"squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we are live from nasdaq market site in times square i'm rebecca quick along with andrew ross sorkin and melissa lee. joe is off today the s&p is up by 15. the nasdaq up 85 this is welcome relief after yesterday's decline. yesterday, the dow was off 1.1%. s&p off 1.2% probably worth pointing out where we have come because if you have been in and out with the holiday and paying attention and not paying attention, for the week to date, you are down 1% and 1.6% and 2.7% when looking at the dow, nasdaq and

s&p. month to date it has been lousy the nasdaq down a whopping 11% here is the year to date year to date, nasdaq off 35% s&p down 20% the dow down 10% we are looking forward to 2023 almost new year's eve. take a look at what is happening with treasury yields the 10-year treasury is yielding 3.8% we are counting down to the end of 2022. troubles for southwest airlines canceled 2,500 more flights yesterday and cut 2,300 this morning. delta airlines said it capped fares in the markets southwest operates in to help stranded travelers. american airlines and united and alaska air said they were lowering or capping fares in

certain markets after the request by transportation secretary pete buttigieg you were saying yesterday this is a tactic to win the hearts and minds of travelers who are disillusioned and ready to switch from southwest to somebody else. >> does it work? how loyal are people to airlines southwest, interestingly, as a brand, was the last one people were truly loyal to. people said i'm loyal to this guy. i think ultimately most of the airlines will tell you that people look at the price and schedule and that's how it goes. >> especially if you are flying southwest, you are doing it because you are budget conscious. this is a no frills airline. you are looking at prices. i think this -- i've been trying to figure out who you blame this

on with southwest. it seems they have been under investing in software for years and a decade at this point it is antiquated and out of date it is a huge problem i don't know how you get back into this because this used to be the airline that had such a sterling reputation. so good at what they did they were so good at making customers happy and employees happy. i'm reading and i'm sure you talked about this. the letter written to staff in denver saying if you call in sick and don't have a valid doctor's appointment, you are fired. if you don't work overtime we drop on you, you're fired. how did they fall from a phenomenal airline to this >> you know how that happened? mon monopoly they didn't have to. all of the stuff they did -- all of the stuff they invested in and all of the stuff they did

for the people and brand, they were doing it because they were competing. >> herb keller would roll over in his grave to learn this happened >> sure. there was a time they were competing against jetblue and virgin america running around. pan am back in the day now on ss such little competition. they are the low-cost airline. that is the niche. on that price, they are not -- in many ways, they used to compete and they had to do these things >> the department of transportation getting involved and pete buttigieg is looking into it. >> it was a system failure >> they have the not -- they have not refunded people >> i think the question for

investors is how much do you like through this? the other airlines are back up and running normally southwest is not if southwest is saying they have to invest in legacy systems and legacy systems -- that is spending >> it is years >> then think about the potential catalyst that this provides congress to act to maybe put more oversight to require refunds and policies that is a cost to the airline. >> it is cost to the airline and gets passed on to the customer. >> it will never been another airline merger that is approved after watching what has happened with these situations. >> i don't think there will be airline mergers, but what happens if congress has the bill of rights similar to europe. lower margins for airlines and higher prices for the ckconsumer should buying a ticket on an airline be a free option for the

airline to either deliver you to said place or not and you are to buy an insurance policy on top of it? the insurance policy doesn't buy you delivery of where you are supposed to be all it does is buys potentially some money >> i got suckered into them a couple of times. if you read the fine print, they're useless. >> the question is what is the right model for these things to happen you had a great line this week maybe it was your line or kayla tausche's line. >> probably kayla. >> you could spend all of the money on the tickets, but getting where you need to get with your family is priceless. >> it is christmas >> like the old "seinfeld" episode for the car rental >> you are supposed to hold the reservation. that's the point >> it emphasizes why travel on the holidays is miserable.

anything these companies get from congress, they did to themselves by not stepping up appropriately and continuing to sell tickets the weather was a doozy. this is far worse at southwest >> i should say we will continue this airline conversation later this hour. we will also have an adjacent conversation around babies in first class. big story in the new york times. i had nothing to do with it of the article. i read it like everybody else. something bigger going on. we started one a decade ago. i tweeted. i love babies. not in first class i like being around babies >> babies should be crowded in the back with their parents.

>> we will discuss >> go to the back of the bus, baby new details on elon musk and the company wide email obtained by cnbc. musk telling staffers not to be bothered by sdtock market craziness. tesla employees have to continue excellence and he believes tesla will be the most valuable company on earth this comes as tesla stock is poised to close the worst month and quarter and now worst year on record. musk thanking employees for the work in 2022 and push for a strong fourth quarter finish and asked to volunteer to help deliver cars to customers before midnight on december 31st. that has been a common practice to have employees deliver cars to exceed delivery goals they were offering discounts for people to take delivery ahead of the now ew year.

>> $7,500. and elon musk in other news. twitter appears to be up and running after users reported outages yesterday. i had trouble on the app myself. the web site down detector tracks outages issues with error messages on the web site in the u.s. and canada and uk. iphone and android twitter users were largely unaffected. it send my tweet out, but when it tried to reload, not so much. it may be my offensive tweet elon musk responding to problems by tweeting, quote, works for me he apparently was not suffering from the problems. >> i didn't notice anything. i wasn't on much.

goldman sachs ceo is warning employees to brace for layoffs for the first half of next month. citing the year-end message to the staff, he said the banking giant is con dubducting review solomon citing economic conditions and slowing economy there has been speculation of how many cuts could come the highest is up to #8% which i 4,000 employees. and a followup to the biden administration story the u.s. will require a negative covid test arrive are from china. any traveler coming from those places is taking effect january 6th. they are deeply concerned about the lack of transparency and the outbreak and failure to track variants circulating and lack of

testing and not knowing the variants we think we know what variants are in china, but we don't know because of the lack of testing >> that is what struck me. the biden administration coming out and calling them liars and saying this is a bold move to say we don't trust anything you are coming with. obviously we have not trusted these numbers for a long time, but the biden administration to say that takes it to another level. they are waiting until january 5th. if this is a problem -- >> the restrictions for china lift on january 8th. >> we talked to dr. scott go gottlieb about this yesterday. there are other varioants, too. coming up, we will talk market strategy with two trading days left in the year.

dow looks like it will open higher 85 points. nasdaq up 96 s&p up about 18. later, we dig into the rough month for apple. down 16% since the start of december you are watching "squawk box" and this is cnbc the first time your sales reached 100k was also the first time you hit this note... ( screams in joy)

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welcome back to "squawk box. it has been a losing week for the marketfor a santa claus rally. joining us now is bill smeed and

hank smith good morning, gentlemen. we have a couple of days to do what needs to be done or hold your fire and wait it out. bill, what's your plan >> our plan is that we expect a second year of difficulty. we are leaning into the things that we think are going to do well despite a market that is designed to punish the sins of the prior euphoria episode we are laeng into things that work this year and we think that we will work off and on and including oil and gas and other valuable things despite the difficulty >> hank, what is your plan let me ask that everybody seems to think that you got to get away from all of the stuff that's fallen. is it all still a falling knife?

is there any value in what has fallen >> look, when you have leaders like the technology sector that led throughout the team is rather that those leaders are the same leaders going forward i would be a little bit wary about jumping into that. we're going to maintain our fully invested portfolio equities and overweight in health care which started to work in 2022 we think it will continue to work in 2023 i have five reasons why we should be optimistic investors, not traders we will have more volatility in 2023 for sure in bonds and equities look, you should be encouraged the fed is taking the mandate seriously and does not follow the same mistakes of the 1970s of the stop/go policies.

as we enter the bear market as we did in june and october, forward expectations go up layer on top of that since 1942 the 12-month returns after mid-term elections have been positive that's a lot of data points to hang your hat on also, sentiment asis as sour ast has been in decades. that is a good indicator when you put it all together, there are reasons why investors should be positive as well, valuations are not all that stretched, particularly if you look at the equal weighted s&p 500 selling 13 or 14 times earnings as opposed to the market >> there are people who still have been hanging out and living in the faang stocks. they never sold. they are trying to figure outdo i get out now after everything has fallen do i take my losses and lumping

or am i holding steady because it comes back? what do i do >> hank, in my opinion, has one thing wrong in looking back are ward almost everybody is looking and saying the market did really terrible it is cheaper than it was. it will do well because we rarely have two years in a row that are lousy if you look back, there's been about four or five major fi financial euphoria episodes. the '60s and '50 era the '07 and '08 era when people do stupid things, the punishment lasts 24 to 36

months we like our amgen and merck. this is more like the years than when we had substantial drops. the problem that everyone has is -- we probably entered an inflation era. an era dominated by 92 million millennials being too large a group. what we want to do is own oil and gas, land, businesses like amgen and merck with products to cure cancer and other things i have seen a lot of our friends and people i normally make the same case which is stocks are going down and it is a good time to be a ckcontrarian the issue is the ipos and spacs

and crypto all of these people shoving lousy investments on people for four or five years andrew, the answer to your question is he is right. you go back and look at the top ten holdings at the end of each decade they almost never are a good idea the next ten years. >> that's a lump of coal for the stockings. hank, i'll give you 30 seconds to respond maybe we have to continue this debate another time. we will run out of time. >> i agree as we with enter 2022 there was euphoria it was confined to the spac and perks ipos and crypto. that has been flushed out. the market is in a healthier position today than previous

episodes of euphoria i think next year will be volume t -- volatile and choppy. >> we will leave the conversation there we will see and have this conversation with both of you next year. maybe we will come back around now and evaluate bill and hank, thank you >> happy new year. when we come back, the whiskey business we hear from distiller michters about the pressure the industry continues to face. as we head to break, let's look at the winners and losers of the s&p 500 tesla up 5%. back to $118 stick around "squawk box" will be right back p.

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welcome back, everybody. right now is time for the checkup on the supply chain and inflation in america joe merioka is the lead distiller for michters joe, it is good to see you how are you doing? >> doing great thank you for having me on today. >> thanks for being here what can you tell us about inflation in america at this point? how are things going >> look, you know, inflation, obviously is 76.1% as of novembr cpi. it is affecting our industry,

too. you know, with that 7% increases for labor which is commonplace that would not have happened in the past few years inflation continues tremendously even steel has come down a little bit, but the steel we use to build barrel houses and distillery expansion, steel is up 63% over what it was pre-covid although it came down. it is up 63% that is huge when we are building something our corn prices, corn is the biggest ingredient in bourbon. corn is up 75% from pre-covid levels a lot of that has to do with the war with russia and ukraine because so much of the world's grain supply comes from them our glass is up close to 50%

over last year and over 70% pre-covid. our rye prices are going up 60% next week. there is still a lot of tremendous, tremendous inflation pressures going on >> i was thinking of natural gas being european problem how much of natural gas prices up in kentucky and how does that affect you >> it affects us enormously. you distill and you use a lot of energy with vodka or tequila or anything and certainly for bourbon. natural gas prices in louisville are up 65% this year and up 187% pre-covid levels that is a tremendous, tremendous difference in energy costs. >> how much of your prices increased over that time how much do you pass on to the customer >> it really has varied. i worked with michter's and a

company that sells vodka and gin. we have been raising prices twice a year we have to that is not uncommon in the industry now the good news is good brands have been able to take price hikes successfully >> you don't get push back how much of the increase has been on average and you don't have pushback from customers at this point >> we really haven't rather than do one 10% increase at one, we do two 5% to ease things in. that is why we have been doing it twice a year. that sort of has been our method >> i won der when prices come down if you keep the prices the

same as inflation comes down >> prices for things generally don't come down very much. again, there are other counter factors here we are in a period when people are tight for money. with inflation running at 7%, people are trading down. the online alcohol platform did a recent survey and 47% of retailers reported a trade down in cost of things that people were buying. that was in september. we have seen that accelerate through the holiday season from our distributors and importers there is a trade down. the other thing that is interesting is we have gone through the dot-com crash and great recession. we typically see a lot of things

that are typical for people tight for money. they go to restaurants less and trade down mastercard report this week that restaurant spending up 15.1% if you look behind the report, it is not as rosy as that indicates for alcohol sales. the national restaurant association said that actually versus pre-covid levels, 16% fewer people are dining inside the restaurants. fast food is strong and delivery is strong and drive-thrus are strong, but eating inside the restaurant where they consume alcohol is not very strong the other thing is the national restaurant association recently did a study and if you adjust for menu price increases, spending at restaurants is actually up 2.7% not 15%.

>> wow joe, thank you for the update. happy holiday and thank you for being here today >> thank you so much >> good to see you coming up, after a surge of $120 a barrel, crypto is on track to close above where they started in january we will talk about the catalyst for oil next. as we head to break, here is a look at the s&p 500 winners and losers from yesterday. >> announcer: executive edge is sponsored by at&t business at&t 5g is fast, reliable and secure 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.

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good morning welcome back to "squawk box. we are live from the nasdaq market site from times square. if you look at the futures, you will see green this was mesissing yesterday dow futures up by 71. and the energy outlook for

2023 depends on three people china, russia and the fed. we have matt from kepler with us i want to start off with xi jinping. the ripping the band-aid off the zero covid policy in china is the recent development how do you see this? the opening is slower with so much covid going on and the lockdowns have not been off to the races. in the long run, it should be inflat infl infl infl inflati infl inflationary for oil >> it will not be an easy recovery there will be speed bumps. in terms of the next few weeks, you know, you essentially are having covid ripping through 1.4

billion people you have lunar new year happening and there will not be a stronger rebound. that said as we move into q2, you will see herd immunity elsewhere in the world with jay powell there, you have the lack impact of interest rate hikes not only in the u.s., but europe as well, which will lead in with lower demand and recessionary pressure in the western world which will reflect on weaker demand for china in terms of the manufacturing sector yes, at first blush, the easing of the zero covid policy is the oil demand surge, but no means will it rip as some people think. >> how will putin play into this as if you think he responds to the caps placed on russian oil

is there a retaliation to impact the oil markets? >> at least from the crude side of things. we have seen the price cap put in place and sanctions put in place. crude flows are continuing for the most part. the seaborn crude flows and more heading to india and diverted away from europe we have seen the drop away this month. that goes from the eastern side of russia into china and reflective of weaker chinese demand as opposed to european sanctions. we are likely to have the bigger impact when we see sanctions put on the products and that kicks in february. for now, flows are diverted elsewhere. >> what is your forecast for oil in 2023 in terms of where you see the highs hitting and the average price? in your view, what is the biggest swing factor to the forecast the biggest asterisk, if you

will >> sure. we will probably finish next year at a similar price to where we are here now in terms of wti close to $$80 and brent as well. on the similar side, russia is a wild card and china will be supportive the third element is we haven't got spr releases strategic petroleum release in the u.s. we have seen that drop 220 million barrels a year that has been bolstering the u.s. commercial inventory. that will influence next year which will not be there. that will be supportive for prices all that said, the lag impact of prices coming through and the pressure on demand means it should largely offset bullish to see where we are right here right now. >> in terms of peaks

i talked to paul sankey and he said he expects $120 a barrel p. that is not the average. that would imply the prices going back to what we saw in the summer like $5 a gallon. >> we don't expect that. i think that is a common perception across the market we will see prices in triple digits here by all means, we could see that. we have seen the volatility this year on wti in march with over $120 did the same in june as well by all means, we could pop up above it the thing we are still remaining for the majority of the year below that level >> matt smith, thanks. >> thank you. coming up, the debate as oldest as commercial flights should babies be allowed in first class. that conversation after this i already know i'm on the losing side of this debate.

later, we talk about the challenges for congress in the new year with representative brendan boyle. "squawk box" is coming back after this >> announcer: currency check is sponsored by interactive brokers. the professionals gateway to the world's markets. ♪ icy hot pro. ♪ ice works fast... to freeze your pain and your doubt. ♪ heat makes it last. so you'll never sit this one out.

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now to an article and debate in "the new york times" travel section. it has been a debate on "squawk box. we started this debate a decade ago or longer. at least it's "babies in first class:which side of the aisle are you on." does first class buy you the right to avoid the huy paloy or

should kids and babies and there are a lot of adults that act like babies be allowed in all sections of all times? i have taken the position from the beginning. i have been consistently >> consistently grinchy. >> i have three children i love babies. there it is. there it is. this really is over a decade old. you can tell from the picture. if you are going to pay the premium and if there is a premium that there is for first class and the ads you see airlines run for first class are of the idea of cerserenity >> the ads are fake. >> it is not people don't want to sleep or have serenity like in coach, but if you charge crazy prices. >> how do you define a baby? 2 and under?

a 7-year-old who iscrazy >> how about a 40-year-old who is drunk you should kick all of them out. >> of all of the lousy people. >> if you do it on an age basis, some think between 8 and 12 is how you do it. separately, i will say, and i have been blessed to be in position to buy first class occasionally or go on business and the company pays >> it is free. the company is paying. why are you complaining? >> i know. i don't take my kids >> you make them ride coach? >> no, no, no. we all sit in coach together >> that is because you're cheap. >> part of that is a totally separate thing i feel like -- >> you are not disturbing people >> a, i'm not disturbing others. that's a huge piece of it.

a secondary piece. when i was a kid, i never had the opportunity to go in first class. >> you're kids go without? >> there is a thinking of a parent >> you don't want them to get used to the luxury >> right >> a lot of things most people are not. >> my kids have been blessed greatly and i try to tell them how lucky they are i hope they get that piece of it >> the best response yesterday because i looked through the responses to the tweet the best response i saw was one you liked, too if they are not selling tickets to first class, how are you going to get a seat there? >> i liked it. i said it gave me a big smile. >> it should be like "survivor." you can vote people out. if they are annoying, you have a drunk guy -- i'm joking. you cannot define who is going to break that. that is the problem.

>> that is much worse than other people's kids. we have to remember for all of the people stranded and not being able to get anywhere with southwest, this is a prima donna conversation >> yes completely diva-esque as they come there are people who spend $5,000 to $10,000 to travel, i don't know, 10 or 12 hours overnight. they are sleeping because they have to go to a meeting in the morning to pitch something should you be in a position where you can't do that for that price tag? >> it is called fly private. by the way, if it was really a great business, one of the airlines would do it none of the airlines offer it. there must be a reason they will charge you for anything taking a bag on the plane and then the bathroom. if thi

business idea, one would try it. i guess on the responses on the twitter thread, a lot of people agree. >> a lot of people agreed. the other last piece i will say. >> it is capitalism. give it a try. >> the other nafascinating thin. more people in business class and first class that don't have kids from a pure market based system, they would say -- >> you really don't see too many babies in first class. ultimately >> when you do see babies there, the people are really taking care of the kids to make sure they don't act up. this is the difference decline of society it is not just kids. you have a 40-year-old drunk next to you. >> obnoxious people in general. >> people take off shoes and socks. >> all of these disgusting habits >> i love babies that's all i want you to know.

if i'm sitting in coach with a baby next to me. i get it that's how we go >> go ahead. write andrew >> @andrewrsorkin. i sat with kids front and back that's how the sorkins roll. when we come back, a new 52-week low for apple. you can see this morning it is up 1%. reminder, you can get the best of "squawk box" with squawk pod. you can follow and listen anytime. we'll be right back. full prescription-strength? reduces inflammation? thank the gods. don't thank them too soon. kick pain in the aspercreme.

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welcome back, everybody.

apple stock hit a 52-week low once again yesterday after the technology sector continues to get badly hurt by this sell-off. you'll see the stock is up by 1% this morning if you're watching tech in general, the nasdaq is down 35% for the year to date and it's given up over the -- over two years of gains in what we've seen this year joining us right now is gene munster. when you start looking at apple, i think that concerns a lot of people it's so broadly held why do you think we've seen this sell-off recently? what's happening >> becky, it's market jitters. it's as simple as that it's this view that the guidance for the march quarter is going to be soft and that unknown has pressured stock 15%. i think it's important to keep focus on the fundamentals here the fundamentals are that they can't keep up with iphone pro demand it's two weeks out demand is getting pushed to the march quarter. it was reported 47% growth for revenue for the october and

november quarters. that's highly correlated to iphone growth. that suggests they will exceed the estimates for the december quarter. i would put this as simple as market jitters those two facts, what apple has said what the lead times are and what has been reported should cool investors' concern. that's not happening which tells us there's something bigge bigger abreu with these investors. unfortunately, we're going to have to wait until we get this guidance if i could just finish the thought, i think apple is going to be fine here. i think the results for december are largely going to be in line. i think the guidance for march is going to be somewhat upbeat and i think it's important for investors to take the december results in the context of the march results. you really need to add those two together because of some of the

supply chain issues that they reported on december 6th when you combine those two, i think it's going to yield better than what investors are expecting. so, jitters, but i think that the business is actually going just fine. i think when i look at apple or any of these technology stocks, the question that comes is, was it fairly valued a year ago, two years ago was it overvalued at that point? how much of the gains that we've seen in these stocks were because the fed add this loose policy and you can put this out for tesla, or any of these when you look at just fundamentals and you try to -- let's say, look at a new reality, which is going to be a fed-tightening situation and central banks tightening around the globe what is fair value for apple or any of these technology stocks what do you think? >> in the case of apple, it's been less -- it's down 30%, the broader faang is down for the year in terms of fair value, it comes

to what is growth. i still believe that fair value, apple should trade closer to a 30, 30-plus multiple if you consider that the current multiple is 20 times next year's earnings, and you look at what the growth potential for apple is relative to the s&p, that's how we think about fair value and i think that should yield a closer to a 30-plus multiple >> that's a big increase from where the stock is right now. >> absolutely. and i still look -- i still come back to this comparison. it's a well-traveled comparison, but i think it's appropriate to remind myself, coca-cola trades at a 28 times number and grows in the low single digits i think apple is as important as coca-cola is when you think about fair value, it's a huge spectrum to briefly touch on tesla, this point it's trading at just under 30 times based on my numbers,

next year's earnings, those may not be the right earnings number given what we're anticipating is a tough year for overall automotive in 2023 what is fair value there a little bit more hard to discern. i think when it comes to apple, i just think -- come back, we can't live without these products that is a staple therefore, it should get a staples-like multiple plus growth rate. i'm going to stay on this drum beat it's not just about iphone and macs apple is going to get into other product categories longer term which should be good for growth. >> is apple your favorite stock? >> i think so. for the long term, yes, absolutely i think they're going to surprise people on what the outlook is for the march quarter. >> thanks. great to see you. >> thank you. new details in the collapse of ftx and what happened to more than $200 million in customer deposits that is coming up. and playbook 2023, we'll talk about how streaming

seic cldrvesou weather an economic torm. "squawk box" will be right back.

good morning it's not how the grinch stole christmas. it's how 2022 is stealing the

santa rally. time running out for an end of the year pop with just two trading days left in 2022. elon musk tells his tesla troopsnot to worry about the stock. his message to employees. and another day of pain for southwest airlines thousands of flights canceled once again is it time for a true passenger bill of rights we'll speak with an advocate as the second hour of "squawk box" begins right now good morning welcome back to "squawk box" here on cnbc we're live at the nasdaq market site in times square i'm melissa lee along with becky quick and andrew ross sorkin we're looking at a positive open we were positive yesterday at this time. and yesterday we saw a sinking towards the lows of the day to

close there. so right now s&p 500 looking to add 15 1/2 at the open, nasdaq looking higher by 80 points. as for the treasuries, the yields, barely quiet today we've got the ten-year yield at 3.88%. oil, same deal there we're looking at wti, pull the latest numbers up, down by 1.3%. we have brent down by a percent as well. for cryptocurrencies, bitcoin is 16,600 is the level there. >> okay. a couple of big stories that investors are going to be talking about today. elon musk trying to get tesla employees to look away from the carnage. an email obtained, musk asking workers not to be bothered by stock market craziness he thanked companies for the work this year, but he asked them to help deliver cars to

customers before new year's day. morgan stanley cutting its price target on tesla to $250 from $330 it maintained its overweight rating goldman sachs heading towards its own job cuts reports say that the ceo telling employees that, quote, head count reduction would take place in the first half of january that had been telegraphed in a lot of the reporting over the last month earlier this month, it was reported that goldman could cut jobs in 2023 they posted a 43% drop in profit meanwhile, an update on the pain at southwest airlines, the carrier canceling close now to 60% of flights already today as it seeks to recover from a christmas weekend of chaos brought on by the monster winter storm. talk more about southwest later this hour and whether the meltdown could lead to increased rights for air travelers let's get to frank holland

with a look at this morning's movers >> let's start with apple. hitting a new 52-week low yesterday. it's been caught up in this big s tech sell-off. tax law harvesting is being considered for the company's 3% decline this week. we've seen a pop in the chip sectors. take a look at this board right here we're seeing the chip etf almost up a 1.5 and nvidia and qualcomm up, as well as amd. amd and nvidia were picked as top tick picks record revenues for the quarter for the egg producer it's comments on the avian flu

outbreak that continues to drive prices sharply higher. there have been no positive tests of avian flu at any of its facilities eggs 49% higher year over year according to the last cpi report >> thank you. when the clock strikes midnight in two day and is we ring in the new year, the clock will start ticking on the need for corporate america to refinance trillions of dollars in debt. that's something steve liesman has been digging into. this is a big deal, steve. >> yes, it is. because debt makes downturns worse and wall street is keeping a close eye on 2023 and beyond on corporate debt and the relationship with the fed because they have the financial crisis fresh in mind so-called rollover risk, the amount of debt coming to you next year, not as high as it could be they extended maturities during low rates of the pandemic.

a trillion needs to be refinanced or 10% of the $10 trillion mark. the bigger problems that happens in '24, '25 and '26. head of credit research tells me high yield investment grades are in decent shape but that doesn't mean there won't be pockets of pain we'll pay a lot of attention on how companies manage earnings and cash flow. depending upon the depth of any potential downturn, earnings could come under pressure, issues have to pay higher rates and a premium because of default concerns there's already a hefty default premium in those rates yields on the lowest rated junk. they've doubled to 15% this year investment grade, more than doubled from just below 12% to above 5% now on average. that's that red line on the bottom there many companies could find their debt crushing if they have to refinance into the current rate

environment. meaning there's a foot race between the fed lowering rates next year if that happens and companies refinancing. chief investment officer at pimco told me yesterday, if you're concerned about earnings, it's hard to love credit you got to be cautious about most sectors of the market if iverson doesn't love corporate credit, he doesn't hate it either if the u.s. skirts recession, yields are attractive at these levels high quality credits, they've taken a hit that may not deserve it high rates mean little issuance next year. the lack of supply could keep spreads higher and returns higher the fed begins to cut rates before 2024, when that cliff of rollovers comes due. but the current high level of rates suggest, guys, the street is preparing for a worse case outcome. becky? >> that's always the prudent thing to do, prepare for the worst-case scenario. is this something that factors into the fed's thinking at all,

steve? >> i don't think right now i think when they see that trillion dollars of rollover -- okay, we can take that down. it does mean not a lot of issuance which means new companies are not going to be formed, new financing for new investments aren't going to be taking place and i think that's the kind of contraction in the economy that they're probably looking for right now. or at least contraction in new business or new activity that they're looking for. so i think they're watching it and what they're watching, i think, most closely, becky, is this idea of systemic risk where -- and that's where i'm focused on it and that's why i took a deep look at it there are other areas, becky, tha that i think we're going to be talking about in the next several days there's commercial real estate credit and private loans and clos there are areas where there might be a bit more risk out there that appears to be apparent in the corporate bond market. >> suggesting that it could be

systemic >> there could be -- i don't know about systemic. those are bigger markets now that have grown a lot, becky and one area, especially, that iverson was telling me about was in the loan market where credit lending standards have not been very tight they've been pretty loose right there. and so that's a place where you could have bigger losses. >> you start saying that and i start thinking of 2008 type of things, ninja loans, those were home mortgages where no income, no job, no check on any of those things that was systemic. that was the problem with those issues is this big enough to do those things is there enough of it? >> becky, imagine what i've been doing the last several days. i'm the guy -- i put on a jacket, put my rubber boots on and i've been walking through the basement or the tunnels of the financial system looking at all of these things. the mortgage market looks to be

pretty good right now. it looks like the lending in the mortgage market was not the kind of subprime lending. there's some problem of subprime in autos there's all these different pieces right now they have not yet in my mind grossed up to a systemic risk thing. of course, all of these things, remember, becky, what the problem was during the great financial crisis was that all correlations went to one credit that was not supposed to be correlated with each other they correlated. that's always a risk that you can't possibly know about. mortgage credit looks okay some of the private lending, they look a little more troublesome. steve, i'm really glad you're digging into it. it's important reporting and we look forward to hearing more in the days to come thank you. >> my pleasure investors are getting ready to say good riddance to 2022 we want to know if the new year is time to add more risk or

stick to the sidelines victoria, great to have you with us i want to start off with technology because that's what you think about when you think about adding risk. and what's happened in the past month or so is really interesting for tech we saw rights go from a peak, recent peak of 4.2 down to 3.4 tech stocks didn't do much then we saw 3.4 to 3.8 where we are this morning and tech stocks continue to fall we saw the dollar decline, that did not help tech stops. what do we need here is there something wrong with technology here in terms of the investment picture >> it's just too -- the wrong time to own them sometimes there's a right time to own them. you're not getting rewarded for owning a longer duration technology stock at a higher multiple because sometimes they got priced to perfection if you look at where they were trading, they couldn't afford to miss at all. now you're starting to see them struggle

first you saw meta fall off and finally the death of the king of apple hitting new 52-week lows there are too many headwinds apple has uncertainty about what's coming out of the chinese factors, what the demand looks like, aws with amazon, you just have these shining stars that are faded a little bit a little too early to add in risk in our opinion. you can track that it's more as the fed has burn off the balance sheet, so has technology fallen. so you have the dow and the russell 1,000 down about 10% for the year and growth down about 30 to 35% on the year and that's what's happening in the markets. right now you need to be valued, you need defense, you need cash flow and you need reasonable multiples. you're still trading at high multiples versus history. >> apple is trading at a market multiple pretty much it's going to be swept lower

the thing about apple, it is so widely held, it is held across etfs if you're going to sell technology at large, that's going -- you're going to end up selling apple. that's the nature of it, of the market mechanics at this point. >> sure, the s&p 500, qqq, apple is a 12% holding in them if you're buying anything in the technology sector, you're buying apple. we look at apple and say it's hitting a new 52-week low. it's struggling a little bit not necessarily on the demand side as much of the supply side as well as on certain demand i think that apple is a fantastic company and they continue to innovate i think they're pushing to health with if watch if they figure out how to get blood pressure and blood sugar if they figure that out in wearables, everybody is going to own an apple watch it's the wrong time to own companies like this. for this year and next year, the first half, i think it really matters where you're positioned

in this market there are tons of good companies that are underperforming right now with interest rates rising, liquidity falling, just not the right type of stock to own right now, even if it's a well-run company. >> we were talking to steve liesman about corporate debt maybe not next year, but in the outyears when they're forced to pay that debt or refinance it and roll that over to higher rates, i'm wondering how much of a factor does that play in how you think about companies now even though those problems might not come to fruition in the near term >> right, that's why we have this large quality biased. it's the big guys that are going to be able to refinance and get liquidity. the smaller companies may really struggle and see their rates skyrocket. we like companies that have buying power, that have established relationships and strong balance sheets to weather if interest rates come up. it depends on your rates we have this disconnect in the market with the fed saying, buy, buy, we're not capitulating and

the market's pricing in capitulation it may be difficult, but if the market is right and the fed is wrong, then rates are coming back down and a little less pressure on the refinancing. you're not getting your 1% debt, but you're not getting 8 to 9% what your ratings are, if you're a single "b" or double "b," i think you are going to struggle. it's going to be much harder for you to refinance and that's why the focus on quality right now is so important because we want them to have strong balance sheets if we see a liquidity crunch continue and we see banks step back from risk. >> thank you coming up on the other side of this, a conversation you do not want to miss on the lies of new york congressman elect george santos and what they might mean for gop leadership in the next congress. next, we're expecting developments in the case of sam bankman-fried as soon as the new year begins.

after the break, we're going to talk about them with a top s.e.c. oicl.ffia stay tuned, you're watching "squawk box" and this is cnbc. man: i'm not slowing down anytime soon. that's why i take osteo bi-flex every day. it's clinically shown to improve joint comfort in 7 days, and continues to improve over time. kinda like us. osteo bi-flex. find our coupons in sunday's paper.

on the third day of the upcoming new year, sam bankman-fried expected to enter a plea in the criminal case against him stemming from the collapse of ftx. the s.e.c. says that ftx used $200 million to invest in two

tech companies through its venture unit it appears to be the first examples of customer money being used for venture funding the ceo of one campaign saying that they're scheduled to be repaid with interest in 2026 but it raises new questions about clawbacks for individual ftx users. i want to bring in john stark, former chief of the s.e.c. office of internet enforcement and a lecturing fellow at duke university we're all trying to figure out what happened here, of course. but, of course, i think the biggest question, especially for customers of ftx and creditors of ftx, is there any chance that some semblance of this money is going to come back to them >> that's tough to say, andrew one thing we know for sure, is that the trustee is going to higher some tough lit gigation firm to get as many assets as they can the traceability, given mixers

and everything that is used to cloak the real pathways of crypto is going to create enormous challenges. in the meantime, the s.e.c. will be plugging along. probably stay there with respect to the defendants that are being prosecuted criminally. for instance, they could decide to name as relief defendants sam bankman-fried's parents because they own real estate and that real estate could have been the result of proceeds from fraud. there's lots of activity, but it -- it doesn't look good for those ftx creditors. >> do you think that customer money should come ahead of creditor money how would you -- how would you deal with that >> that's a very challenging situation. and i -- i'm not sure. i think with respect to the trustee, they're going to put creditors above all else and whether a customer is characterized as a creditor could put them all in the same boat as far as the s.e.c. is

concerned, whatever sort of penalties which will be put into a fund, everything the s.e.c. collects is going to go back to those investors who are also called customers >> just a follow-up on that. i don't understand it. i've had other people tell me a similar thing, that the credit -- that customers aren't necessarily creditors and they can be further down the line they're the only ones who had actual skin in the game in a lot of these circumstances. >> i agree it's hard for us to really get our arms around this customers in this situation, if you had your money, and you had your stocks at merrill lynch or jp morgan or whatever and there was some sort of financial catastrophe, those would still belong to you. in the upside down world of crypto where there's no oversight, comingling, no examinations, audits, no insurance, no consumer protections, nothing, all of this is sort of -- based on whatever agreement you have in terms of your terms of service,

all of these assets are very difficult to nail down and associate with a particular individual and that's the duty of the trustee. they can't just hand out money without deciding or hand out any sort of asset without deciding who it belongs to. in a traditional context, none of these silly decisions would need to be made. what's yours would be yours. >> i have an investor question and those are the venture capital investors that the s.e.c. seems to be working o behalf of in this instance, when i have a question about the s.e.c. itself. but on the investor side, we just showed a list of the notable investor, a lot of big name firms led by sequoia, which is one of the biggest involved in this. and i've made this argument many times. a lot of people say how is it possible this happened and i'm not saying it's a good thing. i don't have any sympathy for the situation. but the business model of venture capital is such that these firms are making 40-some

odd investments oftentimes per fund, if you will, and the view is that 30 of these things are going to go to zero. how do they get to zero? they don't seem to care about, actually, they're just going to go to zero anyway. and so as a matter of course, they're not doing the kind of diligence that you might want them to do if it was a public investment, if it was a private equity investment. if it was just about any other kind of investment because the model is so different. what do you do about that? >> well, you know, it's really amazing. and sam bankman-fried said this himself in his discussions with you, he said, look, when it comes to due diligence, it's not a matter of what we look at, we don't look at the products we don't look at the services. we don't look at the balance sheets, we don't look at the cash flow. we just look, is this idea that we could pitch to someone else and get 10x with it, if we think this is something we can sell, then we're all in. and that level of due diligence is just absurd

it's the wrong way to invest it always has been, it always will be for these venture capitalists. they roll the dice and that's how they want to do it but i don't look at that as a reasonable way that anybody should invest. you should invest for value for the long term. you should look at concrete things like a balance sheet, like cash flow, a product, a service. >> what i'm saying is, you get the terms sheet, 12 hours to sign the terms sheet, sometimes you get 14 days after to maybe look at some stuff over, it just -- the whole business model is completely different than what i think maybe the public understands it to be >> i don't know that's going to factor into the s.e.c.'s calculus i agree with you that this model is different but that's how hay roll. it's a matter of, can i take this in whatever length of time i need, three years, five years, whatever can i get 10 cx out of it. from the s.e.c.'s perspective,

these are investors like anyone else. >> back to investors getting hosed, though, in this whole situation. this does concern the s.e.c. you mentioned a long laundry list of the protections that did not exist when it came to oversight for ftx. what agency, who should be ashamed that we are in the situation where customers have lost their money and have no claims on anything coming out in bankruptcy >> wait a minute, melissa, as far as being ashamed, look at what the s.e.c. has done i'm an s.e.c. critic i worked at the s.e.c. for almost 20 years -- >> was this completely just not their fault? shouldn't they be -- somebody should be protecting investors >> let's look at what the s.e.c. has done they brought over 120 cases in the area of crypto they've won every single one of them they stopped initial coin offerings. they stopped lending programs. they stopped simple agreements for future tokens. they stopped coinbase from doing a lending program before they got started. they stopped bitcoin spot etf

which would have caused extraordinary damage and they're going to be more aggressive when it comes to these crypto intermediaries. gary gensler, the enforcement director, and david hirsch the head of the crypto unit have all said that these crypto intermediaries need to get into compliance and they keep saying the same line over and over. the runway is getting shorter. >> john, what do you make of the dinners and the meetings and the like with gary gensler, with the general counsel who is leaving the s.e.c. is that -- it doesn't look good. it's worse than that it's better than that. you want them to have relationships. you don't -- i can see all sides. i'm curious where you land >> sure. i'll tell you exactly where i land, i would be shocked if they didn't have meetings with all of these people we used to routinely call in all of the general counsels of all

the brokerage firms and sit down with them and ask them what doing right and wrong, what they thought we were screwing up. it's important that sort of outreach you try not to meet to fraudsters -- >> what about the dinner piece does it matter >> no. >> i've had meetings with all sorts of people over dinners and meals and all sorts of things. >> i never did that. i never went to dinner with any of these entities. and there's a fine line because you're in the industry but i don't like that. i like to keep the meetings official but i don't think these are impeachable offenses they might be bad judgment but, you know, if -- the fact that gary gensler, if he hasn't met with sam bankman-fried, i would be shocked because these were big players you meet with them. >> we're up against a hard break. we want to thank you for joining us and offering your insight and we look forward to talking to you a lot more as this progresses >> thanks, andrew. >> thank you. still to come this morning,

was the christmas meltdown at southwest airlines the satcatalt that will lead to a u.s. passenger bill of rights we'll speak with a leading advocate of that position. stay tuned you're watching "squawk box" which this is cnbc >> announcer: time now for today's aflac trivia question. how heavy are this year's ws numerals on the times square new year's eve ball? the answer when cnbc "squawk box" continues 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.

>> announcer: now the answer to today's aflac trivia question. how heavy are this year's numerals on the times square new year's eve ball? the answer, the four numerals weigh a total of 1,160 pounds. the zero is the heaviest at 380 pounds the two 2s are 250 pounds each and the 3 is 280 pounds. coming up, what it means for house gop priorities next year if george santos does not take office he was caught lying about his resume and his religion. it's a conversation you do not want tmio ss and it's next when "squawk box" returns

♪ new york prosecutors now looking into congressman-elect george santos after the republican admitted to lying about his work, educational and

religious background a resignation could narrow representative kevin mccarthy's already tight margin in his run for speaker of the house joining us right now with more on this and the potential impact on the gop agenda is judd greg he's governor of new hampshire heidi heitkamp is a former senator of north dakota and a board member of one country project. welcome to both of you look, it's not new to hear that a politician has been bolstering their resume but i think the examples in this case or more extreme than you hear, especially from somebody who is just getting elected and going into it. what do you think about the situation? >> well, i think it's an opportunity for mr. mccarthy to show some leadership i think if there's one thing that this nation needs right now, it's leaders. at least in the republican party, stand up for fiscal responsibility, stand up for

strong ethics and have a good moral compass. i think he should call the gentleman in and say, listen, time to resign, time to move on. it would give definition to his leadership as speaker. and i think it would give the american people a feeling, well, finally we have somebody who is going to be running a major element of our government who has a strong moral compass and hopefully will lead fiscally responsible. >> do you think that's likely? we haven't heard much from him yet? >> it doesn't appear it is the margin is obviously small and i'm sure they're worried about that but how you become speaker i think is more important. and if you become speaker by tolerating this type of ethical lapse, this type of moral lapse, you're not going to give the country the type of leadership it needs i think he takes the risk myself it would be a profile in courage. it's a risk worth taking

and the american people are thu thirsting for it we don't have any leaders right now. henry kissinger said that. >> tulsi gabbard took him apart, congressman-elect santos she pointed out before she started that these sort of resume brandishing things are not unique to santos, they're not unique to anybody. she talked about some brandishing that's been done, lies that have been told from democrats who are out there too. but this is incredibly extreme claiming that he has jewish heritage and saying, i meant jew-ish with a hyphen between. it's surprising to not see more backlash. >> the democratic party wasn't able to give any traction. democratic party knew that this was true and that he was

embel embellishing his resume had questions to be answered but the most significant part isn't lying about goldman sachs or city bank it's where did the $700,000 come from that's a question that i could not agree with the governor more this is a pivotal moment for the gop house leadership how they respond is going to define that speakership and define that leadership here's a chance to move away from chaos, corruption and say we will not abide by this in our caucus you know, if they don't do that, i will tell you, they will continue to be defined in their leadership by chaos, by corruption, by an inability to control their own members, even though their members do horrific things >> but you know what, this is not just the republicans i think the reason the democrats weren't able to get any traction is because they've got enough of a pox on their own house they say, yeah, politicians lie,

we're used to it, because we've gotten it from both sides for so long and it's ridiculous if there's going to be a cleanup, don't you think everybody needs to take a close look at their house and say hold on, we need to call out anybody who has been lying about stuff >> i absolutely agree, becky but the problem is, this has stepped over a line from embellishment on whether you were top in your class herschel walker was another great example of a resume that just was not true. but yet it was exposed in the media and people had a chance to judge whether that was a defining or a disqualifying factor and so is to me, if there is consequences for this young man, than that will send a message to every candidate coming into the next election that you better be careful with your resume because there's going to be consequences if there aren't consequences, we have a continuation of the herschel walker/donald trump/santos, everything goes.

and it doesn't matter as long as i have the right initial behind my name. >> judd? >> well , i'm not going to throw rocks at the other house but the other house is a glass house and there have been a lot of folks who unfortunately have done things which were inappropriate and were not held accountable for them but this is our party. we stand for something we stood for fiscal responsibility which we haven't been doing a very good job on. another is that we have a strong moral compass and a view of the world that it says, our way of life, our democracy is important and we should be leaders and that's been -- i have to agree with heidi this is just another stick on that pile. but there is such an opportunity here for people in our party who are the leaders today to step up and say, we're going to be the party that we claim we are which is the party of ethics, the

party of moral and is the parties of fiscal responsibility it's almost a no-brainer if i ever -- if i were kevin mccarthy this is an opportunity to give himself some real definition and direction and give the country something to be proud of >> i'm curious where you think voters should fit in and voters specifically who elected, you know, representative-elect santos into office the wool was pulled over their eyes they might have elected him anyway maybe not. but for them where do they stand in all of this they have no standing, i guess >> they don't have any way to remove him from office this is going to have to be done by someone like kevin mccarthy i don't know that he could remove him from office until we find that there's a conviction and i think the likely conviction isn't embellishing a resume if that becomes a fraud claim of

ashes, let me tell you, there's a lot of politicians in trouble probably on both sides of the aisle. where did the $700,000 that he lent to his own campaign and so these are questions that need to be resolved and in the meantime, these folks in the third district of new york will go unrepresented by there's no way this person can be an effective legislator. >> it was a rhetorical question. but it's to underscore the fact that they have no say in all of this they were lied to. they cast a vote based on false information and they will go without representation for awhile it seems like a real tragedy for them that's all >> absolutely. and it is important, that congressional office can help with immigration problems, it can help with passport problems. it is important that you -- someone on the ground, not just for those big issues, but for the constituent services that they provide, especially a state like new york where you're not

going to get the attention of a senator, but you expect your district to respond. >> i'm really bothered by the idea that embellishment is okay. i get that this guy is a crazy liar i saw on twitter where he was claiming his mom died in september 11th and then he claimed later that she died on december 23rd. i get that that's out there but i think it's really wrong to say that we're going to look away at things that we don't consider to be over the line everybody's line is different on this what do you think about elizabeth warren saying that she had native american heritage and using that to an advantage >> i believe that people should not embellish resumes. and i worked very, very hard when i ran to make sure that i didn't say i was top of my class in law school. this is all the part of the accountability system during an election what i am saying, becky, is does it give rise to a level of a fraud indictment probably not but there should be political consequences for lying on a resume and we haven't seen it

for the last five years because we basically turned the other way and become so partisan and so it's time that we bring back ethical people in government and hold them accountable at the ballot point. >> becky, your point is extremely valid. one of the problems we have today, 65% of our districts today or single-party districts. there's nobody there to test the ethics or the morality of the candidates who are running because the party is not going to do it to their own candidates >> gerrymandering and redistricting. >> yeah, gerrymandering is one of the real insidious things that has affected the ability of our democracy to function well the other is social media. as a practical matter, it's an issue. it's a very big issue. >> all right i want to thank you both we'll talk about this -- >> have a great new year. >> thank you, you too. coming up, 2023 set to be a big year for the housing market and not necessarily in a good way. after the break, going to talk

rates and volatile prices with diana olick. "squawk box" coming right back

to the housing market which is ending the year on a low note some low numbers, diana olick

joins us now with more on the housing pain and what could be ahead in 2023. >> if this week's data is any indication of what the new year will bring for housing, then the market may be in for a rough winter let's start with mortgage rates which had been easing up recently off the highs at the end of october when the 30-year fixed flew well. it started climbing again and shot up in just the last week to now 6 1/2. that won't help going forward and the drop in november apparently didn't help pending sales much those sales which are signed contracts dropped a wider than expected 4% month to month and were down 37.8% year over year to the lowest reading since the realtors started this survey in 2001 with the exception of one month at the start of the pandemic now, buyers were unmoved by lower rates in november and by the drop in home prices. that didn't help either. prices nationally in october

fell for the fourth straight month. prices were still just over 9% higher than october of last year but that annual gain has been shrinking very quickly and is now half of what it was in june. it is likely to be a very slow january in the market, slower than usual, given that inventory is low and potential sellers seem to be, melissa, shall i say, frozen. >> appropriate thanks up next, the latest on the chaos at southwest airlines and a pu f ashor passenger bill of rights stay tuned, "squawk box" will be right back

more pain for southwest airlines the carrier canceling close to 60% of its flights already today. we'll let you know whether it could lead to long term or lasting changes. here to talk about the push for a passenger bill of rights paul hudson. president of flyersrights.org. we're all wondering what comes next, whether congress will act. maybe most importantly, if congress were to act in some way, what it should or would look like. >> well, congress, of course, needs to act on a major legislative things, but much can be done by the d.o.t., which is the sole regulator of the airlines the latest situation with southwest is so bad that it's

really a national crisis they're the largest airlines -- >> in terms of what a bill could or should look like, what kind of compensation should be offered? what those costs ultimately mean for both customers, whether they get passed on to customers, for the margins of the businesses. >> well, one thing is we need to have a delayed compensation similar to what europe has and actually what all the international flights involve delay compensation because there is no delay compensation domestically and it actually is more profitable to give bad service and even cancel a flight than it is to operate it in these situations. >> what have you seen in terms of, you know, people talk about margins and what it does for the businesses themselves, but also costs to customers when you look at the flights in europe, are they more expensive, less expensive >> you know, they used to be more expensive but with the low

cost airlines coming in there, actually a lot of them are less and our domestic flight costs have gone up somewhere between 25 and 40% in the last year or so >> and that's a function of just the concentration that we've seen, so if you were to quickly put something in place, what else would you have to do from a competitive standpoint to bring in low cost competitors to control prices i don't want to say control prices but pressure prices lower. >> for competition we have only four airlines that control 80% of the traffic domestically. we need to encourage more entries. that means we have to provide slots for them at the major airports they don't have anything like common gates what happens is major airlines are able to lock up slots and gates and even if they don't use them so there's a whole variety of things like that. the our proposal for a bill of

rights involves 30 or 40 proposals, about 1/4 of them require legislation but most of the rest are simply rule making operations. >> paul, one of the things the airlines say, look, you want a healthy airlines industry in the united states. for many years we did not have a healthy industry insofar as a number of airlines, virtually all of them went bankrupt or filed for chapter 11 along the way. the question is, is there a way to do that when you look at the airlines in europe, whether you believe they are strong or stronger and are able to pay these fees and the like >> well, you have to have a level playing field. the if you're an executive for an airline today and you want to have reasonable reserves, if you want to have good customer service, that costs money. and you're going to be at a competitive disadvantage, but if there is a base level, which is

required, then everyone starts at the same level. service will improve the overall problem i think with u.s. carriers is the deregulation model needs to be revisited. the idea that was we will free up airlines to compete and provide better service no one argues that service has gotten better. it used to be the prices got better and that's out the window now, too >> you know, the debate and the pushback you hear from the airlines goes again to what that ultimate cost would be and i'm curious if you've donnie math on that >> the argument of doing this is we have a dysfunctional system. >> paul, we're on the same page. i'm trying to figure out how

realistic it is and what kind of pushback you're going to get you've been getting pushback on these proposals for years. >> or to glom on andrew, i mean, how much are you willing to pay for that ticket in order for you to have the guarantee of being refunded for a delay greater than three hours, which is what pete buttigieg is proposing in the august proposal for the airlines i mean, 20% more will passengers pay 20% more for the ticket for all of these guarantees >> you know, there's two ways airlines make money. one is of course on the margin but the other is the amount of customers they have. and under the current dysfunctional system, there's a large proportion of the population that won't fly and if they were to make flying better, improve customer service, we think they would probably get a 30, 40% increase. >> we have to continue this conversation i disagree in part because

there's not enough capacity as it is. making it up on volume doesn't make sense right now. >> too crowded. >> it's too crowded. >> yogi berra. >> if the markets really wanted it, then the airlines would do it right? >> want to thank you we do want to continue this debate i promise we will. we're up against a hard break. >> airline tickets are up 25 to 40% because nobody was flying during covid we should compare prices to what they were in 2000, not last year or two years ago. >> let's see what happens over the next year or two as the economy seems to go through a challenge. coming up, if 2022 was the year of the meta verse bubble and it popped, we'll see whether it did, what's in store for '23? that story and more. a big hour ahead right here on "squawk box. can have everything you need to streamline your shipping, returns, and product storage, so you can focus on growing your business. because when we work together, the future is

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good morning, stock futures climbing more troubles mounting for southwest. the airlines canceling another 2300 flights today details straight ahead plus, the next battle for lawmakers. the debt ceiling we'll talk to brendan royale the final hour of "squawk box" begins right now

good morning and welcome to "squawk box" right here on cnbc. we're live at the nasdaq market site take a look at u.s. equity futures. an hour and a half to go dow open 71 points s&p 500 up 15. the nasdaq open 75 points higher let's show you treasury yields that always impacts the world of equities two year is up at 4.361. troubles continue to mount for southwest airlines they canceled 2500 flights yesterday and has already cut another 2300 flights this morning. that is 58% of its schedule. the stock has suffered greatly this morning it's up by 11%.

that comes up to the steep decline that you see over the last couple of weeks here. in other travel news, the united states would require a negative covid test for travelers arriving from main land china, hong kong and macao beginning on january 5th. officials said they are deeply concerned about china's lack of transparency about its outbreak there and about its failure to track and sequence in a company wide email musk told staffers not to be too bothered by what he called stock market craziness that comment comes as tesla stock is about to have the worst month, worst quarter and worst year on record. let's get back to the trading day ahead. mike santoli joins us now. seems like a quiet day, mike it seemed like that yesterday and look what happened during the day. >> no, exactly definitely some opportunity for

air pockets. it's a twitchy market but still shy of risk. still defensive leadership we've been bumping around the s&p 500 level to 3800 for a couple of weeks. that's the down 20% level. a lot of folks saying if this faulters you want to look back to 100 points from here as the early november lows in the s&p 500. that would be the area to be rescued from the october lows. there's been enough towards safer and better performing sectors that the overall market has not buckled even though the big growth stocks. apple, the tech sector equally weighted what i think is important to recognize is when everybody was excited and it was very much a high momentum bull market, apple in orange here was a laggard it doesn't necessarily lead strong markets what it did do for most of this year is retain more of its

value, outperforming the broad market and the rest of the tech sector a lot in fact, a couple of times this year it was 15% -- percentage points ahead of the s&p 500. now it has faultered they're coming for the stuff that seemed like it was stable still has a premium multiple it has not great growth output sort of parts of the market that still have managed to hold that better that would be dividend stocks. this is a two-year look at the sort of very much a flip of the switch a year ago in january of 2022 where you see the momentum etf obviously leading the way in an up market and it's done very little since then. in fact, it's been more or less stuck with the overall s&p 500 but dividend stocks right here, this is about 100 higher dividend stocks, very little tech certainly some utilities, financials and consumer and energy names that has managed to hold up 3.5%

dividend yield not to say we go into next year and there are the same i themes. there are parts of the market that resist. >> getting back to apple, when they come for the generals you know the market is serious you mentioned the early november levels being down could be another 100 points that's the recent peak on 10-year yields >> yes. >> when the yields come off at 3.4. that didn't do much for tech stocks here we are back at 3.88 tech stocks are faultering what we've seen is the biggest headwind but it's a headwind and it doesn't help tech at all. there's nothing that helps tech even with the dollar decline on top of that. >> that is right i think that that's a good lesson i think we overly got fixated on yields if you just look at the 2023 earnings forecast for a lot of the megacap tech stock, amazon, nvidia, go down the line,

they're all down dramatically. they don't have the growth that was going to justify where they are trading. now you mention they come for the big generals, the ones people were hiding in, that's true that shows you there is a market that's out there to punish complacency. on the other hand, that's typically something that happens when the market is attempting to see if, in fact, it can find some kind of a bottom. >> silver lining mike, thanks mike santoli. meantime, starbucks announcing some changes to its loyalty program. my iced coffee for this >> as a prop. >> it's a big one. my second one of the day. starting in february customers are going to have to accumulate do you double the rewards stars so all of these coffees we're getting, you have to double up on hand crafted beverages or hot breakfast items will require 200 stars. that's up from 150, folks. lunch, sandwiches, salads or protein boxes are going to

require 300 stars. up from 200. not all bad news for customers who like to redeem their points for packaged coffee, only have to cash in 300 stars. that's down from 400 >> this is like double inflation. you go into starbucks. you're paying more for that coffee and you have to pay more on top of it for the points. >> such is life. >> isn't that a little unfair? >> such is life. the real question is, we have some very wonderful people who grab us our coffee. >> i want to know who's getting those points. >> because you want to take that from them, too that's the tip. >> no, they deserve it for schlepping two large coffees to you every morning. >> i feel terrible now the inflation of these stars. are they using the stars i don't know these things. >> i hope so the. >> i hope they use it to buy whatever, chock ka mocha, frappe, and a lunch sandwich. >> talking about inflation in america. new details from the nation's

largest egg producer the company reported an average selling price of $2.71 in the most recent quarter. that is nearly double the price from a year ago. the company has largely avoided the outbreak of bird flu but it is seeing enormous demand, even more than earlier in the pandemic premium specialty eggs have been garnering record demand. that came not just because of it's what consumers wanted but boosted in part due to new mandates for cage free eggs, better on a cruelty front but, yes, it does cost. this is an issue you can see cal-maine foods, the stock down 4%. when we come back, lawmakers agreed to an omnibus spending bill to avert a shutdown the next big fight for lawmakers is a fight over the debt ceiling. we'll talk to congressman brendan boyle next

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congress passed a 1$1.7 billion spending bill. another battle set for 2023 will be over raising the debt ceiling. joining us to talk about government spending going into the new year is pennsylvania congressman brendan boyle. he is the incoming ranking member of the house budget committee. congressman, thank you for being here. >> my pleasure >> i wouldask you about your priorities but as the ranking member i think you're going to be following the priorities that are set by the republicans coming in. how do you see things shaping up in terms of spending, the budget, where the battles will lie? >> yes and no. republicans come in with the 2022-2023 majority which is the exact same majority we democrats had for the last several years however, i've also served under republican majority before, in fact much larger ones and what tended to happen whether it was john boehner as speaker or paul ryan then, because of the freedom caucus never getting to

yes on anything, almost invariably republican leadership would need democratic votes whether it was annual appropriations, raising the debt ceiling, national defense act. so, in fact, we ended up then having a lot of leverage in the minority i would expect the same thing would happen now that republicans return with an even lower majority than they had in 2014-2015. >> how would you plan to use your leverage? >> practical common sense measures the last few years have been traumatic in so many ways. looking at this strictly economically and in terms of the markets, we had a dramatic recession induced by the pandemic we in the united states have come out of that quicker than anybe where else on earth. however, we have this inflation

issue. no, it has not been transitory as jay powell and others predicted it would be about a year ago we want to make sure that this continues and a record low unemployment when i say record low, literally tying a 50-year record in terms of the number of jobs added. at the same time though as the fed is raising rates, we have to be concerned that we don't inadvertently fight the last war and end up with a recession in 2023 so i look at my job as the incoming lead democrat on the budget committee pushing for common sense measures that are good for business, good for workers and good for the u.s. economy. >> congressman, i know in the past you have said that you want to make sure republicans don't go after social security and medicaid -- medicare, that you want to protect those programs i know in the past you have also tried to pass legislation that would prevent anybody from holding things up over the debt

ceiling. you don't even think we should be voting on a debt ceiling to begin with, you think that should be taken out. would you use your vote when it comes to the republicans trying to pass a debt ceiling would you use your vote and say i'm not going to give it to you on this debt ceiling i'll let the debt ceiling come through unless you promise not to attack social security and medicare >> so, first, we are, as i know you know, we're the only country on earth that even has this antiquated concept of a debt ceiling. a lot of people think it was created in order to force the united states todeal with its debt issue that's actually not the case at all. that's a fairy tale. a bit of an accident of history that we have such a thing as the debt ceiling i'm deeply concerned that the republican majority would do exactly what many of them have been saying including presumptive incomes house speaker kevin mccarthy, that they will threaten to not raise the debt ceiling at all. they came very close in august of 2011.

the it cost our bond rating. it cost us an extra few billion dollars in borrowing costs and really had the world on edge we need to make sure that we avoid that disaster. that is dysfunction. it a cheers nothing. we need to step back from the brink. at some point in the first quarter secretary yellen will have to use extraordinary measures because we'll be right up against the debt ceiling and then at some point over the summer those measures will be exhausted. so this is something that in my view it's the responsible thing that we tackle now as we vote. >> i agree with you. i don't think the debt ceiling should be something either side should hold them for ransom over does that mean you will never hold your vote for a debt ceiling back and ask the republicans when they're in charge for something as a result you said you're going to hold your vote for leverage >> right so i -- i practice what i preach when i was in the minority before and donald trump was

president and there was a clean vote on the debt ceiling, i gave it in my view, it's the responsible thing. i have a measure with senator durbin over in the senate. it would give them the ability to have the majority and have a say. i would like to see it passed in the new year and finally end the dysfunction once and for all that creates doubts in the market and business that is completely unnecessary and achieve nothing. >> so i know that social security and medicare are very important for you. you've said you don't want to privatize any of these funds you want to make sure they don't raise the age for retirement how do you negotiate that with the republicans? is that something you've started discussions or started thinking and planning about >> yeah, so first i'm glad and believe this should be completely separate from the

conversation of the debt ceiling. so that's number one number two, i have always opposed raising the social security retirement age. we've now just had three, four years in a row in which life expectancy in the united states has declined a very worrying measure on where we are in terms of quality of life in the united states. we also have to recognize that, you know, there's a real difference as someone who's in a white collar profession, my father was in a blue collar profession for more than 50 years working in a warehouse and working as a janitor. that's a different toll on the body than me who's mostly an office worker except for when i'm in the district running around a million different places so i believe raising the social security retirement age would be a great mistake. i've always opposed that the good news is the social security trust fund is fully funded until about the year 2035, then we start to deal with real funding shortfalls.

i believe more revenue is needed in the system and that ultimately that is something we're going to have to do. >> congressman boyle, i want to thank you for your time. >> all right thank you. coming up after the break, your playbook for the new year we're going to talk about what happens to major streaming players, yup, in the event of a recession. how many of these streaming subscriptions are we going to have in the end? a reminder you get the best of "squawk box" on "squawk pod. listen any time. we are coming right back

welcome back to "squawk box" this morning media and streaming giants, they have seen their stocks slammed netflix down 54% disney and paramount down 46%. our parent company comcast down 31%. what does that mean and what does the next year hold for streamers? julia boorstin is here live from los angeles. what do you think, julia what have we got >> well, andrew, so many questions. the big question is what kind of reckoning a potential recession will bring to streamers after a year in which the rules of the streaming wars totally changed going into 2023 the focus is on average revenue per user and profitability. that's replaced the chase for subscriber games with ballooning content spend. big fears, morgan stanley warns

streaming growth is slowing projecting 2023 net additions at roughly half the 2021 pace projecting consolidation of companies and services and cost rationalization. speaking of consolidation, it's worth noting warner brothers discoveries combined service is set to launch this spring. needham warns that netflix peak subscribers might be behind it because turn is rising for all streaming platforms. so what is it going to take to stem that turn, the rate in which people drop their services the focus shifts to ad supported lower cost options such as netflix and disney+ launched the past few months. also drawing a spotlight, free ad supported channels such as pluto, roku or tubi owned by fokts. my sources are asking when big streamers such as netflix or disney+ might launch their own free ad supported versions

an original morning consult for cnbc said more than half are interested in switching their streaming but millennials were most interested in discounted options. the majority of consumers are expecting to spend the same amount on buying and spending this year. so we'll have to see how a downturn and how severe it is ends up impacting all of that entertainment spending. >> julia, do we have any sense right now of what the sort of average american household -- how many of these subscriptions they have and how many people think they ultimately will have? i got a new tv, julia, so i was going to put the password in to all of the different subscriptions and i realized, i have like more than half a dozen of these things. >> more than half a dozen? that's definitely more than the average. i have to go back and check the numbers. the most recent is five.

that five subscriptions could be a mix of ad supported and ad free a service like netflix or peacock which you get access through your paid tv provider. somewhere between three and five the number people coming up with to me, people will end up having three services maybe those are a combination of some of the services we know about now. there's also a question of whether you get hulu with live tv maybe that's how you access tv that's your tv bundle and you get on demand content with it. there is this assumption people will be pairing back the number of services they pay for what we found in our morning consult pole is people are going to be trading down but maybe not so inclined to be slashing the number of services they pay for. one thing i'm really curious to watch, andrew, is the box office in past recessions the box office has been incredibly resilient and has benefitted

because going to the movies has been seen as such a cost-efficient way to entertain yourself the question now is is that going to be very different because people have so many different streaming options at home. >> i was just counting it up i have netflix, peacock, hbo, show time, hulu, paramount, disney+, and youtube tv. >> you've got them all you have them all, andrew. >> way too many. >> too many. >> how much do youwatch? how many hours of tv does your household watch? >> not enough to testify what was going on. >> which one do you cut? >> someone's got -- >> we'll find out after the break. >> julia boorstin in l.a thanks, happy holidays. after the break, breaking economic data. minutes away from new bljoess claims the gain of 18 on the s&p. 83 on the nasdaq "squawk box" will be right back.

welcome back to "squawk box. rick santelli live at cme hq with breaking news initial claims for the week of december 24th, 225,000 exactly as expected. and at least for the moment, 216,000 in the rear-view mirror

stands and if we look at continuing claims, they leaped to 1,710,000 1,710,000. first time over 1.7 going to the way back machine since the first week in february of 2022 when it was 1,714,000. so this is where we're comping to last week comped to that as well last week 1,672,000 upgrade to 1,669,000. now the issue here is that initial claims have been more tame continuing claims moving up is probably something the fed would welcome even though many analysts and economists would not. having that rise will potentially take some pressure off the labor market in the eyes of the federal reserve the labor market always late initial claims and continuing claims a bit different than

nonfarm payrolls this is a much better gauge regarding labor. we look at interest rates. they have moved higher since that number was released by a basis point in tens and do remember the s&p 500 and the dow futures, which are currently open well, we see that they avoided making new weekly lows, especially the dow futures they came very close they haven't moved much on this number one thing we want to point out, everybody is talking about the dollar index going to one end. it's still up 8.5% or so and it could still in many ways present issues for large international companies. much depends on the ecb and the track of the central bank which reflects the bulk. back to you. >> rick, thank you central bank determining the policy steve liesman joins us with more

on the data we just received things you want to point out here >> just real quick, becky. we had hoped that the continuing claims number went sideways last week looks like continuing in the upward trend want to be careful with the data because it is holiday season, holiday hirings and firings distorts the data. i think rick is absolutely right. the fed welcomed some increase in continuing claims that's the longer term slack in context, this 1.7, 1 million number, it's the height of this cycle going back to, say, the pandemic before that if you had 1.7 in the economy, you were doing pretty well. so it's not -- it's like all the other jobs data. probably loosening up but loosening up from a very low level. so hopefully next year will not bring very much unemployment that's the hope right now is that maybe we get off with this

adjustment period, if you might, for a euphemism there, with only a 1% rise in the unemployment rate things do seem to be loosening up judged pi by this data here. >> so many technology layoffs, those are things that probably haven't shown up in the numbers. those were announcements of layoffs coming a lot of people had benefits that paid them through when do you think we see that through? >> becky, it's kind of funny not funny. layoffs are never funny. the reason why everybody loves tech and why tech is so highly valued is because they don't employ a lot of meet the people and they make boat loads of money. i saw a statistic once that said if you laid off the entire tech industry you might end up with something like a 0.3% increase in the unemployment rate these jobs will show up in the unemployment rate to some extent but first of all we have that story we talked about the other day, which is these tech people

seem to be losing their jobs but finding them relatively quickly. we'll see if that goes on. the other thing, just not a lot of employment out there. if you look at like the revenue per employee in some of these tech companies, they're absolutely off the charts. that's one of the reasons why they're relatively highly valued companies. >> hey, rick >> yes >> i just want a chance to put you on camera because i know your shot was frozen before. i want to see your beautiful face >> you know, i find this tech move -- this tech move very, very interesting and i'd like to see what you and steve think it's not so much that everybody keeps saying the dollar is overperforming haven't we just made the plane feel a whole lot more even with regards to how the technology has been too hot over the last several years? and i think in many ways the technology layoffs you're discussing are more about kind of a canary in the kmoel mind

for the broader ee con mif than actual big jobs. i wonder what everyone's thoughts are the galdgets we did not buy >> i think that's a valid point. technology was riding the wave, cresting the wave of all of that free money that was out there. as you start to rein that in, that's the first thing that gets pulled back but that is just the beginning of where you see the tightening impact. i think it's just, as you said, the canary in the coal mine. steve, what do you think >> i think tech has been a place of excess fueled by monetary policy. >> right. >> i think when you look at the broad spectrum of industries,

the idea that you could get people to come to work for shares in a company that made no money and that was a big part of the whole salary, and that they were able to get financing and not really produce anything, i think a shakeout there, i understand it's very difficult for people who started those companies, very difficult for those who lose their obs, but think it's sort of healthy for the economy. i think some of the worst excesses from loose monetary policy have shown up in the tech sector and let's get back to -- you know, like when a car company has trouble getting an engineer because the engineer was given shares in a startup, you know, that is a good thing when that person then goes to work for a company that produces them >> right steve, rick, thank you and, rick, like i said, good to get to see your face you, too, steve. >> thank you. >> for more let's bring in nancy

davis, chief investment officer with quadratic what is your take on some of the moves we've seen in the bond market of late of the move we saw from 3.4 up to 3.9 in pretty short order on the so-year yield? >> yeah, definitely. the u.s. yield curve is one of the most inverted it's ever been, even lower than it was in the late '80s. so i think as the market goes potentially, you know, this is one of the most widely predicted recessions we've ever had at least in my career history i think the yield curve could really normalize in a more stable environment because so many people are expecting, they're hiding in 10-year bonds. that would help normalize the yield curve.

>> with every major central bank now moving towards higher rates, including finally japan, nancy, i'm wondering if we should brace ourselves for more up side on the 10-year yield and what levels you might expect. >> well, i think japan widening the band on yield curve control is a really positive step. the market was not expecting that until after koroda stepped down it happened in the month of december it is another sign that we could see more normal bond markets right now is not normal where you can get paid more yield to own a t-bill than you can long-dated treasury. so i think japan easing off and widening the ban on the yield curve is a healthy sign. at the end of the day lenders lend money and when long-term interest rates are lower than short-term interest rates, there's not a big incentive to extend credit. so it's always a chicken or egg which comes first.

does the inverted yield curve predict the recession or does it cause the recession? no one really knows for sure but i do think it's a healthy sign than japan has at least moved an inch closer to -- is it a good predictor? that's the conversation i was having with mark zandi the other night. he thinks the stock market is a better indicator he's an economist. you rarely hear that that the bond market is distorted to the point where you cannot take what it is telegraphing to heart too much >> there is a lot of leverage in the bond market. we saw that with the u.k., with the lvi managers they're using leverage because we've been in -- really since the financial crisis, a period of such low yields for way too long that investors have added

more risk in their bond portfolios and used those government bonds as collateral for other risky investments. it's definitely -- almost like pulling a string or piece of yarn on a wesweater and we don't want that to unravel and there is move to illiquid investments whether it's private equity, all of these asset classes do not have a lot of liquidity. it's probably going to mean more liquidity moves, more bigger volatility moves in the public markets like government bonds around the world >> on the inflation front, nancy, i'm wondering what your take is on the impact of china on inflation overall i mean, china reopening, it's been a strange reopening because it's being -- you know, i don't want to say -- it's being p

pressured. the economy is not open. with all of the covid going through the system it could be inflationary and cause supply chain snarls how do you view this in terms of the short term and the long term >> i do see it as a positive people are people no matter what country or nationality you are if you remember, when the u.s. opened up, everybody was so eager to get on a plane, they have experiences we'll see a similar kind of boom in terms of spending, travel, getting out of the house i mean, no human wants to be, you know, stuck in their apartment or home for years on end. i do think it is a really positive sign to be opening up i think we all have to learn how to live with covid it's obviously a very -- you know, there are a lot of bad pulmonary diseases going around, and i think it's just one of them

we've lived with the cold for many years, the flu. i think people just need to get on with it and try to carry on as best they can i think it's positive the economy is opening up. it was interesting that the u.s. has put in that travel ban about testing for covid for travelers coming from mainland china that was a surprise to me in today's environment. >> nancy, always great to get your take. thank you. nancy davis at quadratic futures, becky pre-market session highs we strengthened on the back of that inline data interestingly here nasdaq futures up by 130 s&p futures up by 30 points as well we'll continue to track this. when we come back though, shares of facebook parent meta down 5% for the year so far. we'll talk fwha the company side

and tonight don't miss a cnbc special, taking stock 2023 that's coming up at 6 p.m. eastern tonight. "squawk box" will be right back.

shares of facebook parent meta have been pummelled this year steve kovak joins us with the

company's future without that magic ball that tells us what's coming. >> let's break down the year in meta verse you have to start with meta because that's the poster child. just a year ago mark zuckerberg bet the entire company on the meta verse concept today shares of meta down 65% on the year, in part because investors are unhappy with the tens of billions of dollars lost trying to build an experiment that may not pay off for a decade if it ever does at all. the internet had a good chuckle over how bad meta's vision for the meta verse is. remember zuckerberg's avatar selfie i played video games 20 years ago that looked better than they are now. there are signs consumer interest is following. spending on vr headsets fell 2% to a little over $1 billion. to put that in perspective, apple sells about $200 billion worth of iphones every year.

this is despite market leader meta launching a new $1500 headset to meta quest pro. the industry is not giving up. in february sony will start selling the new vr rig for and then there's apple finally expected to enter the space with the long rumored headset apple will show a compelling use case rivaling what it has done so far if that doesn't happen, the meta verse may end before it takes off. >> what did you think of it? you've checked this out. i've seen it from a distance i think it's a little clunky what did you think >> a little clunky is being nice, i would say. andrew and i had the same demo. >> and we disagreed vehemently vehemently about the situation >> yeah. >> i don't think -- by the way,

i think it's clunky today. >> yes. >> i don't think it's in great shape today. >> right. >> but i look at it like i look at any kind of piece of technology and i say, what could this be in two, three, four, five years and i think it could be an unbelievable experience. that's not to say you're going to live in the meta verse. 10 years ago, 15 years ago, dr. eric schmidt, the battery on this thing, it only lasts three hours. he would say, you know what, give it time if you know where it's going to go -- >> not a lot of them go that way. all of the technology things we've given a shot to and they've fallen by the way side maybe it's the meta verse. >> somebody else may do it that to me is a possibility, that somebody else not meta pulls it off. >> that's a possibility. >> the idea this whole concept is somehow a broken concept, i'm not willing to give up hope yet. >> it's not brokin but unproven.

they're selling this today, not in ten years, today. they're betting the company on this today not in ten years, today. >> yeah. well, okay, maybe i'm a polyana. i will also say you look at google, their stock is down 40% this year. >> right. >> facebook more, down 65%. >> if i wa >> if i was meta, i'd take a 40% drop right now sign me up >> the whole idea that the entire company has bet on meta is not even true >> what did they name the company, andrew? >> i get it. look, we'll see. >> in the early days, also i mean, it seems like the investment case for the metaverse may be on the corporate level, at least immediately. until it gets to be a better experience for the consumer. all right, i can't see why i want to be with a headset, but i can see why you want to train somebody, like a doctor or a pilot on a headset >> that's happening today. microsoft, their hololens, they have people -- heinz ketchup,

your ketchup is being made with help of the metaverse. >> that can penetrate corporate america more >> i also, again, i don't know if meta will be the winner of this particular -- but in terms of the technology, my sense, when i was in there, is if you can get some of the glitch ness out, which i am a believer between processing speed, broadband and everything else, you'll get there that experience is so much better than living on a zoom call >> and what is cool, you have memories of it you've done this too when i think back to my time testing that headset, i think of myself in the room, whereas not staring at a screen like this. i think of myself -- i remember myself in that environment that's really fundamental. >> when were you doing this? >> about a month ago, right? >> yes, about a month and a half ago. you ever play "madden" ten years ago, 15 years ago? and you see "madden" today and today, it's almost photo realistic, almost.

if i were to show you that game today, and show you the game 15 years ago, you'd go, okay. >> i think this comes back to the investment thesis for it i'm not going to argue against, like, things being fantastic down the road. i think the question is, how much they've spent on it, how much they've allocated >> it's only going to increase next year, becky, because they have to put out another of these head sets. >> the cuts are not coming from the members. >> it's coming from the core business exactly so, they're still going to spend on this they have another headset coming out next year, a cheaper, more consumer-level headset that's going to adopt some of the technologies you and i tried in the pro, bring it down to that level, but they have to spend a lot to get that thing out the door in time for the holidays next year. >> no question but the idea that somehow we won't be wearing headsets for calls and all sorts of stuff >> you can say, yes, you agree with that, but we're in a world where money is not free anymore, and even though meta makes a lot of money, it still makes a lot of money, money is not free, and

you have to be careful how you spend it >> that, i don't disagree with however, i think there's such a cynicism, not about meta, the company. there's a cynicism about the technology the whole idea of the metaverse. and that is the part where i -- >> some of it comes from the guy they hired >> why is there? why shouldn't we get a better vision from mark zuckerberg on what the metaverse is? i think a lot of investors are worried about that they have not gotten a clear vision as to exactly what this is and why you need to be spending that much money on it >> the cto of oculus walked out the door a couple weeks ago. >> they're not doing it right. >> and he believes in it and he says, look, i believe in it just like andrew does, but i don't think mark zuckerberg's path towards this is the right one. >> right >> and when he says that, you got to listen. >> that may very well be the case i'm thinking more broadly about the metaverse, the concept in general. >> interesting hey, steve, first time here in three years, which i can't believe. >> it's crazy. >> that is weird >> i know. it's bizarre >> so nice to have you in person

>> it might be the metaverse if you were in the headset, you would feel like that we're going to come on back. i need to apologize to the viewers. i missed subscribing to apple plus, and amazon prime, which gets me up to ten. and amazon prime, i just sort of, like, put into the bucket because i thought, we're all -- everybody's a prime member

welcome back to "squawk. futures moving higher after the la latest jobless claims. joining us is julie, portfolio manager and senior research analyst. thank you for that, by the way julie, nice to see you we're all trying to figure out what's supposed to happen, not just in the next three days, of course, but what's supposed to happen in '23. what do you think? >> i think looking at the balance of the year in 2023, it's hard to be very optimistic. it's true that the jobs picture looks pretty steady, but i think interest rates are playing a huge factor, and they're going to continue to play a huge factor into 2023 it's really hard to see why valuations need to be at the levels that they're at right now. we know earnings estimates need to come down

literally my preschoolteachers are asking me, when are they coming down? >> you go into cash? what are you doing >> for us, we're long-term holders, so our strategy hasn't changed over the last, i don't know, 30, 40 years it's a function of just being invested in high-quality businesses, because we don't believe that the macro forecasts are going to be that helpful and these businesses are the types that have durable earnings, and they can do well, even in difficult economic times. >>give us some examples. >> i like a business called tyler technologies i'm worried about a lot of the saas enterprise software a lot of businesses booted up on saas and my concern is that they've thought that it would be a lower total cost of ownership, and that really hasn't been the case so, i think you could see enterprise pull back on some of their saas spending. tyler is a little bit different because its customer is the government sector, municipal -- municipalities, et cetera. i think those are in better shape, and they're going to continue to spend and invest,

because they just don't even have the i.t. resources they need to use technology that's a better quality, more durable business >> what have you gotten out of in the past year >> yeah, i have less exposure to consumer discretionary i continue to be really concerned that consumers are being further constrained. we're seeing the savings rate kind of come down, and that's a place that i don't want a ton of exposure to right now. >> how do you feel about energy? >> you know, i mean, we don't typically invest in energy it's very hard to be tied to a commodity. i mean, right now, if you're invested in energy, you're tied to, i guess, putin's midlife crisis is that the -- is that, like, the best way to say it i can't imagine being just -- having my destiny tied to the output of oil. so, we don't typically invest in the energy sector. >> okay. julie, i hope our destinies are set for better paths ahead, but it sounds like maybe we'll have

to pause or take a wait on that. thank you. happy new year all right, let's get a quick final check on the markets you see the dow futures are up by about 167 points, s&p futures up by 27, the nasdaq up by 126 stick around to see what happens for the rest of the day. melissa, i want to thank you for today, for being here last night, for being here yesterday morning. >> happy new year. >> and tonight at 5:00 >> and tonight at 5:00 happy new year happy new year to all of you we'll see you back here tomorrow morning. right now, it's time for "squawk on the street. ♪ good thursday morning, and welcome to "squawk on the street," i'm morgan brennan with scott wapner and mark santelli, live from post nine at the new york stock exchange. we're looking at futures right now which are poised to open, major averages poised to open higher with the dow up 159 points s&p poised to open up 26, 27 points, and the nasdaq, the