by the end of this week. they said over the weekend it would halt daily infection numbers because of doubt's about the data's reliability authorities are redefined deaths to include only people who die from pneumonia or respiratory failure. we will see how that situation plays out from here as millions become infected. >> thanks for helping out. thanks for having me >> make sure you join us tomorrow "squawk on the street" begins right now. >> and we do begin good tuesday morning i'm morgan brennan with scott walker carl, jim, and david have the morning off. we're looking at futures right now. a little bit of a mixed picture this tuesday morning holiday shortened week with the dow and the s&p both poised to

open higher. the nasdaq down slightly right now now in premarket trade crude is higher. bond is higher gold is higher guys, i guess i'll start with you, bob it is a santa claus rally. but first i think we're supposed to start with our road map, right? it starts with china officially ending its quarantine for international travelers come january. the essential end to zero covid policy crude is moving higher on that news southwest warning mass disruptions will continue after scrapping more than 70% of its flights on monday. the d.o.t. calling it, quote, unacceptable it's looking like another down day for tesla on news on of an extended production pause we have details ahead. >> we do see stocks trying to rally on the last trading week of the year. as i mentioned, kicking off with bob poe sanny. it seems like potentially we

could be poised for that again this week. although we should keep in mind, lower volume, anyone's bet where we finish. this is one of my favorite indicators a lot of old wall street mythologies that aren't very interesting or haven't worked very well in recent years. this one does. the last five trading days of the year the first two of the new ones. unusual to have a seven-day is stretch where the market would rally consistently up 1.3% on average the last 350 years. that is much higher than you would expect over a seven-day period this has interesting value it works 80% of the time four out of five times "the santa clause" rally works. it doesn't mean it doesn't happen and 20% of the time if we don't get a rally we will be down next year it says if we don't happen, january tends to be a down month. and it says the s&p tends to underperform its historic

average. it's one of my favorite indicators that actually works >> rarely does history collide with the fed and that is one of the problems about, a, whether you will have a santa claus rally and, b, whether you will have a bad year next year. fed tightening, slower earnings, and whether stocks can mount any sort of a meaningful move higher in the face of some pretty severe head winds. >> that's right. as we say, stocks since 2008, the worst. the worst year on record for bonds. and 4.5% 4.25% to 4.5% right now. and quantitative tightening. >> everyone is fearful 2023 could be another down year on the 20th% we have had this year. historically, history would argue it's unlikely that would

argue. back-to-back down years are extremely unusual. but the stock market tends to go up since 1928, the s&p 500 has been up three out of four years up 72% of the time down 28% of the time very few times when the s&p has been down back-to-back years really there's been four periods, the 1929-32 period, late in 1939 to 41 2001, 2002 and '73, '74 the last time we had back-to-back down years was swupb 2000, 2001, 2002 25% decline. from january to october, peak to trough decline was 25% during the financial crisis, it was 50%. i'm not saying this is a great year compared to really down years.

scott, just look here, and i will get to your point you want to make in a minute. it's unusual to have big declines only seven periods since 1945 where we have been down 20% to 30%. this may be one of them. one down 50% plus. three down 30% to 40%. peak to trough, not year-over-year numbers we could have another down year, but it's historically unusual. the odds are against it. when it's happened in the past, there have been extraordinary events like the oil crisis, like the dotcom and 9/11 and the financial crisis it takes something of that magnitude to be down two years in a row >> put into perspective what morgan said. raises 400 basis points plus and the implications nobody saw coming a great article over the weekend, the strategyists got earnings dead right. the margin of error was one of

the best in the history of forecasting such a thing where did they miss? wildly on price. nobody expected that the stock market would be down the magnitude in which it was. nobody expected the fed was going to raise interest rates anywhere close to the speed and the degree to which they did that upset everybody's forecast for where the s&p 500 was going to end up this year. >> this is the main argument for why we might have a down year. this is an extraordinary event like the oil crisis, 9/11, the financial crisis the extraordinary speed at which the fed raised interest rates qualifies as such an outsized event it could force a second down year. you just identified exactly the parameters of the event. plus, the lingering effects of covid, the russian/uk invasion it's not happening alone they constitute an extraordinary situation that would have the s&p down a second year in a row.

>> like david tepper coming on the other day and taking down the market that the fed was going to be more aggressive than people think not just our fed but central banks around the world remain the pre immimminent story goingt 2023 it all has cause and effect how u.s. stocks will do. >> it is supply chain and giopolitics. >> absolutely. >> two things the market doesn't care about and then they become the biggest stories for the market >> the other thing i would like to say, the biggest event globally, where does china fit in a global portfolio? the whole situation in china has completely changed the way they look at china as an investable asset. four years ago they were saying 15% of portfolio because it's 15% of capitalization globally people are saying china is so fundamentally different from us we should consider it a separate

asset class. nobody that that debate five years ago. >> four months ago people were saying china was uninvestable. and things start to go crazy >> which happened again this morning. >> should we invest 15% of china's global market cap, put 15% in people are saying, no, we need to have a different quality metric for assessing where they fit in the global investment scheme >> you can see these bounces, knee-jerk bounces. we are seeing it with alibaba, the k web is trading higher as well on these china reopening headlines. the policy in the u.s., and china too, you are seeing it on the tech side. tariffs are in place

those are not going away as well supply chains diversifying that was turbo charged with the pandemic too headlines this weekend you have some of the auto phafrs outsourcing. i realize there are lots of question phafrpblgts but questions about what economic growth will look like in the future in that country as well to your point -- >> you are having a million new infections a day in china as we are having this conversation about a reopening, covid is still spreading wildly in china and remains the biggest wild card for the pace of their reopen >> and you have reports that you have hospitals and icus reaching capacity in certain major cities right now and everything else. >> all right let's turn now to travel with the winter storm canceling thousands of flights over the weekend, this remains a huge

story particularly for southwest airlines they schedule 70% of their flights a day ago. they cut 2500 today. probably will only operate a third or so for the remainder of the week >> which is staggering. >> one of our producers who was supposed to be here from "closing bell" and "closing bell" overtime is strand will. a southwest passenger traveled to the midwest and is trying to find his way back to the east coast, with many people trying to get to their destinations >> you have to wonder how the rental car companies that are doing. people are stranded, getting in and driving to their destinations ceo bob jordan, southwest airlines has, quote, a lot of issues in the operation right now. that's to put it mildly. you have the d.o.t. coming out saying they are, quote, closely look act whether they are controlling, other pertinent d.o.t. rules we will see how that goes when

you're raising the ire of the government you saw delta's operations were a bit more challenged. overall it was southwest that has performed the worst the last couple of days denver operation, extraordinary quote-unquote extraordinary number of employs calling in sick look at what we saw with the storm as well. not to be discounted and having an impact on the energy markets too crude trading at three-week highs. yes, china opened as part of that but you have production down in places like texas right now >> new york's governor calling it a once in a lifetime storm. 25 deaths up in the buffalo area >> awful >> it's the worst nightmare for the airlines not only does it happen on a busy holiday week, but with a once in a lifetime storm >> didn't the governor in florida refer to it to a

500-year storm now we have a once in a lifetime event. this is telling us something, isn't it >> low-hanging fruit, as you said, for the government coming out and criticizing southwest airlines for the degree of cancellations and delays they have had, as morgan suggested earlier, kalg it unacceptable >> they will come out with cat numbers. we will turn to blayne alexander for more on the travel issues and what she is seeing on the ground now hi, blain. >> reporter: hey, morgan high, guys you talk about the once in a lifetime type of weather we are seeing the weather will be a crucial factor in what compensation travelers get for their inconveniences the past couple of days. you talked about the strong statement from the transportation department. it is notable that the d.o.t. is looking into whether all of

these cancellations, this unprecedented amount of cancellations is due to controllable circumstances they said they are point to go weather. saying essentially they did what they could do on their end made sure their staff was in place in proper places but essentially they can't control the weather. the department of transportation says that you are going to be looking into what caused all of this you'll remember southwest was one of the airlines that committed to reimbursing passengers for cancellations within their control for things like hotels, taxis, meals that they had to take on the expense while being stranded what the d.o.t. finds will be crucial over the days to come. as to southwest and how they will be moving forward, you said they will be slashing their flight schedule. they will only be operating about a third of their normal flight schedules they will try and get back on

track. the numbers tell the story when you talk about cancellations, 2,500 or so cancellations already today from southwest. compare that to 300 from other airlines >> blayne, thank you for breaking it down for us. after the break, we will talk about tesla which is down. the stock on for its worst year ever we will take a look at futures as well, which are a mixed picture in the premarkets with the s&p and dow both poised to open higher. the sdnaaq under a little bit of pressure "squawk on the street" is back after this

welcome back tesla shares down 5% on pace for the worst ever year for the stock. today's drop comes on reports that the electric carmaker has a halt at its shanghai factory good to have you on. you have a neutral rating. $85 price target walk me through your take on tesla, which seems pretty bearish. >> yeah. we have been consistent on the last 18 months, two years. we have seen it is egregious overvalued we knew there would be both new and established brands on the market that's what is playing out you see very, very successful entries from porsche, ford, many

others some of the newer names are doing well too they are growing at a more attractive growth rate than tesla. 45% is still fantastic there are better places to put money. people are liquidating and putting money elsewhere. >> you see this as a fundamental st story? you don't see this as a correction of multiples given we have had interest rates increase and have seen high-flying tech names come off pretty aggressively in terms of evaluation this year >> yeah, no. you can always point at multiple things i'm an analyst focusing on an individual industry, right when i saw tesla valued at a multiple of the rest of the automotive sector, that i call

egregiously overvalued you can point to interest rates, short-term economic conditions a variety of other things. like covid, for example, and the -- covid enforcement in china. but the reality is others are doing a good job too tesla blazed the way they have great products but they need to do a better job. they need to hurry up and get the main car on the road and bite the let, build the factory in india put a battery factory in india and dominate that market as well these are things that will give people confidence in longer term growth these dancing actor in a robot suit is like a joke. a lot of people that looked at what was shown later is the state of the art for 2014. they need to focus on a mini car, india and growth markets.

you know, they probably will >> where does all the other stuff. like the stuff, where does that factor in. whether it's the musk selling shares, the distraction from twitter. if you didn't have concerns you do around competition and fundamental issues around the company, how would your rating be influenced, if at all, by the other things that investors are keenly focused on right now? >> yeah. so what had people concerned in the last just say few weeks is the fact that there was an understanding elon musk was looking for another million dollars. jared kushner successfully raised money at the world cup. there obviously is a leadership issue for tesla and twitter. i think from a trading perspective, one of the best

catalysts for anyone long tesla, will be like jack dorsey or dick costello, if they were to go back to twitter. people would expect elon would focus back on tesla. mr. musk is very concerned about the stock price. we did see him say he's not going to be selling stock for the same period of time. but i think he needs to focus on operations 45% growth is pretty impressive. it's just overvalued >> craig, i'm wondering about what you think the market views tesla as it seems almost an ordinary company. 2020 was a great darling 75 cents traded 300 times forward earnings now they will make a little over $5 forward multiple is like 22. that is almost a normal company at this point. what does this say about the way the street is now viewing tesla?

>> so, remember, this is also a growth stock volumes are obviously going to miss automotive margins down 100 basis points instead of up when you look at the multiples on future earnings, they become a lot less relevant than overall earnings momentum. it will be negative. it's going to be pressure because there are great cars coming in. they will have to price aggressively they will have to come out with a shorter range vehicle in the u.s. >> thank you >> all right a quick look at futures again. certainly a little bit different picture than it was a couple hours ago. we will open higher for the dow

and the s&p not nearly as strong, though, as the picture looked a couple hours ago. news that china was loosening more of those restrictions 70 plus and the s&p just about five more "squawk on the street" when we come back

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the quiet ones and the loud ones. make a sound decision. call 1-800 miracle now, and book your free hearing evaluation. the opening bell is just five minutes away. as you can see, it is a mixed picture on this tuesday morning in this holiday shortened trading week the s&p poised to open two points the dow up 55 or 54 points nasdaq under a little bit of pressure, poised to open lower by 10 points we'll be back after this break

welcome back to "squawk on the street." just a minute and a half to the opening bell want to show you shares of

boeing trading half a percent now in the premarket take about a stealth rally up 57% since the start of this quarter. still lower on the year by 6% or 7% despite earnings that were pretty rough to start the quarter as well. guys, you have just last week with the omnibus and ndaa. you had that certification deadline with the boeing 737 max, the big order, aircraft order with united. >> yeah. >> the commercial side of the business seems to be moving back, albeit slowly to some semblance of normal. the dow higher >> remember what happened in the middle of the year boeing had the huge drop in april and may. 175, 185, down to 120. it has come essentially all the way back we are talking a 50% rally s since. right in the middle of the pack for the dow. as you mentioned, down 6%.

>> and a big defense business. other defense contractors rally and out perform this year. we have the opening bell. at the nasdaq remotely from across the country you can see green on the screen with the s&p basically hugging the flat line it looks like, guys >> running out of time for "the santa clause" rally. >> came and went >> you're supposed to get the last five days of the year and the first two of the new year. we better get something going if we're going to have santa claus show up. as you talked earlier, a lot of

head winds hanging over the market >> the biggest thing that struck me, scott, and you talked about it a lot, is the value. 7% growth down 30% growth of course is largely technology, communication services consumer discretionary as well. if you look at tech spots, apple is one of the winners. it's down 25%. microsoft, alphabet, amazon or down 50% right now tesla, which we just talked about, down 65%. there you see the declines the forward pes on these remember, these were growth stocks they had forward pes, 30, 40 in the case of amazon, 60, 70 at the start of 2022.

it's historically high s&p trading 17 times forward earnings right now my point is these stocks, while they are still growth strobgs, they are still above the multiples for the s&p 500, they have come down rather dramatically so this year, 2022 is about the rerating of of technology earnings here. tesla, 65% of the down side. our guest earlier said focus on earnings momentum, which is still strong for tesla >> pull up tesla's market cap right now as well. what a far cry from the beginning of the year. $1.24 million. we talked about it in the marquis lights with the microsofts and the animals it is around market cap. and jpmorgan too

it's going to have a smaller market cap than walmart and jpmorgan a underscores the fall from grace that it suffered. valuation had been lofty we have seen others fall pretty dramatically this year names like neo the other more traditional omes have had a pretty rough year as well to your point, tesla was considered one of the mega cap tech names i have to go back and look we are seeing a lot fall out of the trillion dollar club in general this year. >> look the other way around

to my point about the value stocks this year the winners this year who have replaced tesla exxon, classic value visa united health, johnson & johnson. all stocks are up with the exception of visa, down slightly on the year. meta way down on the list. there is a huge rotation going on at the start of the year, energy was 2.5% it is approaching 6% >> which is amazing when you think about it it kind of raises the question we are seeing a more sustained rally in something like the s&p going into 2023. do you need tech stocks to kickback into gear is that possible in a tightening environment in terms of the fed. >> it goes to the question -- and i wonder what approximate jonathan has to say about. the value stocks have moved so

much they are becoming less value. this is they waited 15 years for value to come back i'm sure some will start saying they are starting to look expensive again. i'm curious what jonathan has to say about that >> we would be remiss if we didn't mention, since we talked about cathy and ark. arkin know innovation fund, if not the worst u.s. fund certainly one of them. near the bottom of u.s. funds for the year down 67% we have watched just a an unbelievably dramatic re-rating led of course by tesla some of the other names that are within her universe. you interviewed her a couple times this past year she is a true believer in what her strategy is. the question is, going to be less of one if this story continues into '23 the market by dictate what she is going to have to come to grips with

>> twillio down. 83%. row co, down 806789 teledoc down 75 >> here's the issue. was it extraordinarily bad luck or good luck she became the dar lincoln? she entered the 2018-2019 at the top of the growth. we didn't know that, but it was. did she have the good fortune of coming in at that moment the same with peloton. is peloton the most luckily or unlucky in the world they came in in the summer of 2019 you were all over that remember all of a sudden they became the dar lincoln. the stock quadrupled it was 25. it went to 150

>> at moments in time they were both >> now there is the great pandemic it girl of the moment and then has now faded is that good luck or bad luck to have had that happen i would want a more steady situation where we didn't zoom up on covid and now look at what they're dealing with now >> i don't know that it's luck they caught the wave of the pandemic they misexecuted, too. >> that's right. >> they thought the gains were going to last longer than the pandemic and much longer runway. now they are selling refurbished bikes at a discount. >> something like $500 according to a journal article this morning. this is seeing increased

competition in the midst of all of this as well. bob, you make a good point just looking at the arkin know innovation fund, to put it in perspective, it did double during the pandemic rally. it did have names that were covid darlings like zoom down 60% this past year maybe more you are seeing the forward demand and the tide go out with it to on scott's point, which companies have done what with opportunities afforded to them with that burst of demand. >> cathy wood is intellectually correct. disruptive technology is what matters in the long run. if you look at the companies that change the s&p 500, they all came in with the big ideas they held on for a long time microsoft went through very volatile times she's right. disruptive technology changes the world. the question is what price are you willing to pay for that. this is what i'm talking about

2019 to 2020, when covid hit, those people all rushed to her id ideas. the question is were people willing to pay those prices. that was it. no, i'm not paying what you want for that company >> i don't care if it is disruptive >> they invested in the ark funds with cathy wood, so many other people as we mentioned at the top of the program, got the fed wrong they got inflation wrong and thus their thesis on a lot of stocks ended up being wrong. not because they were intellectually deficient just from the mere standpoint that people didn't expect inflation to be a sticky the fed would have to be more aggressive raise quicker and higher than people thought we are still in the environment where we are rerating everything

because of what lies ahead >> isn't her long-term thesis that disinflation because of tech disruption is going to be the bigger, more lasting story i imagine she would look at the argument in 2023 in the midst of the fed that that thesis is perhaps starting to take route >> that's the case morgan lays out the bull case. disinflation, slower pace of rate hikes it is higher for longer. higher terminal rate than people think and earnings will fall >> the way wall street values stocks is on a discount cash flow model when you have a two-year, everything is based off a risk-free rate of return when you have a two-year at 4%, that is an attractive rate of return that is a heavy competition particularly for tech stocks not making any money or don't have

any phros expects. discounted cash flow the risk-free rate of return is very attractive. >> let's bring in chief u.s. equity strategist at credit suisse, jonathan i will start where bob teed you up is '23 going to be better or the same >> well, i'm not as overly optimistic on these things i don't think this is a discount rate story these companies have delivered terrible earnings this year. during the pandemic, amount of these companies, and i wouldn't call an ev car company part of that group but a lot pulled forward a huge amount of earnings activity. and the same thing with companies that did at-home exercise equipment and things of that nature.

and then what we did is made the mistake of extrapolating that growth almost forever. and then when the economy opened up and we were able to go and move away from buying goods back to enjoying life, those earnings disappointed the earnings picture, revisions had been lower estimates go lower they are missing the estimates the growth rates have been terrible on these names. this is the worst earnings environment for tech-related companies since the iphone came out in 2008. >> what's the earnings environment more broadly going to look like in 2023 that is going to dictate what stocks do. you are optimistic now 40, 50 is your target for the s&p. obviously higher than where we are now. not looking for a gang busters year with inflation coming off, and that's a positive thing.

that's what the market is expecting. but it's bad for corporate revenues a lot of the reason revenues have been so strong in the last year and a half have been simply you're paying more per unit rather than selling more units then you have a lot of expected rotation within the groups the market is expecting a bounce in tech earnings in the next 12 months and i think it's going to take longer this activity of us buying, you know, whether it's a new laptop or whatever, a streaming service, i think it's not going to be three or four quarters of weak earnings but six or eight i think we will see weaker tech than is expected next year i think this will drag out a little bit longer. i don't think valuations are -- they're a little bit rich still but they're not a problem. on the other hand, energy stocks are expected to go from a blockbuster year in earnings to something much weaker. i think the market has it wrong.

he revisions have been higher than any other sector even though oil prices are coming down a number of big surprises on areas that are going to keep trending >> jonathan, i want to talk about your estimate for 2023 you have a year end price target of 40 to 60. so 5%. earnings look a little lower at 215. the street was 215, 230. you're a little bit lower. you think earnings will be down next year. so slightly higher on the price. slightly lower on the earnings so that means the multiple is a little higher, right where are you on this? you are sort of right in the middle from what i can see >> yeah. first, our earnings -- i'm sorry, our market target is 40, 50 that is an uninspiring 5% return

for next year, which is really historically weak. but i think the story here is that inflation is going to come down much more than i think the average investor realizes. the tips break evens are saying we will have 2% inflation by the end of next year from a peak of over 9% and economists forecasts are basic live corroborating that but what's weird about it, it is not overall inflation that's falling. it is because of all of this at-home buying we did which set up weird comps services will stay pricey, whether it's a hotel, airfare or something like that. wages expected to stay sticky. it's interesting a lot of companies will be stuck with higher wages and losing pricing power. we think it is going to be a little bit of a more difficult environment.

however, the consumer is going to be really resilient think about this they will be getting a raise and the stuff they're buying will be coming down in price jobs are tphrepbtful consumers will continue to spend money. that will keep it very late 23 or early 24. that will be the reason multiples edge not a ton but a little bit higher even though earnings are a little bit soft >> i hope you're right on that you're the equity guy at credit suisse when you see the two-year trashry, where do you put your money to work? are there opportunities right now in stocks? does the 60/40 portfolio still work here after the horrible 2022 year we have just had your take? >> well, first, morgan, i think that everyone in equities needs to ask the question if you get a

high yield or 5%, 6% on corporate bond and default rates are low, whether you should be putting equity money in those things and locking it down this is the first time in quite a while that equities will have that competition and i think you're going to see people taking that over the long term, equities tend to be the better place to be you guys are 100% right. the higher short rates will give equities a higher run for their money, which is one of the reasons why we have kind of an uninspired case for stocks at 5% up next year however, i think that the next three or four months will be much stronger than the back half of next year >> right >> i think this will catch people by surprise >> is i feel like everybody

seemingly likes health care. you're under weighing the health care why? >> if we're going to avoid this recession, you don't want to be in -- not forever. if it happens late apple 23, early 24 being defensive means you're too defensive there is no reason to pay off if you think we are going over a cliff. they are super empowered they have strong wages, plentiful jobs and the stuff they want to buy is coming down, they are going to spend money that will keep us out of a recession. we like the consumer space energy stocks, even when oil was coming down, the earnings held up pretty well if oil backs up, especially if we get a chinese reopening that's really sizable, we all have to remember what did it

look like when rereopened the economy. oil a big push there there is a bunch of things more cyclical than you would like even though you say, come on, do i want to be cyclical. yeah, i think you do for the next couple quarters or so >> see you soon. thank you very much. before we head to break, it's time for the bond report. take a look at how treasuries are faring with yields trading higher across the board right now. the 10-year, 3.807%. we started the year at 1.5% on the 10-year. we'll be right back with all the major averages lower now

check out the top gainers on the s&p for the year led higher by energy names not a surprise as energy was the best sector by far

the only positive one, in fact led by occidental, a berkshire name, up 120%. tonight do not miss our cnbc special "taking stock 2023" hosted by brian sullivan doing a deep dive on the energy sector 6:00 p.m. eastern. we'll be right back.

welcome back beijing announcing overnight it's dropping it's quarantine requirements for international travelers. our seema mody is taking a closer look at what that means for the travel sector. >> china will drop its quarantine requirement for passengers arriving from abroad starting january 8th this is big news for the travel industry jake fuller at btig writing it will be a big tailwind there's been essentially no business or leisure travel to and from the country for three years. on the last earnings call, marriott ceo said the market in china is most certainly where we're seeing the most challenges yet it remains the largest growth market for hotel operators like marriott, which has averaged 40 hotel additions per year these are hilton and hyatt also with significant presence there as well. wall street will want to see how fast the rebound in travel to and from china will be at a time when covid cases continue to rise across the country.

you do still need to present a negative covid test to enter china's lunar new year, what wall street is saying, will be the big test for the travel industry historically a popular time to travel will we see a similar rebound we've seen in the past how quickly will the chinese return to the united states? on average spending 50% more than other international groups here in the u.s. in 2019 about 2.9 million traveled stateside that was down from 3.7 million in 2017, guys. >> seema mody, thank you that's going to do it for the 9:00 a.m. hour of "squawk on the street." n'gonyerre coming up after this brk. dot awhe.

good tuesday morning and welcome to another hour of "squawk on the street. i'm morgan brennan with dominic chu. we're live from post 9 of the new york stock exchange. we're going to get a check on markets because that so-called santa rally, at least to start the hole lay-shortened week came and went with the premarket with the dow down 72 points right now. the s&p down two-thirds of 1%,

and the nasdaq down 1.3% yields moving higher really across the board in the treasury market. and it is, for the most part, some of those growthy sectors, dom, under the most pressure and the defensive sectors like staples, also energy, in the green. >> nasdaq trade has been the epicenter for a lot of the losses so far this year for sure we are now 30 minutes into the trading session. here are the three big movers we are watching right now starting with tesla. moving lower again after falling for six consecutive trading days this time on news it will run production at a reduced rate in shanghai factor in january following an end of december shutdown tesla, by the way, is on pace for its worst year ever in terms of stock performance speaking of autos, check out what's happening with shares of neo, after cutting fourth quarter delivery forecast saying the covid breakout in major chinese cities is constraining supply chain.

and southwest airlines under pressure following thousands of cancellations over the holiday weekend, more than any other major airline experienced amid the winter storm we'll have more on that story shortly. still, you have feel for all the travelers out there stranded still amidst these shortages of pilots and everything else going on for travel. >> yeah. it's awful dare i say, bah humbug, but a lot of people have had to get into cars and drive to make it to see their families and whatnot over the last couple of days. it's not just u.s. inflation falling. global inflation is declining as well that could set up for a global pause on central bank rate hikes. steve liesman has more on this for us hi, steve. >> mroer began, yeah, global food prices have fallen for the first time since russia's invasion of ukraine. global energy prices have also mostly been down supply chains seem to be clearing the result, falling overall inflation not just in the u.s. but also globally with jpmorgan

forecasting sharply lower inflation around the world and in the u.s. and europe next year economists at the bank think central banks will follow that trend. they said our view thatcore inflation will continue to run at 0.2 to 0.3% month-on-month should allow most central banks to pause at end of first quarter 2023 goldman sachs writing, supply chain recovery of the deflationary impulse in the goods sector that it promised to bring took much longer than we expected but have finally arrived. we expect this ongoing process to push core goods inflation negative next year u.s. data friday showed outright core goods deflation this is according to a three-month annualized figure that is calculated by rsm. the core service sector, ex-housing, that's the one jay powell keeps focusing on it remains sicky you can see with the orange line remaining flat whether that measure comes down

helps determine does the fed raise to 5% or higher and stay there for an extended period, or if it cuts, that's what the market predicts right now. key risk to global inflation outlook remain, including volatile energy and food prices along with higher wage prices that could pass through the consumer prices. that's what we'll be watching very closely for slack in the labor market and some diminution of wage hikes. >> curious part about this, you mentioned key components the fed is watching right now. i wonder, what do you think in terms of the data you're seeing, where are we going to see some of the biggest price drags or drops over the course ofhere what could have the biggest influence on inflation can we expect to see food come down dramatically in certain parts or, perhaps, used car prices, anything else like that? >> used car prices could lead the way down and followed by some help with new car prices,

dom. i think that could be a key to watch for. also i think we'll wait to see what happened with the christmas shopping season. do retailers emerge with high inventories as a result. does that force them to bring down that inventory? we seemed to have something of an inventory push in the fourth quarter. we'll see how much of that gets solved from the shelves and whether or not there are some bargains to be had in the post-holiday season. that could also create more goods deflation. the key here, dom, as you suggest, is watching that service sector inflation that's the one powell is focused on rightly or wrongly, that's what we have to focus on, too, as investors. >> it bears repeating over and over again steve liesman, thank you joining us now is newburgher cio eric nuwtson and jordan jackson. good morning to you both eric, i'll start with you. you say challenging growth and

inflation mix is likely to continue here. how do you see it going into 2023 >> in 2022 the biggest issue was high and sticky inflation. we think in 2023 they shift to a challenging growth environment at the same time central banks need to keep financial situations tight steve's comments indicated that central banks were going to finish their process and pause we think the fed will raise rates to 5% and hold them there for 2023 even as inflation rolls over the fed's target for inflation is just over 3% for the end of the year we're a little higher than that. still coming down. but still above target that means central banks are going to need to stay on the restrictive side they need financial conditions to stay tight. that means that they're doing this all in a time of declining growth and where short rates are

now looking interesting, attractive if you get 4%, 4.5% in short-term rates, two-year treasuries, that all of a sudden becomes pretty interesting relative to equities and other risky assets where there's potential for a lot more volatility >> i want to get into that more. first, jordan, i want to get your thoughts on this. we talk about it day in and day out on this network, the fed and where the fed is going, what the fed is doing, what powell is saying but to steve liesman's reporting just now, it is not just been the fed this year. it's been other central banks on the global stage that have been tightening as well how do you see it going into 2023 what does that mean in terms of potential opportunities, particularly within global equities >> sure. so, if 2022 was the year of central bank pressure, i think 2023 will be a year of central bank pivots. i do think most central banks will be finished hiking rates through the first half of next year i think what's going to be key

to watch out for is the wage inflation narrative. and sort of what was highlighted is we're seeing clear size supply-driven challenges and supply-driven inflation is starting to come down. that will lead to negative core goods inflation. what's really going to allow for that pivot is the demand side, the services side that's going to begin to cool off our expectation is the consumer is going to start to come under pressure really around the second quarter of next year. that should begin to weigh on demand, also weighing on the services inflation housing inflation should begin to peak out by the end of the first quarter of next year and probably be the primary driver of that core inflation rate down over the middle towards the end of next year so, i think this does allow for central banks to begin to pivot. i do think the pivot comes in two waves. first is the pivot on where we'll finally be able to pause the next pivot is when we'll be able to cut. i don't think that second pivot happens until the end of next

year and i think you remain defensive in portfolios. inflation will be coming down. that should be a bit of a tailwind for defensives relative to cyclicals as was highlighted, you stay a little bit shorter duration still within portfolios to get 4.5%, 5% in short-term rates >> erik, with that in mind, is there any scenario from a chief investment officer standpoint where you would get, perhaps, bullish on anything as long as you keep seeing the jobs market as relatively strong as it is? in other words, do we need to see some kind of a job slowdown or recession in order for the markets to be, quote, unquote, investable again, for growth sectors like tech, media and telecom. >> there's areas of interesting opportunity. generally where you can pick up attractive income in yields. same with high-quality more

value-oriented dividend stocks those are areas we're bullish and overweight in order to get more bullish broadly on equities. we're underweight global equities right now we would either need to see strong evidence that the fed has been able to stick a soft landing where we're going to be able to avoid recession, which will be an extraordinary feat given global short rates are up over 4% in less than a year. or that we have hit the recessionary point we've gone far enough from a slowing growth standpoint and perhaps it's more extreme than our current expectations than the fed is modelling and that you do actually get what jordan characterized as that second pivot and central banks begin to really loosen in the second half of the year. that's going to require some pretty significant price actions in the meantime. those are the kinds of key factors we're watching >> jordan, thoughts on china, given the fact we do have more

reopening headlines. we do see chinese adrs in this country trading higher on them thereth on the flip side, there are questions about what economic growth looks like in that country over the longer term >> well, i guess for us, we thought that this shift would be a little bit more gradual, but it almost feels like they're going from zero to 100 on zero covid, pun intended. so, really reopening up their borders more widely in early january. i think that's going to provide a real strong boost to demand, domestic demand and probably domestic consumer confidence as well, which has really been struggling over the last few quarters so, where we were anticipating china was going to come back online, second quarter of next year, maybe even the third quarter, they may be looking to come back online even sooner than that. i think that provides sort of maybe a more optimistic outlook for global cyclicals, demand-driven global equities,

you know, some of the commodity-sensitive sectors. some trade numbers may start to improve and some of the asean economies as well. i think it suggests while growth may still be a challenge in the first part of next year in china, we could see things bounce back as soon as the second quarter, providing a little more optimism around global equities within portfolios >> jordan jackson and erik knutzen, thank you for joining us all the major averages in the red right now. >> dow down 57 points as we speak. thousands of canceled flights up-ending travel plans across the u.s. for so many travelers. nbc's blaine i will aecblayne alexander joining us from atlanta. what does the aftermath look like >> reporter: good morning to you. it's still going on. we haven't even hit aftermath because there's still a number of passengers trying to rebook flights and thousands more today who are dealing with newly

canceled flights the numbers really tell the story in all of this when you look at the fact that southwest airlines slashed more than 70% of their flights yesterday and already today we've seen more than 2,500 cancellations from southwest airlines just today. now, that's stunning when you look at that compared to the other airlines, just over 300 or so cancellations for the other airlines southwest is saying this is unacceptable they've said that in a statement. they're apologizing to their customers. they're also saying they can't control the weather. they said they did what they could to put the right amount of staffing and personnel in place to deal with possibly potential delays, but they say weather is something that's out of their hands. the department of transportation says in a statement that they are going to be looking into whether these were controllable or uncontrollable circumstances on behalf of southwest here's why that's important. as you know, southwest, of course, is one of the airlines that agreed to reimburse stranded travelers for things like hotels and meals and taxis, things they had to do to take

care of themselves if their flights were canceled. that only applies if those were circumstances within their control. the d.o.t. is going to look to see if this unprecedented amount of cancellations falls into that category certainly news for travelers who did have their flights canceled. southwest is saying they can get a full refund or travel credits do use at a future date. i've spoken with a number of people here at atlanta's hartsfield-jackson airport they've been standing in line. one couple tells me they started their journey early yesterday. they started in new york, had to take a bus down to atlanta, and they're trying to get back to vegas. they're still very much in the early stages of this travel nightmare with no idea when they're going to get back home dom? >> nbc's blayne alexander live from one of the world's biggest travel hubs, atlanta hartsfield-jackson. as we head off to break, here's our road map for the rest of the hour, including big tech's wreck in 2022 apple, microsoft, all losing at least a quarter of their value this year. more pain ahead.

plus, after years of shrinking retail footprint, barnes & noble announcing plans to expand its store fronts we'll discuss with the ceo. tesla continuing to sink, on pace for seventh straight day of losses now down more than 40% in december alone we have a big show still ahead don't go anywhere. ng 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.

welcome back apple's japan unit is being

charged with $98 million in back taxes. this is according to a report out of nikkei's new service. the stock is down over 25% so far year to date our next guest is optimistic on two fronts for the company -- the supply chain easing in the new year and strong consumer interest for the iphone 14 pro and its pro max. joining us now is barton crockett from rosenblatt securities who has a buy rating on apple with a target price of 189 bucks a share. always great to talk with you. i guess maybe the question we'll start off with, overarching is, can apple recover quicker than other parts of the tech complex? >> i think apple is well positioned for a good recovery i think that issues in the december quarter have been well telegraphed, making the report for the december quarter almost a throw-away i think what is going to be important is how much of the demand they weren't able to meet

because of supply interruptions for the pro and the pro max is simply deferred into the march quarter. and i think there's reason for optimism there first is our survey would suggest the consumer interest in the high-end phones was very strong and i believe that that held up through the holiday season and i think that production is coming back online for apple if you weren't able to buy the pro and the pro max thanksgiving and get it in time for christmas, but you can order one now and get it in early january. so, i think the production pickups are correcting, and i think the consumer demand is there. and i think that's a good back drop that is going to be a sort of improvement for apple over the course of the year >> so, if -- barton, if you take a look at the sweet spot for many of these retailers, when they launch products like apple does in the early fall, the idea is to capitalize on the most consumer traffic you can get for the holiday season

is there a point -- you've aubl looked at this because you still have a buy rating, but is there a point at which consumers may say the window has passed and they say, maybe i'll just wait for the iphone 15 or whatever the hypothetical new model is, if i just wait four, five, six months >> look, i think we'll sort out, you know, what happened to consumer demand in the coming days and weeks i don't think we have a clear picture of that today. i think the indications are that people want these phones so the question is, how quickly do they come back? and i think a correction of apple supply chain, the strong interest in these devices. these are not just holiday christmas presents i think the number one purchase is for utility you need it for yourself, you need it for someone in your family so that demand, i think, was sticking through the holiday season and i think the buttons apples been able to touch are

resonating through before and after the holiday. i think the setup is that when they can get it, people will be buying it. i think we'll see strong demand and i think the market will like that >> apple under pressure down 1.5% this morning but the dow has turned positive again, up about 86 points right now. we're talking about iphones and devices, but the services part of the equation, i want to get your thoughts on that, especially given the fact that apple now has to allow outside app stores in that overhaul in the european union right now i realize it's just in that market for the time being. this is such a profitable piece of the puzzle for apple. is there a real risk here that you could see similar types of legislation and regulatory changes come to the u.s. and other major markets for the company? >> look, i mean, there's a lot of scrutiny in capital hill. i think it's difficult to carve a consensus in this country that is meaningfully disruptive to

apple's business politically it's difficult to handcuff a company that so many of their constituents love what they get from this company i think that the app store regulations in europe, you know, if we look at the example of android, you know, people go to the dominant app store these side-loading app stores that may be allowed tend not to be very popular. the apple tends to have a very good kind of lock on that business there's a lot of people that think that's unfair, the levers that apple can pull to maintain a position are unfair but the law in this country is on their side and until there's new legislation, you know, they're going to remain dominant in app. >> barton crockett with apple shares trading 22 times forward earnings we appreciate you. happy new year, barton. >> thank you same to you. still to come, it's been a big year for aerospace and defense stocks they have outperformed the s&p

in 2022, to put it mildly. up nearly 9% on the year versus the s&p's drop of 19%. we'll take a closer look, especially now that we've got fiscal 2023 defense spending numbers. first, a check on the biggest laggards on the s&p, which is under a little bit of pressure but moving back towards the flat line right now it's tesla, which is down 6% and southwest air, which is down about 5.5%, given all those travel snafus. other names in the top five, moderna,npse erg ehaney and solaredge. we'll be right back.

take a look at defense stocks all in the green this tuesday morning. and all -- many of them -- all of them outperforming really since the start of this year obviously, a lot of focus given the invasion by russia into ukraine, what that's meant for defense spending that is very much in focus with these names trading higher this morning as well. why? because we got that ndaa, that policy bill that sets -- the policy sets the pace for defense spending, signed into law last

week, as well as that nearly $1.7 trillion omnibus spending package, which actually appropriates or funds that policy bill. so, what did we learn? the top line for defense spending for fiscal 2023, which mind you, is three months late now because that started at the end of september, beginning of october. top line is a 10% increase in defense spending look at that investment and research and defense, double-digit percentages, up 14% and 17% respectively those tend to be early indicators of where future defense spending and the trajectory is going. you see procurement, which is the actual purchase of new weapons is up 12%. operation and maintenance is up 8% in the fiscal 2023 budget as well in terms of some of the winners that we're seeing, this is according to jeffries, you have general dynamics and hii, formerly known as huntington engals, are seeing more ship

orders gd also more money put to abrams-stryker lockheed martin, just awarded $1 billion plus long lead contract for future f-35 materials orders as well for another round of production late last week. textron, you have the award earlier this month, a big win for extron over lockheed and boeing northrop grumman, all the names trading higher jeffries does note the challenge for fiscal '23 is going to be converting the budget to outlays, which was a big issue it was a lag this year in 2022 i'd also just note, have you $45 billion in additional aid for ukraine military, economic, humanitarian assistance. have you more money to replenish u.s. weapons stockpiles that have all gone to ukraine, to the vaccine mandate repealed oh, by the way, a 4.6% pay raise

for troops, which is the largest we've seen in 20 years and speaks to the inflationary environment, although not keeping pace with inflation. >> what's so interesting about the defense story, morgan, and i know you've been following this closely, is that it's been pretty steady in terms of an up-trend for all the defense primes if you look at lockheed, northrop, general dynamics, they all outperformed the market and all kind of gradually moved upwards and to the right through the course of the year the one standout has got to be boeing, right? one of the biggest defense contractors out there, a prime on so many projects for the defense department, but it's also gotten so many headwinds because of commercial aviation, other parts of the business that have maybe overshadowed some defense aspects of what boeing does the fact that boeing is up 50% in three months and has been a driving force behind why the dow has been outperforming has got to catch some investor attention at this point. >> i would imagine so. it's up something like 57% since

the start of this quarter. it's been a stealth rally. what's been buoying the dow as well it's the commercial side more than the defense side that propelled that rally, given the fact you saw the extension of the certification mandate for the 737 max. you had that big order with united it was a very noisy quarter last quarter, particularly on the defense side with a lot of charges taken. commercial seems to be where the focus is, at least for investors. still to come on the show, after years of minimizing their brick and mortar footprints, some retailers are actually expanding their store fronts in 2023 we'll discuss with the ceo of ba barnes & noble physalootos e ckn ic bksrearba i vogue. back in two.

at this hour the mayor of buffalo has

confirmed seven more deaths from the historic winter storm, bringing the city's total to 27. buffalo alone has suffered nearly half of the 634 storm-related deaths nationwide this month more snow is expected in buffalo today. complicating efforts to open stores and clear the roads chinese government officials say they have enough hospital beds and equipment to handle rising covid cases, but there are multiple reports of emergency rooms overwhelmed with patients "the new york times" reports in some hospitals doctors and nurses with covid are continuing to work because of staffing shortages. and for the first time in five years, north korean drones crossed the border into south korea. south korea's president slammed his country's military for not intercepting the drones. he's calling for stronger air defenses and the development of south korea's own high-tech drones back to you. >> thank you of course, it speaks to the fact that defense spending is a global -- increase is a global trend right now, not just here

domestically. let's get to bob pisani back with us breaking down the market action so far. bob, santa rally >> we're positive on the dow when you and i were on, we were negative we're positive, thanks to boeing, and we've seen nice moves up in other industrials like caterpillar and the energy stocks doing well. look at the upside leaders in the s&p. still struggling to get in positive territory on the s&p. if you look at wynn, obviously the casino and las vegas sands china reopening story. freeport metal, china reopening story. apa always in leadership, oil has gone from $70 to $80 in the last couple of weeks we have new highs. two dow components are at new highs today. merck has been a huge mover this quarter, up about 30%. caterpillar another one. that's -- caterpillar was $180 in the beginning of the quarter. it's $240 now. another 30% move here.

new 52-week-high the market is obsessed with tech and the very poor fourth quarter and full-year performance of tech names two big new lows on the s&p today, tesla, you know that, new 52-week-low. apple is also just now at a 52-week-low. it's been hovering around that mark for a while now a bunch of etfs all sort of tech-oriented also sitting at 52-week-lows cathie wood's ark innovation fund the renaissance ipo etf has had a horrible year, that's biotech and growth names lithium etf, that's electric vehicles, and that's been hit very badly by tesla. consumer discretionary, which has been hit very badly by the poor performance from tesla and amazon that's xly, one of the s&p 500 sectors. look at tech stocks in 2022 and you can see why people are concerned about whether or not

this will fall into 2023 apple, 25% microsoft, alphabet, amazon. tesla, 65% declines. meta is down 65% overall if you want to see the sort of poster child for this, vanguard has a mega cap growth etf, mgk this is the one everybody owned a year or two ago. that's down about 40% so far this year. that's got all of the stocks i just showed you in it. that's the one that's getting hit hard finally on the s&p, santa claus rally. it closed thursday at 3822 remember, it's the last five days and the first to days of the new year for it to work this year, it would have to close above 3822 after the seven trading days that will end -- i think it's the 3rd or 4th now 3822 is what you have to be over so far it is working dom, back to you. >> thank you very much, bob pisani. barnes & noble expanding

brick and mortar stores by 30 new locations while amazon is closing 65 retail pop-up shops joining us now is barnes & noble ceo, james daunt thank you for being with us this holiday season i wonder, can you tell us, i thought that people were not going to be reading physical books anymore. this is the age of e-readers why are people still buying books? >> it is the age of e-readers was probably called a little too early. but in particular, we benefitted hugely from the pandemic people read, had more time to read, read more. once you do start reading real books, you tend to then go on and read more still. that's been the experience of barnes & noble once we got over that major panic when we had all of our stores close at the outset of the pandemic >> so, this is interesting because, in essence, the pandemic -- we don't often look

at barnes & noble as a company that would be one of the poster children as a beneficiary of the pandemic you're saying it was do you think that those trends continue what is it that keeps people wanting to buy physical books? i will say this, i'm a little biased because i still like reading physical books as opposed to e-readers but why will other people do it like i do it >> in truth, you can look at my gray hairs and realize i've been a book seller for a very, very long time, 30 years, and i've experienced these moments when reading has jumped whenever it's jumped, it's actually kept that gain. that's happened notably in my time with jk rowling, each of the harry potters that came out, lots of young kids in particular came in reading and bought those books and then read more in the pandemic, the combination of, i think, people wanting social connections, the way a lot of social media sites, particularly tiktok encouraged

that it concentrated on books most importantly from our perspective, on good books as these young kids in particular read them more, they stay with you. they are your customers for the future so, i'm hugely optimistic for us as book sellers. >> james, what's your, i guess, chief competition now? a decade ago, two decades ago, many different types of bookstores in terms of chains and mom and pops a lot of that has gone away. so, where do you see your, i guess, major means of competition coming from? is it the likes of netflix these days or something else >> amazon, which you just mentioned, is obviously the competitor independents are doing well as well independents and barnes & noble are creating beautiful spaces, beautiful stores and people are flocking to them i think we've gotten better, both us as a chain retailer, the

last chain retailer left, and also the independent bookstores. between us, we've wrestled back that market share from amazon. and i think we've reached an ee quib lib reyum people are buying books and enjoying buying them in real bookstores and still buying them online and enjoying the efficiencies that amazon undoubtedly brings. >> here's the question, because are you intimately familiar with this and the reopening plan, can you just take us through where the stores are going to be open? is there a specific geographic centric plan to where you're opening these bookstores and what exactly -- what types of books are people going after? are they the nonfiction? is it fiction? is it biographies? is it kids' books? what is the driving force behind what this expansion is all about? >> i think everywhere and everything we will truly be opening bookstores across the united states as often, we are following where we are really good book-selling

talent that's spread evenly across the country. we've already opened east coast, west coast and every part in between. i think we'll carry on doing that as far as what people read and enjoy reading, that really depends on your age and the demographic you are and the incidents of publishing. we're doing fabulously with fiction. we're also selling a lot of sort of, perhaps, less sort of literary fiction, the colleen hoover of the world are doing brilliantly. and then we have, you know, business books still dominanting a lot of our nonfiction best sellers. so, everything is working. and the great thing about a real bookstore is kids enjoy it once they're in a stroller and beyond to the very eldest of our citizens everybody enjoys a bookstore our job is to create these nice community environments in which all, everybody can come and enjoy themselves and pick up the book they want to read >> james daunt at barnes &

noble, apparently the death of physical books has been greatly exaggerated. thank you very much. happy holidays, sir. >> pleasure. and to you quick note as we head to break. tonight don't miss our cnbc special "taking stock 2023" hosted by brian sullivan he'll do a deep dive on energy stocks the best-performing sector on the s&p for the year that kicks off at 6:00 p.m. eastern time we'll be right bk. ayitusac korswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever. because once you experience thinkorswim® by td ameritrade ♪♪♪ there's no going back.

welcome back to "squawk on the street." freight rates have fallen from the 2022 highs the price is down 70% year-on-year as congestion has cleared up and supply chain pressures are easing joins us is brett rose, ceo of united consumer suppliers, a wholesale distributor. brett, it's great to have you on today. i think that's where i want to start, can we actually say, as we look to 2023, that the worst

of the supply chain issues are over the congestion is behind us. and now it's more or less a return to normal >> absolutely. first of all, happy holidays and thanks for having me back. i think normal is a relative term, as we've learned the past couple of years. supply chain challenges have eased up in every spot from the ports opening back up in china, port congestion easing in the states i think the biggest challenge is behind us. what the challenge is now is how retailers utilize all the merchandise they purchased that was more expensive during the challenges, merge it with stuff they can get now to sort of normalize prices to give us a break from inflation right now, especially as consumers. >> so, let's dig into that a little bit what are retailers doing how are you advising them? what does that mean for your business >> you know, so, first of all, we're coming off a holiday season where we were about flat as last year the average consumer spent $870, which is down a couple dollars, up over the last five years.

so, that didn't move the needle too much what we saw, consumers in q4 started in september/october if you want to look at the holiday season this year, you almost have to look at it as a four-month quarter versus three months what we're seeing as well in the last 48 hours is consumers, and we predicted this, are going to start returning more stuff because, perhaps, they thought they wanted, they opened it, you have retailers bringing prices down 70%, 80%. return what you got for the holidays, get what you really want and then we start to ease into january, which traditionally there's a january sales slump. we feel the retailers have a massive opportunity here to take the high inventory levels, bring prices down and, in turn, start the year, get out of the january sales slump and really see bigger numbers in january than we have in the past. it's a great opportunity for both the retailer and the consumer right now it's really the perfect storm. >> so, brett, it's dom here.

i guess you're a wholesale distributor, which means this is business-level volumes you're dealing with eventually those flow through to the consumer or retail level i wonder if -- i mean, i know you're not an economist, but i'd like to get your business expertise and sense on just how inflation will be a big part of the story in 2023, or will it? do you see things slowing down in terms of price increases given what you're seeing in shipping and everything else >> absolutely. inflation played -- inflation was almost the straw tra broke the supply chain's back. when fuel prices went up, container prices went up, intermodal transportation prices went up, it all translated to higher prices to the consumer. when you have shipping costs down 40% just on the freight side, to put it in perspective, we saw container prices drop the last three months from 40,000 to 6,000. that's a significant price reduction. what that does is it drives the price down the challenge retailers have, we

saw the street get nervous with walmart and target a few months ago, is retailers are sitting on heavy inventory levels that they paid a lot of money for. they have two options. they move it to the off-price channel, the marshall's, the five blows of the world or blend it with more regular priced goods they're now getting in if they were buying something at $10 and bringing it in at $5, lower the cost on your balance sheet 7.5, lower the price to the consumer and the street's happy because your inventory levels are coming down and wall street raises your share price >> is nike a leading indicator for what we're seeing play out across retail right now? >> yeah, you know, we're seeing retail change significantly. what we're seeing a bigger shift to off price before off price was a limited segment. now when you look at macy's and nordstrom's and neiman's, five years ago they were looked at different than marshall's, rose,

home goods, five below now it's one those retailers have to continue to shift if they want to take advantage of the consumer because an off-price retail consumer also looks different. it's sort of economic agnostic it doesn't matter what your household income is. if you can save money by is. if you can save money by shopping at one of these stores, that's where you will shift your purchases to undeniably. >> thanks for joining us today and happy holidays. >> and to you. all right. let's get a check on the markets now because we are, believe it or not, at session highs the s&p is just about flat on the session after being down for most of it the nasdaq is down two-thirds of 1% 10,431 stay with us we'll be right back after this break.

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the street." stocks improving, though in a relatively tight trading range the nasdaq underperforming today with tech stocks lagging the tech sector is down more than 9% this month and down 30% this year. we are seeing broad based selling today. a number of chip names including invidia among the big laggers. apple down today i'll send it back downtown to you guys. >> thank you very much for that. coming up on "tech check," a closer look at that apple trade and tesla as well. both, by the way, are touching 52 week lows for tesla it is lows going back to multiple years. tesla down 70% all of that is coming up at the top of the hour on "chte check," so don't go anywhere keep it right here

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clean energy, stevens is here to explain why these stocks have not fallen. >> it should have been a good year but it was anything but the clean energy found is down 40% for 2022, while the nasdaq lost 30% solar wind, hydrogen and uranium focused etfs in the red. this underperformance is thanks to several factors, rising rates, a broad rotation out of growth, production delays and policy uncertainty around key proposals. all of that is offsetting the tail winds as well as a spike in fossil fuel, demonstrating a need for alternative energy. but there have been notable out performers this year including first solar, the largest u.s. based manufacturer also higher for 2022 as is

infrastructure name quantum services despite this performance for 2022, there is optimism looking forward. jp morgan saying that 2023 is a catalyst rich environment due to clarity around how policies in the ira will be implemented. they favor utility scales with array and shoals goldman noting there is a significant positive momentum on the heels of the ira but that investors should remain selected they favor, morgan, solaredge, first solar and enphase. back to you. >> thank you we will take a look at the s&p, which has been under a little bit of pressure this morning, dom. one of the names that has been dragging the index lower is tesla, down 7.5% down more than 70% from the all time high in november of '21 pick your list of issues. >> so the crazy thing is i was

looking at the market caps we're talking about a $360 to $370 billion a lot of it will come down to valuations a lot of people are debating whether it is a stock worth buying. >> we will keep our eyes on tesla. in the meantime, "tech check" starts now >> good tuesday morning. welcome to "tech check." today you just heard about it, tesla falling again. production pauses now hurting that stock is the bottom still not done plus, what the digital markets act means for meta, google and apple. then, is it too late for a santa claus rally. down 8% in december alone. the s&p on pace for a historically bad year as well. are there names that can provide