what he just said it is okay for powell to be wrong here they will just adjust later. there is a loss of credibility and an issue beyond that ultimately, the main important point here is the fed get the funds rate right if that -- >> you are saying the fed is the lighthouse though. go ahead bring it >> that's the most important thing. that is the key rate for the economy that interest rates be set at a right level to bring down inflation and do minimal damage to the economy. the most important thing >> he said it a few times. we're at full employment or above that we're at 7% inflation. what do you expect we're not trying to get to full

employment we're already there. if it is a dual mandate. >> he tied -- our job is to make sure we get inflation right and if we don't get inflation right, you cannot have this continuing strong market to answer any of the critics saying you are not following the dual mandate we cannot -- he is basically saying the first mandate is the more important one that's what is going to take hold >> let's get to the ten hottest. >> what do you got, steve? >> for christmas >> we will bring everybody in. >> stocking stuffers >> you know what is back >> you want to go to christmas things >> yeah. you started -- >> we can talk about labor. >> you talked about quantitative tightening on steroids i had to think about that one, steve. have you seen those jackets? it looked like the '70s. you look like hef.

>> i don't hang out in expensive stores i don't know these things. >> i don't know. >> two pockets here. it is very -- i don't know they're back >> oh, i see >> take it from mr. fashion. >> that's not me >> that's sergeant peppers lonely hearts club jacket. >> take the members club cauoat out. >> it is ugly sweater day. i forgot my sweater. >> is it >> steve, thank you. sam bankman-fried days before the filings last month, the co-ceo ryan salame said he may have committed fraud by sending ftx funds to alameda research this is the first public acknowledgment of insider turning on bafz.

sa -- sam bankman-fried. he said this was contrary to normal corporate governance. sam bankman-fried left the bahamas. >> he is the guy the stuff is based on or other people flipped as well? >> i don't know. we talked about it we talk about caroline ellison running alameda. there has been at least a dozen of the top lieutenants basically left sam bankman-fried within days of this all happening including the general counsel, but the way. you think every person would try to save their own skin if they were involved in said crime because -- >> especially throwing everybody under the bus with the interviews >> clearly, the ryan fellow --

>> was anyone over 30? that guy looked like he was 26 >> young crowd >> i can't blame it on the millennials. >> don't trust anybody over 40 >> the only people you should trust. coming up, we'll talk about this and so much more. central banking action we will get decisions from the eob and ecb. that is later on in the show don't miss the exclusive interview with binance ceo chengpeng zhou he will address the arrest of sam bankman-fried and the stablecoin he will be here. that would be something. remotely u 30 a.m. eastern time yoare watching "squawk box" and this is cnbc >> announcer: this cnbc program is sponsored by baird. visit bairddifference.com.

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welcome back to "squawk box. on the general today, the ecb and bank of england expected to hike rates today both expected to hike on 50 basis points we will get retail sales at 8:30 a.m. eastern time. one thing to note. adobe will report after closing

bell this morning. let's get a check on the markets. this is after the fed's decision gabriela santos at jpmorgan chase asset management i want to know what you thought at 2:30 and then 3:30 after the press conference >> at 2:30, i did think it was a very hawkish statement as well as projections the statement barely changed still ongoing increases. and hawkish at 5.1% and 17 of 19 members believing that rate would be over 5% next year no rate cuts pencilled in. neutral above 2025 at 3:30, i also thought it was a hawkish meeting. i think what powell emphasized in the press conference was

ambiguity about the pace of inflation coming down and ultimately what the terminal rate is and could move higher still. what was surprising is the market reaction to all of this directionally, it understood the message. yield up dollar up. stocks down. the magnitude was very, very mild i think it shows we're moving to a phase where the market is questioning the fed for being too hawkish, not dovish. >> how does it change your outlook at this point in the ball game with equities? >> i think for the discussion around cyclically, should we take more risk or not? the cpi was the most important on tuesday for the first time in over a year, we had the second consecutive month of below 0.3% increase in core cpi it is finally giving us more conviction that we are getting a

disin disinflationary force from goods and shelter. at this point, we think we are at peak inflation. we don't think we're there yet on peak pessimism about the economy. that still suggesting an un under weight to equities against bonds. not as big as the last two sets of inflation prints. for the fed meeting, it is still suggesting to us that some of the volatility in the bond market rolls over to the beginning of next year of to january and february with the tug-of-war of who is right we are close to getting peak yee yields we are close to buying >> who do you think is right is it a sailboat or regular boat, becky?

>> the light house and boat. >> i think the market pricing for the terminal rate is right which sees the terminal rate below 5% that is because we are starting to see the disinflation forces take hold. also because we see the economy slow down more than meets the eye. something we expect to pick up speed next year. we don't think the market is right in terms of this expectation for the economy to continue growing at this pace. we don't think earnings estimates are accurate for example, looking at $230 for next year. that doesn't jive with the soggy economy much less recession. we don't think credit spreads are accurate at 450 basis points for high yields. nowhere near pricing in the turn in the credit cycle. it depends where you look. >> gabriela, thank you appreciate it. coming up, shares of

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the s.e.c. addressed payment for order flow and seeking for additional opportunities sales of roobinhood fell on that news if you have been watching shares of tesla, you know about $180 on december 9th and now it can open at $154 elon musk has been selling $22 million tesla shares worth $3.6 billion. according to the s.e.c. filing last night the sales took place between monday and wednesday this week he sold $94 million shares that's according to research from verity data the market cap is $495 before

the move today in tesla. no longer, it has been pointed out, i don't know if he cares. no longer the richest man in the world. >> you will do one of two things with the money or possibly both. you will try to buy back some of the debt some of this is marketed and banks will not keep it on the balance sheet. twitter debt take the money and buy back the debt can you get it for 60 cents on the dollar that would actually be beneficial to him so he wiould not have to service the same payments if he does that, he will still not have enough money at the end of the quarter for this business to be generating more cash than the amount of debt he has to pay. he is going to have to put that money up himself okay he puts up the money will he put up the money at a different valuation? now you reduce the valuation and

then you have to go to all of your other investors and say, guys, do you want -- we'll have a down round do you want to put up money with me or not? if you don't wput up money with me, i'm diluting you >> do you want a dollar cost average down with twitter? >> would you want to be dollar cost averaging in twitter on the assumption he figures it out >> or not throw good money after bad? >> the question becomes when you think of this complicated mess some people who are friends of his doing this with personal money and others like jason horowitz, who may be friends and an do doing it with clients' money.

>> why buy back the debt from the banks? it is the banks problem right now. you may have the financing issues you have to deal with at higher interest costs associated with it. it is not my collateral at this point. it is the banks. >> if he is long twitter, it might be a good deal to buy back at a cheap price >> if he believes what he said yesterday where he was tweeting you want cash on hand if things get diceyer. if you are worried about financial conditions >> i think some debt -- >> i wouldn't put more money in my mortgage at that point. >> you may not some debt will come up at a decent price >> i love watching it. life is short. he's like, hey, i'm doing this come what may. i'll handle it when it happens tesla still a great long-term buy. i do think you make the point --

it is funny. some people won't buy teslas anymore. it reminds me of the actress alyssa milano. not buying a tesla buying a volkswagen. she's not going to give money to that fascist elon musk. volkswagen ding, ding, ding perfect. >> if you were really crazy, you buy back all of the debt get rid of the creditors then file for bankruptcy then you wipe out all of your own equity shareholders and take over the company >> you sunk a lot of the money into this. if you think things are going to get rougher and fed raising rates to address the economy -- >> just business that's how you do it that's how you do it >> nothing personal. it's business. can't be a hot-head like sonny

i miss him already >> cannot be a hot-head. >> remember sonny? remember him that is why he ended up with -- at the toll booth. what a way to go when we mccocome back, we talking global markets with mark mobius we will ask him why he thinks the market will crash. don't miss our interview with binance ceo chengpeng zhou. he will join us live at 8:30 a.m. as we head to break, look at s&p's winners and losers from yesterday. >> announcer: executive edge is sponsored by at&t business

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good morning welcome back to "squawk box" live from the nasdaq market site in times square. checking the futures now it's not down 260 points this morning on the dow. nasdaq down 155. s&p down 41. the point moves we saw between the cpi and then the actual jay powell move by the fed and the commentary seem large in terms of points. they weren't it is interesting. we go 900 points and next thing you know we're up yesterday before the fed meeting he said what everybody knew he was going to say it goes down. >> i think we predicted the market's reaction along the way. i don't get it it seems straight forward. >> they are small moves. >> 1.5% here 1% here. >> yesterday, it was down 300 in

the middle of the afternoon up 50 points and down -- all after 2:30 all of those moves after 2:30. it was positive. and today. he was talking i was watching him talk. he was making sense. when you say we don't have the workers we need right now. we're beyond full employment you have a dual mandate. work on price stability at that point. >> let's ask an investor about this right now after the fed did raise interest rates to the highest level in 15 years as the bank of england and ecb is set to hike rates this morning and the swiss bank up 50 points. 50 is the new manim magic numbe. joining us to talk about this is mark mobius. mark, i take it you were

listening to what the fed chair had to say yesterday or at least parsing it reading and seeing what it all means. did you change your stance on anything based on what jay powell had to say? >> you can see what he started with and that was he was determined to get the inflation rate down. this was the key point that i picked up on that talk so, we can expect continued interest rate rises until that cpi comes down to 2% we are still on that path. it could happen quickly or it could take a longer time if you look at lending supply, we are up at high points money supply has come down the total amount of money in the economy is still very high i think it will take more pain in terms of higher interest rates before they will get that down to 2% on the cpi. >> we've talked a lot about how the fed was going to alone for a

while. this is not the coordinated global central bank movements we were used to in the financial crisis and since then. now you do start to see some of the other central banks like the ecb raising rates pretty significantly, too, or at least the ecb will do, too some others have, too. what does that mean to the global economy where will we be in 2023 >> it is interesting to see how the reaction of the europeans are in a different place with the ukraine war. if you look at the market in emerging markets in the last six months, they have gotten stronger against the dollar. the u.s. dollar got weaker it is interesting. a lot of the emerging market countries have been ahead of the game in other words, they raised interest rates fairly and that

is not having an impact on their currencies because the currency is becoming more attractive. it is very interesting development with the emerging market currency like the yuan in korea and the thai >> for you looking to invest around the globe, where does that lead you to conclude? where are there bargains >> we think the place to be is india. india will gradually take over the role that china has been performing in terms of production particularly of high-tech goods. a lot of people don't think of india in that light. it is happening, as you know, apple beginning to assemble in india. tata, the big conglomerate in india, will trointroduce

semiconductors many people didn't expect that to happen. even though india is the largest exporter of software in the world. i think india is the place to be >> we have spoken with people over the years india is a democracy unlike china. that makes a lot of western companies feel better about things you also deal with complicated state by state regulations and in the past when we have spoken with industrial companies, i remember the ceo of caterpillar. one of the ceos of the major industrialists saying he would rather do business in china because they move in a coordinated manner it is really hard to get things done when you are dealing with so many local authorities in india. >> yeah, it is complicated modi is now making it easier he is speeding things up on the bureaucracy. i call india the united states of india it is individual states as you pointed out. complicated bureaucracy. you must remember one state is

like a country the size or population is incredible a lot of companies from overseas are going into individual states and getting special deals from the states in terms of tax breaks and land build plans, et ce cetera, et cetera. some ways there is competition to build investment. if you look at the accomplishment so far, they have been able to get through a common tariff in all of the states they yused to pay a tariff from one state to another now they have a common tariff. that is a huge move in the right direction. i think that will continue >> that was united technologies that told us that a long time ago. the ceo of united technologies said that mark, let's ask about krip t -- crypto crypto has done anything but perform well in the inflationary

environment. you have ftx bankruptcy and scandals that puts up pressure on this. you have an interesting point why you think bitcoin could go down to $10,000. why that made bitcoin an attractive place for investors to put their money why don't you explain the interest payments and no longer offer a great comparison when you have interest rates going up >> you talked to a lot of people who put money in crypto. you find a reason they did that was offered 5% or 6% interest rates. now with interest rates moving up in the u.s. officially, that's not going to be so attractive unless they try to raise it higher. it will be unsustainable the problem is the credibility is going down with ftx don't forget the ramifications of ftx is going throughout the industry there are many other companies in crypto who are now defaulting on the money that people gave

them they will not get their money back this is a big, big deal. i can't predict exactly where bitcoin will be, but it is quite possible it could fall to $10,000. already the crypto have gone down by 70% in one year or so. you could see that the confidence is going out the window of course, the question now is binance is the major exchange. the question is with them recently being attacked with a number of withdrawals. we will have to see. you will be talking to the head of binance it will be interesting to talk to him about that and what it means for the whole industry >> we're looking forward to the interview as well, mark. excellent questions. thank you for being here we will talk to you soon mark mobius.

>> george david. >> utc out at the old building. >> we didn't have louis on very much >> do you remember that conversation >> i do. >> he said india is a democracy, but way too hard to do business there. i would hear do business in china. this is going back 15 years. >> i like george he is like 80 now. guys with two first names. never really sure what to think. george david david george >> larry david when we come back, a jury will soon decide what beverage is defined as beer we will look at that case. don't miss the interview with binance ceo cz. there are a lot of questions and a lot of answers we will be seeking today. "squawk box" is coming right back

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corona >> i'm off the hard seltzer. >> it is a remake of zima. don't pretend it is new. >> was zima vodka? these things give you a headache two of those things give you a headache >> coolheadache. coming up, we're going to -- i don't know -- >> lactate i finally have something that shuts you guys up. >> we're going to talk interest rates -- we're going to talk interest rates with sri-kumar after yesterday's fed decision is when she came in. i watched my mother go through being a single mom. at the end of the day, my mom raised three children, including myself. and so once the client knew that she was heard. we were able to help her move forward. your client won't care how much you know until they know how much you care.

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to the extent we need to keep rates higher, the longer

inflation might haves up higher and higher, i think that narrow the runway but lower inflation ratings, if they persist in time certainly could make it more possible. i don't think anyone knows whether we're going to have a recession or not and if we do whether it's going to be a deep one or not. it's not knowable. >> that was fed chair jay powell speaking after the fed announced 50 basis point hike. joining us is k okomal sri-kuma. it's been pointed out by the newspapers that the market still doesn't seem to necessarily believe jay powell completely about where we're headed there's still a disconnect between where rates are and where chair powell says they're going. who's right, do you think? >> i think that there are two aspects to this, joe you said it, i think you hit the nail on the head at the beginning of this

program, when you spoke with steve, you said why is it that they started out with the national interest rate much lower, like 2.5% now, we're talking about 5%. the fed was not aware then how high it was going to go. it still doesn't know, and the market is confused because you have a fed is essentially without any vision looking forward. that's one point second point, you would look forward and you're looking at 2023, a year before the presidential election. and i cannot imagine the fed continuing to tighten right through 2023 with all of the political noise that we are going to have. then, it was just said in the segment you showed that it's unknowable that is not correct. he's wrong again, as he was wrong with inflation in 2021 the bond market has been

suggesting since early july that there will be a recession. it may not be politically acceptable to move forward to accept that, to acknowledge that, but that's what the markets are saying and two or three days ago, the inversion indicated that the two and ten-year curve was minus 84 basis points, like nothing like we have had since the early 1980s. in the last two days, the curve has steepened. that is exactly what we had in 2006-2007. first, there's a steep inversion which will suggests recession. even before the recession begins, the curve begins to steepen because it signals recovery so there is going to be recession. there is going to be pivot and as you know, like the fed, the next one coming up is going to say pivot, but not yet. so there is going to be a change

coming, joe. >> meet somewhere in the middle between where chairman powell says we're going, and we actually go? or does the fed come down to where the market is? or does the market inch up to where the fed says it's going to be >> the fed comes down to the market it finds out in the next two months, it's not going to bring inflation down to 2% and epi, with a 4% rate, just declared victory we're happy with 4% and this is the end and we're going to pause and see what happens in the future which means it doesn't right again. >> i'm with you, sri >> and i've said, 2, 4 -- you know, not 8, but, companies would like 4 i think. up to 6. inflation at 4 done done

they wouecstatic >> all right, sri, great to have you on when we come on, bank of england decision just a few minutes away we'll bring that to you. at 8:30 don't miss the exclusive interview with chang peng zhao.

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of what happens at ftx, but we can't lets could lance abandon the great promise of potential of crypto. good morning lawmakers taking aim at cryptocurrency and calling for regulation, as criticisms of the ftx fallout now. we will hear from galaxy digital mike novogratz >> futures in the update for stocks and the economy and elon musk cashing out near $3.6 billion in tesla stock. an update on where the stock is sitting this morning after that news the second hour of "squawk box" begins right now ♪ ♪ good morning, and welcome back to "squawk box" right here

on cnbc live from the nasdaq market site in times square. alongside beck quick and joe kernen taking a look at stocks this hour we're less than 24 hours after jay powell announced yesterday the market is down looks like 223 points, nasdaq off 133 points s&p 500 off 36 points we'll talk about that decision, what he said afterwards, and why the market may be feeling the way it does this morning treasury yields at this hour, if you look at the ten-year note it's standing at about 4.72. the two-year at 4.224. oil, when you think of energy complex, wti crude sitting at about 77 now 33. it's been moving, inching up, over the past couple weeks here. and then finally, crypto in the wake of the ftx collapse we're learning more and more about what took place. you're looking at bitcoin sitting at 17,727, eth at 1290

eth has not moved around nearly as much. we've got new details on the ftx founder sam bankman-fried. he made court records, one of the closest associates of the bahamas entity telling regulators days before the bankruptcy filing that bankman likely funneled funds from the hedge fund alameda research. and ryan salame and the security commissions of the bahamas may now be the first known instance of a top associate of bankman-fried to assist the government in trying to bring down this alleged year's long fraud. we'll be speaking to galaxy's mike novogratz in the next hour. in the next -- next hour, the

8:00 hour, the ceo of binance. c.z. is here to talk about crypto and actually the implications for his own firm lots of questions has been raised as a result of what happened at ftx and what it means as it relates to binance in fact, one of the interesting moments of the testimony yesterday that kevin o'leary provided is the idea, we keep saying where did the money go? where did the ftx money go well it appears that $3 billion went to binance. >> we're trying to find more information on that. >> when you think about potential acts -- also, the potential, they're going to need more money on the other end. >> do you know the details i've been trying to find more information, when it took place. >> i don't know. >> the $3 billion -- was it like the bs -- >> when the -- this goes to the -- the house stuff is traded

back and forth it would have imagined, we can talk to him about it, it had to have happened in last six months which is when this happened. >> club x can go for at least 90 days, maybe a year -- even a legitimate transaction >> i think there's a lot of folks getting clawback money >> i think the anthony scaramucchi -- >> i think all of the liquid investments, the liquid investments are going to be all up for grabs and i imagine, you know, depending -- to the degree this is a fraud to the degree this is something going on for years, i think it's just as likely those investments made in 2019 -- i don't think the investors had all the money in 2019, but in '20, some of those investors. >> some saying a creditor -- you're not a creditor -- you

know, if you were promised money or if you had anything going on, if it was all -- you know, like you're not going to get that money. >> let me ask you this -- >> i hope they make the people who had the assets whole >> o'leary is singing the blues about losing that money. we found out he got $15 million. and he said, you know, i had to pay taxes on it -- what's that called >> gross-up. >> you need the money to pay taxes. next time i do a deal, you're going to be my agent so i can get that, gross stuff on stuff >> he's still paying taxes >> i know. here's my question, was all of that money worthless and is it gone for o'leary and ifs there was a clawback, how does he pay it back if it's gone if you believe that he's -- are you arguing that he's a creditor or -- >> no. >> he's arguing he's a creditor. he wants to be on the creditor's committee. >> but, where was that money

was that ill-gotten gains from a scammer? >> that's what i expect -- someone has to be made whole >> was that 18 million, you know, scammed from clients >> let me ask you, because you made this distinction, andrew. you said that the s.e.c. was focused on the investors my guess is the bankruptcy court is looking at people who lost their money. i'm assuming it's people who had their money in assets there that bankman-fried was stealing, allegedly, and putting in his use for his own uses like bitcoin, for example. >> do you think he can be a creditor >> yes, that's what he was arguing yesterday. >> essentially, he could be a creditor -- >> well, if he had bought into it >> it was his to begin with. >> right >> how do you get to be a creditor when you got it from -- it's like if you're an employee of a employee, if you're an employee of a company that was

owed money to me, the more interesting one is going to be like, for example, like a sequoia which put money in, and the s.e.c. is essentially fighting on their behalf, to some extent and yet sam bankman-fried took money of sequoia, sam bankman-fried was an investors in sequoia, and that money would have to go back. and how does that work >> yes, and that's a sequoia situation, that's a sky bridge situation. >> i don't know how it would work in the sky bridge scenario. >> all right we're going to bankman, but yesterday when rubinstein was on >> yeah. >> and sigh channeled barbara walters and what would you be -- we missed a great opportunity, because he should have said not a sequoia. bank of england out with the

latest policy points, the bank raised by 50 basis points it's now raised rates for six straight meetings. it was 6-3 two members voting in favor of keeping rates unchanged. that, of course, was a day after the fed announced a half point rate 6-3. the two that said no, do they say what's the interest rate >> maybe they would have said 25. >> 25. >> or 75. >> they said 75. we need to know. maybe leisman knows. >> let's get straight to him steve liesman has more on the boe and the fed. steve, enlighten us? >> yeah, the third person was kathryn mann, somebody we know, head of economic citigroup, and was the former chief economist for the oecd he's on the bank committee and she wanted to go 75. she wanted to go 75 to break the

inflationary psychology. i'll break down the vote 6-3, two went, out of the three dissenters, two wanted to go unchanged. one, kathryn mann wanted to go 75 basis point seven of the nine wanted to increase rates andrew bailey, the governor of bank of england saying inflation has peaked a slight upgrade in gdp. but they are saying that the uk will be in recession, quote, for a prolonged period of time and that future increases may be required they do see inflation falling sharply in mid-2023, maybe even falling below target by 2024 at this rate. one other thing, the swiss national bank raising by half a percentage point i just want to get back to the idea in the last half hour about the markets fighting the fed or the fed fighting the markets whichever way you want to put it here's a chart that i think shows the situation pretty clearly. this is the goldman sachs financial conditions index

versus the fed funs rate if you go back -- there's that chart there -- that's not a chart, but the essence of it, the fund rates two percentage points since september of 2021 series there's the chart on the right-hand side, thank you very much up two if you go to the center portion there. goldman sachs index is down in september. 0.3. and more recently a full percentage point while the fed is hiking. you get to the question who has it right which one has it right there's the idea that the market is going to fall, what the fed has done, plus minus 50 basis points will be sufficient to bring it down. that's not the attitude of fed jay powell who is concerned about what's happening in the labor market with wages rising the way they've been rising. the one saving grace here, i think, powell is willing to slow things down and feel his way a little bit more carefully here

and it sounded to me like the next couple rate hikes were going to be quarter point hikes. so the chance of making a big mistake here is suppose a lesson and then there's the issue of perhaps turnaround, in this way, if inflation does turnaround, he would be able to increase rates more and have the market with him if the date is with him. >> all right steve, thank you we knew you'd have the answers to the question. we'll see you later, okay? >> okay. coming up the lord mayor of london in town, in new york, that is, discussing the state of banking, the uk's inflation problem and the reaction to this morning's bank of england. she's going to join us next. before we go to break, a quick check of the markets, we are up, dow up 250 points. back after this.

and welcome back to "squawk box. i'm frank holland with your morning movers we begin with tesla. shares falling, musk sold 22 million shares shares down 1.5% another fact putting tesla stock under pressure a lot of people believe musk is distracted after purchasing

twitter. side note, art fund bought 12,000 shares of tesla yesterday. verizon shares moving up citing cash flow. will only approve the capex spending and at&t is down 1.5%. american express named as a top pick by bank of america and payment and credit card space. the big bank saysing the confidence in the revenue guides and growth and business model and possible recessionary environment could maybe a mex top for investors. you'll see that. those are the morning movers andrew, back over to you welcome back to "squawk box. the bank of england voting just moments ago to raise its key interest rate by half a point as expected the rate hike coming after uk inflation came in slightly below expectation at 10.7% joining us to discuss the

economy, nicholas lyons. he's the lord mayor of london. he's the ambassador for the uk professional and financial services sector. he's been in new york. you've spent a lot of time with big wall street folks this week. >> i have. i'm delighted to do so actually, i had an advantage of having a meet with mike bloomberg before i came here he popped in a neighbor, and yeah, we've got a lot of great meetings today and yesterday. >> i heard you've been making the rounds >> i have. >> who you have seen >> well, i -- we've seen -- we've been to goldman. we've been to bank of new york we've been to blackrock. i think i'm seeing jamie dimon later today. i'm seeing citibank tomorrow and blackstone pretty much the big guys john doyle at marsh. very keen to see the new chief executive. >> and the conversations you're having, and i want to talk about the inflation rate and what we're seeing in the uk i imagine are around that.

and what's happening inside your economy right now. >> yeah. it's about -- this is the first time international trip i've done since becoming lord mayor on the 11th of november. i wanted to make a statement between london and new york, the two greatest financial centers in the world and we've had a lot going on in the uk there's a lot of questions about what's happening, i'm sure you'll quiz me on them >> yes >> but i'm here to really tell what i think is a very optimistic story about the city of london. and through that, the uk >> and by the way, what is your sense of all of these financial services firm which have been, i think, on pins and needles, a little bit, about what the relationship should be in the future >> yeah. i mean, all of these firms have huge investments in the uk they've all had the -- had to manage the fallout from brexit they all had to have subsidiaries in continental europe they've had to capitalize the

new people and assets. that's been a pain that's caused them to, you know, look very carefully about where their priorities lie but london, everything coming back to london >> and in terms of inflation, in terms of what the boe is doing, is it enough by the way, the strong dollar makes it so much more complicated. >> the dollar got stronger what our fed is criticizing for the rate, even more criticism on the boe because it wasn't s synchronized in your view, is that true >> well, we're very reluctant to point fingers at the bank of england. they have an inflation target to aim for. our inflation is stickier than yours. >> because of energy >> because of energy >> and because of the nexus of the bad policy decisions in the continent? >> well, you might say >> i did

>> i think the point -- the point here is that we're not getting some significant wage inflation. it's understandable, we've got a lot of people struggling with high inflation and cost of living but the problem with that, you send up moving from supply side inflation to structural inflation. so, i think it's going to stay with us longer it's going to stay a little higher >> for how long? >> how long is a piece of string >> that's a long time. could be a very long piece of string >> i think it will be 18 month, as we start seeing significant reductions from a mathematical point of view, when you start ratcheteting down on energy costs, that makes a significant difference 24 going to be at 4 or 5% inflation.

>> how do you look at uk versus the rest at the moment >> i think we've reached an interesting inflexion point, the announces with the exchequer they mark what the lobby services has been doing for the last three years but demonstrate desire and growth in the economy. and we haven't seen that commitment in government for a long time. so, i think that will change the dynamics you know, we have great relationships with our friends across the water in continental europe we would love to see a resolution to issues around the northern island protocol and getting back to something that resembles a more commercial relationship but polit politicss obstructing that right now but we're not stopping in london

we're going to be competing. >> there's still people that still question the long-term viability of europe at this point. you've still got that wonderful sterling i'm sure you do at this point. >> it gives us another safety valve. >> does that -- five years from now, it's going to be status quo, will it still be in exisexist enc ence look, i'm very optimist that we'll see a resolution in ireland. the northern ireland protocol. i think that will trigger the change in the eu i think, frankly, the massive global problems that we're all facing means that we've got to work together, so i'm an optimist i think that will change >> favorite restaurant, just so i no >> woolsey >> woolsey, it's good. >> going down the road, have you

watched the netflix documentary? see, i wasn't going to go there. that road, i decided not to go down that road people say you're an ugly american >> sure, megan and harry, we want to know >> i have not watched it i have not watched it. but it's difficult family issues >> right >> we have sympathy for both sides. >> right right. thank you. >> you should have been lord mayor. you really should have look at this guy >> a pleasure. >> thank you coming up -- >> i mean -- what about princess di you can you believe that -- i don't know, where are you going -- coming up, we're going to talk markets and the fed with jeremy siegel up next, a new ai businesses that can spawn new businesses, chatgpt came on a couple weeks

ago. is it a game-changer for business, are we going to fire our producers or another online gimmick? we'll get to ai. don forester joins us with both sides of the argument. time for the aflac trivia question -- name the stiet where is these three u.s. landmarks are located, mount rhme,usor monument valley and cloud gate the answer when cnbc "squawk box" continues -hmm. 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. it pays you money to help close that gap. aflac, huh? don't tell me he high stepping. af-lac, af-lac! he stole my move! get help with expenses health insurance doesn't cover at... aflac! ...dot com.

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now the answer to today's aflac trivia question -- name the states where these three u.s. landmarks are located, mount rushmore, monument valley and cloud gate the answer -- mount rushmore, south dakota monument valley, utah. cloud gate, illinois ♪ two weeks ago a new artificial program called chatgpt made it's debut online this project from the open ai research lab can write essays and carry on convincing written conversation so does chatgpt represent a

breakthrough that will spawn you businesses? or is it more of a gimmick jon fortt is here to weigh in. what's up? >> the ability to marshal facts, organize ideas, stir passion is now something that software can do computers have created this. how did we get here, seven years ago, elon musk and others pooled $7 billion to research ai. three years, microsoft did another 1 billion. chatgpt comes out in the same year where ai released dolly 2 which seems to photograph drawings or paintings created by humans what's the business application? so my bet is on sales first. soon the company's most affected sales will be training for a bot that scours a website and crafts a custom pitch

humans will swoop in to close the deal another use, bots should be able to look at sales and inventory data and quickly craft a narrative that highlights trends that a human wouldn't have quickly thought. conversational ai is a tool to help us learn faster apply it in the right way and there are billions to be made, becky. >> what about chatgpt's accuracy problems does it know how to say when it doesn't know something >> well, on the other hand, chatgpt is already getting overhyped. how do i know? i tried i asked it to write on the other segment i'm happy to report it did a horrible job and then i asked about shakespeare, and doesn't quite understand pentameter yet. and the problem is portrays zero self-doubt and doesn't show its work as a source of information. it's a bit of a black box unlike wikipedia which shows you

references or google which shows you links. at least with those it's easy to assess the quality of information you're getting, chatgpt has volume and commoditizes value brand for the reset level of business impact where it can disrupt today's information giant needs to be more transparent ironically, the parlor pick part pretends to be an expert but its value will be limited until it gets better in asking for help for what it doesn't know >> it's just like an obnoxious -- like we all know. >> yeah. kind of like -- >> we're just in the beginning -- we're like in the first part of this >> six months from now, they'll give you links, they'll give you footnotes, you'll have all of that stuff >> but that's a design issue more than an artificial intelligence issue and i think the --

>> they want it that way >> well, they design it to be transparent. >> you think they don't it wasn't to be transparent >> well, right now, it's pretending to be human that's part of the trick part of the joy, oh, wow, look what it's given me i almost can't distinguish this from the real thing. >> from a bunch of links, blah, blah, blah >> i would imagine, if you were sending out the sales notice, you would generate the thing for you. it would put the footnotes in for you. you could judge whether it's any good or not. and the information is right, if you can therefore choose this is what you do in the ai and you want to send it out to all your clients and make it look like you wrote it and you feel comfortable with all the citations -- you remove the citations -- right >> i think that sounds like a lot of work. >> it is a lot of the work >> to go back in and do some of the same things. just like these chats if you're

online doing retail, hey, can we help you with something? you know it's not a real person. they even give them a stupid name hi, i'm melanie, you're not melanie, you're the bot. i guess the other question is, it's probably going to get way better from here it is scary when you can't distinguish, though. >> in a certain design, i think better actually is worse because it gets closer to being right. >> right >> but the way these things are trained there's actually a ton of data going into it which is great. we need a indusdegree of confide >> i would imagine there would be an enterprise version for folks that would offer a degree of confidence, it might highlight something that might tell, our degree of confidence is 50%, our degree of confidence is 100%, you'll make a choice, don't you think. >> well -- >> our history with this sort of thing is sometimes you let the technology get way down the road

before you discover, well, social media, connecting people, there are downsides to that. maybe we should have designed it -- you know >> to send a thank you card. >> my kids would love that >> it's pretending to be human >> aren't we all at times? >> i'll just say, i just got -- >> a sonnet -- that's what you start with -- >> i mean -- come on >> you know how hard it is to write a sonnet >> i do. i enjoy it >> amazing, let's be honest. >> and a little scary. >> yeah. >> end writing did it catch that -- >> i'm excited acquired by 3m who then -- >> shut it down. >> thank you notes in handwriting. to be human. >> that's a start. when we come back, wharton

professor jeremy siegel with us after the break. later, on the latest hearing on sam bankman-fried's house of cards. mike novogratz with galaxy digit. we're coming right back. with gold bond... you can age on your own terms. new retinol overnight means

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yesterday, the fed raised rates by 50 basis points as was incredibly widely expected our next guest has been critical of the fed and now that the central bank will be lowering rates in the second half of next year joining us right now is jeremy siegel he's professor emeritus of finance at university of pennsylvania's wharton school of business jeremy, it's great to see you. let's talk through it. because you have been very vocal for a long time that the think the fed is doing too much. that they were slow to get started on this but now they have taken things too far. jay powell made it pretty clear yesterday that he has no intention of lifting up at this point. that they think inflation is still rampant, and is still going to be very hard to get rid of and as a result, their plan is to go higher and stay there longer you're not buying it you don't think they will be able to do that in second half of next year they're going to have to lower rates? >> no, no, not at all.

and, you know, as joe pointed at the very beginning, in the year ago meeting, only two people thought that the funds rate should be above 1% this month. it's interesting, only two people thought that the funds rate next december should be below 5% i think that they're going to be exactly wrong in the opposite direction. they were way too loose before, plus, a lot, and now, they're way too tight. and, becky, i was really very disappointed in powell, in his reasoning and his justification for this overly tight policy first of all, he acknowledged that the housing data is lag that housing prices are actually going down but we're not going to vsee it until the middle of next year. so, we're going to wait until

the middle of next year, before we decide, you know, whether we need to pull out the rate hike look, even though we know it right today, i think we've got to get out of this, you know, year over year look at inflation. remember, when we get year over year, we're getting 11 months of old data, outdated data. only one month of new data >> yeah. >> and one month contains data that he admits, particularly in the housing sector is extremely lagged >> but, jeremy, i'm sure be the first to admit we can't look at one month. one month does not make. that's why you look at the year over year, you're right, it came down year over year because you're rolling off some of the highest numbers but we looked at year over year way up when things were really hot, too? >> it has. but the fed has to be forward looking. let's go to the wage part. i think that's really -- they started to say, okay, we have

this housing wages is a problem first of all, wages have gone up less than inflation. i mean, steve mentioned that last month was one of the very few months where wages actually tipped a bit above inflation but over this whole pandemic period, wages have fallen short of inflation it's hard to understand that that is an inflationary force. but more important, he brought up something new he said there may be a structural shift of a reduction in labor supply. so what does economics say if there's something that is a reduction in psupply, you got to let its price rise you know, that's economics 101 you can't expsuppress structura shifts the fed is not supposed to act on structural shifts on supply side problems. remember, becky, a year ago,

chairman powell said we're not going to act on inflation because there's supply side problems now he's saying, oh, there's supply side problems in the labor market and we have to crush wages to stop the inflation. that's totally inconsistent with monetary policy. >> why don't we look at control. let's call up the ten-year, look at where that's trading, obviously, professor, you're not the only one thinking along this line you look at the ten-year, the yield has been lower than it was yesterday. over the course of 24 hours, bond market doesn't seem to be buying it. the stock market is down you're talking it was basically 3.5% yesterday >> yeah, basically saying, if the fed is tight, one is going to break down inflation even more maybe even deflation

secondly increases the probability of recession that will bring down the yield it doesn't like the fact that there's a recession. that's one reason you buy bonds is that they hedge against inflation. so, you can basically see that you're absolutely right, the bond market and, you know, that ten-year is a really important signal saying you're too tight you're going to get too tight. to remain at over 5% throughout the year, even though you admit that all of this data is going to roll on to absolutely bring the rate of inflation down to the level that you need? i think the fed is going to eventually have to pay attention to this. i think it's going to be sooner rather than later. maybe there's 25 basis points on the february 1 meeting i don't even think there should be that one. and maybe that's the last one. in the conversation. even though chairman powell said, oh, we're not even talking about lowering rates you could be sure that next year

they're going to be talking about lowering rates >> professor siegel, thank you, it's always a pleasure we'll see you soon >> thank you, becky. up next, the release of the technology executive cncouil latest survey results. we are back in 30 seconds. because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place. so you're covered. on-premise and in the cloud. you can run things the way you want - your team, ours or a mix of both. with the nation's largest ip converged network. from the most innovative company. bring on today with comcast business. powering possibilities. welcome back to "squawk box. now it's time for the result of the technology executive council s

survey, 85%, chief technology officers and senior leaders they say that cloud computing software, it will be critically important for their business in 2023 and over the next 12 months you've got to remember, we started this survey back in november 18th. the cloud represented stocks, it actually outperformed both the market and the nasdaq 100 represented by the qqtets, and the questions about demand, palo alto having shifts in the business and to the close. the etf also 50% off its high. cyber security generally seen as the biggest risk for tech leaders however, 74% of them say their company is better protected than it was in the beginning of the year. 69% said they were better protected in the first half survey obviously, we're seeing more positive sentiment when it comes to cyber security. on november 18th, the ishare etf, well it wasn't

outperforming but now outperforming the market and 22% off of its high. these tech leaders they're cyber-security focused we ask them what should be the top priority for the newly elected congress, the top two, data privacy and security, as well as competition with china more than a quarter also saying cyber security and reporting standards. that rounded out the top three answers. that's the latest from the t.e.c. survey. andrew, back to you. >> whethmr. holland, thank you coming up, michael novo grat of galaxy digital. the next hour, the ceo of binance will be joining us for a special interview, so many questions for him in the wake of his ftx collapse what it means, frankly, for their firm and the correct and trust in the crypto space coming right back after this.

♪ ♪ crypto experts like binance ceo cheng peng zhao are saying that the situation involving cryptocurrency is a stable buy after the fallout from ftx

currently, crypto markets are up a little bit today crypto got over 18,000, after fed chair powell talked about continuing interest rate rises, maybe going higher, maybe more, staying there longer and that's really been one of the things people point to with the reason crypto has been a tough year joining us for the market ahead is michael novogratz, galaxy ceo. i bet you that's why more bitcoin is down, whenever you do the math from 16,000 to 17,000 has more to do with risk-off and the tightening of monetary conditions, mike, maybe more than it has to do with ftx is that your view? and is this -- i mean, any asset, if it's leveraged too much, you could have a situation with the old story, you know, it goes back hundreds of years, thousands of years if you're leveraged this can

happen but the underlying asset may not be to blame. is that what's happening >> i don't hear you, mike. >> we're going to start again. >> can you hear me now >> you >> sorry about that. >> he wants us to pay the royalties to verizon for that. so start from square one >> i heard you i heard you. listen, people bought bitcoin because the central banks around the world had monetary policy like we had never seen you were debasing fiat currency by creating this inflationary wave that came it was a perfect inflation hedge in a lot of ways it went from $8,000 to $60,000 when powell took out his hammer and started beating inflation on the head, they came down and what will drive price action in the future is some sense that

governments won't be able to keep tight fiscal policy and tight monetary policy for very long the pressures of populism get to governments and they spend too much that and constant adoption you're seeing even in this terrible bear market of crypto, you're seeing now ways people can participate in bitcoin and the crypto market. fidelity is a perfect case in point. they're just turning it on to their retail customers it's a really easy to use app and really well explained. so i think people like to call the death of crypto because we had a sell-off, but i don't think they're right. >> we have had sell-offs of the same magnitude over the past 15 years how many times how many times have you seen the same magnitude sell-off to have it go to new highs, bitcoin? >> i plenty. i started in 2013, so you know,

went from 200, back to 200 p painful. i always tell someone to sell something along the way. trees don't grow to the sky in a straight line and it's a really volatile asset it remains a 60 vol asset, which is three to four times the s&p >> unfortunately, bitcoin itself is kind of held hostage from, can we assume all these exchanges are acting in good faith and not doing similar things to what sam bankman-fried was doing. >> it's really dangerous to think that you have one black swan, you're going to see them everywhere you're going to have criminal organizations all over the place and these places run by sociopaths it's just not the case i'm not saying every other exchange is playing by every rule a lot of exchanges are under

some assault from regulators for violations often in the past, when they started. they didn't have near as robust protections against who was using their exchange as they do now. but i don't think, you know, under every rock there's a guy stealing your money. >> mike, we're going to have cz on give me the one question if he answers honestly, no reason to think he's not going to, but what's the one question we could ask him that would be a red flag that we need to worry about other exchanges, not necessarily binance, but other exchanges what's the most important thing? >> i think you could ask him, what are his regulatory fears. again, binance had explosive growth and if you read the newspaper, you know, regulators are worried about some of the kyc, so he's hired an army from the irs, from the department of justice, from our regulatory agencies to i'm

sure clean up his place and make sure there's processes in place that build confidence. but what's the regulatory fear that he has and how is he addressing it? that would be my question. >> when you think about some of these exchanges or other operators that are still offering an interest rate product, and you start to think through how they're offering the interest rate product and how they're actually capturing a rate, it effectively means lending out shares to other people who want to short them. that's really the only way this all works, i think >> there's nothing illegal about an interest rate product or quite frankly even an ethical. what i have argued for a long time that is the disclosure around lots of those things weren't great. that you have lent your money to celsius, and maybe you didn't know that while you were getting

7% interest on your bitcoin or stable coin, you were making an unsecured loan to that company it's not like you're putting in a secured deposit. so i think a lot of this has been about disclosure. it continues to be about disclosure the industry needs far better disclosure but again, there's nothing inherently evil or illegal about an interest rate product >> hey, mike one of the things you said after we found out about sam bankman-fried was that it really bothered you you had been thinking where is this guy getting all the money and you were right your spidey sense was right on that do you have that same sort of a spidey sense with binance or any of these other exchanges do any of them seem to have money that can't figure out where they're getting the massive amounts of money they're investing in other things or spending on other things >> binance is an easier one because it's the dominant

exchange and the profitability of it. cz was probably the richest man in the world at one point if you used coinbase as market cap and realized coinbase was 1/15 the size of binance. i flew over to abu dhabi after the binance thing and met with cz and spent a bunch of time with him i find him a very straightforward guy. canadian by birth. does that mean everything he says is, you know, i'm going to take him at his word no, we trust but verify the best we can it feels like they're doing everything they can to built confidence or continue to try to build confidence they had a big redemption cycle recently they met all the redemptions quickly. so i have no reason to think that there's a sociopath under cz's skin. there's zero reason at all to think that i think, again, sam snookered

the world to think everyone else is trying to >> is it fair to think, trust but verify show me the money. i'm not going to take anybody at their word because we got burned doing that >> this idea of proof of reserves is a really good idea cz is championing it people can nit-pick and say you're off by $200,000 here or there, but broadly for the scale and scope of what binance does on a daily basis, they are working real hard to be transparent. >> let's hope. he's got a lot, cz has a lot riding on his shoulders. >> that would not be good. >> no. for i don't know about crypto after that it would be just leave it at crypt, probably. mike, thanks good to have you on today. we're going to have cz on, so stay tuned >> be well >> when we come back, morgan stanley's mike wilson will join

us on the fed, the markets, and much more. and then the big interview with the ceo of binance lots to discuss with him surrounding sam bankman-fried and the ftx turmoil. "squawk box" will be right back. ♪ ♪ opportunity is using data to create a competitive advantage. ♪ ♪ it's raising capital that helps companies change the world. it's making complicated financial concepts seem simple. opportunity is making the dream of home ownership a reality... ♪ ♪ ...writing new rules and redefining the game... ...and driving the world forward to a greener energy future. (applause) ♪ ♪ opportunity is setting a goal...

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stock futures pointing to significant losses add the opening bell we're 90 minute away investors digesting the latest fed hike rate and commentary from jay powell. we're due to get another rate decision, this time from the ecb. meanwhile, elon musk selling another huge chunk of tesla shares the stock continues to slide, down more than 50% this year and falling again this morning and then we're going to talk about crypto exchange ftx, its bankruptcy, and attention turning to firms that remain can they and the broader crypto experiment, can it be trusted. we're going to speak with binance's ceo, cz, about all this and more as the final hour of "squawk box" begins right now.

>> good morning and welcome back to "squawk box" on cnbc live from the nasdaq market site in times square i'm joe kernen along with biecky quick and andrew ross sorkin there's the three of us. really big guests. really big guests coming i'm going to go fast mike wilson. i say that all the time. people look better in person than on tv is that the same with us >> yeah. >> that's why people say -- whatever they say. >> i don't know what's worse >> wow, you look different >> you look better on tv you look better in person because the way i see you every day is pretty bad. >> wow, you're fat u.s. equity futures at this hour down about 269 points. nasdaq down 138. let's look at the treasury yields we're going to definitely touch on those with mike in a second what it means.

348 now. still have a pretty big inversion between the two-year, but it's fascinating how do people watch anything but -- i don't get bored talking about the fed and what it means for the economy. isn't that life? >> we just had this chart up, you could go for three hours >> easy. >> you're fun at a party >> let's talk about other stories investors will be watching tesla shareshares falling aftern musk sold another $3.6 billion in shares. bringing the total to almost $40 billion, the s.e.c. filing shows this 22 million share sale took place between monday of this week and yesterday earlier this year, musk told his millions of twitter followers he had no further tesla sales planned. and we're also just separately speculating about what he's going to use the money for, whether it's a cram down on his other investors at a new market

cap, whether he decides to buy out some of the debt from the banks, whether he tries to do a combination of both. we will see. speaking of twitter, musk saying he's going to pursue legal action against jack sweeney, the 20-year-old college student who created the account that uses publicly available data to track musk's private jet that account and others were suspended ed yesterday on twit. a month ago, musk said his commitment to free speech extended to sweeney's account. a stalker confronted his car sweeney says he has not received any notification of legal action and the last time his account tweeted anything was on december twelfth so he didn't understand how it would be connected to an event on the 13th. maybe it was related to where people thought the plane was going compared to where the car was going. but nonetheless, raises all

sorts of questions about free speech, about publicly available data, and when it's being used directly for his sake or others' sake in fact, he started tweeting out yesterday a picture of the person he thought was the assailant in the situation and their car, and their license plate. asking for information about them so the whole thing is -- look, this is a very complicated thing about when this kind of information should be out or not. in the case of airplanes, for better or worse, including air force one, it is a completely trackable thing for the public and that's how the faa has set it up. we can make some determinations about whether that's a good idea or not, but then the question is, there's lots of other places you can now go if you still want to track elon musk's plane it's not just on twitter >> the latest meanwhile on the collapse of crypto exchange ftx former co-ceo telling bahamian authorities days before the

bankruptcy, that sam bankman-fried may have committed fraud by sending money to alameda research firm. he told regulators only three people at ftx including bankman-fried had the access and authority to engineer the possibly fraudulent transfers to alameda. this marking the first public acknowledgment of an insider turning on bankman-fried who was arrested monday in the bahamas we're going to talk to the ceo of binance, and that company under a lot of pressure and questions about the integrity of the crypto world and what it all means. >> stocks are set for losses the day after the fed eased off its base of interest rate hikes but you did have some tough talk from fed chair jay powell. here's what he said yesterday referencing the central bank's latest summary of economic projections. >> today, the sep that were published shows overwhelmingly, fomc participants believe that inflation risks are to the

upside i can't tell you confidently that we won't move up our estimate of the peak rate again at the next sep. i don't know what we'll do it will depend on future data. >> ahead of the interest rate decision, our next guest said the fed and cpi inflation data were yesterday's news. joining us is mike wilson, chief investment officer and chief u.s. equity strategist for morgan stanley, and mike, i guess you would say today and tomorrow's news has to do around earnings >> the fed and the c pirx, that was the story in october it's interesting the price action in october, the downtick in cpi was a surprise we got a big rally off that because rates came in, but to think you're going to get another rally on that news is a bit naive because you already had it you're not going to get another rally on this. what we can say about this week's data, cpi peaks, inflation peaks. we're confident it's going to come down hard next year, and what does that mean about growth that's the second part of our bear market story we have been

talking about for almost 12 months now the gross slow down is not yet priced that's going to determine the winners. there are going to be companies that deliver on that, but at the index level, we're pessimistic we can support these prices given our outlook on earnings next year. >> pretty pessimistic is putting it lightly your consensus for earnings for 2023 is 16% below the consensus. t the would mean a long way down usually it's a big deal if you move 2%, 3%. >> we're looking for 20% potentially. the good news is most investors agree, the market, this is not new news people assume earnings are going to come down, but it's the magnitude of that design and how fast that's going to happen. we think that's where the surprise is, that the negative operating leverage we have seen from falling inflation, is what's going to hurt margins, and that's irrespective of whether we have a recession. >> there are people who said we

heard the story before we heard there was going to be an earnings recession three times now and every quarter the numbers are pretty good. why do you think this is when the rubber really hits the road? >> this is always the trick. so i would say some companies are already in earnings recession. what we know is this year every quarter has been disappointing, but we haven't yet gotten the guidance on 2023 because companies have no reason to talk about 2023 until we get there. they keep deferring that but in january, they are going to have to address that. that's why we think this is the quarter where you get a bigger step function lower on forecast for 2023, and that will create the final kind of plunge on multiples that can give us a real buying opportunity. >> mike, you have been pessimistic for a while, but not brutally pessimistic without any signs of life for things there are moments where you have said, yeah, we're going to see some gains, and we have recently are you just following the markets up and down based on where they should be >> that's our job.

>> but a lot of people don't do it >> you get a 15% rally, you have to try to catch it this one we got. we don't always get it right we felt rates were going to come down, that the fed is yesterday's news this is now known. the bear market has been driven by fed policy, higher rates, concerns about inflation, multiples have contracted. so we got relief on that that's why we rallied. that's a trade because ultimately stocks will care about the earnings decline as much as they care about the fed pausing or even continuing for another couple month >> you think the earnings recession is going to come because the fed raises rates too far or because companies at this point are now bracing for a recession and as a result are cutting their spending expectations and that's going to ripple through everywhere? >> there's a whole host of things there's a pay back in demand we overconsumed, overstimulated the economy. there's some of that price destruction or demand destruction from higher prices there's the fed policy from this year which will affect next

year's economic growth, and then the last part which is a really important point, becky, which is at some point confidence just fails. and the corporations stop spending because they're like, we have to batten down the hatches a bit. that's how you get a labor cycle. >> that's what it's starting to feel like from the ceos we talked to last week at the business roundtable and other places i'm going to prepare as if this is coming. >> totally, and that's the light switch >> if you're a company that's been successful raising prices and you go in with a slowing economy, the consumer is not going to put up with it. it will be, and the margins will go down because they're not able to raise prices. will sales and earnings will both be worse than probably we're used to in recent months >> everybody understands not all sales growth is slowing. but because of inflation, there's a view that nominal gdp will stay positive even in an economic recession we agree with that we have positive revenue growth

in our forecast. the problem as you said is margins. so the real point we're trying to hammer home with clients is the following. inflation increases operating leverage that's the main point. and operating leverage can go both ways. it's not always positive right now, costs are increasing faster than sales. that's the margin degradation that's not in most people's numbers. >> we have to run because we have ecb data. >> great >> coming up, breaking rate decision from the european central bank we'll have that number in just minutes. then later this hour, the ceo of crypto exchange binance joins us on all the latest developments in the industry. cz has, i think, 8 million followers. nice if we tweet out he's going to be on anyway, out flows from his platform, sam bankman-fried held and facing criminal charges and regulatory chatter heating up.

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facility look at the headlines here, joe. it says keeping interest rates at a restricted level over time, reduce inflation by dampening demand pretty much as expected here the main refinancing rate at 2.5% they're one of a series of banks that raised interest rates including the bank of england this morning went up by 50 and the fed yesterday by 50. we also had norway and the swiss by 50 basis points joe, i don't think this is any big surprise the terminal rate at the ecb had been 290 they're not going to go as far at the fed already has gone or as far as the fed now plans to go or at least forecasts that it's going to go with that over 5% funds rate for 2023 that we got yesterday. guys >> yep, not only do the multispeed economies with us,

steve, but with all of the different members in their own -- on the continents a crazy way to try to do things. at least we'll have some dry powder around the world at some point. remember how long that was a big complaint, if something happens we're at zero, what will we do i'm trying to look at the bright side we're definitely in a period where we haven't been used to it for quite a while. so let's get it out of the way, i guess. >> a positive way to think about it, joe. >> does the dollar turn -- they're still behind us, and we have expressed concerns here about a strong dollar. >> i'll give you the dxy i have to look it up here. i have the dxy at 104. it was as high as 110, 112 at one point. it was super strong when it looked like our main trading partners were not going to be on board with raising rates here.

and that's another feature of this, joe. it's sort of every central bank, every economy for itself i have here a peek back in september, joe, of 114 on the dxy, which is the conglomeration of the blend of different currencies out there versus the dollar and look, joe, i have never been a big fan of following the dollar as a big economic indicator because the u.s. economy is so dynamic that you have some people benefit and some people not benefitting. i think we ultimately benefit from a stronger dollar because we import so much stuff. and i am interested, just real quick, 8:30, take a look at those retail sales we get a beat on at least the initial month of spending for christmas. you guys were talking about christmas spending and the top hot ten items. make sure you take a look at that we'll see what people are doing with their money, at least in november then of course, we do november and december together to get the

full beat. may have been some october in there. >> all right, steve. thanks you get anybody except socks and underwear? that's my life anything >> that's what you get for christmas? >> what else what don't i have? there's nothing i don't have except clean underwear >> you said it, not me >> what do you get >> love. >> i'm sure you got kids giving you stuff, relatives >> it's always a surprise. >> kids make stuff that's nice. >> when we come back, the ceo of binance is going to join us live for an extended interview. >> and why the premiere of the new avatar film is so important for disney and movie theaters. that story is next "squawk box" will be right back. ♪♪

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. welcome back to squawk billionaire tech entrepreneur peter thiel speaking out about the midterm elections at his speech at the ronald reagan presidential institute this week he called the republicans' performance in the midterms, quote, disastrous, and, quote, depressing he said it was structurally set up for gop wins thanks to inflation and high gas prices. he asked if you can't win in that kind of context, how are you ever going to win?

thiel had backed and spent millions behind arizona gop candidate blake masters, who lost his election. also gave big to ohio gop senate candidate j.d. vance, who won his race, but a number of prominent folks on the gop side have been quite frustrated as you might imagine. pretty simple. >> he said that, that morning, i think. >> goldman sachs, what happened, obviously. there's extenuating circumstances other than just what was staring you right in the face considering shrinking the business portfolio of its more than 3,000 investment bankers by more than 40% this year. they look to navigate rising interest rates and a slowing economy, according to a report shares down about 6% only in 2022 that could be worse. >> interesting to see if peter thiel, by the way, changes the kind of people that he backs in

the future >> he didn't have any choice this last time that is the overall problem, as we know. primaries are messed up on both sides. >> that is true. been the case for a long time. >> let's talk about what's going on in hollywood. this is the biggy. disney's avatar, the way of waters, it owns in theaters tonight. joe joins us with a look at why this is so important, not just for disney but for the whole industry good morning >> good morning to you, andrew back in 2009, james cameron's avatar grossed $2.9 billion, making it the highest grossing movie of all time. here we are 13 years later and there is a lot riding on its sequel which reportedly cost about $250 million to make, plus much more for marketing costs. but director james cameron indicated it cost a lot more, when he told gq the film would need to be the third or fourth highest grossing film of all time in order to break even.

that would mean topping star wars the force awakens, which grossed $2.07 billion in fourth place. now, this is a very important film for disney. it was seen as a key piece of fox's entertainment assets which disney acquired and bet big on with its investment in an avatar themed area at disney world. a couple things working in avatar's favor it faces little competition for this kind of film until the new antman sequel comes out in february it's also released in china which is a key market and yielded high returns on the first avatar film. on the downside, it has been 13 years since the original film, and this movie is over three hours long limiting the number of showings per day. plus, james cameron developed the film for people to watch in 3d, which as we know has not taken off since the first avatar this film and its performance is being watched very closely, not just by disney but also by the theater chains, which has

struggled with a box office that's still about 34% below 2019 levels, according to comscore >> how quickly do you think the window is for this film in terms of how quickly people will see it on disney plus or what not? >> i think this is going to be a longer window for this film in theaters avatar performed not massively in the first weekend like a superhero film, but performed very well over time. this is the kind of film they're hoping families will go to and continue to go to through mid-february when antman comes out. i thing the question is, the fact it's three hours long, is this a good thing to do with your kids over the holiday break? and will people continue to go to it, not just over the holidays but also over the long weekend in january as well so i think that's the hope for this movie they're going to give it a long runway in theaters but word of mouth, particularly the first weekend, will be essential >> i saw it yesterday, it was

great, but it was long three hours and ten minutes. it's long, but there are certain movies that i would rather see at home. 3d makes a difference. >> i will say, i remember buying a plasma tv, this is now, when was this out, 12 years ago whenever that was, and i bought one of those tvs that could do 3d, it came with the glasses and the dvd that came with it was avatar and i remember we all watched it and that was the last time we ever did that. julia, thank you >> coming up next, breaking retail sales and jobless claims data. plus an exclusive interview, been waiting for the ceo of crypto exchange binance. cz going to talk to us much more "squawk box" ahead we'll be right bk.ac

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.

welcome back to "squawk box. rick santaly here. live at cme hq with a litany of breaking news. empire for the month of december down 11.2. that's the weakest level since august when it was down 31 we're only expecting down 1. retail sales for the month of

november expected to be down two tenths triple that, down .6%. that's the first minus number since july but the weakest number since december of last year so this is the weakest number of 2022 thus far. if you strip out autos, it remains a bit stronger, but it still remains negative at minus .2%. this is the weakest also since december of last year. strip out autos and gas, still down .2% that's the weakest since december of last year as well. and finally, if we look at the control group, which is used for higher up the chain economic imputs it's also down .2%. that hasn't been negative all year and that also is the weakest since december of last year initial claims, 211,000. 211,000. that is the lowest, and whether

it's good or bad depends on how you view the fed, will view a 211 number that's going to take us back to, oh, wow, that takes us back to september, third week in september. if we look at continuing claims, 1.671 million. 1.671 million. that actually is exactly equal to last month which is highly unusual, and minus .2% are wild, we saw the swiss central bank, the bank of england, the u.s. central bank, the ecb all raising 50 basis points yet we still see the ten-year note yields are basically hovering unchanged they have traded lower if that's a paradox to many, consider this, the treasury complex itself is a self-adjusting mechanism as convoluted as it may be, it

still tries to give us a real glimpse and real signals of what's going on. if you try to configure that with what is deemed to be a data dependent fed, but are they? they kind of know where they want to go becky, back to you >> rick, thank you >> meantime, the collapse of crypto exchange ftx causing increased scrutiny for the players still out there. one thing that got attention earlier this week was binance seeing more than a billion dollars in outflows, but the company's ceo tweeted this was, quote, business as usual, and about 12 hours later he said things seem to have stabilized also, a new filing tied to ftx's bankruptcy proceedings saying days before the company went bust, a top executive told bahamian authorities that sam bankman-fried may have committed fraud by sending customer money to his alameda research fund joining us, cz thank you for joining us so many issues about trust and

credibility and integrity in the space. i want to start with what's happening at your own firm given the outflows this week io said on an ama, you said there's no amount of withdrawals that would put us any pressure but that, i think, was a very bold statement to be making. how are people, and why should people trust that their money is safe at this point >> so i think -- thanks for having me. the well run crypto exchanges should hold user assets one to one. so user deposits bitcoin, we move to a cold wallet, we keep some in a hot wallet and people sell it, now the bitcoin belongs to somebody else, but we still hold it in cold storage. people can withdraw 100% of assets they have on binance. we will not have an issue on any given day. so 100% of users withdraw 100% of assets, we'll be fine this is very different for

traditional finance people to understand because banks run on fractional reserves and the traditional regulators, many of them may think it's okay for crypto businesses to be running on fractional reserves that is not okay in crypto, there's no central bank printing money when there's a liquidy crunch crypto assets have to hold them one to one that's what we do. >> let me ask you about that specifically indulge me for a moment. when you had what seemed to be liquidity issues around customers wanting usdc, it looks -- it looked at least from this vantage point that what was happening here could have been avoided if, and tell me if i'm wrong about this, you allowed customers to deposit and hold usdc insaid of what it looked like you auto converted them into your own exchange dollar. am i wrong >> there's minor corrections so number one, we do the auto conversion to eusd, which is not

issued by us, which is not the exchange dollar. it's actually issued by a new york dyf licensed entity so the reserves are in new york. it's a stable coin the problem we had before is we had many different type of stable coins on binance, and bitcoin trades against usdc, and there's a bunch of other things. it's very difficult for users to find the best price. we said okay, they're all stable coins and they should convert one to one, so let's combine all of them into one so the users want to buy bitcoin, they go to bitcoin and they find it on the depausive withdrawal, we do the conversion. we have channels to convert them one to one, but the channels we have to have go through a bank because to convert, whether to sell it into u.s. dollars cash in a bank, move it to a different bank account and buy it at a different institution, so that day, we had more users

trying to buy or trying to deposit busd and withdrawing usdc, and we ran out of that the bank that does the conversion doesn't open until six hours later. that's a bank in new york. this issue was caused by a bank. stable coin is the only one we convert. every other asset, people deposit bitcoin, we hold bitcoin. >> you understand why i'm asking that question, because it does appear in that instance, at least, that when you said no amount of withdrawals would put you under pressure, by default, it put you under pressure. whether it was your doing or some other bank's doing, so the question is, longer term, would you re-evaluate how you do that? >> we have the assets to convert. so there's no margin, no leverage we just needed the bank to open. so the bank opened six hours later, it was fine so banks don't work for like 24 hours a day. banks only work for a few hours

a day, and when you try -- when the banks are shut done, when the banks are closed, you try to withdraw money, it doesn't work. we allow people to withdraw other stable coins onto other platforms to do conversions they want there was not a liquidity issue. there was a conversion issue that was going through the bank. >> in terms of the credibility of binance, you disclosed binance holds about $60 billion of crypto assets but thus far, you haven't disclosed your liabilities i wonder why that is and whether you will >> yeah, we are working with firms to do the audit the financials like liabilities. simply, binance does not owe people money it does not have loans from other companies, from other funds. we just don't have it. you can ask any fund in the ecosystem, you can ask we also do not have bce investments so we don't owe

anybody money. we also do not have loans to other people that we depend on for our next pay roll. so we are very simple, very self-contained type of organization and we manage our cash very simply so that's very very different from the ftx situation where people who were hurt by ftx are now worried about everybody else, and they were defending ftx before, but just because they were bitten by one snake, doesn't mean every other animal is the same. >> cz, you're in a business, obviously, it's not the same as you pointed out as maybe a bank, but it relies on confidence to some extent, and the easiest way would be to publish a real audit by a respected audit firm. why is that so hard to do? why is that so hard? >> so it actually doesn't -- in our industry, we don't depend that much on trust we depend very much on verification

two days ago, people want to withdraw, we have an issue and the usdc thing was fixed within an hour of the bank opening. so every other asset works just fine we are working with auditing firms, interestingly, many audit firms are kind of scared to work with crypto businesses there are a few audit firms that audited ftx and they got burned because they give the stamp of approval and i don't know how they did the audits, but audits don't reveal every problem >> no, but an audit from a big four auditors would reveal that, if you could get a big four auditor to say that, if you're saying some of them don't want to work with you, that raises questions too. they don't want to work with you because you don't have the files and data that would make them feel comfortable signing off and giving their stamp of approval >> actually, many of them don't even know how to audit crypto exchanges. they don't really -- so when they audit, they are very used

to auditing a firm they don't know how to audit user assets, different block chains, et cetera. that may or may not be there, but many of the top leading audit firms, they're much more comfortable in the traditional finance space. >> cz, i know you have come out and said -- my understanding is you came out publicly and said deloitte, pricewaterhousecoopers wouldn't participate in the audits have you spoken with them since? and is there a circumstance under which they would do it is it about the disclosure you're providing to them, is it about their own experience >> i have not personally spoken to them, and i also did not name them but you know, we are very happy to work with anyone that wants to audit properly how to audit a crypto business. yeah >> even the audit -- i shouldn't call it an audit even the disclosure you're doing

is not -- you're setting the rules for this it's not a real audit. you'll telling them what you'll share and setting up, they wouldn't call it an audit. >> look, the ftx went through a gap audit and that firm got a lot of reputational hit right now because ftx went down, so people are edgy. people are very, very edgy about their reputations, et cetera and we are now much more transparent than traditional finance businesses >> cz, coinbase has a big four auditor. >> i actually don't look at coinbase we don't really look at other -- >> i think so. they understand it well enough >> deloitte is the auditor of coinbase they do have some experience >> coinbase is a much smaller jurisdiction coverage. global coverage. number of coins, number of products just, you know, still a bit different. >> cz, the other thing i wanted

to ask you about, and this relates to ftx yesterday, kevin o'leary testified in front of the senate and he was asked where did the money go meaning the ftx money. he suggested that one place the money may have gone is in fact to you when sam bankman-fried back in '21, the summer of '21, effectively bought out your stake in the company how concerned are you that that money will be clawed back? are you prepared to hand it back to creditors if in fact they were to ask, and was it paid to you in u.s. dollars, in some other kind of currency >> first, kevin o'leary, he's making a bunch of nonsense claims and they don't make sense. they don't make any logic. he shouldn't be making those claims as a celebrity investor i am very surprised he's able to omit a lot of different things and make some really specific

targeted things. for example, in that interview with you guys, in the same interview, he said the entire record from his account of ftx, entire records are gone. he's not concerned about that. he picks up the phone and called sbf. he's not concerned the platform records for users are gone he's not concerned about other users. how many people can pick up the phone and call sbf, and he said he was talking to sbf at the point sbf was arrested that's an indicator of a very special relationship >> i see your point. i don't think the problems that existed at ftx were simply any back and forth between your two forums it definitely led to the disclosure that there had been money that was taken, but that disclosure raises lots of questions about firms like yours. have you done the same has there ever been commingled funds? have you ever taken client funds and done anything with them? and again, why should we believe you because sam bankman-fried told everybody, no, that hasn't

happened, and he tweeted a lot of the same stuff you have been tweeting in recent days which goes back to the idea of show me the money. >> let's get back to the show me the money tart kevin admitted the fact there are no records that's not a problem to him. he wants to talk to sam and believe whatever sam says. and he wants to omit all the small spendings. $50 million, $200 million. $200 million in small spending, that's very convenient he said he didn't know binance was a shareholder of ftx he invested in ftx without looking, but he was spifrk in the way he accounts for a transaction two years ago. that's kind of contradictory i think kevin is a liar. i think he's lying about a bunch of stuff so that's his problem. to us, we want to be transparent. we want to set the golden standard for reliability solidness in the space >> cz, but let's go back to the specifics here

in '21, sam bankman-fried said he bought you out, your stake in the company. i imagine he transferred funds to you, likely somewhere between $2 billion and $3 billion, is that right >> $2.1 billion at the time, and a big chunk of that is in ftt tokens which are now worthless >> so he sent you ftt tokens and you believe that the majority of the $2.1 billion was that >> it's a combination of i believe it was a combination i don't know the exact combination now, but it's probably about i don't remember exactly, but ftt is a big chunk. that's why we still had, you know, even after the ftt price dropped over the last year, we still had $500 million worth of it, $580 million worth of it on the day we transferred from the address we received a year ago, we never touched it. we transferred it on the

blockchain from that address we received to binance.com and that got picked up by the community in this industry, everything is very transparent >> my question to you is, both a bankruptcy judge and potentially others could seek like they did in the case of bernie madoff, frankly, to seek to claw back that money are you prepared to send that money to them? and by the way, and maybe this is a risk to your firm, some will measure it as the value of ftt today. some may measure it on the value of ftt at the time if you had to send a check in u.s. dollars for $2.1 billion, could you? >> i think we'll leave that to the lawyers. our legal teeam is perfectly capable of handling it my expectation is there was a lot of spending after that transaction in the more reese b ant times ftx has done buying football stadiums,

referees, sponsorships >> you're right, but would you be able to handle it if someone asked you for $2.1 billion back? would you still be able to withstand things >> we're financially okay. >> including you have $2.1 billion to give away if someone wanted to claw it back, you would still be fine? >> we'll let the lawyers handle it we're financially strong >> the $500 million you guys spent on twitter, where did that money come from? are you confident in that? do you have additional money, and the reason i ask is again, you guys aren't ftx, but ftx was making a lot of investments in other places that turned out to be customers' money. where did you get the money for the $500 million investment in twitter? >> we have revenue revenue comes from trading fees and we have saolid revenue we're okay and we pay the investment

already in cash. it was not customer money. >> one other related question, which goes to interest related products the way interest related products work from my understanding, the way you can capture the interest to create profit for yourself is to effectively lend those shares out, typically for people to then short them. that's how this all works. is that changing given what's happening, what just happened with ftx, and have your lending standards or how this all works shifted? >> so there's different types of those type of products there's what ftx is doing is take customer money without permission and give it to alameda to trade, and that's a very different situation than when a user puts their money into a program, an earnings program, and that is used for other traders who are on the system who are properly margin

monitored. and if they go through their margins, they'll be liquidated the way we do that is we have a program called earn where people can put their money into a program to earn interest that is used for other margin traders to borrow from, and sometimes we do run out because the demand supply sometimes don't match up but the money never leaved the platform and we do margin controls for those, we do risk management for margin traders across the board so we don't have an account with unlimited leverage like alameda had on ftx that is very different >> okay. cz, we appreciate you joining us today. we look forward to talking to you again. hopefully very soon in the future i know there's so many questions people still have and we hope to continue to ask you and we appreciate you engaging with us. thank you. let's get down to new york stock exchange jim cramer joins us now. correlation is not causation, but it looked like some of the

crypto may have gotten weaker during that interview. bitcoin is down 300 or 400 at this point correlation or causation >> got to go back to that statement that gary gensler gave when he charged sam bankman-fried. in it, he made it very clear that everybody has to be in compliance now this is what's going on going forward. and that had been a very big change because there were people even on the commission and in congress who were pushing back gensler and wouldn't let him be. he was prometheus bound, now he's unbound, and this gentleman we just spoke to did not sound like someone who was necessarily in compliance with american laws i think, becky, when you asked the question about whether he had the money and he came back and said, well, that's up to the lawyers, i don't regard that as

reassuring i regard that as obfuscating and just typical fashion of what i have come to expect of this industry i don't think when gary gensler is listening to that interview he's feeling like, you know what, these guys sound a lot like bank of america or pnc financial. so let's just pass it's the opposite. so i think that the glib nature of this gentleman does not inspire. just doesn't inspire >> does it mean anything for sure, obviously, but just were trying to get to the bottom of all this >> he's going to get a call from gary gensler, let's see what you got there. >> how many times did gary talk to sam he didn't help too much with gary >> gary had members of his own commission who loved financial engineering so much that they kept him from doing what he wanted to do there were members in congress who were pro-financial innovation some of those congressmen have

very close ties with the man who is right now incarcerated. i think gensler now has the excuse he needs to be who he always wanted to be, which is an enforcer and i think this gentleman who was just on did not necessarily make me feel like, wait a second, he's jamie dimon number two. >> all right jim, thanks. we'll see you in a couple minutes. quk x"ilbeig bk. getrefunds.com y 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. i think i'm done. honey? what? i'm shopping for gifts. i need a softball bat, table tennis table...

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futures turning lower after this hour's retail sales and jobless claims data. investors also digesting rate h hikes. joining us now, jeffrey lacquer, former president of the richmond federal reserve bank greatto have you on, jeffrey and we could just talk about the fed, but i think we got what a multitude of riches. we have the boe and the ecb to talk about let's talk about that first. everybody is behind the curve, but we look good compared to those other two entities, jeff >> yeah, i don't know how good we look relatively speaking, but

yeah, all strl banks fumbled the ball in 2021 and waited too long to respond to the surge in inflation. and they're still catching up. i think they all still have a ways to go if you look at the level of nominal policy rates relative to the run rate of inflation, where inflation is expected to be over the near term, the next six to 12 months. they all have deeply negative or some real rates, and the history is pretty clear that that's insufficient to by itself restrain inflation we have gotten some good luck lately cpi report yesterday was good news but the fall in energy prices since the summer and commodity prices seems to have been a bit of good luck those typically bleed into a reasonable extent, so they have benefitted from good luck in recent months

but there's still abundant inflation pressures in the pipeline i would point to wage setting where our best measures, the ones that aren't polluted by the composition effects that affect the average hourly earnings and employment report are showing wage gains of over 6%, and that plus the fact that measures of expected inflation are between 5.5% and 7%, or 7.5%, suggests there's still a fair amount of momentum in inflation and they haven't gone far enough. >> jeff, chair powell saying all of the right things. and we were just talking about confidence and credibility and all kinds of things. do you think when he says these things that people look back to what the fed was saying about inflation and it was transitory? does he need to regain that credibility for the markets to sit up and pay attention to exactly what he's saying they don't seem to believe him

>> no doubt, their credibility took a hit last year, but i have been impressed and pleased with how forthright he has been in his communications this year about the intension of the committee to bring inflation down even if that involves some pain and dislocation and obviously a recession. he very clearly doesn't want to be the burns, he wants to be the volcker, and they have been really clear about that. what i don't think they have been clear about is what it's likely to take i have a feeling that they all know, but they have been sort of sugar coating it in these economic projections they release. so this one, again, they have sort of made some concessions to reality and have moved up a bit, so growth is low, a half a percent on gdp next year and this year.

inflation comes down very rapidly to 3.1%. >> thank you yep, sorry we're out of here in ten seconds. i had more -- i would talk to you more we'll try to do that again quickly or soon, not quickly we have to get out of here quickly. markets are down join us tomorrow "squawk on the street" is next >> good thursday morning welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at the new york stock exchange. futures are red as the ecb and the bank of england hike 50 basis points retail sales post the worst print of the year, more signs disinflation is accelerating our road map begins with recession fears resurfacing. stocks set for a lower ope