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

outperformer, at least premarket, poised to open up 123 points, that coming after another rough day for the markets, particularly the nasdaq, particularly the tech stocks with yields this morning taking a breather as well. our road map starts with tesla snapping a seven-day losing streak as musk tells his employees to ignore the stock's volatility plus goldman-sachs ceo david s solomon saying to expect job cuts the u.s. requiring airline passengers from china to test negative before their flights. a lot to get to, but we are going to begin with tesla, trying to build on yesterday's gains, and a bounceback from a rough december ceo elon musk sending an email to tesla employees yesterday saying, "don't be too bothered by stock market craziness. guys, we know it has been stock market craziness for this name it's shed almost a third of its value, at least before yesterday, and that rally we saw just in a week, given the fact

that you have not only all the technical stuff that's going on within the broader market and where this name is concerned and issues around valuation, but also some of the fundamental focus too with things like production and waning demand and higher interest rates in focus >> easy for musk to say, right don't be bothered by the stock market craziness, though he obviously has seen better days in terms of how his own holdings have fared certainly sold a lot adam jonas today, you know, probably the best-known named analyst who follows this stock, defending it somewhat today, even though he cuts the price target, mike, down to, what, $250 from $330 he still says this derating has creating an opportunity, so he's still defending it >> absolutely defending it saying it's a broader ev issue for the first time he's expecting since the covid crisis next year, supply is going to exceed demand for evs globally

that's tough mfor any company, but he says tesla's inherent technological advantages and all the rest are going to have it consolidate its market share and its leadership now, what's interesting to me about that call -- well, first of all, about what musk said, it's your typical -- it's just your typical ceo speak, right? telling employees, focus on what you can control, you know, do what's right for the business, and the stock price will take care of itself, but it comes two months after musk said he expects tesla at some point to exceed the valuationof apple and aramco combined, which means $4 trillion. you're under $400 billion right now. 350-ish or so. tesla is now less than 1% of the s&p. it's fallen toward the 20th spot so in other words, it's the correct message, but the craziness also happened on the upside, and we should remember musk also, over the years, has said he's going to essentially go after the shorts, and they're going to have a problem, but he's also said the stock price is too high. what are we listening to

what's the message it's the reaction to the last quote. that's all it is >> it's interesting that you talk about the message, but what about the messenger? and yes, it's typical ceo speak, and you have heard a lot of other ceos say the same thing when their stocks have fallen, but some would argue that the messenger is as responsible for a big portion of the stock drop as anybody is, so i wonder what the employees who are not supposed to be bothered by the stock market craziness actually think. >> on the flip side of that is you could say the messenger has been responsible for the gangbusters gains we saw through the pandemic, for example, and even before that, even before tesla, which now, mind you, is sitting on something like $20 billion cash pile, even before it became profitable, even when it was more speculative that so many names, particularly on the resell side, piled in because of elon musk, so i think it's one of those swords that cuts both ways we don't -- i don't know that we're talking about it enough. the fact that oil has come off, and yes, it's still trading at

elevated levels, but whether there is a correlation between not just tesla by also the other ev names and kind of going back to jonas's notes, in terms of demand, and this idea that ev supply is now exceeding ev demand, because when you do see energy prices and gasoline prices start to come off a little bit more again, and when you see things like electricity outages and power outages in the midst of brutal winter storms like we've seen in the past week, i would imagine that too is going to dent ev demand and what consumers are willing to pay. >> there's no doubt that's true. on the other hand, the entire story, the halo effect over tesla for so long was, demand is insatiable at these levels so all we have to do is get supply up to where it can somehow eat into the inherent demand out there. they're talking about weekly deliveries in china, half of what was expected, like, 8,000 vehicles versus 15,000 or something like that. in jonas's note.

so, clearly, there's a hiccup just going on because of what's happening in china it's not the whole story the final point on the morgan stanley note, on adam jonas's note, is what he does to take the price target down for the non-auto parts of tesla, because to me, that was always the most contentious thing, this pie-in-the-sky idea that it was going to be valued as a network software company, as a mobility company, as a separate product that you were going to value separately if you look at what he did to the valuation implicitly, he basically cut by half the non-auto components of the price target so, he said, actually, the market's not going to pay up for this mobility product as a stand-alone, not going to capitalize at this high level and similarly with this network communications thing so, i feel like you are stretching to get a price target high enough to stay really bullish at one point and now it's like, well, the car company is worth $140, is what he's saying >> it was 80 times forward at its peak, okay now, it's closer to 18 times

the question, ultimately, is going to be, and the market is going to figure this out at some point, what is the appropriate valuation for where we are there's still -- >> earnings have come down >> take off $5 in earnings the bulls will point to that and say, there is evidence that the fundamental story is intact relative to what some of the other ev players are doing it's all a matter of what was 80 times forward appropriate for the time, given what the circumstances were, what is it next year and the following years? >> i mean, it's such a key point, the idea of cutting targets on the tech-related portion of the supply chain, because this is what we're seeing and this is, to your point, in some ways, this is like -- i don't want to call it a bull case, but it's the not-just-tesla case, which is if you look at the nasdaq or other tech-focused areas of the market and speculative areas of the market, i mean, all those valuations are coming off, and to your point, we talked about this yesterday, tesla's still

much more highly valued, even in 19 or 18 times forward earnings, than a ford or a toyota, which are at, what, 6.5, 8.5 times forward earnings so, it goes back to the tech company valuation or auto maker valuation, and by the way, if it is a tech company valuation, what's happening in tech more broadly right now in general >> maybe a little slice of both. it's going to get a piece of the tech valuation and a piece of the traditional auto maker >> by the way, this is a man, musk, who has basically said, oh, we might be doing a stock buyback. what's going to happen to that now, looking to next year? >> well, sure, but to me, that's, like, look over in this direction. every company's doing a stock buyback. >> trying anything to get the stock up >> maybe not that's also something that may not happen, so it's just one more negative pressure on the stock. there's a lot of them. >> let's turn to the broader markets now. only two trading days left for the year nasdaq coming off a 2.5-year low. s&p touching its lowest level since november

we're tryingto keep in perspective, as morgan said at the top, the nasdaq and what's happened with tech, you got the china reopening, and now the cdc with the new testing of flights arriving from china to get into the country, starting on january 5th, the flights in italy, uk and france saying they're not going to institute, at least right now, covid tests so, it's all something for the market to keep a close eye on, because all the stories we talked about with apple, tesla, it's all related >> one way or the other to china. >> it didn't help yesterday in the afternoon. there's definitely been this feeling of, let's just continue to trim back on risk if you look at cyclical stocks, underperforming in this latest bout you look at, you know, more volatile or aggressive stocks, they've been underperforming obviously, nasdaq making a new relative low versus the broader s&p 500, so those trends are -- have been pretty well in place it didn't seem to me, though, that the market was saying, oh no, we fear lockdowns, we fear massive economic disruption,

because bonds did not rally yesterday. in fact, yields were up. the 30-year was pushing 4% yields are in a little bit today, and maybe you can't always script what the multiasset response is going to be, but i still have think the market is willing to look through something like this if it doesn't seem like that last little blow that's going to knock it into a hard landing >> we have to see. john was on in the 10:00 hour talking about the impact of china reopening and the uncertainty around what that reopening is now looking like and how that's emerging and what that's going to mean for economic growth in china next year on the crude markets. and you do see crude under pressure again today, and i realize it's thin trading across the board, but it does raise those questions. italy is one to watch. i think there's a reason that wall street was very focused on italy and the fact that you had two flights coming in where something like half the passengers between those two flights tested positive. coming from china. with covid there's no new variants in those tests, i think, putting some ease into folks' minds, but the

thing to remember is, italy was ground zero for europe during the beginning of the pandemic in 2020 because you do have to in chinese workers that go to northern italy and work nin the factories there, so it's a country to watch in terms of those flows of people and what that looks like as china reopens and as we do have these question marks about what that means for economic growth and the future trajectory of the pandemic evolution, more broadly. >> part of the bull case is built on, in terms of global growth, is china normalizing after the shutdowns. i asked dr. scott gottlieb about that very issue yesterday during overtime china is just trying to get back to some semblance of normal. is there a chance that they would go back again? here's what he said. >> i don't know how they go backwards right now. they don't seem to be reimposing the restrictions, even as they're dealing with an overwhelming amount of infection. if you read some of the reports coming out of the south china morning post, it looks like

their healthcare system is overwhelmed right now, and they seem to be burying it. they don't seem to have a plan to deal with it. i don't know what the trigger point would be to reimpose certain kinds of measures to slow the spread while their healthcare system catches up you would have presumed that they would have done that already if they were going to do it i wouldn't expect it at this point. >> interesting thought, obviously, from dr. scott gottlieb markets going to be paying attention in the weeks ahead >> it's hard to game it out. think about when omicron showed up black friday of last year. people assumed, i think, that it was going to be another kind of lockdown episode the fed, in my opinion, actually continued to go slower toward normalizing because they didn't know what was going to happen then it was almost an easy money fix. the market did not actually have a sustainable selloff for another month and a half so, i don't know if we're going to get any of that offset this time the fed's not going to go easier just because china has some backsliding in its reopening, if it does. >> it's going to be one to watch.

also probably worth watching, your drug maker and vaccine names like pfizer, like moderna, because yes, those are not -- you don't have the mrna technology in china, but you do have those reports surfacing that chinese can travel to places like hong kong now to get some of those vaccines and some of those treatments. so, i think probably also something to watch as that develops still to come, it has been a rough few days for southwest, but other airlines like united and american are also down double digits since the start of the month, so we're going to take a closer look at the group, and another look at futures right now as we do have yet again a premarket with the major averages poised to open higher we're going to have to see how e eng lln t kes out when we ge thopinbe ia little less than 20 minutes we got more "squawk on the street" straight ahead

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southwest airlines, fractionally higher this morning after falling 11% in just the past two days. the major airline canceling more than 14,000 flights since friday joining us now to discuss, raymond jaifz analyst savi, it's nice to talk to you today. what's the longer-lasting damage here for investors, if any >> it will be interesting to see what southwest does in terms of restoring their, you know, network or making changes to the network to make sure that, you know, in future, if an irregular

operations, they'll be able to recover better than they have here today to be fair, this was a really tough storm for everybody, but it rose through many of your geographies, that's a tough set-up, and then clearly they'll need to address their crew handling system, which seems to be the system that really took the brunt and caused some of the chaos that we're seeing today. >> that may be fair, but some would suggest that the writing was on the wall here for a while, that their systems needed to be upgraded for some time, and the airline knew that. it's just that they diverted their funds elsewhere, and when you look at a story like this, you can say, okay, well, passengers and those flying and the feds, they're all angry, and for good and obvious reason, but at some point, if management -- mismanagement turns out to be a greater part of this story, would the impact to the stock over the longer period be

bigger at the end of the day, people fly for price and convenience, and that's not going to change, regardless of what happens in this situation >> in terms of the, you know, technology, yes, southwest is kind of widely known in the industry that they're behind but it's not because they haven't been making investments. i mean, they've been investing kind of $500 million to a billion dollars a year in this n nonaircraft type of investments they have been making. they've just had a lot of wood to chop, and they have to pick the battles on which fronts that they move forward. and with airline systems, it's really tough it's legacy systems, and if you make a change in one place, you could break something in the other place, so you do move a little bit slower than you might in other industries or for airlines that are kind of newly started up and have a fresh tech stack to work with so, i'm not sure -- there will be, clearly, a review of what happened here and where the failures and maybe who might be to blame, but i'm not really

sure that there's a smoking gun here in terms of somebody who really dropped the ball. it's a matter of kind of doing more of what they're doing and maybe kind of refocusing where the investments are going. >> yeah, i mean, to your point, bob jordan, the ceo, has been pretty vocal about the fact that they need to continue making more tech investments and they have essentially expanded faster than their technology has in recent months. you have a buy rating on the stock. do you stick with that here? just as importantly, do you expect that there's going to be an impact to earnings in the next quarterly report? >> yes, there will clearly be a big earnings hit in the fourth quarter here, and we've kind of quantified that. i think they'll still eke out a small profit here, and in one queue, unlike for the other airlines that this event probably is more of a fourth quarter event, southwest will probably see some book away as a result of this incident. we suspect, as you head into the second quarter, some of that kind of wears down you might see southwest doing

some fare sales to kind of bring some goodwill back so, we do think that the implications of this event do last at least into the first quarter, so there is some earnings risk there. right now, our analysis is there's no kind of structural issue with southwest that needs drastic rethinking, and therefore, we're sticking to our strong buy rating, but we are monitoring this very closely to see what they come out with as kind of the reasons for this event. >> savi, this seems like the kind of thing the market would be willing to try and look through and certessentially just write off as a crisis-type episode. if there were confidence that next year more broadly was going to see decent end demand, in other words, if there weren't these overhanging concerns about consumer fatigue and the overall travel picture for next year, so how does that play into the outlook for the stocks >> i mean, i think you make a very good point, and the

interesting thing is, there is a sense that the consumer probably has to slow down here, but we're not seeing any indications of that so far, and the important thing here is -- and i think what this episode highlights -- is the airlines are having a really hard time adding back a lot more capacity. they would like to add a lot more than they can, and for various issues, including just airbus and boeing not being able to deliver aircraft. and so, i think as much as we're focused, and the investors are focused on the demand side of the picture, i think what they're not really appreciating is the supply side of the picture might result in fares remaining elevated, even if demand slows down a little bit they still have a lot of catch-up to do here in some areas, like large corporate demand, so i think the results will be, maybe, pleasantly surprising, but it definitely is an overhang for these stocks, and with this event and no positive catalyst for a strong holiday season that people

thought, i think the stocks are languishing a little bit >> all right we'll leave it there savi, thank you so much. savi syth joining us this morning. with just about eight minutes until the opening bell, take a look at futures we are poised to open higher the s&p, up 30 points. the dow, poised to open up 181, and the nasdaq poised to open up 136 points keep in mind, though, this is after another down day yesterday with the nasdaq at a nearly two-and-a-half-year low and the nceaback to its lowest level sie rly november we got more "squawk on the street" when we return

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generac is at the top of the list, down 72%, despite the rally it's had the last couple of days. it also had a huge run-up during the pandemic match group, down 70%. align, down 70%. and tesla, well, not in the top five right now, has been hovering between the number five and number six place 'rba after this with the opening bell in just a few minutes.

>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. welcome back well, apple trying to rally this morning, up 1.5% premarket after closing yesterday at a 1.5-year low. stock is down around 28% in 2022, and of course, yesterday, meaningfully, falling below, mike, and closing below that 130 key technical level that at least some strategists were calling out and watching closely. >> it's getting a little bit oversold, not really profoundly, not to the point wruhere you wod say, it's really washed out. what's interesting to me is it's really just, in the last couple of months, acting more like how all of mega cap growth is acting even right now with this decline

it's had recently, it's outperforming the nasdaq 100 year to date by 5 or 6 percentage points, same thing with the broader mega cap growth etfs, so it's sort of resisted the pull for a long period of time, and now, i just think that people are hacking away at the iphone demand estimates and it seems like there's going to be a little bit more of a bump toward what is already anticipated to be basically a flat earnings performance for the fiscal year that we're in right now, and since september. so, you know, it's sort of, to me, also reiterates my case for a long time, which is that apple really isn't a bellwether for the broader market in the sense that it anticipates what the market's going to do or it reflects the broader macro concerns it kind of operates on its own pendulum it goes in these long streaks, estimates go up, it doesn't really kind of fall victim to the macro very often, so i do think it seems like it's the end of the year, and it can only kind of resist gravity for so long in a market that wanted to sell everything that was big and

on the nasdaq. >> reflective of what's happened in the nasdaq too in december, down 10.7%, going to be the worst december on record, according to bespoke, if that holds. worse than the december of 2002. >> all right there's your opening bell. cnbc realtime exchange here at the big board, you've got gradient investments, an innovator, celebrating the listing of its etf at the nasdaq, make-a-wish, granting wishes to children with critical illnesses, and you can see there's a lot of green on the board right now. you've got all the major averages trading higher as the premarkets had signalled, and really just energy, the only s&p sector that is in the red. it is some of those tech names that are making a big bounce as

we see the ten-year yield. keep in mind, mike, and i know we talk about it a lot, it's been a tightish trading range across in different markets for many days now. >> it has. market has been mostly just kind of sticky in this area one thing to watch for -- this is something that emerges in january and sometimes people try to front run it into january -- is just the worst laggards of a year getting a bounce. typically, you have some selling pressure that manifests at the end of the year, lets up, and you get some relief. if you look at the s&p 500 leaders on the day, their year to date declines are pretty significant, right so, tesla's up there monolithic power, down 29%, but nvidia, netflix, match group are all among the day's leaders, so there is always this kind of reflex trade, go for the stuff that was hit the hardest in the prior year and see if it gets a little bit of a trade higher in january. >> we still thinking about how we finish over these couple of days and what it means for the new year piper sandler has a note today

that says, among other things, if the market fails to rally during this time, it has been a precursor for lower prices you don't want to finish, really, with a big whimper >> the only real relevance of the santa claus rally period that we talk about is, is it up or down? what might it suggest for the following year the sample sizes on these things are small. we're talking about 50, 60 instances, 50 or 60 years. it is worth pointing out that the close of the s&p 500 the day before that test period began was 38,022, so we're right there. you're just a little bit of a throw from it at this point. so, yeah, maybe it does matter, and especially if it's negative. if it's positive, you know, it's usually just sort of the absence of a headwind as opposed to something that means we go higher but i do think it's worth keeping an eye on. there was also data point that was yesterday, we had two 1%

daily declines, rare to happen, and you go back to similar years, 2018 was one of them. i think 2002 and they have happened in a -- at the end of a very weak period that didn't kick off a weak period so, you know, 2003, the market took off in march of 2003, so it was two or three months after that december of '02 washout, so just something to keep in mind again, we talk a lot about it because there's not a lot else driving the market at this moment >> well, sentiment is so bad they have another stat today this is eye-popping too. this year is going to be the first in the history of bespoke's individual bullish sentiment sort of individual investor survey that bullish sentiment was below its historical average every single week of the year it just tells you how pathetic this year has been for investors and how miserable people have felt from almost the beginning of the year, right, when the fed got on this new path it's been a rough road, even though you have had some pretty

sizable bear market rallies within this period of time it has done little to reverse what has been really negative. >> and just -- we did come into the year very frothed up, right? at a high. and i think there's some weirdness going on, because this was a rare year where the peak was literally the first trading day of the year. so, there have been many times, i'm sure, when the market was down 20% off its high 12 months after the peak, as we are right now. it just didn't happen to be on january 3rd, so all of a sudden, all the calendar year stuff looks like, wow, we've never been this negative it's because of the way the calendar has happened to fall this year. >> yeah, and it's interesting, because you did see the rollover happen, really start to happen last fall in the nasdaq first. >> that's right. november, yeah >> so, some of the ugliest charts in terms of some of the tech names or some of the spac names, some of the more speculative tech names, really go back a year, even a year-plus, in terms of the beginning of that. so, nasdaq was kind of first to roll over, then the s&p, to your point, at the beginning of the year, and the dow has been

relative to those other two averages, the outperformer this year, in part because it does not have as much tech within that index it is more focused on cyclicals and other areas, and staples, other defensive areas of the economy that have not been hit quite so hard. >> your point raises an interesting question is first in the one that's going to be first out and have a surprise rebound in many raise some are suggesting that value is replacing growth on a longer period of time >> you know, it's -- it is a tough call i think you could make the case that the gut check in growth has gone far enough to really sort of sweep away the most extreme of the valuation excesses and the speculative excesses, but historically, the thing that led the last bull market is not the thing that restarts the new one, right? so, that's why the largest growth stocks, you know, might be in the penalty box for a long

period of time any long-term growth versus value looks like value just starting to barely turn higher after, you know, decade of underperformance >> we're trying to get a little bit of a comeback. tesla is up 5.33%. recapping that news we did at the top of the program, elon musk telling employees not to be bothered adam jonas out defending it today, and maybe that is helping the share today, arguing that even though he cuts the price target, the rerating is an opportunity for investors as well maybe they're taking advantage of that this morning just a little bit >> i saw a stat in one of the reports that i was reading let me pull it up here, that tesla has seen -- according to vander research, that individual investors have been doubling down, producing a net $16 billion of tesla stock this year meaning that it is now surpassing and dethroning apple as the most purchased stock by individuals, which kind of gets to why, in part, we talk about these two names as often as we do >> that's true

yeah you know, and tesla, it is a fascinating battle the attachment that people have to the stock, not just because, oh, it made me rich on paper for, you know a couple of years, but just, it's -- it's kind of a movement they don't tolerate a lot of negative, you know, details about what's going on with tesla, and you know, we'll see again, it became a big part of the s&p for a brief period of time you had to have managers who were, like, oh, if i'm going to be outperforming my benchmark, i need some consumer discretionary. how could i not have exposure to tesla? that's gone. i think that kind of effect among active managers has gone away but yeah, retail still plays the game >> another hard-hit part of the market that is bouncing higher today are the streamers, are the media companies. you see it in consumer services more broadly, which is up more than 1% right now. paramount, netflix, warner bros. discovery and disney are leading the charge within that sector. and as i mentioned, it speaks

to, they have had a rough year they had a rough december, and there are questions about what these streamers and the strength of these streamers, what that's going to look like next year consolidation. a move towards profitability can that happen? what does that look like and of course, in the midst of what is still an inflationary environment, who has consumers in a rough macro environment, as consumers are buying -- spending more on things like, i don't know, eggs, which we can get into too >> you're absolutely right i mean, i see it mostly as a, you know, buy some of the laggards trade at this point they've obviously been, you know, pretty beaten up, and you know, the last few days, you can't really see it in the intraday action, but clearly, people just dumping losers either for cosmetic purposes or tax purposes >> i'm thinking of disney too, when morgan was talking about what's been taking place with the streamers. one of the worst dow performers on the year, down 44% year to date we'll have to see if, like, a

laggard like that draws new interest in the new year, although, if you're worried about where the consumer is heading and where the strength of the economy is going, maybe it's going to be a little bit of a tough road that mr. iger part two -- i think -- is it just part two three? >> he threatened to leave a few times but didn't >> part two. we'll see what the sequel -- we'll go with the sequel we'll see what happens with that one. it's a widely followed and a widely held name >> it is as i mentioned, ags, i do want to mention, because it's quiet here, you know, quiet time for earnings, but we did get earnings after the bell yesterday. that was cal main. not the biggest of companies it's got a market cap of 2 or $3 billion, and certainly under pressure this morning after missing some estimates, but it did report record sales. you got this avian flu outbreak that continues to limit the supply of eggs and driving prices higher, and what's so fascinating is that your more

standard carton of eggs is now priced lower than the specialty, your brown eggs and some of the other cage-free, et cetera, you're seeing this weird divergence happen in the market. >> priced higher >> yes >> generic eggs. >> no. yeah no yes. they're higher it speaks to -- eggs-cellent content there. but it speaks to some of these areas of the economy where inflation continues to be stickier i mean, we talk about the shift from goods to services but food inflation, which the fed strips out as it looks at inflation, is very real for many people, and certainly as that continues to persist, is going to affect the other places that consumers put their money to work in 2023 >> for sure. and i mean, this is always a fun stock to watch, just because it really is boom-bust. you can't really -- the product is perishable. the producers, you know, they can die unexpectedly

and so it does have this really jagged movement out there, and it's product-by-product, though. i would say food inflation is a big part of the story this year, and now i think it's present in places and coming off in others, and it's all about supply chain and the fact that you can't have -- there's not a lot of excess capacity in any of these areas that they could, you know, take advantage of to kind of build storage and things like that >> yeah. also want to point to what has been an outperformer this year, and that is the defense sector, the aerospace and defense sector, higher again this morning. lockheed martin is up about 0.5% this morning as well, in part because it has filed a protest against the army's decision to avoid textron a big helicopter contract, what's called the fluora contract to build a new fleet of helicopters to replace the blackhawks it's estimated to be worth $80 billion, upwards of $80 billion, this program, over its lifetime

this was widely expected, that the lockheed-boeing team would file a protest with the gao. there's now a hundred days for that entity to decide whether to move forward with the protest or whether to bat it down textron likely to halt work on this project in the meantime, but as you can see, all those names are trading higher, whether it's because of this or maybe in spite of this the military continues to modernize. we know that there's increasing demand not only here in the u.s. but abroad, and even though it takes a long time for all of that demand to actually translate to sales and growth on the top line for these companies, at some point, it's coming, it's starting to come, the fact that it finally got awarded speaks to that >> it's been a rare place to hide this year, lockheed, raytheon lockheed is up 37% over a 12-month period. raytheon is up this year i mean, there haven't been that many places to hide. energy's been the most of course and some of the staples groups,

utilities, healthcare, have outperformed the s&p 500 by the widest margin in decades they still closed negative they will still go out negative for the year not defense. >> it's interesting. many people have been pointing to industrials in general as a big outperformer defense and aerospace has a lot to do with that. it's not really a macro signal, although if you look at thing like machinery, capital goods in general. >> cat's had an incredible quarter, by the way, right behind boeing. >> deere as well >> yes let's get to bob pisani for more on what's moving this thursday morning. hi, bob. >> good morning, morgan. hello, everybody, happy new year we are all 11 sectors on the upside but let's not kid ourselves. the momentum's been terrible, particularly growth, as mike mentioned earlier this year and this month has been the triumph of value over growth in terms of sectors that have momentum, weak momentum in the last few weeks, well, guess what it's all growth. ark innovation's been terrible this month overall it's down about 20% for the month.

retail has been terrible tech's been awful. communication services, generally, the trend has been down the last several weeks. and what's held up comparatively better it's all the value stuff that's done better. so, utilities, for example, are flat this month. energy is down maybe 1% or 2%. consumer staples are holding up. it's down only a couple percent. this is relative outperformance, so here is what you -- broad group, defensive, you can call them semivalue stocks as well, but that's what's going on here. in terms of the leadership board, you know, we had four stocks that were essentially at 52-week lows or even more in the last few days and all four of t them, this is the leadership board, tesla, apple, paypal, even ford was at a new low and they're all bouncing here. that's the leadership board for the s&p, so people are picking at these new lows today, but there's no sense of any strong reversal in the downward trend we're going to have some changes

in the s&p in the beginning of the year remember, ge, a big spinoff of the year ge spinning off into three sectors, three groups here, and ge healthcare is going to go into the s&p 500 on january 4th, and of course, ge will continue to stay -- the remaining parts of it will continue to stay in the s&p as well. coming out, replacing the s&p component is vornado vornado is going into the s&p mid cap on january 5th, the following day, and we don't have to tell everybody how difficult reets have been, but particularly the office reets as the work-from-home continues here vornado, any of the big names, brandywine, sl green, sort of the big three office reets all have had terrible years, the reets in general, but particular what's going on with the office reets. finally, this is the time of year this week when all the strategy i di

strategists come out with their 2023 year-end estimates, despite the futility of trying to guess where stock prices are going to be a year from now, hope continues that somebody's going to get it right. the current estimate of 22 strategists surveyed by bloomberg was 4,078. that's up about 7% for the year. strategists like analysts tend to be fairly bullish, but there's an unusual wide dispersion of opinions this year, really wide, so the high estimate is 4,705. that's fun strat that would be up about 25% or so the low estimate is down 10% that's a very wide dispersion of opinions, and it's not because people are stupid. it's because there's -- it's very difficult to predict what's going to happen in 2023. just look at the issues the people have to deal with we've got the continuing effects of covid, particularly china, the russian invasion of ukraine, and the fed higher for longer, what kind of recession we're going to have. any one of these would create a very wide range of economic outcomes, potentially.

put them all three together, it's little wonder the strategists are having a hard time figuring out what's going on and such a wide diversion of opinions finally, we have to remind everyone about these economic forecasts. they have a very poor track record, and it doesn't matter who you are. analysts, strategists, economists, the federal reserve itself has a very poor record of predicting the economy, predicting stock prices. they have little predictive value, and the problem, of course, here, morgan, is a lot of people -- there's a lot of biases that infect people's opinions, and secondly, the future is really hard to figure out. there's a lot of variables so, remember that. one year from now, we all may want to believe we have more control over our own personal lives than we do, but we don't have much control or influence on figuring out what stock prices are going to be one year from now >> such an important public service announcement thank you for making it. bob pisani before we head to break, it is time for the bond report. let's take a look at how treasuries are faring this

morning. we've got yields currently largely under a little bit of pressure right now the ten-year, 3.865% the two-year is in the green everything else is a little bit lower. we'll be right back. how will your business adapt to change? you could hire an office full of peyton mannings. what's up, peyton? good morning, peyton. hold for peyton. they'd huddle.... welcome to the peytonverse. such a visionary. game plan... you go. no, you go! and call audibles... double our investment in omaha! omaha! omaha! omaha! or you could use workday. omaha. the finance, hr and planning system used by over half of the fortune 500. for a be-agile-like-an-mvp world. workday. for a changing world.

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- as we get personal about making an impact. check out the chip stocks today. what was down earlier in the week is getting a bit of a bounce today, including amd, up 2.75%. taiwan semi, 2.5%. micron nvidia was a big loser earlier te the week, up more than 3% inl on the list as well, up about 2% back in two minutes.

some even weaker than expected numbers in the housing market to end this year and what that says about next year. our diana olick has that for us. >> new numbers out this week don't bode well for the winter market as a housing recession appears to be digging in even deeper let's start with mortgage rates, which have been easing up recently, off the highs at the end of october when the 30-year fixed flew well over 7%. just two weeks ago it was all the way down to 6.31%, which was the lowest since early september. then it started climbing again and just really shot up in the last week. now 6.5%

that won't help going forward. and even the drop in november apparently didn't help sales pending sales, signed contract dropped a wider than expected 4% month-to-month and were down nearly 38% year over year to the lowest reading since the realtors even started tracking this survey in 2001 with the exception, of course, of one month at the start of the pandemic buyers were unmoved by lower rates in november and the drop in home prices didn't seem to help them either prices nationally in october fell for the fourth straight month. prices were still just over 9% higher than they were in october of last year but that annual gain has been shrinking very quickly and is now actually half of what it was last june. it is likely to be a very slow january in the market, especially given that inventory is still historically low and potential sellers seem to be unwilling to list right now, not to mention that the home builders continue to pull back on new construction. scott? >> diana, thank you. that's diana olick

rounding out this hour, a reminder coming up on the "halftime report" we have one of america's top ranked financial advisers with us today, richard saperstein, giving his top plays for 2023, and al michaels is with us, famed announcer, of course, and investor, too. he's in the stock market big time he's calling the game tonight, amazon prime, cowboys/titans inaugural season we're always excited when we have al with us so we can talk football, and he likes to stock stocks we'll talk to you, too >> i'll be there >> i feel left out of this party. i'll just watch from here on the other side of the set. >> i'll see you back here tomorrow morning >> yes, for sure we've got all the major averages are higher right now. still to come, though, we've got another hour of "squawk on the street." don't miss our exclusive with travel giant booking holdings on how rising covid concerns is causing chaos. right after the break.

good thursday morning. welcome to another hour of "squawk on the street. i'm morgan brennan with mike santoli. we're at post 9 of the new york stock exchange carl and david are off markets are higher and the s&p is adding to the gains since the opening bell just 30 minutes ago. now up 1.25% the nasdaq is up 1.75% and the dow is up 268 points or about 0.8 of 1%. we are 30 minutes into the trading sector here are the three movers, including tesla, after snapping a seven-section losing streak yesterday. morgan stanley, the latest wall street firm to cut its price streak target. analysts go to $250 a share, while the firm cut the price target, morgan stanley says the d rating creates an opportunity. the shares are up 7% then it was announced spinoff ge

health care will be added to the s&p 500 when it begins trading as a separate public company that happens on january 4th. ge health care replaced vornado realty trust holding up better than the broader market so far this year. finally, we continue to follow the meltdown at southwest. we'll talk to the ceo of booking holdings in just a moment about the state of travel. we'll talk now, though, about the broader markets as we head into the end of the year. stocks paring the weeks losses the s&p now 3834, above where it was at the 22nd, the beginning of the santa claus rally test period joining us now, barry bannister and vance howard good morning to you both barry, love to start with you about the setup into next year seems like the prevailing consensus is, weakness in the early part of the year we have to account for earnings

estimates coming down and maybe some kind of recovery when maybe the recession call is clearer. how are you viewing things >> actually, it looks to me like that's flipped if you look at the risk, it seems like it's more later in '23. the recession risk, if there is recession, would be later in '23 with these long and variable lags to policy all of the yield curves, ten-year, three-month, 2s, 10s, fed near term forward spread, they all indicate, including a resteepening assumption based on our models, that the recession risk would be later in '23 the other thing is the fed's own forecast for the u3 unemployment rate builds in coincident recession later in '23 we have to watch credit. credit has been very well behaved. if credit is going to cause a problem, it will be in weak earnings in the back half. i'm more concerned about the second half. first half looks pretty constructive to me

no official recession in the first half china's going to be slow that will keep at least a lid on oil prices and inflation will come down real fast. to me, it's backwards. i think it's better in the first half and possibly weaker in the fourth quarter >> that feeds into your call that the s&p 500 can get up to about 4300 by the spring or so you think the market is going to be willing to -- i mean, is it going to seem like the market celebrates a false dawn, kind of gaining some comfort that the economy is holding up, even if the forward indicators of recession are getting clearer? >> we look in real or aflags-injusted terms. it fell 32% from the intraday low to october 13th when we had the bad cpi print and the fell off and the day finished better. that was 32% that equaled the 14 recessio associated bear markets in the

post world war ii period we're in a trading range 4300, believe it or not, is where we were august 15th, before jackson hole. it's not a heroic assumption but it's something we think will happen in the first half it would be led more by cyclical cyclical growth and cyclical value. not so much by the defenses that dominated in 2022 in the weak market >> how do you see the market as we go into 2023 with so many question marks, so many uncertainties? what does that mean in terms of where you will be putting money to work in investments >> the trend of the market is down a trend indicator negative out of the $5 billion i trade, i'm sitting in almost $2.4 billion in cash waiting for this market to turn there are two things you don't want to fight -- don't fight the fed, and the major thing is the trend. and the trend is down. i don't think this is going to be the effect in 2023.

there's only been four times in history that the s&p has closed down two years in a row. '29, once in the '40s and '50s and 2003 i think 2023 could be a good year, could be a double digit year be patient let the trend turn back up there are so many opportunities out there when this thing turns. >> what are you looking for in terms of factors or indicators to suggest the turn is happening? >> like i said, the hbc by-line. you can think a thousand reasons the market is going up and a thousand it's going down sit on your hands, sitting on cash, let the trend change we love the energy going into 2023 i don't see how energy can't be higher that will be a major player as far as what we're looking at like i said, i'm so hungry to buy stock, you can hear my stomach growl. i won't do it until the trend changes. don't fight the trend. >> barry, to what degree have we seen in 2022 a proper reset of some of the things out of

balance coming into this year, whether it is the mega concentration in the largest tech stocks. obviously we got interest rates normalized and the stock market has done its best to absorb that what does that mean for the landscape heading into next year >> we have been saying since the latter part of the last decade, 2019, that the s&p was in a sideways trading range flat in nominal terms, down in real terms after inflation that's called a secular bear market they're typically led more by value relative to growth value does well. and think financials industrials ahead of technology. however, technology has had its moments. it's had a huge reset, as you said it's become growth at a reasonable price, garpy. the risk-free alternative that's

a competition for your earnings yield, your pe ratio, essentially, any reduction in the ten-year real yield is going to be positive for the market. that comes from a fed pause. the fed knows they work with long and variable lags they will pause in the first half and inflation will come down every model, every subcomponent we track and analyze is going down or flattening out and about to go down i think you're going to get some good news in the first half. the fed will react to that and we have to wait for the latter part of the year to see the true effects of all the fed tightening we've already had >> vance, you mentioned energy name some names for me what stocks do you like right now? >> we like chevron, exxon, the big players. one of our largest holdings right now on the money we do have infested is xle just own the basket, the etf the trend's up i think as far as 2022 goes, i think energy is the only sector

that may close up in the black this year. i don't see any way energy is going to go down in 2023 it's a great trade play it with chevron, exxon, but you could play it with a good etf, xle. >> obviously been the standout this year. we'll see if that carries over vance, barry, thank you very much good to see you. >> thank you >> thank you with more on southwest and the impact it's having on the rest of the travel space, seema mody joins us with a special guest. >> good morning. glenn fogel, ceo of booking holdings >> how are you >> i'm doing well. you dealt with flight troubles this week. across booking holdings, what are you seeing right now from priceline to kayak, more customers trying to rebook any indication that the situation will improve any time soon >> well, the situation will definitely improve obviously, a big problem for a lot of people, myself included, trying to get home from a

holiday on monday. we didn't get back into late last night with a lot of problems involved. let's face it, everyone is doing their best all the airline people are trying as hard as they can to get things back the way they should be. and there have been frustrations i was frustrated look, most of the people really helpful. airline people trying their best you run into one or two, perhaps, who aren't the best, not doing well with the stress, but neither are the passengers look, this is the situation. weather influence obviously very bad and system problems, too all in all, things will get better it happens we're looking forward to a strong travel industry going forward. >> are they doing their best, glenn? fill us in on the conversations you're having with your airline partners now i spoke to the ceo of expedia two months ago who said the airlines need to be adding more capacity why aren't they do that? adding more flights which would potentially ease some travel friction we're seeing right now. >> well, every airline executive i talk to say they are trying to

add on as quickly as they can. it's not as though you can bring in a pilot off the street. a lot of training, bring back pilots, getting them retrained, flight attendants, et cetera let's face it, the plane deliveries are not coming in on schedule at all. boeing, airbus, delays in getting those planes in. look, everybody wants to travel all at once. we had a terrible pandemic problem that took a lot of capacity out of the system now trying to bring it back in, it doesn't happen overnight. i know it's frustrating. look, believe me, my family, three days trying to get home. it's not easy. it's not good. look, we're doing the best we can and we have to recognize that this is not something that can be solved overnight. that's one thing i hope everybody can understand, everybody is doing their best. >> three days to get home, ouch. i'm glad you're able to do it safely, even though it sounds like it took a lot longer than it was expected to. >> yes. >> the other travel story

playing out is china and the china reopening. we have certain countries, including the u.s., starting to impose restrictions and mandatory testing on chinese travelers into these markets in general, as you see the reopening happening, i guess, what is your outlook for how smoothly that goes and what that means in terms of travel trends given that china is such a big part of the market on the global stage. >> yeah, this is something i've been talking to our team for some months. at some point, china is going to open up travel what does that mean? how do we prepare for this they opened up the inbound, right. we had, i think, there's no testing at all, can you come in and that's fine. that's not a huge impact to the global travel industry it will be good for our business to bring people in, but that's not a big thing. the bigger concern is, though, you have hundreds of millions, literally hundreds of millions of chinese customers who want to travel they've been wanting to travel

for a couple of years. they've not been able to get out of the country they want to go. what's going to happen to global travel industry when several hundred million chinese people start traveling outbound to the u.s., to europe, to southeast asia in terms of demand, it's going to be a spike. i think what we'll see a little bit when we had europe open up, when we had the u.s. open up there will be a lot more pressure on the demand side and might not be supply available to be able to accommodate everybody at once. we know what that does to prices. >> that's exactly where i was going, glenn does that mean an upward trajectory for prices given we have been so focused on inflation, and inflation in services like travel, hotels, et cetera >> it could be, but you have the countereffect, though. we all keep talking, i'm listening to some of your guests earlier today. everybody talking about the recession that's supposed to be coming all the concern about what's happening in europe right now. the terrible tragedy of the war

and the impact that's having in terms of europe and also the recession. could there be counterbalances while demand comes in heavy from china, perhaps demand lessens up, perhaps n europe or the u.s. by the way, we haven't seen that yet. >> back to china, glenn. do you think the restrictions, including the u.s. and other countries have imposed on china, stop at requiring a negative covid test upon arrival or do you think those restrictions could heighten to an outright ban if covid cases continue to rise at a rapid pace coming out of the country >> the first thing is, unfortunately, we don't know what the true data is in china they're not doing a great job reporting what the impact right now is in terms of infections in china. next thing i say is that have we really seen any benefit in terms of country's health situation when they limit the number of people who come in, who potentially could have an infection? i haven't seen any data that's said recently that's going to do

anything certainly didn't seem to help much when the pandemic first started and doesn't seem to have helped at all. i think this is a much more political issue. when i go through these incredibly crowded airports, nobody's wearing masks anywhere. nobody's taking any of the basic health precautions instead, we're going to try to prevent a certain number of people from one country to come in, or, perhaps, ask them to test first it doesn't make a lot of sense to me in terms of medical science. but i'm not a doctor i just see what's happened over the last couple years. didn't seem to help at all i would suggest, perhaps, that may not, the best thing to do in terms of helping make sure we have free flow of people from country to country possibly a better thing to do is continue to do all the stuff we've done in terms of makin new vaccines, all the health precautions we can to help tampen down infections. >> and get chinese vaccinated. washington watching the story in the u.s., pete buttigieg calling

on better reimbursement and refund to travelers. in europe there's much better customer protection if your flight is delayed or canceled. i'm curious what you think the airlines should do should they be providing compensation to travelers who are delayed, ground transfer, hotels, meals, what else do you think the airlines should be doing? >> you're absolutely right in europe, if you are delayed a certain number of hours due to travel or if your flight is canceled, you are given certain types of compensation. in the u.s., there are no laws that give that same kind of benefit you get in europe. there's definitely a groundswell in the u.s. that says, hey, we should be making regulations to make sure consumers are fully compensated for the inconveniences when things happen here's an issue, though. there are no free lunches. if we want a system that gives that kind of compensation, it's going to be more costly. the flight costs will go up to spread those costs around. it's really what we want as

society. do we want what is almost a regulation that requires compensation it's almost like insurance that is almost put in place by the government, or do we want to have what we currently have? firstly, neither side really is saying the right thing, which i think is just let's make sure we have people putting together systems and process that will enable us not to have these terrible problems we've had over the last couple of weeks and make sure we have the right supply and the people in place to be able to help out the customers who are inconvenienced. >> yeah, it's a great point. we'll see if we see some actions on that front next year. lawmakers are taking notice. glenn, we certainly appreciate your time. such an important time to talk about travel glenn fogel, ceo of booking holdings booking holdings up abt 2%ou "squawk on the street" will be right back

welcome back to "squawk on the street." apple shares are up 2.5% after hitting fresh 52-week lows that was yesterday our next guest believes, quote, while the current quarter is constrained by supplies, we will remain resilient in 2023 joining us is jim, who has a buy rating on apple. seeing reports in the last few moments that apple iphone production in china is starting to ramp up despite covid is that what you're hearing as well >> absolutely. important to note. the data looks like it worsened

and got the worst point in the month of november. as you correctly stated in december, it's getting better. if you looked a lot of times the iphone 14 wasn't available for christmas. this demand is simply going to be pushed out to 2013. as we look forward to 2013, we see this as a buying opportunity and we have a target price of $175 >> okay. what is it going to take right now -- we're trading higher on apple but strategists have been watching key levels, things like $130 a share, which were now trading below, saying that's at least in the near term bearish for trading activity what is it going to take as the next catalyst to sort of move out of that trajectory lower, at least in the near term technically. >> the next catalyst will also be, while they will not be attending the consumer electronic show, which i know next week your team and i will be there, we know earnings at the end of january will be the next catalyst. we expect them to talk about and

reconfirm these datapoints you talked about of china improving its supply and covid supply chain issues starting to lessen. that should set up for a better than normal march quarter. we can also talk about apple during their earnings call they continue to push forward innovation when we look forward to 2023, we is see an arvr headset come out, and develop more of a foldable phone so i can watch on my top screen cnbc and see emails on the bottom screen without their interfering each other that will likely come out in 2024 we think these will set up for a good '23 apple stock >> jim, these kind of ebb and flow of the stock, with obviously it being on the downside recently has occurred with earnings forecasts being pretty stable. it isn't one of the big growth stocks that's seen people really downgrade their expectations for profits. on the other hand, the action has happened on the multiple you came into 2022 at like a 30

times forward multiple now you're down around 20. so, what is going to happen with apple that can happen independent of what's going on in the overall market to either rebuild that valuation or just, you know, preserve it? >> that's a very smart observation. when the fed was increasing interest rates, investors were on a risk adverse portfolio. they didn't want high growth stocks they didn't want tech stocks they shifted over to more defensive stocks and now that we're starting to see or hopefully that the fed starts to level out its interest rates, we believe that investors will come back to the tech sector overall and start to have more of a risk appetite. so, what you talked about will be called the valuation compression, even though earnings didn't materially change a lot, investors were not willing to pay up as much because they were more risk adverse due to fed interest rates, impact with covid, closure of china now we're seeing a lot of

travel-induced demand destruction. during the past week or two, santa claus had trouble delivering because people were stuck at airports, stuck in snowstorms now hopefully we look forward to 2023 with the federal reserve taking more of a plateauing of interest rates, hopefully, especially in the second half of the year, and tech coming back in favor but that's a great observation >> you list in your most recent notes six reasons apple shares can trade higher reason number four is the launch of a new product category. apple ar vr headset in 2023. we just had a report in the last 24 hours that vr headset sales shrunk in 2022 how meaningful is this for apple if at least for now the metaverse hasn't really taken root >> to add to your question directly, it's immaterial to apple other than the sentiment the prior question about valuation, if they continue to have more products coming out,

people will get excited. the reason why arvr hasn't taken off as much is the entire ecosystem hasn't been there. all the apps and developer tools. you want to be able to put on these headsets and be trained as a pilot. you want to put on headsets and be trained from a different country how to perform a surgery or educational items you want to renovate your kitchen and see what it looks like if you move the stove and change the tile colors these type of things apple started in june of 2022 of its worldwide developer conference they are very much into let's build the entire ecosystem, so when people buy the device, they have an entire app ecosystem of support for great consumer experience that's why we think they've been slow to market they want to build the entire ecosystem up for apps and usability. therefore, that's why we've seen a little bit of a softness in the overall market for arvr headsets >> okay. jim suva, thanks for joining us

with apple trading higher and many suppliers and chipmakers trading higher as well. up next, goldman confirming mass layoffs coming in the new year we'll talk to the cnbc reporter who had that scoop earlier this orheh on what it means f t state of the economy we're back in two.

welcome back earlier this month cnbc's hugh song reporting goldman sachs was planning to cut 8% this morning goldman confirming mass layoffs would, indeed, be coming put it into context for us here. obviously these firms have an annual process of calling culling some people. obviously with goldman sachs, maybe retrenching on the consumer finance side. how does this current layoff push fit into all that >> it's a terrible way to start the year if you're working for goldman sachs. there's a lot of anxiety, concern. we talked about an 8% cull,

which is a bit outside compared to the typical 1% to 5%. that will happen in the first half of january. that was really the one tidbit of news in the voice memo that goldman ceo david solomon sent out to his staffers earlier. and so it was really seen as, okay, this broke in the press last week earlier than they would have liked it. so, let's at least tell our staffers, our 80,000 or so employees, what to expect. what to expect is a cut up to 4,000 people in the first two weeks of january and that is going to focus on people they consider underperformers, people in the past who would have been culled already but they had two years of pause to these kind of layoffs, or people who are involved in the consumer operations in which they're retrenching. that's a very specific goldman story. >> so, there's a very specific

goldman story. there are the job cuts then there's also the reports that you're going to have big banks kind of across the sector slashing bonuses as we've seen the dearth of deals this year as well i guess, just walk me through, in general, what the beginning of next year is going to look like for financial services employees. >> well, i'll walk you through the bull case, which is if you're goldman sachs and head of debt capital markets, right now you're in the process of saying, look, david, i understand, you know, we've had a terrible year. do you think '23 is going to be as bad as '22? their pitch is, once we get certainty on the glide path of interest rates, there's going to be more activity there's going to be some more ipos than there were in '22. there will be more deals than there were in '22. that's the bull case you talk in your book if you're goldman sachs and say, don't cut as many as 8%, cut a smaller

amount the bear case is, you know, we're headed into an economic downturn you know, if the s&p is down 10%, 15%, 20%, that's not a great market to be going public. and, you know, this -- this continued crunch of companies that were in the pipe but have yet to go public is just going to continue until, perhaps, the second half of next year if that happens, then you'll see more banks decide to say, let's cut back on our human infrastructure a little bit. we're overstaffed for the current environment so let's continue to cut. i think it's possible you will see other banks follow goldman in the first half of next year >> okay. human infrastructure, i haven't put it quite like that hugh son, thank you for joining us. time for a news update >> good morning, morgan. here's what's happening at this hour the travel ban had been lifted in buffalo, new york, the small city suffering more than a third of the weather-related deaths

that occurred during last week's massive winter storm buffalo's mayor says the city did everything it could to prepare, but the blizzard conditions were the worst in decades. ukraine's power grid is reeling yet again after another huge russian missile attack. the strikes also targeted cities across the country homes in kyiv were reduced to rubble and at least two people were reported killed around kharkiv. in cambodia, a fire at a hotel casino lasted more than 12 hours before it was extinguished officials report at least 19 people dead, 60 wounded and others still missing investigators say the fire may have started by new year's decorations overloading the electrical wiring. and the vatican says retired pope benedict remains in serious but stable condition officials say the 95-year-old is now liucid and conscious after a downturn in his health yesterday. morgan, back to you. >> thank you after the break, more on the meltdown at southwest airlines we'll talk to the former ceo of

pan am and sun country don't go anywhere.

welcome back to "squawk on the street." we're getting back to travel and flights. southwest airlines continues to run on a reduced schedule, canceling about 4,900 flights yesterday and today alone. our next guest is former airline executive and author of "turbulence:50 years on the leading edge of the airline industry." let's bring in david banmiller, former ceo of pan am, sun country, and aloha airlines, and current ceo of falcon airlines let's start specifically with the tech piece of the puzzle here we know the ceo, bob jordan, has been vocal about the need and the efforts to continue to upgrade the i.t. of the network, but this really sort of casting a light on that. your expectations about how quickly that could happen in light of what we've seen in

recent days. >> a long time let me give you some history i see this discussion and there's been a lot on the news in the past several days southwest, government intervention and how the airlines in general are doing. a little bit of history about southwest. it started in 1971 with herb kelleher and robert king on a cocktail map in dallas drawing a line between three cities in texas. that's how it started. one airplane type, very simple, not complex and grow slowly. they were restricted to just texas for a while. all that disappeared all of a sudden over the past ten years southwest is now in what, 110 cities, in 11 countries. and the growth and technology didn't match in other words, they got ahead of their skis, noo my opinion. a lot of talented people but

ahead of their skis in technology versus expansion. you have to think of that of central operations control at american, which is like nasa the way they monitor the crews, maintenance, scheduling, stations, weather, so on is fantastic. now, they've been technology-oriented through sabre and other technology for years. so, the first thing on their agenda -- look, bob jordan is a smart guy. gary is a smart guy. they have wonderful people they'll find the solution, but you can't turn this switch on tomorrow morning it's going to take a while to get crewed organized and in place. because of their quick-turn program, their sprint and low cost was based on turning airplanes fast that's good on good days when snow of this magnitude hits, all of a sudden you're vulnerable because you got the crews in the wrong place, they run point-to-point operation, and it's going to take them this week to catch up and a long time

for technology improvements. >> the fundamental question, that is, does the business model now have to change does there need to be a complete overhaul of the network? they run this so-called daisy chain network where planes hop from one city to another versus orbiting major hubs, which many of the other major airlines do does that now need to change given the fact they have expanded so much so quickly? >> i think it's a very intelligent observation. and if i were sitting there, as a board member or whatever, i would say, okay, guys, it's not just the weather 55% of the cancellations this year in the industry were weather-related. but does this model continue to work in today's environment, competitive environment, the landscape environment, airports, et cetera, technology improvements it was wonderful for so many years, but you can't believe your own press clippings, in my

opinion. not that i always had good ones. in any case, they do need to revamp, not just the technology, but manage the crews and the crews, cockpit and cabin, as well as all other elements of scheduling scheduling is unbelievably complex. we hide behind the curtain passengers say i would like to get there on time, cheap, alive, and on time. behind the curtain it's incredibly difficult to put all those resources together, plus all the regulatory requirements. job jordan is a planning guy i've known him for a long time i think they will do that. >> david, with this level of public outcry and dissatisfaction, it would be surprising if there weren't some government response, some efforts to put some boundaries on things or impose some policies would any of that be helpful

or -- and what do you expect might come out whether it's how customers have to be treated or simply mandating some kind of redundancy at the crew and equipment level? >> i'm going to be fairly transparent here, mike i knew you were going to say something like this. as i said, first of all, don't let good crisis go to waste. the d.o.t., secretary of state, they're going to get on the band wagon. let's do the european model. most don't even know what the european model is, by the way. in addition, as a surprise to your listeners, 15% of the taxes on a ticket for 50 years have gone into airline coffers to improve air traffic control system you want to ask them where the money went it didn't go to improve the air traffic control system government intervention is fine. too much, bad. we're already overregulated. to cast at a stone at the airlines without looking inside

themselves and how they manage the air traffic control flow, which i guarantee you,can technology can be improved dramatically, which would improve fuel efficiency, reduce emissions and improve on-time performance. challenge them with that question >> david banmiller, we'll leave the conversation there it's been an insightful one. thank you for joining us. >> take care we'll have a lot more on the state of travel tonight, especially when it comes to china. you won't want to miss the cnbc special "taking stock" at 6:00 p.m. eastern brian sullivan will do a deep dive into tech, supply chain and relaxed covid guidelines in those countries. "squawk on the street" will be right back

welcome back to "squawk on the street." major averages at session highs right now. best day for the s&p and the nasdaq for the month so far. what's left of it. new data shows commercial real estate vacancies at san

francisco are at an all-time high yasmin is joining us good morning. >> cnbc got an early look at preliminary numbers by cbra research showing that for the 12th straight quarter, vacancies for commercial real estate in san francisco have shot up now at a record 27.2%. prior to the pandemic, san francisco had one of the lowest vacancy rates, just under 4% today more than a quarter of the city's office space is just sitting here, completely empty while the growing number of zombie buildings and commercial real estate continues to be a nationwide problem, san francisco is hurting the most among the big cities it's really because of its historical relationship with tech that vacancy problem is two-fold here let's break it down. tech's early embrace of hybrid and remote work culture was the chief catalyst during the early days of the pandemic but now rising rates and a brutal macro economic environment, especially for tech, have caused many of those

headquartered here in san francisco to dramatically cut their workforces in turn, their need for office space. now only one-third of the city's commercial real estate square footage is leased by tech companies. that number last year was 50% and as high as 75% previously. so, everyone's wondering, is a recovery ahead two interesting data points to suggest this is more of a correction on tech spending than an indictment on san francisco subleases, as you can see here, continued to increase about 8% quarter over quarter, meaning those businesses aren't leaving but instead, downsizing and getting some sort of return on their investment here while they're kind of stuck in the city that big tech, think meta, sale salesforce, google, still have more workers employed now than they did pre-pandemic despite this year's layoffs we keep hearing about. the trick, guys, is getting them back into the office >> yeah, it does seem like a

trick considering the vacancies are higher now than they were fourth quarter of last year. thank you so much for all that appreciate it. as we head to a break, let's check out shares of tesla again. elon musk telling employees not to worry about the falling share price rating don't be too bothered by stock market craziness yesterday shares snapping a seven-day losing streak, and they have been bouncing this morning. to adapt in the changing world, you could hire a professor of theoretical mathematics. we all know this equation, right? he'd crunched numbers day and night. that's it. to maximize profitability. morning. i have quarterly numbers that are beautiful. and forecast revenue from every corner of your organization. is that important? or you could use workday. the finance hr and planning system that helps cfos make better decisions faster. for a solve problems like a genius world. workday. for a changing world. ah, these bills are crazy. she

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welcome back to "squawk on the street." it has been quite the year for the space industry, from the first artemis moon mission launching to amazon earlier this year settinga multi-billion launch contract record for broad band constellation that's under development. i sat down withdoreey toro brun that will carry a majority of the amazon satellites to orbit to discuss what's been a dramatic swing in the launch market this year from oversupply to capacity crunch it's a dynamic bruno expects to persist over the next decade >> between keeper, but not

kyper, alone starlink is also the majority of spacex launches launching for themselves, for their own constellation. these are the two big elements you see today, but there are several others one web is entering the marketplace, and the last three years the licenses for spacecraft going to orbit to do this mission has tripled and we're now looking at licenses for 50,000 objects in space. this is huge and that's just the beginning. the applications take that to 100,000. and there are people filing, it's gotten so crazy, there are countries filing just to grab the real estate. that takes it to 500,000 >> to put this in perspective, in 2018, there were les than 2,000 satellites orbiting earth, today that number is roughly 5,000. when you hear applications for hundreds of thousands of

satellites, it's eye-popping ula is developing a heavy lift vulcan rocket, to corner some of that coming commercial business, but it also speaks to the m&a wave afoot in the satellite industry, including that eye-popping private deal of maxar just earlier this month. still, none of it has stopped newly public space stocks from crashing back to earth that's as financial conditions continue to tighten, and investors punish the sector more broadly with names like rocket lab, virgin orbit, virgin galactic, even planet labs all plunging dramatically over the past year. you have even got some names we used to cover and talk about because the market valuation, the market cap was big enough. now facing the possibility of delisting on the exchanges as well but this was a wide ranging conversation we also talked about the need to secure space, given everything we have seen play out with russia invading ukraine, mike.

that's also taken some launch capacity off the market this year with sanctions. we talked about all of that in this episode of my latest podcast, manifest space, which is available wherever you get your podcasts. but bruno always has a lot to say on a lot of different topics as someone in the industry for a while now. >> really fascinating take i mean, the market has been in no mood to pay up for these companies which obviously are more about a more distant profitable future, but have the initial interest in the companies caused them to build out something, capacity that can last a while >> this is kind of the key, right? and it's not -- it's not that different in some ways to what we saw with a last boom and bust cycle of commercial space, which was tied to the tech -- the dotcom bubble bursting two decades ago. a very similar situation we saw this massive flurry of

money and start-ups including in the rocket and launch part of the industry, now you're seeing a correction there and you're going to start to see consolidation. bruno would argue it's the heavy lift rockets like the one he's developing or some of the ones spacex is developing that are going to carry a lot of satellites to orbit, not the small rocket makers that are publicly traded and some are starting to see some pains around their future. >> thanks, morgan. >> time for a sector short steve kovac has that for us. >> every sector is higher this morning, as stocks try for a positive session along the pop performing sectors is communication services. w within that group we're searing gains in warner brother. net flex and meta are also higher, and we'll end on alphabet which is firmly in positive territory but still down double digits this month

and tracking for its biggest annual decline since 2008. "squawk on the street" will be right back after this.

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during the pandemic, trillions of dollar of investment grade and high yield debt was issued at low rates now corporate america will need to begin refinancing the debt coming due steve liesman has more on what this means for the economy >> hey, mike as you know, debt makes downturns worse, and wall street keeping a close eye on corporate debt and the fed with the 2008 financial crisis fresh in mind so-called recoverover risk, the amount of debt coming due next year is not that high. corporations extended mat maturities about a trillion needs to be refinanced, that's 10% the bigger problems are in 2024 and then you get to '25 and '26 where it gets up to $2.7 trillion, $2.8 trillion. john fitzgerald tells me it's in decent shape but it doesn't mean there won't be pockets of pain we'll be paying a lot of attention to how companies manage earnings and cash flow.

that's was rollover risks just one of the concerns depending on the depth of any potential downturn issuers will have to pay higher rates and a premium because of potential default concerns that's already in the market there, a hefty default premium yields on the lowest rating junk bonds have doubled this year investment grade yields more than doubled from just below 2% to now above 5% on average danieliveson,chieve investment officer at pimco tells me when you enter a recession, you never know if it's mild or not and you have to be cautious about most economically sensitive sectors of the market. at pimco, they're looking at utilities, wireless towers, food and rest taunts and some technology the optimistic scenario here, the fed begins to cut rates before 2024 when the cliff of rollovers becomes due, but the current high level of rates

means the street is preparing for a worst case scenario outcome. >> steve, thank you. something to watch as we head into this new calendar year. mike, stocks trading higher. nasdaq up 2.5% tesla leading the s&p right now up almost 9% >> laggards leading at least for a day. >> that's going to do it for us. "tech check" starts now. >> good thursday morning welcome to "tech check." i'm deerd yeah bosa with julia boorstin and frank holland we're discussing streamers shifting their focus among recession concerns we'll cover the stocks set to benefit. plus, tesla continues to be a battleground stock, down almost 40% for the month of december but it's rebounding strongly today. so is it time to buy the dip >> plus, we have exclusive data on the fintech sector pointing to more volatility in the new year we'll discuss how to play it and is there more cybersecurity opportunity ahead? we have the 2023