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 open as the fed remains hawkish.

>> plus, tesla's troubles. they continue. shares will take another leg lower, it appears. elon musk continues to sell down his stake in the company >> we have travel downgrades rolling on jetblue, delta, marriott among the latest calls on the street today. >> let's begin with the markets extending losses following the fifty basis point hike yesterday at the fed chair powell stressed the importance of restoring price stability. >> i think my view and my colleagues' view is that this will take some time. we'll have to hold policy at a restrictive level for a sustained period so two good monthly reports are very welcome, of course, they're very welcome, but we naed to be honest with ourselves that there's inflation, 12 month core inflation is 6% cpi, three times our 2% target. now, it's good to see progress, but let's just understand we have a long ways to go to get

back to price stability. >> a couple more signs of progress today, philly fed price is paid two-year low >> he made it clear. first, i love him. i thought it was great because he was consistent. he made it clear he was happy he had a couple good numbers but it's wage inflation. it's wage inflation because that allows everything else to go higher if you make more, that means your employer has to charge more, and this is the endemic inflation. david, he's not looking and pulling apart, as some of us think he is, the cpi and the ppi. he's looking at unemployment and he wants wages lower he doesn't want to say it because then he sounds like grinch and he's not that kind of guy. he's obviously an optimistic person who is stuck in a job where he has to be pessimistic, and he's doing it in a way that i kind of like >> what part of it do you like

>> what do i like? well, he's certainly gentlemanly about it, not someone who comes on and says, he's not larry summers. he's a smart guy, but not a bull in a china shop. not even a bull. not a bear in a china shop, either >> we look at futures down pretty substantially this morning. >> please,that's people who didn't pay attention yesterday >> then i also have people say to me this morning, ifflation has peaked, is growth really going to retract that dramatically >> who is saying inflation has peaked >> i don't know. >> what happens is there are industries where wages have to come down, and there will be a bit of a new cycle for some people a bunch of research today about how, look, you have to look through theproblems. now, i don't buy that. i'm just saying, can we please give him something that isn't, hey, it's not as bad as it was he doesn't want that he doesn't want plateau. he wants rollback. because inflation is too high.

he made it much more clear yesterday what he really wants which is he is not going to settle for a couple cool cpi numbers and start things up again. wages, wages, wages. >> those who are buying and selling stocks are trying to understand what this means for next year and for earnings for the companies they follow and how dramatically those numbers are going to come down >> it means don't buy -- you have to buy cyclicals because we have an unbelievable infrastructure we have three different bills that congress passed people are starting to talk negatively about bags because they say the banks are asking -- customers will want a bigger return on their checking account. so that hurts. but in general, this is just people, futures people waking up and saying i have to get out of the market they want to get up and they're selling merck. yes, merck is part of the s&p. you don't sell merck on this do you sell all these banks?

goldman sachs is doing what's right. they're cutting some of the compensation that's what they said they're going to do. i think we have some of the wisest ceos in the country with a great fed chair, and this is not going to be something that we're all going to look back and say i can't believe we didn't sell it's not going to be that. it's not >> well, most of those ceos right now, jim, are not actually -- some are more negative than others, but most are not pointing to significant weakness in their opinion as of yet in their business. >> they don't have it, carl, the enterprises out there are strong what the fed wants to do is make it so they're less strong so that they don't hire, so that there's they can't do it through immigration, the questions, by the way, were much higher quality than usual i thought the questions rose to the occasion but i just came back and said, all right, he's saying listen, we have to win more than

adjusted cpi and ppi we have to win on wages. i think he said we have a long way because we have to win it was measured. >> morgan stanley today, it was difficult for us to follow the logic of the changes to the sep and the chair's comments, both of which appeared inconsistent they took the unemployment data before 6 that's a serious jump in unemployment >> it is, but look, he needs to have it go -- i don't like the people who say so what happens after you win? does it -- do rates go down? he's saying, can we win first? that's like saying what happens after you beat chicago do you get home field advantage? we have to beat chicago first. there wasn't anything about him that wasn't nfl, meaning the gold standard, that wasn't impressive and he basically said, we haven't beaten this yet. >> if all this is true, what's up with bonds. are bonds calling their bluff? >> bonds are calling their

bluff. i think bonds are saying he's big hat, no cattle i think he's real. >> you think he's real >> yeah. >> but the bond market doesn't >> no. the bond market think he's - >> bond market often wins. >> they may lose this one. >> really? >> yeah. yeah they may lose this one >> others argue look what happened to liz truss. she'll tell you what the market is about, and what point do they force him to do something different? >> well, i think he's got a path i think he's going to get a couple 4% unemployment numbers and when he gets that, i think you can say, you know what, we're almost there if we have a rally, and if -- like the reporters, well, sir, is the rally inconsistent with what you wunt? he can say, i don't care about the rally. i care about the american people >> i get it. listen, we always try to come back to the market itself.

>> that's because we're small thinkers >> it's because i end up talking to people who allocate assets in the equity market. i said this yesterday, of course, they continue to be quite negative in terms of their view for next year at the same -- by the way, that is shared. we had roger alman on yesterday. it was interesting how negative he was in terms of reflecting what he's hearing from ceos. take a listen. >> most ceos say the following business is still okay but i think it's going to get worse. that's the message i hear most often. they both show, as you know, almost 100% agreement on the likelihood of a recession, which would mean lower earnings. it doesn't mean they're right, but the expectation of weaker business conditions next year is universal. >> okay, so then again, let's just say you're caterpillar, you're deere you're about to get gigantic callsfrom floor and dicom --

nucore, saying we need everything you have because we're building bridges everywhere we may be building bridges to nowhere because congress has empowered us with trillions of dollars and you have a fed that can't stop that money from coming i think this whole notion that everybody is negative, i speak to many more ceos -- i would say i speak to more ceos that almost anybody. when the interview is over, what do they say? the order looks good you know what, sales look good >> it's a great point. i'm a couple calls on disney and comcast this morning oppenheimer, the strength of parks is very unusual given the uncertainty. >> it's an unusual decline there's a lot of places that are strong >> there are, and that's what makes this a particularly unusual time and a very difficult one to navigate. >> i think that history is not as helpful right now and i just find that for instance when i think about china, i heard people say, well, china is going to shut down

because of covid, and then i hear other people say, well, covid, it's going to be immunized in three weeks because everybody is going to have had omicron. i'm saying that everything is so inconsistent >> everything is inconsistent and hard to follow by the way, you mentioned china. that is not an unimportant component here also. >> thank you >> if they are focused once again on economic growth, as the journal reported this morning, that will have an impact as well positive in some ways but also potentially they consume a lot of commodities it could have a negative effect. inflationary impact. >> brian sullivan, who is on the five, he is still saying 3 million barrels a day if china comes back i trust brian more than anyone else because he spends all his time he was he was europe looking at this. 3 million barrels means a little more inflaig, but also you're going to get orders from china >> look at the oil trade right

now, back to $76 seasonally getting into that time going to be cold >> we need to see layoffs. i don't want to jinx anyone, but we need to see, say, a rental car -- a car company that sells used cars. we may need to see that stop we may need to see a place where i buy, i don't know, things like, you know, like bed wear, bath wear, where sometimes to infinity and beyond. you know what i mean >> i do. i know exactly what you mean you think we need to see some bankruptcies >> thank you >> you're welcome. >> so let's say -- >> a couple bankruptcies -- >> i want to say right now, i want many people laid off. i want people to feel really bad. i would like it to be done before christmas but i understand it's an important holiday so we're going to have the layoffs after. is that what you want? how about a fed chief, very measured, look, we need to see,

have we had a couple wins, but it's not enough. i thought it was so great. look, i don't know if he went out for high school acting i don't know what he did i made lieutenant rooney i got cut in guys and dolls. i think he is just really good a lot of other people aren't as good you do have -- i did like the reporters. there's no reporter anymore who is saying, frankly, i don't know what you're doing. they're not doing that i think he's giving it very straightforward. we had good cpi, not enough. we haven't seen wages come down. we want to see them down, not stabilized he also said something great, we don't want to see a good year over year because it was bad last year. >> sure. >> you could not be more clear what do people want from a fed chief? what are you asking for? what do you want you want lincoln four score and seven months ago we had high inflation. what do you want out of the guy?

>> don't do that to me he's playing that silence game >> i'll tell you what jeff gunlack wants, maybe a pause here's what he said yesterday. >> down very substantially i'm surprised people don't talk about this the long bond yield is down something like 90 basis points the ten-year treasury yield is down 75 basis points and even the two-year treasury yield is down 50 basis points. and we're at these levels that suggest that recession is coming >> really weird. morgan stanley sees one more 25. goldman sees three more 25s. >> yeah, i think three more 25s is what he has to do here's something - >> gundlach also thinks inflation once it starts is going to decline rapidly >> let's take lennar now, lennar had an okay number some cancellations

but the housing stocks, if we have a chart of the housing stocks, they started going back up the numbers are good, the margins are good that's not supposed to happen. we're supposed to go into a recession. you're not supposed to be buying those. those stocks are on fire can we please put up a six-month chart? this group has been strong the margins are strong they're raising prices that's not what powell wants he wants to see a surfeit of housing, so the margins are crushed and you may be able to buy a house in this country for less money that's what he wants >> right although your monthly costs will still be significantly higher if you take out a mortgage. >> he wants to see that down >> i know, but shelter, we're structurally underhoused and will be for years. labor, he said, we took 3 pite poiv million people out of the labor force. >> he's playing for time

more people will come back, more people will run out of money we'll have more immigration. we will have, he has to play for time what i don't want are people jumping the gun and starting to buy the housing stocks before he's even put the wood to them that's more metaphorical >> understood. >> i just think that when i saw the housing stocks go up, i said uh-uh, too early he's not going to be happy with this one >> we're getting more data this morning on top of retail sales let's get to rick on industrial production >> yes, good morning, carl industrial production for the month of november down .2% of 1% and believe it or not, that is the weakest number of september of last year, of last year and if we consider capacity utilization is below 80 in this read, 79.7, very close to expectations, 79.7

well, that is the lightest going back to february of this year. february of this year. and when you look at yields for ten-year notes, at just a whisker under 3.47, on the day the fed hikes a half a percent, we're below yesterday's low yields on the lows of the day. the lows of the week are 3.41. keep an eye on those, and "squawk on the street" will return after a short break you ok, man? the internet is telling me a million different ways i should be trading. look!

what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning. learn your way. not theirs. td ameritrade. where smart investors get smarter℠. if you run a small business, lea you need the most from. every investment. that's why comcast business gives you more. more innovation...

with our new gig-speed wi-fi, plus unlimited data. more speed... from the largest, fastest, reliable network... and more savings- up to 60% a year on comcast business mobile. all from the company that powers more businesses than any other provider. get started with fast speeds and advanced security for $69.99 a month for 12 months. plus ask how to get up to a $750 prepaid card with qualifying internet.

tesla shares continue to slide this morning in a regulatory filing, yelon musk disclosing he sold another 22 million shares of the company from monday through wednesday worth about $3.6 billion tesla did close yesterday with a market cap below $500 billion for the first time in two years as investors have expressed concerns about musk's focus on twitter. gary black of the future fund, we mentioned him yesterday, among those investors. he's going to join us in the next hour to talk about it, jim. people are watching the p e at tesla, now below say chipotle? >> twitter is going to go down as perhaps, david, you're flawith all of the great ones. >> yes, i am yes y am i have a long list of horrible deals. >> this one is requiring endless financing because it's losing endless amounts of money >> we don't know exactly why he sold the shares but we can surmise perhaps because he's seeing an opportunity, either

the company needs tefor its ongoing operations or there's an opportunity that he may have to reduce the debt load in some way and reduce his annual interest payments which may be as much as a billion dollars because he's taking on $12.5 billion to $13 billion. thank you, morgan stanley. not going to sell it to anybody unless they want to clear the market low >> now, you sound like someone who has done a lot of work on this and know things >> as you know, i have been following it quite closely that said, it's always hard to discern exactly what's going on at twitter he sold $23 billion of stock since he said he wasn't going to sell anymore or tesla. >> that's just this past round >> since april >> april is when he said no more sales. >> he got in the place and -- look, there's a lot of advertisers that have gone away. the trajectory wasn't good

anyway he bought a -- look, he got had. he didn't know that there's a system of law where there's some little state, delaware, i don't know if he was like like, delaware, and he got the delaware chancellery >> we know the story he got himself caught in something he shouldn't have because he seemed to make an emotional decision and a very quick amount of time to buy this company at $54 .20 >> they were scared of him >> none of it means a thing anymore. he owns twitter. he paid $44 billion for it, and the only question is, what is its future and will he be able to meet his interest payments? and is he endangering the future of the company as a result of all the different things he's tweeting or putting it on a new path that's going to lead to greater and ultimate success far beyond what it had previously. >> maybe it's the greatest investment ever. there's a valuation for his

spacex >> $140 billion was the last number >> will you give me a break? you think in this market that's not even worth more than the fanatics >> i would argue spacex might be able to come public even in this market >> p.t. barnum >> they launch a rocket every six days and have starlink, which by the way, could have real significant revenues from commercial operations and consumers. >> that's worth a lot. >> i don't know. i wouldn't necessarily question that >> i'm just saying that this is better than ftx. it's working out better than ftx. >> twitter is? >> yeah. >> meanwhile, we talked about the other side, which he continues to antagonize some of the buying population for his cars who perhaps don't want to be associated with the brand in a way they had previously. >> there's someone, you can get a check. i get it on my push. do you want a heck, do you not

want a check i don't know, check please >> we'll talk more about the impact on tesla shares as we said coming up in the next hour. we'll get cramer's mad dash. we'll count down to the opening bell on isth very busy thursday. futures down don't go away. to adapt in the changing world, you could hire a professor of theoretical mathematics. we all know this equation, right? he'd crunched numbers day and night. that's it. to maximize profitability. morning. i have quarterly numbers that are beautiful. and forecast revenue from every corner

of your organization. is that important? or you could use workday. the finance hr and planning system that helps cfos make better decisions faster. for a solve problems like a genius world. workday. for a changing world. ♪ ♪ connecting to opportunity is just part of the hustle. ♪ ♪ 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... ...and charting a course to get there. sometimes the only thing standing between you and opportunity... ...is someone who can make the connection. at ice, we connect people to opportunity. the decline in futures this morning indicates the dow,s&p, nasdaq once again on track for a losing week. we're about halfway through the month and all the major averages are on pace for their first losing december in about four years. "opening bell" coming up in four minutes. 5, 4

3, 2. you are down to your last life. i am not really a math guy. rated pg.

ho ho ho! not again... oh no... for the gifts you won't forget. happy holidays from mercedes-benz. see your mercedes-benz dealer today for exceptional offers. ♪♪ ♪♪ ♪♪ be ready for any market with a liquid etf.

get in and out with dia. we got a minute and a half we're going to get an opening bell then, but let's squeeze in

a mad dash >> disturbing piece. talking about the mixed legacy of iron. and i'm going to read this to you because i don't want there to be words minced fox constituted 77% of disney's total investment in r & a. the deal impairs disney's balance sheet, diluted family entertainment, increased their exposure to streaming assets basically what he's saying, it was a strateg ic error >> the fox deal. >> consistently, you brought it up as a valid question >> okay, that's good but i did feel that this was, my charitable trust owns it i wanted to buy more i read this. i think it could go lower and

then we'll buy more because i believe in ieg xr i believe he's coming in at a good time, and believe all this is priced in and i'm going to buy iger. i want to buy iger right here. iger not d-i-d. >> new ticker. the big board. celebrating the listing via spac at the nasdaq. software development platform gitlab >> david has talked about how spac performance has been uneven >> uneven is a nice way to put it, yeah >> i have gone over the data i want to be careful the cash flow is very good those are survivors. they pivoted i was too critical there were companies who tried to buy it before it went public. if you went too low, you had a

nice put >> remember, tomo bravo has the money in their pocket. >> they're putting it to work quickly. >> they are. >> the deal was only a few days ago, monday morning. >> seems like forever ago. >> like a long time ago. but your point is an interesting one in terms of value that the private equity firms do see whether they're private or public companies vista is another name we mentioned many times they were not there at the same value as thoma bravo >> you need a willing seller and none of the companies i mentioned feels like it's time to cash out. >> meanwhile, jim, what do you look for today when you think about reaction to the fed, we have already spent15 minutes talking about that what deyou look for? >> bargain, companies i believe like disney are going to have a better year in 2023. because they have good management, better management than they had, and going to figure out how to make more money because maybe they can go and talk to talent

talent knows what they do. i don't want to buy a company directly in the cross hairs of the fed. for instance, i don't want to buy traditional cyclical companies that are not related to the infrastructure giveaways of this administration >> right >> when you say giveaways you're not suggesting we don't need infrastructure activity? >> our country is well behind in infrastructure, but i'm saying that typically, you would do those things -- when there's enough workers, when there's enough steel plants. we don't have enough of any of that those companies are all going to be very inflated and they're going to be a great place to be on earnings because you can't believe they'll have such great numbers. i think caterpillar will shock you. i think deere will shock you these are must buys. they're must buys. i like them. >> right now, nothing is working. all sectors are red. finances down, industrials down. jim, this goldman sell call on western digis going to make that

your worst s&p laggard >> they're doing terribly. and the inventory glut that i think a lot of people would end at year end is not over. there's a glut of tremendous proportions for semi-conductors. we have these analysts trying to jump the gun and say the glut is over none of the companies you're talking to are saying the glut is over. i speak to the companies, how is the glut i would like to make a year end call saying it's okay. no, don't do that. >> takes us back to what sienna said last week no problem getting the semis we need >> no problem at all i mean, there's a couple stocks i'm watching t-mobile, fantastic note at jpmorgan about how well t-mobile is doing, a great note about how mondelez is doing. i think hershey is going to do well when it comes to anything connected with semis it's a bad day there's too many and that's also china not using them as much as we thought

>> speaking of china, we saw earlier many of the china related stocks are up. a release out from the pcaob, the public company accounting oversight board, you may recall as a result of something called the holding foreign companies accountable act, remember that congress passed? the pcoab wanted the right to actually inspect all the books of these chinese companies and they put a release out saying, hey, you know what, so far so good. it's the beginning of our work to inspect and investigate firms in china, not the end. we're continuing to demand complete access in mainland china and hong kong moving forward. but it's important to understand that today's announcement is about one question and one question only. is the pcaob able to investigate firms in china and hong kong completely at this time. the answer following thorough and systematic testing is yes. that's being seen as a real

positive they did get access that had been promised in the way it was promised >> usually positive. so were the answers i got from david calhoun, when i pressed him about china. seemed to think china could be doing some bf. certainly didn't want to slam a client, gratuitous slam i was demanding. i do like the idea that we have any conversations with china, because china, this is the worst it's been since pre-ping-pong with kissinger and i don't like war what is that good for? >> nothing, absolutely nothing say it again >> war >> that's very good. >> you like my huh >> i think we're in a situation where the enterprise software stocks could come down again wrrbs but i want to buy some of those. look, the stocks that are down

50% to 60%, they were reflecting this so now we have this and i'm thinking about what's going to happen after this. not doing one of those things where if you think rates are going to go higher, if you look at big tech, big tech has been crushed. a lot of them still won't be able to make thir numbers, but let's take meta. m meta has had giant cutbacks. they still haven't monetized whatsapp i think if congress goes against tiktok, meta goes to $130. >> we mentioned it almost every day, the latest is a bill, i think, out of the senate thanks, carl that would ban tiktok on all - >> government devices. >> thank you >> hasn't hit the house yet. it's not a ban on tiktok for users. >> but that's very significant >> it continues to be a reflect of sentiment in the legislative bodies that this is a

possibility. to your point, jim, if in fact you were to see tiktok actually bannedby the u.s. government, that would be a major benefit for meta >> in the many times i go to them and try to say something, they have been diplomats they're not getting me anything. >> meta, to say something against tiktok >> they will give me mow ammo. >> there continues to be questions about the safety of the platform >> safety and looking at the stupid things they have on tiktok like, the idiotic things look, they ought to have -- they ought to say listen, we can't allow tiktok because we're trying to get s.a.t. scores up in this country. >> yeah. that's for the individual parent certainly to battle. no doubt you're right. >> i'm definitely right. >> and then mental health issues that are staggering, unfortunately. >> why don't people talk about that i mentioned that because my daughter was in the business of trying to save people's lives and the first thing you have to do is take away facebook >> take away all social media.

>> which between facebook and fentanyl, which is worse when it comes to suicide >> i don't - >> let's not have that debate. >> if you don't talk about it -- >> we don't talk about a lot of things enough. >> fentanyl is a horrible thing going on in this country >> if we talked aboutope i'ds maybe we could have taken down purdue before we took down the country. >> over 300 people dying every day of drug overdoses in the area equal to about how many people die every day of covid would like to see that in the newspaper next to it because it is a crisis. >> moving on how about netflix? it's getting hit on some -- carl, i don't know this publication, digiday they say netflix is failing to meet its viewership guarantees it made to advertisers on the new ad-supported team and may be

offering to return funds to advertisers. >> this moved the stock up >> i don't know digiday, but i'm repeating what i see reported because it's having a real impact on the stock. >> the stock was doing so well >> well, it happens. so is our parent company's stock until charger decided to increase the capx. >> maybe the new netflix aren't so good. >> netflix is getting hit, way worse, by the way, than warner brothers discovery, which writes down some of its content, a non-cash charge. but apparently, as they look at stuff even more, they like it less like, let's just give it back to the producers. run it on third parties. >> were you referring to producers like - >> no. the company shall remain - >> spring time >> 10% of everything they make how about you? we should go back to something

>> warner brothers discovery is down about 2.6%. again, noncash, but their pre-tax restructuring charge seen as $3.1 to $5 billion because of additional charges related to content impairment. >> can't they look at that right now and come up with determination? >> maybe they're done. tesla shares are actually up >> i'm glad you mentioned it phil lebeau and i have been going back and forth the people who are saying that musk has eyes off the ball, you know, if you were right now mary barra, jim farley, jim ford, they know his eye is not off the ball his numbers are really good. they are selling a lot of cars i think that this man is underestimated i do think the problems in twitter were underestimated. but if anyone thinks that tesla is going to somehow be hurt by this other than the stock, oh,

come on. tesla is a good stock right here >> we got to $152 premarket, and as we have reminded people, $150 was adam jonas' bear case. wonder if we bounce off that >> that's interesting. >> you think the stock would rally if they named a new ceo at tesla? >> no, no. i don't want them to do that i just want thime -- i suggested on twitter that he pick john ledger as ceo, that made sense >> for twitter or tesla? >> for twitter he needs someone like john to run twitter. >> his plan was to be twitter's ceo for a number of months and find someone to run it >> maybe he needs to go back to tesla. >> changes his mind every hour >> he's not as consistent as we may -- >> no, but he also lets you know about all his changes instead of just - >> he plays with an open hand. >> the other thing is the fresh wave of downgrades on travel

today. marriott, jetblue, delta >> only jetblue is bad try to book a plane, try to book a hotel other than jetblue, they have been staggeringly good. i don't understand where these people -- i remember talking to brian chesney and saying people are saying you're saying the high end is bad. he said to me in an interview i did with him, what are they talking about? the high end is good so people want to be too negative on industries that are doing well >> right >> aerospace is doing quite well there's a dearth of planes people need planes what are you listening to? >> trying to listen to chip tell me something my hearing is gone >> i think people are too negative >> amex is a great example almost back to the 50-day this morning. that's a one-month low

a little more on axp >> steve spruill is a good ceo he just told marc benioff, business is good i don't know like, travel is good although, anyone see the note upgrading gap stores and foot locker >> no, missed that one >> it was a good note. >> something i didn't miss and i want to get to, guys, is quick divergence into activism world here fis, fis you may know that company. a $48 billion company. >> go ahead. >> d.e. shaw has been an act have they seemed to engage with the company in the last few weeks quite in a positive manner, but we got an announcement from fis this morning they're in all sorts of areas, a

big company,had been a lot bigger you can go back and look it's been cut in halfover a certain period of time but the announcement this morning, a couple important things gary norcross is going to depart from the company as its board chair. he's going to be replaced by jeffrey goldstein who is lead independent director right now, now will be independent chairman they moved up the appointment of the new ceo, stephanie farrah. she's coming in basically as of now. she starts tomorrow. she was going to start januaryo separate releases, as part of the second releasei'll call the second release in which they say the following the review, they're going to undertake a review, comprehensive assessment is what they call it the review will also evaluate fi certiorari's business structures and portfolio assets to insure optimal configuration and

deliver the greatest results for their clients and shareholders this will complement and enhance the ongoing enterprise transformation program what does that mean? they're taking a look at whether it might make sense to break the company up and that is a number of analysts have been out with some of the parts, de shaw made the case is my understanding that a separation would allow each individual business, and here we're talking about three different businesses perhaps as many as, to be evaluated appropriately by the market which could be as much as 50% or 60% higher, would be tax compliant and a number of other things as well three franchises in banking solutions, merchant company, which would be in merchant acquisition, and then a capital markets company. will they do it? who knows. probably take a quarter or two to review. but it is a possibility now, and it does appear that in fact de shaw's involvement, which also actually extends to getting one new director on the board, a

gentleman named mark ernst will also be joining the board as a director could be something worth watching the stock has underperformed over the period of the last five years, and again, broadly speaking, payments is what we're talking about here >> payment services underpressure everywhere whether it be toast, which is not toast. they're okay to payment square, paypal. these are all stocks that were part of the november pivot against. and there's been, i mean, fintech in particular, if we look at stocks like affirm or upstart. do you think they don't reflect what's been going on in washington with the fed? i just find people are too negative because they don't realize lo and behold, these stocks have already reflected a lot of what powell has done, carl it's just -- i just think that people are saying, holy cow.

it's bad it's been bad for a year and a month. it's been 13 months. when people ask about the stock market, the first thing they say is can i not hear about it do you mind? i'll talk about anything they're willing to talk about teams like the houston texans. >> they came pretty close. >> i mentioned that. >> impressive. >> but i'm saying that people would rather talk about anything argentina, you know, croatia please don't ask me about stocks >> we are down 500 almost on the dow. only one component in the green, that's verizon let's get to bob pisani. >> the soft landing crowd is having a tough time of it this morning. retail sales miss, empire manufacturing missed industrial production miss the ecb is raising the inflationary outlook the good news is the dollar moves down, rates are moving up, but it's not helping the

markets. retail is getting hit again. nike is weighting on the dow what i call the risk-on stuff, metals and mining, the china trade is fading. that was a wig mover a few weeks ago. ark innovation, another risk on risk off down 2% semis down 2%. semis had a decent run they're kind of sideways the last few weeks but a few of them, nvidia had an amazing run. it was at $110, $115 in the middle of october, $170 now. quite a run. it was higher than that a couple days ago maybe it's time to cool off a little on semi-conductors, particularly on nvidia i'll tell you what the main problem is in the last day, since powell, is there's a real valuation problem on wall street right now with the s&p 500, because the prices are too high. so the strategists, the top down guys, the mike wilsons of the world, they have been very aggressively reducing their earnings estimates in the last month or so. right now, average of 17

strategists i did yesterday had earnings down 6% for 2023. now, these are strategists, analysts are a little more optimistic down 6%. if you put a forward multiple on that down 6%, you have 19 times forward estimates for the s&p 500. that is a big problem because the historic average is 17, and multiples over 18 are extremely rare they happened in the dotcom bust in '99, 2000 they happened briefly in 2017, briefly in 2020 because of covid. it tends to fall back. when you start arguing you have a 19 multiple, and this is flat for 2023 if you want prices to go up, now you have to start assuming earnings are down, we're going to be very aggressive in terms of the economy and do a lot better that's hard to argue in this kind of argument, so this is the valuation problem wall street has. we're going to get a lot of

volume tomorrow. the quarterly exploration of stock futures and single stock futures and options. we'll also get the rebalancing at the close, a lot of heavy volume after the open and lose these are not as important as they used to be because there's a lot of different options, monthly and weekly options, but we're weekly options, carl. we'll see a lot of action right at the open. back to you. >> biggest expiration, i think, in two years tomorrow. >> bob, thanks as we go to break, watch bonds, not the activity we're seeing in stocks down 5.40 on the dow, but ten-year, two-year down but not quite to levels we got earlier in the week.

what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create ♪♪ for skin as alive as you are... don't settle for silver. harness the power of 7 moisturizers & 3 vitamins to smooth, heal, and moisturize your dry skin. gold bond. champion your skin.

take a look at nasdaq 100 laggards

marvel and nvidia, micron, asml. plenty of laggards to choose from because only seven components are in the green. back after a graek break ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq

esg is responsible investing. yeah... oh. who's responsible for building esg into your investments? at pgim, the pursuit is on for outperformance. as active investors, to outdeliver with customized strategies, integrating esg best practices into our investment decisions. as asset managers and fiduciaries, to outserve, with our commitment to better esg outcomes. join the pursuit of outperformance at pgim. the investment management business of prudential.

what's on "mad" tonight? >> doug peterson has done a great job, and ritchie brothers, we're interested in industry that is in carvana they do auctions for cars. >> maybe your own auctioneer business gets -- >> i miss the days >> he's a good one >> you're supposed do the cadence. don't do one, i've got two that's not the way a real auctioneer does it >> "mad money" 6:00 p.m. eastern time. continued weakness dow down 600 coming up, gary black, one of the tesla investors who has been outspoken about musk's focus on twitter. don't go away. good luck.

td ameritrade, this is anna. hi anna, this position is all over the place, help! hey professor, subscriptions are down but that's only an estimated 15% of their valuation. do you think the market is overreacting? how'd you know that? the company profile tool, in thinkorswim®. yes, i love you!! please ignore that. td ameritrade. award-winning customer service that has your back. to adapt in a fast changing world, td ameritrade. you could hire a professional pit crew. go, go, go. sorry. nope. okay. fresh donuts - hot coffee! they deliver real time data and business forecasts when you need it. i think it was fine how it was. (air tool sound) to help you stay ahead of the curve... or you could use workday. the finance, hr and planning system that helps cfos make better decisions faster. on the other hand, we had a great fourth quarter. for a accelerate your decision-making world. workday. for a changing world. lily! welcome to our third bark-ery.

oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business. did you know your health has more to do with your zip code than your genetic code? that doesn't seem fair. we agree. but where you live determines access to doctors, green spaces and fresh food. that's why we grow our own. smart. we don't think it's right that some people are healthier than others just because of where they live. that's why we're delivering food to areas with less access to it, and helping schools teach kids about gardens. wish they'd taught gardening at my school. you would have aced it. introducing elevance health. where health can go.

good thursday morning. welcome to another hour of

"squawk on the street. morgan brennan has the day off gottened selling in the wake of the fed, the ecb, the bank of england as more recession fears accelerate given the prints we've gotten today there's more rick santelli. rick >> this is another one to put in the weak category camp we're looking at our october read on business inventories expected to be up 0.4 of 1%. it's up 0.3. up 0.3 is actually the weakest month over month business inventory growth going back to april of last year when it was actually a minus number. so, whether you believe that's good or bad, it is at the smallest rate of change month over month and the high water mark was 2.4 in march. highest since '82. why do i bring that up march is when all the ppi metrics, all six of those metrics peaked it's something to pay attention

to maybe this is something the fed will like. david, carl, back to you >> thanks, rick. we're 30 minutes into the trading session. we'll get to tesla shortly let's give you a look at other movers lennar forecast a slowdown in new homes stemming from higher mortgage rates the company did report lower than expected earnings revenue was slightly above what the street had been anticipating can you see that stock barely down novavax is down a lot more almost 19% after announcing $125 medical common stock offering. it also added a $125 million offering of convertible debt and we're going to end on warner brothers discovery it's raising the projected cost for scrapping planned content by $1 billion it's another billion basically noncash charge

the company has been implementing a series of cost-cutting measures since the merger of at&t warner bros. unit. seems to long ago. certainly for suffering shareholders. meantime, as you know, the fed raising rates to the highest level in 15 years, indicating the fight against inflation not over yet despite recent promising signs of easing. our senior economics reporter steve liesman in the room yesterday joins us with more given some of the prints we've gotten since economic data coming in weak the fed 50-basis-point hike coming against a market that has rate hikes priced in and making the fight against inflation even harder the fed has raised rates by two percentage points since september to 4.38.

goldman sachs financial condition has fallen 0.3%. financial conditions have eased. it's down a full point since early november can you see the disagreement between the market and the fed in the outlook for 2023. the median forecast for fed officials for the funds rate rising to 4.15 fed futures are trading at 4.37 for the year and has cuts built in after a few more hikes. this might not be a problem. now since the fed and the market, they're in good agreement through spring it could be a problem if inflation persists and tighter financial conditions are needed. swiss national bank hiking by 50

basis points norwegians we want up by a quarter. data did show emerging weakness. november retail sales falling 0.6% that's doubled expectations. some economists thought as a result of falling prices and give back from that strong october number we had where we had early discounting maybe pulling christmas sales forward. december now the rubber match in the contest for the holiday shopping season and the year-end growth numbers, guys >> i would love to get your take -- we mentioned this with cramer morgan stanley saying it's difficult for us to follow the logic of the changes to the s&p and the chair's comments, both of which appeared inconsistent our strategists turned neutral on all their trades and will re-evaluate in january did you think yesterday was more confusing than most? >> i didn't find it confusing in the sense they brought down their growth outlook, raised their inflation outlook, raised their unemployment outlook and

increased their fed funds outlook. i think all of that was consistent there is just two different theories of inflation rolling around there the market has it rolling over with recession, perhaps. the fed doesn't necessarily have a recession built in, has very weak growth. but they have it coming down as a result -- or they see the need for rates to go considerably higher what i thought was not confusing but remarkable was the unanimity. 17 of 19 folks over 5%, 7 of them over 5.4% this is a fed right now means business for next year when it comes to raising rates >> indeed. bank of england, 6 to 3. a lot more uniformity on the fmoc, as you mentioned thanks, steve liesman, as we're trying to hold 3900 on the s&p for more on the selloff and what fed policy means for investors,

let's bring in b of a jill hall. what do you think is going on? why the reaction to this particular fmoc meeting? >> it's great to be here thank you. i think it's really important for investors not to get lost in the fed sauce at this point and to really stay focused on how every market reset presents basically a corridor of new investing opportunity. if you engage the market with a capitalist mindset as a portfolio manager, very different than a forecaster, forecasters and economists tells the conditions in which we're building portfolios. the greatest threat to portfolio outcomes is decisions. they should be looking at health care, utilities, consumer staples, building portfolios and let them deliver or a time set

that's key. >> are your clients listening to you? you're a wealth adviser, right you have a lot of clients. i would assume you've got some 60-40. it's been a brutal year. i wonder, you're making that argument, are they saying, i'm not interested or doing what you tell them? >> history makes the argument for me i just listen to the science of investing as a senior portfolio manager but i'm also a private wealth manager so i take in the client's net worth unfortunately, yes, i'm thankful clients do listen to me. this isn't the first time we'll see a market like this i go back to 1998 looking at '01, '02, 2008, 2009, now coming out of a 100-year pandemic i don't think anyone should be surprised we're facing a profit reset. especially for new investors to create indecision that keeps them out of this market. there's plenty of opportunity.

>> i ask the question because i'm interested in the sentiment, like the ones you have it can be instructive for what we're going to see how would you characterize the sentiment of your clients? >> i think the sentiment of clients is more concerned and weighs heavy on the heart geopolitically than it does with the market i understand that. psychologically when you look at this geopolitical setup for deglobalization which presents its own supply chain, inflationary pressures in the market, the war in the ukraine, and ongoing sort of political discussion and discord in the u.s., that weighs on investors more than the markets. we want to separate the two. how we feel about things is also not an investment strategy so, my job is to really help people connect to that in a meaningful way in their own lives to find joy and happiness for a private wealth adviser and at the same sometime, make sure their money is speaking both to their mission and to good money

in this market. >> that's full service >> joy and happiness, i like that. >> jill, i'd love to get your take on where we are at the moment i know your focus is in small caps we talk about history and looking at past lessons. what do you say to people, history is less meaningful if we are really graduating to a different structural period of rates and inflation and alternatives >> right well, i think it's important to look at both it's important to look at what can historical context tell us there are many things we draw from that today that if we are in a period of, you know, a leadership shift that the old leadership, things like tech and growth are unlikely to be the new leadership but we also like to look at, you know, what's different this time obviously, the rates back drop very different you know, playing into our views on some of the mega cap tech and growth stocks where we're more cautious we're in an environment where

given the fed hike and battle inflation as you saw in the 1970s, you know, this is a back drop where we do expect the economy to slow. our economists are looking for mild recession we do expect there could be downside risk to the market first before it bottoms in the first half of next year. i do focus on small caps, as you mentioned. that's one of the things typically history would suggest you don't own smaller stocks going into a down turn today when you think about that back drop of high inflation, high but slowing inflation, small caps have actually done well in those back drops historically they were the best performing asset class in the mid-'70s to early '80s in contrast heading into prior recessions, they're pricing in the risks much more adequately than they were typically historically that's one segment of the market we've been relatively more

cautious even going into this soft patch in the economy. >> so, pricing in the risks more why? just the multiple is much lower? give us a sense as to what you're talking about. >> qula, small caps have been trading at dramatically lower priced to -- we think small caps are pricing in a much more dire scenario than the mild recession we're expecting. so, they're trading at the same multiples they were during the global financial crisis. meanwhile, we think there are some positive macro fundamentals for small cap. service is spending, holding up better than goods spending, which usually happens during a recession. covid was the main exception to that when everyone was home buying goods typically as what happens, small caps are more exposed to services right no you. they're also more geared toward corporate spending on capx and we think will be more resilient.

you have reshoring of u.s. manufacturing, esg-related capex spending, some big tech companies spending on physical capacity smaller and more domestic stocks should be the beneficiaries of that. >> dallas fed had some data out. axios mentioned this, the number of u.s. battery giga factories, 21 announced since the beginning of last year, $54 billion. is there a point you envision yourself getting stronger on tech in '23? >> definitely. you have to look at the tech wreckage and look at the value creation that area of the market down 38% is a huge opportunity for people to step into i wouldn't overthink that. i think the bigger story here, too, that you just touched on is that companies are going to be onshoring here in the united states because the security of supply chain is earning

security so, you know, our portfolios are in big cap because that's where you have the ability for people to basically reimagine their supply chains and pay for it that's going to be crucial >> guys, a lot to think about as we continue to have one eye on the markets this morning appreciate it very much. thanks. >> thanks. as we head to a break, let's give you a road map for the rest of our hour. we're going to start with tesla's troubles elon musk is selling his stake down once again as investors bash mask's twitter focus. we'll speak with one of those critics, gary black. also the latest rate hike signaling trouble ahead for housing. home builders trying to navigate this market. we'll have more on the market as we continue to see declines picking up a bit. quk t see wl "sawonhetrt"ilbe right back

millions have made the switch from the big three to the best kept secret in wireless: xfinity mobile that means millions are saving hundreds a year with the fastest mobile service. and now, introducing, the best price for two lines of unlimited. just $30 per line there are millions of happy campers out there. and this is the perfect time to join them... save hundreds a year over t-mobile, verizon, and at&t with xfinity mobile, and for a limited time get $400 off a new eligible 5g phone. switch today.

tesla having a reasonably good day, given their recent history. bucking the overall market trend. still the stock is down about 55% year-to-date that's left some investors requesting elon musk, and new s.e.c. filings overnight show musk sold $3.6 billion taken in for an unknown purpose perhaps related to twitter as well there are bulls out there, of course

oppenheimer, morgan stanley call the stock a top pick into the new year and cathie wood out there, buying the dip. our next guest says tesla is one of his top holdings. he has been critical of musk in recent days. joining us, gary black good to have you some viewers may recall, have you been critical of these dual responsibilities, really more than that, that musk has, but in particular what musk is doing at twitter. what would you like to see here? >> look, let's -- if you look at the fundamentals of tesla, they haven't changed at all this company is going to earn at least 7 bucks, growing volumes at 40%, earnings at 50% and trading at -- my number is 22 times earnings so just above the s&p. i would argue there's a ton in front of us, the cyber truck, a $30,000 model coming out, we think they'll have a $10 billion

buyback next year. the i.r.a. ev credit will kick in we would like to see elon bring in a ceo for twitter who's from the social media space, give up running twitter and focus, again -- refocus again on being 100% tesla's ceo i believe the board is probably pressuring him to do that because i can't imagine a board allowing him to rebuild from the ground up. >> you could argue for the longest time during tesla's history, there was a musk premium. do you think there's now a musk discount >> i don't think so yet, david look, the problem is with him insulting his customers and so he took over twitter and immediately said he's going to name and shame the advertisers, which pissed off all the advertisers, 50% left.

amazon and apple have come back, and i think that's turned the corner lately he's got this woke mind virus rhetoric that i'm sure is not making his ev customer base happy. these are the same people buying evs. i know you pointed that out. i think that's a big mistake i would hope some of his advisors are saying, you're brilliant, but stop pissing off our customers. i think people are actually canceling orders because of his woke mind virus rhetoric i don't believe so people still love buying teslas. they're the only ones that can give great battery range, great technology and safety. those are the four elements people look for when they buy an ev i think that the -- this is just a pause. this is price, not value if you look at estimates by the street, they haven't changed all

that much despite all this noise, for lack of a better word >> yeah. but if it continues, does it change your opinion? to your point, he seems to be antagonizing the very buyers of teslas, perhaps tarnishing the brand. is there a point you get so frustrated and say this is a long-term issue and i no longer want to be a shareholder >> let's see where it goes what i have found with ee lon, recognizes when he's made a mistake and pivots i have to believe the board is pressuring him to spend more time at tesla. the second catalyst, he has to stop politicking and insulting customers. i have to believe someone on the twitter board is saying something or on the tesla board, stop doing that. i bet you'll see him calm down

i saw him calm down with twitter. i speak with a lot of advertisers. we own google. you know, look, people still believe in musk. they believe he's disruptive, innovative, he's got great ideas for increasing -- i think he's smart enough to realize he can't keep going down the path he's going. therefore, i think he'll bring in a ceo i think he's probably interviewing ceos. i don't know who it will be, but somebody from the social media space who gets advertisers, who's innovative and tech-driven. i hope people on the tesla board are guiding him and saying, hey, here's how you need to behave if you're going to keep being ceo of tesla and twitter at the same time to answer your question, no, we're not readyto give up. i went through all the catalysts. we have $550 valuation on tesla without really heroic

assumptions. what tesla is doing is basically leveraging the global ev adoption we're at 10% ev adoption in this year it will be 60% by 2030 we have earnings next year of $7 going to about -- over $20 by 2026 let's put a 40 multiple on tesla, which is two times growth, you know, future growth, that's still $800 stock. that's $3 trillion in valuation. we think the opportunity in front of us is extraordinary elon has to focus on tesla and stop talking politics would be my advice. >> gary, your tweet suggests you think he's done selling for now. that the cost drain over at twitter has been satisfied for now. and how do you evaluate competition like the f-150, we

mentioned earlier in the week, motor trend truck of the year? >> yeah. it's hard to know when elon is -- if you look at his past pattern of selling he sold in april, he sold in august, he sold in november. normally he does this where he'll sell for three days and then you have to file within two business days after your first sale his first sale is monday he filed last night. that fits the pattern of what he's done in the past. in the past he's finished selling. he's filed his form 4s and stopped. that doesn't mean he's done selling forever. he made the mistake in august of saying, i'm dob and then he sold in december. when a ceo says he's done selling, it just means for now in his tranche to your point, twitter has turned out to be more of a basket case than i think he realized we didn't want him to buy twitter. we were very vocal in april. please, don't buy twitter. you don't advertise. you're an engineer guy

yet, he bought it. he tried to get out of it. we felt strongly the delaware court would force him to do it he had to buy it we're at this point where i think he's trying to make the best of a bad situation. the good news is, he got rid of about half the staff or they left that cut a couple billion dollars of expenses out. when we look at the burn rate now, the cash burn rate, assuming he's lost 50% of the advertisers, which is probably too high with apple coming back and amazon coming in, they're bellwethers. we estimate after the $1.2 billion in interest out the door, we're looking at $2 billion in cash flow going out the door in 2023 to your point be, that $2 billion could have been funded he sold $4 billion of stock back in november. but i think he's going to use some of this to pay down debt. if you look at his tweets the last week or so, he's talked about not having debt going into a recession. i think some will go to getting

rid of the most expensive debt, which the bankers are holding. if someone came along and said, we're going to take this off your hands on 80 cents on a dollar, i think they would be thrilled. >> i think, gary, that's a good point. i think morgan stanley and other banks would most likely at 80 cents say, be sold to you, and at your point he would reduce his overall interest payment again, just the larger question is, you want him out of twitter as soon as possible in terms of a management perspective you seem to be indicating there are board members at tesla who are pressuring him to do that. do you know that or is that a guess on your part >> i don't know that i've been on boards before i've been on public boards before i know the way boards operate. i have to believe -- i talk to a lot of individual shareholders and institutional shareholders there's immense pressure being directed at the board to do something. the fact that they've let elon basically buy another company

and spend whatever percentage of his time, 80%, 70%, most boards - >> does he listen to his board, though does he care what they have to tell him >> i think he used to listen to larry. i have to believe he does. what people tell me who know elon very closely is when he realizes he makes a mistake, he will pivot much quicker than other ceos and say, this is what we should be doing instead i believe at the end of 9 day he's brilliant, he's made a lot of money for shareholders. he's a great visionary, the visionary of our times, people still love his cars. i think he's going to realize the mistakes he's made i've seen him change with advertisers. he's changed his whole approach to them. i think he'll realize he made a mistake with his rhetoric and everything and he'll stop. i think the biggest issue, which will make me and other shareholders feel better, is he gets out of twitter, lets somebody he twuss work 24/7, his same vision, take over twitter so he can go back and focus on tesla.

can i throw one more thing at you guys >> we really got to go, so make it quick >> so, i don't believe he would have been allowed to share shares last night if he had any mmpi the trading window for tesla closes on friday if he knew that there was something bad coming up like a fourth quarter volume miss or something, i don't think the board would have allowed him to sell shares. i think that's a positive you can look at him selling shares before the trading window closed. >> it is the first day we've seen that stock actually up, in particular, on a day when we have a broader market to climb gary, great stuff. very happy you're able to join us today thank you. >> sure. thank you. meantime, the fed's latest rate hike signaling trouble for housing. home builders trying to navigate cha is a cooling market. the etf ticker icb losing a quarter of valuations

lennar, forecast higher mortgage rates will lead to a decline in new home orders, trying to make gains in the last three months of trading we've been watching shares year-to-date charts. gains of nearly 20%. i think it was jim yesterday said the best soft landing chart you can find at the moment. >> talked about it this morning saying, it's not about what necessarily mr. powell wants to be seeing, that six-month chart. when we come back, the david kaplin will join us. ♪ ♪ wow, we're crunching tons of polygons here! what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it!

become an agent of innovation with invesco qqq

with your news update. the kremlin warns there could be consequences if the u.s. gives ukraine sophisticated patriot air defense missiles

u.s. officials are poised to approve the transfer as early as today. the kremlin spokesperson did not elaborate on what those consequences might be. tornadoes touched down in the south for a third straight night pu one hit in new orleans causing widespread damage to homes. the death toll has risen to 3 with 30 injured. near orlando, florida, a dinner delivery ended up being a tasty meal for an unwelcome guest. a black bear was caught on video swiping a bounty of chick-fil-a before it could be brought inside the homeowner said the bear made off with 30 nuggets and a large order of fries but did not touch the salad. what a bearish appetite. back over to you, carl >> thank you kristina partsinevelos about an hour into trading the selling accelerating, dow down 700 points. bob pisani with us

>> it's a lousy day for the soft landing crowd. retail sales numbers were lousy, the empire numbers were lousy, the ecb is raising its inflation forecast remember, there's a whole crowd out there watching the strategists and analysts lower their earnings estimates for 2023 they're actually negative. most strategists have negative earnings estimates for 2023. that's not good for valuations there's a whole crowd playing against them that's why prices are so high right now. they're saying, we're going to have a soft landing. the strategists are all wrong. earnings are not going to fall apart in 2023. you get this data today and it says, this is not good for the economy. maybe they're right. people are lightening up on positions. this is what i call the valuation problem for the market prices are high butearnings ar coming down. strategists think earnings are going to go down 6%. that's a forward multiple of 19. when you get over 18, you have major problems because the historic average is 17 when you're over 18, it's

dot-com, '99-2000. to have a multiple at 19 or 20, you've got to argue that the economy is improving, you have to argue that earnings are going to be improving. you certainly can't argue earnings are going down and the economy is going down and i deserve a 20 multiple. you see today, carl, across the board, we're down just about 2%. some of the more defensive areas like consumer staples are down 1.5% don't kid yourself this is just a lightening across the board from people out there saying, no, the crowd that thinks we'll have a harder landing is completely wrong. it's going to be the soft landing. now it's a little harder to make that argument. >> bob, appreciate that. good setup for our next guest, ubs floor operations director art cashin hope you don't mind the late request to talk on the phone, but we are curious to know what you think is going on here

is this just a swirl within a range or resetting longer term economic expectations? >> well, a couple of things, carl you know because you get to see my daily premarket comments every day. i've been writing for about a week that there's a cycle in here that indicated we might see an interim low between december 13th and december 21st and this may be that test going on the key here is 3900 level we've been testing that all morning. if it holds, we'll be in good shape. if it breaks, we can have a problem. now, we got a little help -- or the bears got a little help this morning from christine lagarde when she announced that the ecb had raised rates she said something like, the market is clearly

underestimating how high we're going to have to raise rates to cut inflation. that scared the heck out of everybody in europe. and the yields on european bonds began to spike we already had weak economic data here. we were softer that led to these lows that spike in european rates led to these lows. now, i don't mean to hog up the whole thing but let me get this out because today is very important. number one, you got to try to hold at 3900 level if you break 3900, be careful as to how the rest of the day goes. if it develops into washout selling, that raises the possibility that you could get an extension to get new selling on not friday, but on monday and tuesday. so, if you've been doing this 60 some odd years, as i have, you

get to see these patterns develop. nothing certain about that that's, at best, a 10% risk. but watch how they close today do they hold 3900? do they get a late-day bounceback if they, in fact, you get a washout day, you have to be a little careful as to see whether it extends into monday and tuesday. right now it's all about the market taking its own pulse, taking its own temperature it's almost all internal >> do you think the possibility that we do bounce on europe's close today is important >> i think it will be. perversely what you could get, if lagarde scares the europeans enough, you could get an accidental flight to safety. in other words, people in europe say, holy smoke, we're in bigger trouble, we have a lot more to go than america, let's go in and

they would then start buying u.s. currency and start buying u.s. bonds that would bring yeeltsdz down and probably put a bit under it's all interconnected here it looks to be one heck of an interesting day. we're going to keep watching the internals. they break 3900, particularly if they break 3900 and brings in come cascade selling this could be a very tough day keep your seat belt fastened out there and hang on. >> it's interesting. just a couple days ago, art, we were looking at that 4100 level. we'll were saying, well, you know, maybe not as important as you can get to maybe 4220. that would justify the argument that maybe the october low was an important one that seems to be far in the rearview mirror this morning >> well, it is that's why, as i said, carl, have you to look at all of these cycles some of us don't have a

computer we're still using a slide rule that told us to be careful of a possible interim low between the 13th and the 21st. this could be it if so, get ready for the santa claus rally. so, we're going to make a low here in one of these next several days maybe this is the one. and then the end of year seasonality should kick in >> we'll end it on that hopeful note, art. i imagine we'll be talking in the next few days. thanks for coming to the phone art cashin. david kaplan will join us, talking the fed, recession fears, private credit markets, and a whole lot of oth ticerops. "squawk on the street" is right back

(vo) is three hundred and ninety-one thousand four hundred and thirty-four square feet... enough space for your ambition? loopnet. the most popular place to find a space.

osisko development is a premier gold mining company with a goal of achieving mid-tier gold producer status with the company's advanced-stage projects located in north america, headlined by the cariboo gold project in bc and the tintic project in utah. osisko development (clearing throat) what do you... got there? a hospital bill for me? mm-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. stocks, as you see, continuing their slide, the fed continues to raise rates, we're now at the highest level we've

seen in 15 years our next guest leads ares management, operates in the private credit, private equity, real estate markets and joining us now is co-founder of ares, david kaplan good to have you, particularly on a morning like this let's start off with the underwriting process, from your perspective and decisions you make every day how has it changed, if at all, given the uncertainty you're seeing out there right now in corporate america? >> well, thanks for having me. really appreciate being here it is definitely an interesting day, an interesting morning. you know, from an underwriting standpoint, our job actually is a little difficult today in terms of probability weighting outcomes obviously, the fed is very committed to raising rates and squashing inflation. we're definitely seeing inside the boardroom of many of the

companies we sit on the boards or touch, difficulty in projecting what their budget's going to be for next year. so, there is a high degree of uncertainty. as a result, we are raising our, you know, standards, if you will, around rates of return for a quantum of risk in the underwriting process today >> you are are you pulling back at all to a certain extent our still committed to these markets, but as you say, only willing to do so at, perhaps, a higher rate of return sq . >> i wouldn't say we're pulling back at all. we actually have $88 billion of dry powder these are markets, frankly, and if you go back to 2008, 2009, even 2010, we grew through that market environment and actually these are markets in the volatility we see in the markets that really fit our type of capital, which is extremely flexible in terms of what we do.

>> do you see a default cycle coming i'm just curious, particularly given your long history and with some of these predictions of presession, or are we off in terms of expecting something that would be similar to what we've seen in the past >> well, obviously, defaults right now are very muted we don't see a wave of defaults coming in terms of a tidal wave, but certainly when you look at '24 and '25 maturities, and definitely we're hearing in the market owners of businesses with credit and borrowings that have '24, '25 maturities are starting to think about solutions today and early in '23 to deal with those, and whether that -- you know, the market contraction or market conditions lead to market defaults >> i do wonder if you think that has something to do with the

price action today, meaning if the conversation continues to pivot to how long the fed holds at a certain level, maybe it's not so much about maturities in '23, but you do think about what comes up in '24 and '25. >> you know, what we've seen, carl, in terms of, you know, the companies that we touch, generally speaking, we're a little more senior in the capital structure, we're investing in and lending to more upper, middle market companies that are a little more resilient. so, that is from a credit perspective and our positioning, we feel pretty good about that but i don't really see, you know, a wave of defaults in the traditional sense. i do think you're going to see alternative credit being -- and alternative capital being raised in '23 in anticipation of debt paydowns as well as maturity

i don't really see the inability to pass along and protect margins yet. >> you know, your ceo eric getty has talked about a golden age of private credit not necessarily saying we're in it but sort of intimating we are. do you agree with that, david? give us a sense of where things stand with private credit, which we've seen enormous growth over the last few years >> yes, i agree with that. i would certainly say that we're in this capital rotation that has been taking place for quite a period of time of capital exiting, if you will, the more depository, regulated bodies of capital, into the hands of more institutional capital. we do not see that abating if you think about today where the base rate is for our credit

has moved 400 basis points in the last year, and so we're actually seeing on the private credit side double digit return opportunities today. so, folks that are allocating institutional pools of capital see that as well, and so we actually feel pretty good about where we sit in terms of private credit today and the opportunities that sit before us. >> on the other side of that, private equity, which obviously can't generate the same return given higher rates of interest, what are your expectations in that part of the business right now? >> you know, 2022, obviously, is muted volumes. i would certainly say a bit of a bid/ask spread in terms of what sellers of businesses are looking for and what buyers of businesses are looking to pay. i actually think that balances out a little bit here coming into 2023. we're actually seeing the early signs of, you know, what might be an increased level of

realizations because there just needs to be realizations when you think about it, many gps, many private equity firms are built upon, you know, the fact they have to return capital to their investors so, we actually think there's going to be a little more deal volume, assuming there's no exogenous factor that comes into play but a little more deal volume in '23 than '22. >> i want to ask about a specific indication because it's come up a number of times. carvana. you're apparently part of a group of creditors that have kind of banded together to make sure if, in fact, there was a bankruptcy you're in a good position is that the case do you have any expectations that carvana, where you have provided credit, is in deep trouble? >> i really don't want to comment on a specific credit carvana is, we think, a viable business one in which we feel very good about our position in the credit

>> yeah. tif finally, just to come back where we started, on the fed, on the outlook. how would you characterize your own view at this point given, obviously, the portfolio companies you deal with as we head into '23? >> look, i think there are a lot of fed watchers that are prognosticating what's going to prognosticating what will happen and parsing their words very, very carefully from my perspective, what we're seeing realtime is the fed is getting the job done and we're seeing certain items, whether it's consumer-facing businesses or business-to-business services companies where there's actually, you know, a decrease in pricing happening in terms of cost of goods, whether it's transportation, container costs from asia to the u.s., that's getting close to where it was pre-pandemic i think as that data comes out, the fed is going to have to factor that in in a more robust

way. we'll see what '23 unfolds in terms of where they take rates ultimately and how long they hold them there. >> yeah. the key questions that we entertain every day. david, appreciate you taking the time thank you. >> good to see you thanks coming up this morning on "techcheck," the analyst who named tesla as a top pick for next year as that name is really one of the view index components in the green this morning besides verizon. we're back in a minute - [narrator] if your business kept on employees through the pandemic,

getrefunds.com can qualify 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. what if you were a global bank who wanted to supercharge your audit system? so you tap ibm to un-silo your data. and start crunching a year's worth of transactions against thousands of compliance controls with the help of ai. now you're making smarter decisions faster. operating costs are lower. and everyone from your auditors to your bankers feels like a million bucks. let's create smarter ways of putting your data to work. ibm. let's create

worst day in about a month for the major verages. all of them down 2% plus for the lows of the session, it was the worst day for the nasdaq since november 2nd we'll watch all of this and watch europe's close not long from now stay with us

what kind of movie are we gonna make? time magazine declares, the fabelmans is the best movie of the year. and now it's nominated for 5 golden globe awards. including best picture.

♪♪ ♪♪

♪♪ be ready for any market with a liquid etf. get in and out with dia. ...comes the legendary cat with 9 lives. be ready for any market hmm, hmm, 8 lives. 7, 6 5, 4 3, 2. you are down to your last life. i am not really a math guy. rated pg. welcome back home flipping is still a big business, but it is coming off of its record run. diana olick has more on that story. >> it's not surprising given that home prices are weakening so quickly so the record run has had flippers making big money. it appears to be fading and flippers are moving on just 7.5% of all home sales this

year were flips, that's down 8.2% in q2 a flip is a home bought and sold in the same 12-month period. here's why flippers are bowing out. gross profits and profit margin declined significantly, reflecting the overall pricing weakness in today's housing market gross flipping profits dropped at the fastest quarterly pace since 2009 to just $62,000 that's down 18.4% from q2 and down 11.4% year over year. that's the smallest profit since the end of 2019, of course pre-pandemic the return on investment fell as well to 25% from 30% in the previous quarter still not terrible, but just not as good. it's not the size of the profits but really how quickly they're falling that's so dramatic

markets that did still show the highest flip rates were phoenix, spartansburg, south carolina, atlanta and gainesville, georgia and winston-salem, north carolina while mortgage rates did drop over the last two months slightly, that won't matter much to flippers as about 64% use all cash and that is unchanged from previous quarters. going forward, profits are likely to fall further as home prices continue to weaken. back to you guys >> very interesting. diana, while we have got you, lennar shares not doing too much in response to earnings. what is your take. >> it's not surprising given the weakness in the housing market what was surprising to me is they did not mention in their release the recent drop we've seen in mortgage rates, if that had any effect, any green chutes to their business.

we'll watch for that on the call >> diana, thank you. speaking of watching, we're keeping a close eye on markets the s&p 500 down to 3,905. 2.5% down. the nasdaq down almost 2.7%. that's going to do it for us on "squawk on the street. time to hand it over to "techcheck." good thursday morning. i'm carl quintanilla with deirdre bosa and jon fortt today, stocks under pressure following that 50-point basis rate hike by the fed elon musk sells another chunk of tesla, one firm says now is the time to buy we'll talk to the oppenheimer analyst who names it a top pick. and can chips be key growth drivers in this market amd, nvidia an