after kevin maccarthy failed to win enough support with three votes. and southwest airlines is hoping $300 worth of frequent flyer points will make up for 16,000 canceled flights over the holidays i heard 25,000 i thought that was a mistake go ahead and keep it it's wednesday, january 4th 20rks 23 and "squawk box" begins right now. good morning, everybody. welcome to wks on cnbc we're live from the nasdaq market site in times square. i'm becky quick along with andrew ross sorkin and joe kernen this morning we're looking at the u.s. equities. dow futures up by about 61 points, the nasdaq up by 52, and

the s&p up 11. we saw a reversal of all that. the dow gave back 11 points at the end. they ran across the board. as i mentioned, the dow was down fractionally the s&p was down by 0.4%, nasdaq by three-quarters of a percent yesterday the 2-year yield ticked back up it was the highest levels during the day we've seen since norchlt the yield's a little bit lower ooimgs, it's 3.45% the 10-year is at 3.964. the u.s. house of representativesed a journg after kevin mccarthy failing in three consecutive votes to secure now if be elected. it was the first time in 100 years the majority party has not elected a speaker on the first volt here's mccarthy after the third vote failed.

>> members are talking we're walking through. i think we'll find our way to get there. this is a healthy debate it might not happen on the day we want it, but it's going to happen. >> are there any circumstances in which you'll pull out as speaker? >> no. >> no. there's not one. >> there's not one. >> they can't move forward without any legislation until the speaker is selected. an interesting note worth mentioning from the senate side. senator patty murray was sworn in as senate president pro tempore -- how do i say that -- pro t pro t pro tempore making that -- >> she's not a food. >> with no speaker, senator murray temporarily becomes second in line we're going to talk more about speaker vote with congressman french hill in the 8:00 hour. >> you watched a little bit? >> i watched a little piece of

it. >> there was a speech that gave great support of mccarthy, and it was so good he should be speaker. matt gaetz came out -- he was so nasty about mccarthy matt gaetz position, heal thyself. >> he wrote, complaining, under what right does he have to take the speaker's office >> right that he sold smars of himself over the past 16 years to lobbyists. >> they were also negotiating to try to get their own slots. >> there's one guy who's insisting term limits -- >> brilliant that i can get behind. >> one guy also that we balance the budget by the next year they're all able to get on the soapbox for a day. >> and then all of the back and forth with aoc did you see that >> i saw her with gomer. >> and with gaetz.

and marjorie taylor greene is mad about this. >> apparently kevin mccarthy was telling them he was going to get some of the democrats to leave the room so they could bring down the vote and they were going to aoc to see if it's really true and she said it's not true. >> the whole dynamics with pretty funny i didn't know where to watch because some cable networks would show it. others would break away and give their own opinions i found myself on cnn for a while. cnn was enjoying it so much, they were over the top just injoint i tried to watch fox for a while. guess who else loves it? fox loves it fox loves it because they hate mccarthy he's too much of a rhino, and cnn loved it because it's chaos in the republican party.

it's like, wow, they're both -- they both love what's going on from different sides it's hilarious it's hilarious. >> they're learning the rules, the byzantine rules of how congress works you don't have to be an elected member of congress. >> it could be lee zeldin. >> it could be donald trump people suggested. >> a great idea. >> then you would have the third in line for presidency, somebody who's not even an elected official. >> i saw something yesterday you would have liked i'm not going to retweet it because it's someone from the far left what's the guy's name, the liar that should not bel -- >> he's an obvious choice. world war the, combat veteran, nobel laureate there are other things he landed on the moon at one

point apparently on one of those missions what >> what was i supposed to say? say simple le you didn't want to retweet it but you're able to say it on tv. sam bankman-fried pleaded not guilty the trial will begin october 2nd. the judge approved bankman-fried's motion to seal the names of two people who guaranteed his release on bail with the bond and the judge agreed with the defense attorneys that the visibility of the case posed a risk to his parents. do you have any idea who they are? >> i don't know. i don't know where nbc is in this the judge effectively said he was very open to it, who i

imagine are going to be asking for access to the names. and he said that he imagined they were going to come forward. it wasn't so much like i really want to protect these folks. it was that i'll do this for now, but somebody else is going to show up with another argument and we'll re-evaluate it then. i would be very impressed if we did not know these names in short order. >> it was also funny watching on twitter who they're speculating it could be. >> oh, yeah, but i don't -- >> i won't throw any of those naples out there. >> what was the best one you're not saying it on international tv i'm the opposite we're going talk more about the case with s.e.c. chair jim clayton in the 7:00 hour. southwest airlines has begun

award 25g,000 frequent flyer points to travelers affecting by the holiday meltdown the bonus miles, which is around $300 are worth it. they were accompanied by a letter by the ceo bob jordan who told customers no amount of apologies can undo their experience southwest hasn't disclosed the number of passengers affected by nearly 16-inch,000 flight cancellationer of the holding. the department of transportation is weighing in on this you imagine there could be fines that are elevenies against the company that are much higher. >> i was looking just so you know >> you can get a couple of highballs. >> you can get between 7,500 miles and 57,000 miles will get

you a round trip ticket. >> not one way >> 25,000, it's possible it could get you a round trip ticket $7,000 to the low to 57,000 on the high time of year, yield on the flight >> it dpensd on when and where you're going. >> right i don't know if you think that's going to do it it depends on whether all of the other compencompensation. >> would you want to fly southwest at this point? >> i may. >> if you want to fly in the front of the plane, which we all aspire to that some day, you're not doing it for 25,000 miles. >> you might get an upgrade. >> in general. >> i'm thinking about what these miles are worth.

i was just not impressed 25,000 does not impress me it is not going to help. i really did think, okay, can i have an alcoholic benefit raj and maybe can i get two of them? >> it doesn't work on that. >> exactly that will be the day. >> this is your day. apple falls more than 3% givening the company a market capital low. that's for for very first time since won even topped $3 trillion on an intraday basis. we're going to to talk about the apple dragging down shares with gene munster fascinating article about nfg and their efforts on what might

be described a the metavirs, the new goggle system that's outrageous if real both vr around ar. as you know, i'm here for its. >> outrage is now. >> really, it looked -- if it's as described in a earth kl it's pretty amazing and lee marngable. >> it's not some sick perverted use of this, is it it would be far from it for you. how much better than reality can you get? you're still not in rome you think you're walking around. you're not you've got goggles on and you look ridiculous. >> when you see what they're going, you ieng going to be considered weird. >> i just read an article.

coming up, stocks started off the new year -- have some fun. >> i'm trying. >> you know that everything migrate ys because of that industry everything goes that way that's what drives the whole technology. >> i will tell you between apple doing this and facebook and others doing this, the metaverse thing is a real thing. maybe not yet, but it's coming. later a new documentary makes stunning claimings about bernie make-off. we're going to talk about that you're watching "squawk box" right here on cnbc

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. futures at this hour almost up 100 let's talk markets with the head of strategy. amy, i don't understand why the worst trade was puts and one of the best trades were selling calls or -- not. selling puts, which is weird, i guess, because it wuch such an orderly decline, and as a result, people have that muscle memory and aren't hedging right now for downside, which is possible

>> yeah, that's exactly right. it was a really counterintuitive market it burned a lot of people because we had the s&p draw down 20%. and the only drawdown strategy was worse than that. it was sort of the boy who cried wolf everyone who wanted to hedge last year got burned or maybe as we set up, the positioning is not there, joe. they do have that muscle memory. you know, it kind of kills when the thing that's the best was selling puts to own calls. >> that's weird. i don't know why that would work i guess it did a little bit because it was in the trading range. as far as not making money long

puts, is that because it -- there's obviously -- it only lasts so long when you buy an option, so the time premium is always expensive if it didn't go down quickly enough, you lost money, is that what happened? >> that's what happened. we lost some of the gappiness. we didn't get the sharp moves down we got a grinding market it went down, it went up it's about timing and the wild swings that you're actually looking for. that really contributed to the path that we saw last year. >> for whatever reason, you think it's going to be gappier this year in terms of more, i guess -- and we had some people on yesterday talking about vix

-- you know, vix at much higher levels, which i think would require severe rates or gappiness to get that type of volatility and you're lending credence to that notion that we see some of that this year. >> one simple thing i say, if you think about where investors stood at this point last year, there's almost universal con si csensus is different. second, we're starting to see the crafts and other market, people play downside in leverage loans and high credit. they're extremely expensive.

>> interesting the -- your comments on two really interesting names, and that's tesla and meta your shop, i guess, is bullish on both. you talk about the option prices are expensive, but the volatility might be low. that would make sense to sell either puts or calls on those and take in the big premium without worrying about much of a movement because they're already sold out >> yeah. so, you know, meta and tesla are two interesting names because these are names where in the past we saw kind of that skrub exsub rant call rebuyering it was the action where it seemed pretty attractive but you won't do it because you would get run over by the exuberance

recall mind. even though we've seen this big drawdown, our own research analysts are quite bullish on it at this point. you can actually place those structures now, net volatility selling. something i wouldn't consider doing in kind of the peak of the pandemic because of the call finding. >> still you get paid to play because the prices are still expensive even though the volatility seems like it's done. that doesn't really -- that's counterintuitive too. >> yeah. it's been a messy market historically that's how it works.

we've seen a weird market in vix and also single names where volatility has gone up we don't have as much of the retail fraud as we did in the past. >> that was the best trade last year you're doing both sides of that. >> there's a complex that's called skew. especially downside it's more expensive than downside because people want to hedge a lot of that has changed.

we used to accept that as textbook it's not anymore. >> people are starting to make the upside so it benefitted from that last year that's part of the reason. remember, this is all s&p, all of those were on s&p that was part of what benefitted that risky trade. >> great amy wu sullivan, i love talk about it it's interesting the worst trade last year were buying puts -- not for you, but that you monitored in a down 20% year that was the least rewarding trade. it's just bizarre. thank you, amy

appreciate it. >> okay. coming up, elon musk undoing a policy from twitter's jack dorsey we'll tell you what that was. shares of tesla, stocks fell by 12% this after delivery numbers fell short of analyst estimates, falling by more than 50% we'll be right back. realtor.com (in a whisper) if we use kevin's college fund, we can afford this house. the house whisperer! this house says use realtor.com to find options within your budget. good luck young man.

realtor.com to each their home.

the first time you connected your website and your store was also the first time you realized... we can do anything. cheesecake cookies? [together] the chookie! manage all your sales from one place with a partner that always puts you first. godaddy. tools and support for every small business first. jack dorsey had banned political ads saying at the time political messages should be earned, not

bought elon musk is now undoing that policy, relaxing ads that's calls for people to take action or educate and take a position only a small portion came from that political ad. the good news is there might be some -- a lot of revenue for him come election season the bad news is depending on what happens, it could put the company in even more political crossfire when it comes to regulation depending on how things are done as whether as we know other things were to happen. >> could you imagine having an o and o or local affiliate you saw what these guys do they make so much money. >> the big thing on these o and oess, you submit an ad, swurn

changes it and signs off historically when it came to facebook advertising and others, a lot are being programmed in the minute, changing -- you know, there's a hundred different versions of it we keep talking about is it chat pt it's very possible that that kind of technology gets used for advertising before just about nechlg if you thinkit could be used it can generate an ad. the point is there will be no opportunity for somebody at twitter or somewhere else to read each ad and go i approve, i disapprove that's part of the issue.

>> you think of extreme ads that would embarrass either an o and o or embarrass -- >> owner operated for those at home. >> it could bring down intense scrutiny. >> because it could be so malleable. you can change it so quickly on social media versus the -- they have to sign off. >> right. >> someone is actually looking at it. >> he did a good job at signs off. -- >> of course they have having help from the feds. >> it's bringing down a lot of enfo enforceful sanctioning. >> do you think our ads will be didn't >> our ads do you think they will be

different? >> it's possible a possibility. >> it's weird, though, because on some things, i'm way over on the left, and somehow you end on the -- it's mind-boggling. it's crazy. >> the only reason we have those pictures is because c-span is controlling the cameras right now. they ask every year to control the cameras in the house every year as the speaker moves in, they say no. there's no speaker, so c-span still has cameras in control at this point. >> i think things go on that we don't understand it. >> we're getting a look at how the sausage is being made. when we come back, salesforce announcing job cuts. and we're going to dig into the slide in natural gas prices down more than 35% in the last

month. it was down yesterday. we'll talk than next. later we'll be talking with the filmmaker behind the new dock you series. it's called "madoff: the monster of wall street." as we head to break, let's take a quick look at the winners d seanlors >> 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. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.

good morning you're watching "squawk box" at the nasdaq market site take a look at the futures as we're opening. the s&p 500 looking open at 16 points higher. a couple things moving higher. in the u.s. listed chinese companies including alibaba, pinduoduo, and jd.com, they're giving comments in support of

economies. we're looking at it there. you can see, alibaba up close to 7%. and salesforce reducing office space in certain markets. they expect to reduce charges that's related to the plan affected employees in the u.s. will get a minimum of nearly five months in pay, health insurance, and other resources this is something that had been sell graphed a little bit and expectations of what might happen they spent a lot of money over the years. i think you're really seeing the belts are tightening >> good. they spent a lot of money in davos. >> what do you mean good 10% of the employees are going to be without a job. >> it's purely related to the experience with mike davos.

>> you want them to spend less money. >> yes over there on their fancy exclusive velvet rope parties. >> we'll get you an invitation. >> i was in. but i tried to get some of our other people in and that was a big no and the next time i tried to go -- i haven't gotten over that yet. >> we'll get the bouncers going. >> there were bouncers there's a red carpet for you you're up in the vip section. let's turn to what's happening this morning look at prices of wti. down 2.5%, back $2070 a barrel natural gas is up another 1.75 dlrks $4.05. the big moves came yesterday it was a move of more than 11% drop to a new the ten-month low. a rise in domestic produngz and disruption of lng exports. we'll talk with the founding

partner. john, this relief that we've seen for natural gas prices, is this temporary relief? is this longer term? right now it's warmer weather doing the trick, but could that turn quickly if things get cold again? >> well, first of all, happy new year and good to see you, becky. it's keep your fingers crossed is the best advice i can give you at this point. you're underselling the move, i have to say. over the past ten or so days, the natural gas prices have fallen 40% it's been a remarkable drop mostly because of the recent spate of weather we're having, warm weather for that matter, that's pretty much eliminated heating demand to a large degree in most of north america here in the united states. the extended weather outlook shows more of this to come, more of this relative warmth, more of above normal temperatures, and it's just what the doctor ordered in terms of the fear

premium had been built into this market in terms of the s sufficiency of supplies. we're lucky across the board here as from a consumers perspective because natural gas supplies are dead on even with last year's inventory levels and the five-year levels they're normal to the extent this warm weather persists into the third week of january, a couple of weeks hence, the winter will be declared basically a bust in term terms of demand. we can start worrying about next winter later on in the year. >> is it the same story for europe because it's warmer than expected there warmer than usual weather patterns, and that's been a huge issue with putin trying to put the screw to all of europe with not giving them the natural gas they would normally need. >> the warm air has almost been miraculous in fact, it's pushing 85,et 0

degrees fahrenheit so, yes, they've caught a break here they have plenty of gas in storage, something to alleviate their situation and their price situation. as a matter of fact, the main dutch index that we all take a look at these days price-wise, it's back below pre-ukraine invasion levels right now. they have looked to have gotten through the situation as well. it's concerning. it could still produce a polar vortex visit in potentially early february, but so far this winter, this season that we've been in, this fall and winter season we've been in, all these long-range forecasts that have predicted a spate of cold

weather have all not panned out. that's allowed inventories to stay robust and get us through in terms of a slack demand s setup. >> you say this buys us another year, gets us to next winter what's the supply situation ore that time? does that extra year provide us the means to deal with it if it's a cold winter next year >> it's going to be a question one of the things you first alluded to when we started speak was freeport and lng in the united states. a big part of it went offline. we saved a good chunk of natural gas supply here in the united states every day that otherwise would have went to export. and ore the course of thisser yoo, these exports are going to return more exports are coming online, and it's going to be an interesting setup next year to see if the u.s. inventory levels, in fact, get to, you know, previous year and the

five-year average. it's a jump ball in terms of whether or not we're going to have robust inventories next year, but i will point out these higher prices we've been dealing with, the vulnerability we even been seeing is encouraging more to come online we've seen it steadily rise in the u.s. that's going to be a question. no, it's going to be tight look, let's take one winter crisis at a time at this point and let's see. we were in a huge deficit situation in the united states as recently as, say, july, august because of mild weather later in itemer is, it enabled big injections of gas over the course of several weeks, becky, that got us to the comfortable position we're now in that has allowed prices to go from $9 a unit in the july and august period to the $4 you're seeing there. >> and every time there is concern about inventory levels, and there was this summer, you hear talk in washington of them

stopping exportexports, saying,e it, we're going to keep it all here do you think it will change? that seems to me like it would rise back to the occasion. this year they were too worried because europe was in a tough position because of russia maybe next year that's not as big of an issue. europe may have more time to prepare too. >> right and, you know, there could be ukraine war fatigue and the like and, yeah, that's going to be legitimate political issue in terms of america first yes, banning these exports or eliminating these exports have going to be a political football in terms of this issue no doubt about it because these natural gas exports in particular, also the crude oil and winter fuel exports have -- are at a level now where the u.s. consumer is not necessarily as walled off from this energy picture globally as they preev previously had been. not that we ever really are

because of what goes on with the natural gas. yes, very much a political situation and a tough one at that. >> john, thank you. >> thank you. coming up, it was a chilling fourth quarter for for the new york real estate market. we'll have the new numbers coming up next and later jay clayton with the fallout of ftx as sam bankman-fried pleads not guilty. we'll be right back.

welcome back to "squawk box. apartment sales tumbled 29% in the fourth quarter that's the biggest decline since the third quarter of 2020. the prices declined for the first time since early 2020 with the median price down 5.5% we're going to hear more about the troubles in real estate in the market from robert frank who's going to be joining us in the 8:00 hour. when we come back, apples market cap falling below $2 twl gene munster after the break on what may come next a reminder you can get the best of "squa bwkox" on the squawk pod. listen any time. we're coming right back.

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[comcast jingle] welcome back to "squawk box. apple now the latest causality in what some are calling the tech wreck stocks tumbling down 15% over the past month on iphone shipment concerns. gene munster is joining us now, managing partner of loup the question is, are you a fan boy of the valuation >> i am. i think this is an understandable concern given tesla's miss really hit home hard the point that risk assets are off right now. companies that have been beating and exceeding are now missing numbers. if you look at an aggregate, the

stock that is most at risk with dollars at risk, it's apple. understandable what's happened with the sell-off here in the midst of uncertainty, unknowns, is that people are going to protect their assets and sell apple. i still have an answer to your question, what's my view my view is still optimistic. i think this is one of the world's greatest companies and ultimately if we think about the december quarter and the march guidance, let me take the near term for a minute here, the december quarter and march guidance, at first glance, this may be a disappoint. i recall in november apple warned that some production issues are impacting iphone demand that's somewhat of an unknown. you really need to look at the current state of the business in the context of the december quarter and their commentary, putting those two things together one final thought here, i want to answer your question, what's the long-term prognosis? let's take the case that i'm wrong here, is that their

business is not strong, that something is awry. consumers may delay for three, six, nine months, they're going to come back and i think that's going to be something that investors can lean into. >> so we're looking at 125 bucks, 126 bucks today that's about a 20 p/e -- but that's backward-looking. you tell me. what do you think this thing should be valued at. >> so this is not investment advice, but i think this should be a $250 stock. and i put that in the case -- if you look at the camp of companies like coke and disney and caterpillar, those companies trade at a 30 multiple apple is trading at a 21 multiple if you put a 30 multiple on 2024 earnings, you get a much higher stock. i'm still very optimistic. >> how much of that is dependent on just what might be the base case of what the -- the devices

and products that we know about, versus the prospect of new products we talked about cars forever we were talking -- i don't know if you were listening to the program, this is article in the information that talks about their new vr headset that may be introducing. i'm optimistic about the apple but i don't know if some of these in the short term are going to work. >> my optimism is not based on that you can get more upside based on the car or mixed reality headset. i'm not optimistic that the headset is going to have any impact on the business probably over the next two to three years, five years, maybe even long term. this car piece is something that i just kind of walk up to the line, i don't want to step over the line, given some of my history and products, and so -- but i do think apple wants to build a car. yes, this is going to be a tough year for evs, but this is a massive market for apple that's

not baked into that -- some of my prognosis about where this could ultimately go. >> let me ask you a headset question there's an article about it. what do you think that means for the world of meta and oculus given there's going to be two competing products in this space that seem to be doing similar things, though, maybe in different ways >> i think it's a positive for meta we are shareholders of meta. we're shareholders based on the add business ultimately, we think that you get optionality around that. so we have an interest in that piece. i think that there's a case that, you know, apple can enforce that there is some form of a metaverse that's coming i think there's a debate among the investors whether that's true just their investment in the space i think will be reassuring for zuckerberg's vision. as far as how the product is

going to play out, i suspect the apple product will be better from what we've seen from meta it's going to cost more too. double the cost and it's only going to be developers that are going to buy it. as far as laying the groundwork of is the metaverse something that is real, i think that apple's mr headset can play a big role in that. >> gene munster, thank you. >> thank you. >> we'll see how all of this pans out and maybe see you in the metaverse. >> right on. when we come back, some morning movers including some more big-name tech stocks to watch in today's session and later, a new documentary makes some stunning claims about bernie madoff. we'll talk to the filmmaker behind the monster of wall street that's coming up in the next hour "squawk box" will be right back. i'm glad we invested for the long term with vanguard. and now, we're back here again... no jobs, no kids, just us.

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good morning kicking off 2023 with a wimper has stocks fail to add gains the fed minutes are released this afternoon . sam bankman-fried pleading not guilty to federal fraud charges.

jay calculatlayton is here to tk about what is next. and we preview a new series coming to netflix about the largest ponzi scheme in history. bernie madoff, the monster of wall street. the second hour of "squawk box" begins right now ♪ good morning and welcome back to "squawk box" right here on cnbc. we're live in times square i'm andrew ross sorkin along with becky quick and joe kernen. take a look at u.s. equity futures. we look like we'll open up, about 85 points on the dow s&p 500 up about 15. we'll call it 14 points. nasdaq up about 65 points. treasury yields right now, you're looking at the ten-year note sitting at 3.681.

oil, you can buy it by the barrel looking at $74.93. and finally, we'll talk about sam bankman-fried and crypto and we might talk about ponzi schemes with the director of the new madoff film in just a bit. you're looking at bitcoin trading at $16,832. >> go to frank holland with a look at this morning's premarket movers. >> i don't know, dom chu might be mad if we call it the holland movers >> i don't know where that transition came from, joe, but we have some breaking news this morning. salesforce shares are moving higher after announcing job cuts you see shares are up more than 2.5% right now they plan to reduce the workforce by 10% it will reduce office space. it will run through fiscal year

2026 we're in fiscal 2023 right now as much of a billion of the charges in the current quarter salesforce shares up 2.5%. microsoft, shares are down almost 2% after be downgraded on concerned about its azure's cloud computing business azure has 22% of the global market other tech names are moving higher we're seeing all of these names in the green meta, up more than a% today. it's forecasted that this stock will rebound in 2023 seeing alphabet up a percent and tesla and rivian moving

higher tesla also up following a 12% decline yesterday after missing its delivery targets seeing the nice bounce this morning. back over to all of you. >> becky thinks it could be ch, which -- frankly speaking? holland? holland tunnel. >> the reason we segued that way because ponzi. he's going to live forever probably not in the way that he intended, but that was like a long time ago. >> what happened to our podcast, joe, it's an odd couple type of theme. you and i. >> why who is who >> are you serious i'm not felix. >> i thought you were going to do the cup it challenge, one of

those tiktok dances. whatever happened to that. >> i sent you a link he didn't respond to the email >> you sent me an email. i didn't even see it i apologize. >> i think the people want a cup it challenge on twitter we need to get the momentum for you guys to do the cup it challenge. who is whistling the odd couple theme. >> i recognize that. thanks -- >> good morning, guys. great to see you >> chu on this for dom >> joining us right now is stephanie link hightower chief investment strategist and a cnbc contributor. new year, new calendar, but maybe not a new strategy this time around, right just a few days later, what's

changed? >> i know. not much as changed, right we turned the calendar year but we still have to deal with the fed, higher rates, higher for longer, we have to deal with slower growth because of the higher rates and lower earnings we probably are in this trading range until we see earnings for the fourth quarter in february which i think are going to be good, but it's going to be the guidance that dictates the tone of the market. but i don't think all is gloom and doom, becky. i really -- i think the consumer has been very resilient. that speaks to the jobs and wages and actually we're seeing lower input costs which is very positive and currency is kind of tamed itself and overnight, we just got some really interesting china data. so luxury travel spend is on the rise it's picking up. macau averaged daily rates are closer to 2019 levels so we've seen a pick up in macau as well. and we're seeing china pause

spend and investment on semiconductor companies in their country. that benefits our semiconductor companies, right the u.s. companies so you have a china situation that is changing and that could also act as a tail wind for 2023 that i don't think a lot of people believe and i don't think a lot of people are giving any kind of credit so, yes, we're going to have headwinds on demand, but i think there are some things on the positive side that i'm looking towards because everybody is actually on the negative side. >> yeah, let me throw a new theory out on you. yesterday we had the ceo of paychecks on he said that small businesses are actually starting to find workers, they're having less trouble with it. they don't have to pay quite as much maybe there's a little bit of a cash on the wage inflation starting to come down a little bit. when it comes to the retailers, they're seeing the same thing. they don't have to pay quite as much to get workers in the door. if that's the case, i mean, that could be setting things up for a

much better situation with the fed. if you don't see the wage inflation, the spiral from here and continue to grow, then that would mean maybe the fed doesn't have to be quite as tough this year as maybe our worst fears? >> absolutely. because that's what the one thing that they're focusing on is the wage component. we know that wages are rents and sticky we know what's happening to housing and rents follow housing. eventually rents are going to start to rollover and you're starting to hear signs from pockets of the country where rents have stabilized. so now you have to look at wages and wages are still quite high which is, by the way, a very good thing we root for higher wages if they are moderating, for companies, that's a very good sign, for sure absolutely in addition to the other parts of inflation, input -- like the food, right, and beverages and -- morgan stanley did a great article the other day talking about they did a survey

of all kinds of -- an index of inflation goods prices and they're still up 7% year over year, but down from 11% last quarter and in every single week in the month of december, input costs, goods, came down. so that's a good thing in addition to your theory of possibly wages moderating as well >> let's get through a couple of quick stats. i don't know if i completely buy into it. but i like the theory. i'm waiting to see more information on whether wage inflation has topped out yet i'm not sure i believe it, but i like the early signs let me ask you about a couple of stocks one that you like and one that you recently bought. one was paypal that's one that you've been eyeing >> it's interesting because the stock used to trade at a multiple -- by the way, i used to own this a long time ago. i used to trade it, 30, 40, 50 times earnings it was hard to justify but they had the growth, the

dominance, the market share. a lot has changed since then the stock trades at 18 times forward. and you've got elliot management as an activist in the shares which has -- they have proven to be very successful whenever they get themselves involved with a company. so i like that, i like the valuation. i think there's a lot of cost-cutting it can do they've got $6 billion in that cash and they can do a lot of m&a. i haven't bought it yet. >> one you have been buying recently is cleveland cliffs how new of a position is that for you? >> it's a volatile one for sure. but i do think, a, be careful, please anybody that's listening, don't get a huge position in this thing. i'm keeping it in check. but it does trade at five times earnings and three times ebitda and i think they are a beneficiary of the infrastructure bill passing, right, and also the content changes that this bill has in it

for the auto industry and they're one of the leading suppliers. the most interesting thing is they've increased prices for 202023 most have accepted them and at the same time, back to input costs, input costs are coming down by the definition of operating leverage, higher prices, higher margins and better -- lower costs, right, and i think the demand is there because of the infrastructure bill tailwinds. >> it's good to see you. we will check in with you soon. >> good to see you happy new year. >> happy new year. we're coming back in just a moment before we do, by the way, very special viewer this morning, sidney sorkin turns 6 years old. we want to wish sidney a very happy birthday, sidney. >> she's the queen of the sorkin household. >> that's a great sign the best >> happy birthday, love you. >> aren't you a --

>> i am. bankmafried pleading notam guilty to federal fraud charges in new york. we're going to talk with form s.e.c. chair jay clayton about the charges against him and what lies ahead. and then the markets and jay powell on two different pages when it comes to the state of the economy. we're going to find out what investors should take away from this afternoon's release of the fed minutes. squawk returns after this. the first time your sales reached 100k was also the first time you hit this note... ( screams in joy) save 20% with the lowest transaction fees and keep more of what you make.

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welcome back to "squawk box. sam bankman-fried pleading not guilty in new york federal court on tuesday the ousted ceo facing charges of conspiracy fraud the judge proposed a trial start date for october 2nd joining us right now is former s.e.c. chairman jay clayton. nonexecutive chairman of apollo and a board member of american express and a senior policy adviser. we should say sullivan represents ftx -- >> in the bankruptcy. >> in the bankruptcy but you're not involved in that. >> no. >> i'm curious what -- i know that that's a big issue about how fast did they move on a relative basis, i think they have moved fast the question is, how fast do you think this whole thing happens >> i think you make a point that is missed here and damon

williams and his team have done a remarkable job your interview with sbf was, what, a month ago, just after thanksgiving, in the bahamas, where is this all going? now you've gotten the extradition issue off the table. you have cooperating witnesses, you have a trial date, what looks from the outside as a pretty orderly administrative process, administration of justice here on this, so look how far the doj has come in a month, pretty good, right? >> here's my question to you, though, this will play out and there's two options on the table. and i wonder whether there will be -- there may be one option which is, there may be a trial and that will be the only option for a sam bankman-fried. at some point if you're a sam bankman-fried, depending on what the evidence is against you, will there be an option and would the government -- is it palatable for the government to

consider some kind of settlement, arrangement with a plea meaning, at what point do you say to yourself, this is -- i think probably depends on the strength of the evidence on one side, but also there's going to be the timing, the costs and all of those other things in terms of what kind of sentence you think may or may not come from this. >> and other things, which is, how much of the information that -- as you're alluding to in your description, how much of the information that the public wants to know has already come out or comes out as part of any plea process as opposed to a trial process. if all of the information that we as the public want to know about what happened here is on the table, then the question of whether you need to go through a trial and need to go through the expense is diminished, right because we as the public want to find out what happened, wanted to deter it in the future -- >> from a deterrent perspective,

you would think you would want to go through the full trial. >> it depends on the deterrent effect of the sentence whatever the sentence is, is going to have, i think, the lasting -- >> at 30 years old, if i told you it was a life sentence, that would be a real deterrent. if it was a 30-year sentence -- >> i think -- look -- >> this is assuming guilt and maybe that's unfair to do. >> a sentence of that type of length, we believe in this country is a deterrent effect, for all sorts -- >> what about 15 years what is a number that seems commensurate to the crime? and if it's proven to be true, it's bigger than what madoff did. >> it seems to be of that caliber, right and madoff was going to spend the rest ofhis life in jail. >> he was much older but, again, 15 years -- >> in terms of getting money back, though, for the victims, both of the customers and what might be described as the creditors and there's a question of who the customers are and who the creditors are and whether

they're the same thing or not. how much of that is a function of the bankruptcy court, the doj of justice looking back at some of the transactions and other things, trying to determine whether they were criminal or not. if they're criminal, it helps in the bankruptcy proceeding to be able to claw back that money, right? it changes the dynamic the doj announcing yesterday that they're forming the ftx task force and whether that turns into something, that's looking at adjacent relationships of other elements of crypto. how does that all play out >> well, you point out something that is -- it's a good thing that we have such experienced people on this damon williams -- remember the chris collins case, that was his case, okay understanding the interplay between what will happen with

the doj, what will happen with the s.e.c., the cftc and the bankruptcy and trying to optimize for a number of variables, of course, you know, the administrative justice, bringing mr. bankman-fried to justice. but all of those other elements, there will be communications back and forth to try to optimize both recoveries for the victims as well as, you know, justice in the case. and that's -- it's complicated, requires communication it requires -- and it requires experience it's good that we have people who are experienced on the case here >> we have a little time left. you want to talk about yesterday? we have a great system in this country. but there are some things that happen occasionally. it's a narrow -- they've got a narrow majority. each guy guys you've never heard of some of these guys in the republican party that you've -- i've heard of matt gaetz, but other guys that you've never heard of, now are very, very important. how is this going to work out?

what were your comments on what happened yesterday >> i will tell you the observation i had, which is nancy pelosi looks terrific, right? she had a narrow majority and she -- >> she got it done. >> did you see any of this if you're -- if you're in the white house and you have a speaker who can deliver a narrow majority like that, you're pretty happy this does not look like that. >> was that mccarthy's fault >> no, i think it's endemic to what i would say -- >> the fringe gop -- >> i don't think there's any other way to look at it. >> what's the -- >> well, mulvaney was on yesterday and made a good point. he said what's the alternative to mccarthy? >> they were making that point yesterday but that fell on deaf ears -- >> judd greg said he thought it would be scalise. >> to this point, though, which is why does the gop -- look, democrats have various wings of the party and this and that.

>> they always stick together. >> but i would also say it's very rare where anyone in the gop is calling out typically the members of the most extreme parts of the party meaning, most republicans are -- >> do you see the democrats calling out i lomar or alexandra ocasio-cortez? >> the ability to have different voices in the party doesn't have as many ramifications when you have a broader majority as when you have a thin majority. >> when you have a thin majority, those differing voices, they get -- >> you don't have to be in the house. >> i don't think so. i don't think so. >> jay, what would you do? the concessions that they've asked for are incredible extreme, wanting committee positions, chairmanship positions on some of these

things. >> one guy challenged the -- if one guy is mad at mccarthy -- >> they're holding out for ransom. >> transactions are -- when you have somebody holding up that they don't have an alternative, i think you have to stay the course >> do you think mccarthy will eventually be named speaker or is it going to be somebody else? >> i -- let's put it this way, i think somebody who is of leadership -- if i had to bet, you would bet on mccarthy. it will be somebody of leadership it's not going to be somebody from the outside >> you're done >> i'm going to watch today. as i go between the different cable channels just to laugh -- >> you're having a good time with this. >> watching this, it's classic watching the objective cable channels cover this from both sides. they agreed, they both hate

mccarthy the left loves the chaos, they were giddy john king. i've never seen him so excited and giddy. >> jay clayton, thank you. appreciate it. >> you talk about yourself, i guess. >> sure. >> and then we work for a news organization. >> well, we -- that's why we have this show so we can show the rest -- >> the rest how to do it. >> exactly when we come back, a preview of the fed minutes and what it could mean for the markets today. and then a new docu-series about the architect of the largest ponzi scheme in history that's been moving out to this point, that would be bernie madoff. that debuts today. we have the director of madoff the monster of wall street joining us right after this. check out the futures this morning, right now it looks like the dow is up by 55 points s&p is up close to ten points.

yesterday we had big gains in the future, we closed down across the board 4 out of 5 down sessions in a row right now for all three of the major averages "squawk box" will be right back. >> announcer: time now for today's aflac trivia question. what is the widest bridge in the united states? the answer when cnbc "squawk box" continues spital bill? mm-hmm. for 1,100 bucks? ga-a-a-ap! looks like your wallet may need a sling too. tell me about it. did that goat say "gap"? he's talking about expenses that health insurance doesn't cover. eh-ehh-eh! well i'm talking about the money aflac pays to help close that gap. aflac, huh? aflac! ga-a-a-ap! aflac! gap... uh-oh! that duck can motor! get help with expenses health insurance doesn't cover at... aflac! ...dot com.

>> announcer: the answer to today's aflac trivia question. what is the widest bridge in the united states? the answer, the driscoll bridge in new jersey. it has a total of 15 travel lanes and six shoulder lanes and is part of the garden state parkway. still to come this morning, the latest on the housing markets, new data on weekly mortgage demand. we have that right after the break. and later, bob diamond on the recent market volatility and what he sees as we head into the new year you're watching "squawk box" and this is cnbc

no matter what you' against, we have your back. we are united way. we are neighbors helping neighbors in communities around the when disaster strikes we get you back on your feet. we help children build brighter. we've been here for over 135 s but now our work is more . join us. join your neighbors. join united way. the housing market where we've gotten the latest numbers on weekly mortgage demand. diana olick joins us now with more >> hey, joe. and you get two weeks for the price of one this week as the mortgage bankers association was closed last week i'm going to give the totals for the two weeks.

first off, rates at the end of 2022, the average rate on the 30-year fixed jumped to 6.58%. just for context, it was 3.33 at the end of 2021. as a result, total mortgage application volume plummeted 13.2% over the two weeks and that is seasonally adjusted. applications to refinance a home loan dropped just over 16% and were 87% lower than the same period the year before applications for a mortgage to buy a home dropped just over 12% from two weeks before and were 42 weeks lower than the same period a year ago. the end of the year is the slowest period for the housing and mortgage markets, but these year over year comparisons show just how hard consumers are taking rates but economic uncertainty. mortgage rates started a tiny bit lower. really, all eyes are on the all-important jobs report friday which will move rates more

significantly. we just don't know in which direction. so now let's go to steve liesman who has a preview of this afternoon's release of the fed minutes. >> and fed rates have a lot to do with what's happening in the real estate market the members of the committee have shown remarkable agreement but fed watchers are going to scrutinyize the minutes today. the fomc minutes may indicate a broadening debate on slowing the pace of tightening further the emphasis in that statement has to be on "may" because fed officials have shown support for a rate that is higher for longer projections for rates in 2023 show 17 of 19 fed members, they're forecasting rates ending the year at 5% or higher compared with the current rate of 4.38. some a full percentage point or more so what would you look for in

the minutes? weakening jobs, slowing wages, declining growth and recession, monetary policy lags, all the hikes so far are hurting the economy now and also financial instability. some have mentioned that maybe too soon to see too much concern because even the market doesn't show much debate about rates until may. there's good agreement on two more 25-basis point hikes. so today we look for clues if the rate hike train stops before, on, or after, joe, the 5% station stop. >> we're going to continue that exact point, steve, right now, about -- supposed to be 5 and a quarter or above but the market still says five, right? >> actually, lower, joe. just below five, 4.88. you know, the difference may not be quite so much

the fed has to write down a point. the market can go out there and hedge probabilities. if you look at, for example, may, look at the -- that's the rate outlook now, there's the 4.94 which is plus or minus that 4.88 number. look at the distribution in may and what you see there is you see small percentage say, you know, if we reach 48, the fed will cut 25 in may some say they stay at 4 .88. some say they hike another 50. if you're an investor in this market, joe, you can put bets across that spectrum if you're a fed official, you got to write down one number. >> we're going to -- as i say, let me get to the guest, steve i'm just wondering -- let's go the market and the fed have mix matched expectations joining us now, senior fellow at

brown, megan you only live one day at a time and i know calendar -- now it's a new year but we're still basically it's a continuation of where we were last week. but, just let me ask you, will 2023 be a year of declining inflation, not deflation will we see a very resilient economy and labor inflation will persist throughout the year. what will we have seen >> yeah, thanks. look, i think peak inflation is behind us in the u.s. barring any kind of black swan event i think we probably have seen the high watermark for inflation. so inflation should continue to

decelerate over the course of this year. will it get to the fed's target of 2%? almost certainly not and the biggest reason for that is that the driver of inflation in the u.s. now is services and the largest component of that is wages and wages are pretty sticky it's easy to boost them. it's really hard to cut them i think inflation will be somewhere around 4% by the end of this year closer to the fed's target, certainly, from where it is now. but still not there. i think growth will also decelerate in fact, i think we will go into recession. it's going to take longer because there's a massive cash cushion in the u.s and so we'll have to burn through that cash cushion before consumers, in particular, really start retrenching, also corporates i think we'll see a recession in the second half of next year the fed has been really clear about their policy path. we just got their latest dodd

plot and economic projections in december and yet the markets have been really relentless in looking at that and saying, yeah, we don't buy it. so in december when the fmoc happened, the markets pushed out their rate cuts for may of next year to now august of next year. while the fed has been saying we're going to get rates up at -- to five or above 5% and we're going to hold them there for the whole year the fed is pointing out that there's no fed put left. the fed is not going to cut because there's been a fall in equity markets it would require real dislocations in credit markets for the fed to step in, that would be the fed's job so i think, you know, in so far as credit exists, there is a fed put. otherwise not really and so i think the markets continue to misprice what the fed is going to do. >> is that the fed's fault should we say the fed doesn't have credibility, or is it market players fault because they just -- they just love the notion of higher asset prices,

whether it's equities or bonds or whatever? they always want the pivot to come whether it's coming or not. might not be the fed's fault might just be market players or just stubbornly long or want to be long. >> yeah, i think it's a huge piece of it. investors really want a fed pivot. they're going to continue to price it in. if you look at the history of the fed and other central banks, sometimes they are led by the markets. sometimes they are pushed into it because that's what the markets are demanding. that's why i highlighted the notion that this fed put just doesn't exist anymore. i don't think the fed is going to be pushed into rate cuts unless there are real problems in credit markets. we could get problems in credit markets, right a third of our corporate debt is triple b rated if that gets downgraded to junk, then there's going to be a lot of forced bond selling, maybe the fed would have to step in. they would have trouble doing so because the fed is not going to buy up junk debt that is a real concern but my forecast for a recession

leader this year is for a short and shallow recession, not a financial crisis on top of it. in that case, i don't think the fed is going to step in and ease i think it's going to take longer than the markets are pricing. >> steve, you still there? what are you -- give me your december 31st wrap up for 2023 in terms of inflation, in terms of the economy, gdp, everything else, what do you think you'll be seeing? >> first, i just want to say, the issue for the investor, joe, to what megan was saying is the fed is going to be wrong here and it's almost certainly -- it's never right over this kind of period of time. if you go back and look at their projections for their own funds rate a year from now, so the -- you know there's money to be made as a player here on betting that the fed is wrong and the question is how? i do not believe there's going to be a recession. i know that's an out of sample

forecast but i think that we can skirt a recession or at least a huge increase in the unemployment rate because i believe that the labor force is going to be permanently lower than it had been or labor force growth is going to be lower. i don't have that built in there's going to be a continuing demand for jobs and employment i think we can eke out 1% growth this year, stay on the positive side -- >> you're taking the opposite of the recession declining inflation, you're saying labor -- >> you know what impresses me, joe, is the capitalist system and the oil and energy market. you put those prices in a place and they respond, you have a little help from better and warmer weather, and i think what's very interesting what's happening in inflation in the oil and the natural gas market and i think we're going to get a surprise to the upside, which means a downside for inflation

this year. maybe i woke up on the right side of the bed this morning. >> then we get lower inflation and continued growth that would be good that would be good megan, i just wanted to get steve in quickly appreciate it. we'll see you, especially tomorrow on "squawk box. kansas city fed president esther george is going to be our guest. coming up, madoff, the monster of wall street debuts today on netflix the docu-series goes into the life of bernie madoff. we're going to hear from the director in just a few minutes about all of it. and the u.s. house of representatives adjourning yesterday without a speaker. this after representative kevin mccarthy failed in three consecutive votes to secure enough support to be elected we're going to speak to french hill about the chaotic day in washington and what comes next "squawk box" comes right back.

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behold... all that talent! ♪ this is how we work now ♪ welcome back to "squawk box," everybody. take a look at the futures this morning. we've picked up just a little bit in the equities futures. dow futures up by 71 points. s&p futures up by ten, the nasdaq up by 55. yesterday all the gains we saw

in the morning e vaporated. when we come back, the man behind the new netflix docu-series, madoff the monster of wall street >> he was a financial sociopath, a financial killer. >> it was all fake the money went poof. gone you're going to put billions into something, you check everything even if god sends you a resume, check the references >> but there's a lot more to the teiamo including madoff's pontl b ties the director is going to join us next right here on "squawk."

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and now a lot more people can. so let's go. the digital age is waiting. i admitted to doing enough things that were totally embarrassing and wrong that i regret, but this is my own doing. no one had a gun to my head. unless you knew me and you knew my relationship with these people, my four big clients being the greedy people that they were never wanted to close out the transaction. >> that was an exclusive never-before-seen footage from bernie madoff's deposition back in 2016. it's featured in a new documentary, "madoff: the monster of wall street." it is streaming on netflix today and joining us right now is the series director joe berlinger. good morning to you, joe

nice to see you. congratulations on the film. >> good to see you. >> so much to talk to you about. the film itself as well as i would love to talk about what you make of what seems like -- we'll see whether it's a crime or not but what's going on with this ftx situation and sort of how that relates to all the work you've been doing on this. start with this, we just showed this deposition. it's the first time i had ever seen bernie madoff in prison on tape how did you get access to that >> yeah, it's incredible stuff he's very revealing and we got this material from the victims' attorney she was representing victims in the clawback actions she was against how the clawbacks were happening and she provided us with this incredible material that's never been seen before >> there's a number of never been seen before elements of this, perhaps, the most provocative is this idea that's

presented in the film that one of the reasons, if not the main reason that he turned himself in, in fact, was because he was worried about being, quote, hit by the mob >> well, i wouldn't say it's necessarily the main reason he was -- that he turned himself was -- that he turned himself in, but he's a sociopath anyone who would look a widow in the eye and take all their savings, anyone who would do this to an elie weizel or a regular investor is a sociopath with no empathy. he's widely credited for turning himself in and looking out for his family that's a lot of bs there was a lot of dirty money in the hedge funds and evaporated i think he did the smart thing and took himself off the streets. it was less about protecting people this narrative that he was the singular genius is also one of

the reasons i wanted to do the show he's been mytcredited with doin this on his own. just like with sam bankman-fried, there were a lot of sophisticated investors that should have known better and institutions like j.p. morgan chase who had a view into his ponzi scheme billions of dollars were flowing through one checking account, and a lot of institutions due to greed, i believe, looked the other way. >> the clip we just played from the deposition, that's kind of amazing, this idea that he's blaming his greedy customers for being the ones who made him do it none of them, you know, decided to call on this or to pull their money out. that speaks to the sociopath description that you just gave of him. >> exactly classic narcissist i have done a whole bunch of serial killer shows over the past couple of years bundy, dahmer, and gacy.

he shares a lot of qualities with serial killers, a complete lack of empathy and blaming other people john wayne gacy famously blamed his victims for the situation they put themselves in and here you see bernie blaming the greed of some of his customers it's just incredible he destroyed the lives of so many and he's blaming others going back to your original question, andrew, the idea that he magnanimously wanted to save his family and pled guilty is a lot of bunk. >> because it's new to me at least, what is the mob piece of all of this? >> well, there was a lot of cartel money there was a lot of just dirty money, you know, being invested. more of his money was offshore and in europe than in the united states and so there is a feeling amongst many that a lot of this money was dirty money.

>> you mentioned j.p. morgan, some of the feeder funds and others, do you think it's that they looked the other way because they were simply greedy? they didn't know or didn't want to know or do you think they actually knew? >> that's a hard question that is hard to answer. i think people with fiduciary responsibility for other people's money have a need and a responsibility to look deeply into where they're taking other people's money and investing it, and the red flags were so loud and so bright on this case, you know from the simple basic fact that, you know, for example, his strategy involved options. if you believe the size of his hedge fund, and if you believe that he was using this split strike conversion strategy, there would have been more options that he needed than were in kexistence in the total

options market there's just things that real investor, sophisticated investors should have known. >> and real regulators. >> and regulators. i mean, the regulation, the regulatory failure here is massive. i mean, harry, the famous whi whistle blower went to the s.e.c. five times, and they ignored it. >> do you think he always intended to be running a criminal enterprise. we often talk about ponzi schemes and whether they start innocently if they can start that way, if you will, meaning the person starts on the straight and narrow, gets into a hole, and then, you know, tries to dig out or do you think it's more premeditated >> i think bernie deluded himself that he was a good guy and he did some good things. he basically created nasdaq, it's a long story that i won't

go into the details. obviously people on wall street are aware of he democratized trading. his work in electronic trading in the '70s, helped make that possible he did some incredible things, but he played fast and loose with the rules from the get go there's a famous story, you know, when he's in his 20s and first opened his shop in 1962 after the big market crash, he ended up losing $30,000, and instead of telling his clients what happened, he borrowed $30,000 from his father-in-law and gave the money back to his clients saying that he had gotten out just in time. and as said in the show, he decided he would rather be a liar than a failure because his father was a failure

so was it a ponzi scheme back then, no, but he was playing fast and loose with the rules. he had this investment advisory business on the side that he kept shadowy while he had his legitimate business. >> fast forward to today, there's been lots of comparisons made fairly or unfairly and maybe time will tell i'm curious where you land on this with sam bankman-fried. and what looks like a lot of commingled funds and the likes or worse >> yeah. well, look, it's an apples and oranges comparison on a certain level, but fraud keeps happening in this country every five to eight years, and the roots of fraud are the same the same things happen as are happening here with ftx. you have a charismatic guy who deludes himself into thinking he's doing good in the world, and he's actually sticking knives into people's backs

you have nonexistent regulation. the former s.e.c. chairman who was on a few minutes ago, it's great that we got here a month after your interview in the bahamas, but why weren't we here regulating crypto or having an insight in the pastm the regulatory failure with bernie madoff is mind boggling and then you have people who know better. sophisticated financial people taking other people's money, and investing it you better know what you're investing it in, and people look the other way. i mean, madoff -- >> sorry go ahead. >> i need to thank you, you're a great director and producer, so you know this better than i do, we're up against a hard break, unfortunately. >> i hear you. >> i want to wish you lots of luck with the film it is called "madoff the monster of wall street. i have a public cameo in it myself. >> i do. and happy birthday to your daughter sydney. >> you're very nice to say that,

joe, thank you very much we look forward to seeing the film i should say series. >> you're even in the meghan markle thing. >> i am. >> on netflix. >> on netflix. >> you're like everywhere. >> just one of you too amazing. we're going to talk to e tet ssman french hill about thatmpto pick a speaker. bob diamond is talking marketings, the fed risk, and much more. we'll be right back.

good morning, take two on the second trading day of the new year futures now pointing higher, of course, they were pointing higher yesterday too, and guess what, things ended lower salesforce this morning, the latest tech company to announce job cuts we're going it tell you what ceo marc benioff said about it and republicans unable to agree on a leader in the lower chamber. they're going to try again today, and we're going to speak with arkansas congressman french hill about all of it the final hour of "squawk box" begins right now ♪

good morning, and welcome to "squawk box" here on cnbc live from the nasdaq market site in times square i'm john kernan, along with becky quick and andrew ross sorkin on this jobs week >> it's coming up. >> first new year, and now we're going to get the december jobs report u.s. equity futures this morning are up a little bit. we're up earlier up over 100 at one point. just kind of mirroring what we saw yesterday. we'll see. but we're still positive on the nasdaq as well up 52. s&p up about 9 look at treasuries could be an interesting year in treasuries i can't help but look forward. i want to know where things are on december 31st but have to go back to the future for that, right >> this coming december 31st not the past one >> i got a pretty good idea of where we were on the last one. that's why i like the term going forward. as if you need to say that

don't we know what happened going backwards? why do you ever have to say going forward. >> history >> at the end of the day, another one of my favorites, anyone ever talk about what happened at the beginning. >> we do >> we're here at 5:00 a.m. beginning of the day energy prices right now, 75 on wta. >> let's get you caught up on today's other top business stories. first up, salesforce says it's going to lay off about 10% of its employees and close some offices as part of its restructuring plan in a letter to employees, co-ceo mark b-- salesforce says it expects to take up to $2.1 billion in charges from the moves. you can see the stock up by 3 1/2% we're keeping a close watch on shares of tesla after the stock

dropped 12% yesterday, its worst day in two years tesla saying on the webo social network, it will extend how long it will offer discounts on some models in china. we heard that offer would be good for anybody getting delivery by the end of february. tesla shares up by 1.1%. and more tesla, elon musk booster kathy woods snapping up more shares. a daily disclosure shows two of woods' funds added 175 shares of tesla yesterday. also, southwest airlines saying it will give flyers caught in last week's scheduled melt down, 25,000 frequent flier points as compensation in addition to refunds and other reimbursements the points will be worth $300 in flights. still unknown how many fines will be placed on the airlines as well. >> our first guest this hour says he expects the s&p 500 to retest its low from 2022 in the first half of the year

joining us now chief u.s. equities strategist and global head of quantitative research at j.p. morgan. year end target of 4,200 we won't get there right away. >> that's right. we think that in the first part of the year we still continue to face a head wind on the earnings side margins we think were made under a heavy dose of pressure a backdrop where you have goods deflation, probably also soon enough service-based deflation. but at the same time, wage inflation remains quite sticky, i think that's a pretty bad combination for margins. i think expectations are simply still too high, even if you look at simply the 10 largest companies in the s&p 500 expectations for 10% earnings growth next year, this year, and 1% margin expansion. >> now it's this year. funny the way that works so what do you -- and the fed stays restricted so that

means -- >> initially >> which means that multiples have no reason to expand. >> right >> lower margins, lower earnings, lower multiples, on what s&p total for the year, do you think? >> so we think eps basically moves lower towards 200, 205 205 is our eps estimate. >> times 18? >> yeah, i think you could put times 18 right now. that brings you to about 3,600 level >> right >> some form of fair value then i think if the fed starts to signal some form of easing as inflation continues to make more progress, let's say middle of the year or second half of the year, that's when i think you could start seeing multiple expansion, including in some of the most beaten up equity segments, which is a lot of these hyper growth names. >> you think easing, not just a pause. >> i think a pause is not enough it's too restrictive >> you're never supposed to time the market, and everybody is

going to listen to what you're saying if it's going to end the year in this better place, maybe i should just, you know, do it now and i'll get there that way or if i'm really greedy, i'm going to wait for the lows to be tested the way you describe, whether they come or not, we don't know obviously, and then if he's right, i'll do even better but what's the better path >> it's a tough one. what i will say is people tend to think about the market through some form of normal distribution we think this year we'll end up being another call it nonlinear year i don't think the fed is going to make it easy for the market they will probably stay restrictive for too long, too long that's going to continue to result in a flush. i think you're seeing a lot of retail money coming out of the market a trillion dollars wiped out of crypto, tesla. as the panic starts to build up. markets face near lows and at some point the fed may start to

ease >> i think if we knew, you say, well, tesla, do they hold. if you knew there was going to be just a test, then you would buy here, i think. we're 3825 on the s&p, what do you see the low, 3580. >> so do we go to 32 and wait for that if all we do is test the lows, you could buy some of these st stocks now. >> on the institutional side if you look at the data, there has been already pretty heavy unwind i think institutional positioning is quite low retail is the area of vulnerability. panic starts to basically increase you will start to see some institutional smart money stepping in. so, again, 36, we think, is at a minimum. market could go somewhat lower, how low. >> 36 is the minimum. >> i think, yes, yes, it is backdrop. >> 38, 25. will that get the vix up to the

point where it's a true capitulation >> vix is in the low 20s we could surpass the 30 mark. >> not 50. >> probably not 50 because, again, i think you have already seen a pretty heavy dose of de-risking, including a lot of systematic strategies they de-risk heavily. >> i'm hoping that instead of this, you can get just bored to death and make a decent low that way. just from years of not balancing. can that happen? without a capitulation low can you make a low just in terms of a long time versus just how deep it goes >> you could, but i think a lot of that will depend on what happens with cost of capital if the fed stays restrictive cost of capital, let's say hypothetically two years, you could be basically moving range bound at some lower multiple level. >> do you think the leadership that emerges is going to be the same or different? >> so we have been calling for a

broad-based rotation into value assets for, i would say, two years now, straight. energy has been our topic, primarily for supply reasons a lot of the unprofitable segments of equities, they were on the expensive side of the trade. you have seen already a massive rotation there i think the rotation likely continues to persist, not to the same degree it has the last 12 months, but that's the direction. think about the experience it was a three to four year rotation from expensive to cheap. the first year, super violent, and then a gradual continuation of that same rotation, and i think somewhat of a similar scenario is playing out here. >> overall, everybody is dying to buy some of these tech names. >> yeah, but i think -- are they going back to these great value rations. >> they're not >> i don't think anytime soon. money is not going to get that easy anytime soon. i think within tech there's definitely good quality, profitable, good cash flow

businesses that have come off on the multiple side. they could bounce. i think you have to differentiate. >> when you think about multiples, what's the height of the kind of multiple you could see in tech over the next two or three years. >> so, i mean, depends, again, are you talking about smith software, microsoft, which is a high quality company let's say, i don't know, high quality tech, now trading anywhere from 20 to 25, it could go back to 25 to 30. i don't think it's going to go back to like a 35, which a number of the names were at not la long ago. you could see multiple expansion. you need easier fed. >> are meta and tesla high quality tech in your opinion >> based on the quantity of screens that we ran, meta is not high quality tesla a little bit of higher quality, but no. it's really other types that

rank higher on quality. >> i would have thought maybe the opposite of what you said. >> no, facebook is definitely becoming value, but then again, i don't think it has the quality aspect in it. >> are you going to live min the metaverse, andrew, move now. >> i don't want to move now. five years from now, i'm ready to move. need to get the tech right first. >> you don't want to be out in the world, mingling, having fun, hosting. >> smell you later >> with my goggles, on >> thank you >> 4,200, can i just leave on that note. 4,200. >> yes, absolutely >> we'll hopefully see you more this year, but we'll definitely see you at the beginning of next year, where things land. on the other side of the break, day two of the representative kevin mccarthy's bid to become the speaker of the house. after the break, we are going to speak with arkansas republican french hill on the economic

priorities at risk if things stay stalemated and what's going on behind the scenes he's going to tell us all about it. plus, check out some of today's top pre-market movers. microsoft lower, got a downgrade from ups on what the bank sees as a risk for cloud azure. and his top pick and the firm looking for a rebound in shares this year. we'll see. stay tunes you're watching "squawk box" and this is cnbc go, go, go. sorry. nope. okay. fresh donuts - hot coffee! they deliver real time data and business forecasts when you need it. i think it was fine how it was. (air tool sound) to help you stay ahead of the curve... or you could use workday. the finance, hr and planning system that helps cfos make better decisions faster. on the other hand, we had a great fourth quarter. for a accelerate your decision-making world. workday. for a changing world.

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welcome back to "squawk box" this morning take a look at apple shares are higher in the premarket. comes after a 4% drop that happened yesterday on an uncertainty around high phone shipments, the decline pushing the company's market cap below $2 trillion. it was obviously at one point at 3 trillion but falling below 2 trillion for the first time since last may. the house of representatives expected to reconvene at noon eastern time and continue its quest to find a speaker after california congressman kevin mccarthy failed three times yesterday to secure enough

votes. our next guest says he's prepared to get the ball rolling on the inflation fight, and until there's a speaker there's nothing congress can do. joining us is french hill of arkansas, he serves on the financial services committee first of all, welcome, thank you for being here this morning. i realize yesterday was a pretty strange and curious day. and it's my understanding, at least from the reports that i have read that kevin mccarthy sent you out to try and negotiate with some of those 20 holdouts to see what kind of progress might be made i don't believe there was any deal reached last night, but what did you hear from the 20 holdouts and do you see a path to try and find something to bring them back into the fold. >> happy new year, it's great to be with you this morning look, kevin mccarthy for the last few weeks has been listening to every member of our conference to try to find the path for 218 votes to elect him the next speaker of the house. and i think those issues that we're still listening to, becky,

are in basically three categories, first the rules package that there's been a lot of press coverage about, how kevin mccarthy has listened and changed both the house republican conference rules and house of representatives proposed rules package that opens up the process, makes sure members have their voice heard on the floor, decentralized power that had been so centralized particularly under speaker pelosi the second category is our budget house republicans and conservatives across the country are concerned about the fiscal mania unleashed since the pandemic, not only during the pandemic but since joe biden green lighted federal spending how do we get budgets under control, have consensus to move forward on a budget, and the third issue is personnel certain members want to make sure they're fully represented on committees, and so kevin mccarthy's listening to all of those topics and trying to come to a conclusion that can move our conference forward, and see

kevin elected our next speaker. >> what did you hear back, though, last night and speaking with the 20 people who voted against him in the third round of voting? i mean, is there enough that could be handed out? i realize it's not unique for this type of bartering to take place, but to have 20 people hold out, to have three votes where he's lost it, it almost seemed to me yesterday when you watched this play out that kevin mccarthy himself was kind of sick of it saying they're asking for things i can't deliver, things i won't give. is there a change in that stance or something else that brings these people back in >> look, i think we have to keep listening to our members to find out what will motivate them to cast their votes for speaker mccarthy that's the key issue, and i think that listening is important, and i don't think all 20 members, i can't speak for them, you'll have to speak for them i don't think every one of them is absolutely firmly opposed to voting for kevin mccarthy. and so that's why the listening is important and that's why the

work will continue today >> he doesn't need all 20, but i guess he needs at least 15 of them to be able to pass. he can't lose more than four votes. so 16 of them. >> there's 212 democrats, so we need at least 213 if some people decide to vote present and not cast a vote, but the bottom line is we're working hard to get every vote and make sure that kevin mccarthy can listen to every concern of every member and find a path forward to elect kevin the next speaker. >> he made a pretty intense concession when he said that he would allow if any five republicans wanted to remove him at any point he would allow that to go through. that brings the question where even if he is able to get elected you wonder how strong he will be, how much leadership he'll be able to provide, how much can actually get done in this congress. what would you say to that >> well, first, we have the power to remove our leadership inside the republican conference by a secret ballot now, and i've

seen that happen since i've been in congress these past eight years. look, kevin mccarthy has the three things that i think make him a successful speaker he has the vision and the commitment to america on what po policies that we should be pursuing and leading up to the next presidential election he's raised a lot of money for our members, including hundreds of thousands of dollars for members who are currently opposed to him, and thirdly, he's putting gt the right peopli the right seats to move this election forward i mean, this policy effort forward. so i've seen that in business. you've got to have a vision. you've got to have financial resources and you've got to have leadership, and kevin's demonstrated all of that over the past two years as the minority leader and that's why i support him for speaker. and as to the vacate the chair motion, look, we already have that authority to remove a speaker inside our conference, so i didn't view that as a major issue. i didn't support the concession personally but i don't view it as something that changes the

dynamic. >> even if it doesn't change the dynamic, you have to realize that with such a thin majority you're going to be in a position of pressure, and whether you find ways to bring in the extreme parts of your party, the most conservative parts or the freedom caucus, as they have been holding out on some of these things, or whether you reach across the aisle, which of those would be a better solution to you is there a point where you try and cut a deal with the democrats if you cannot convince any of these members to vote for kevin mccarthy >> i think for, you know, well over a century and a half, the two parties have attempted to work by consensus inside their party when they lead the house, and that's kevin mccarthy's leadership prescription, which is we're going to get republicans on the same page and lead with republicans to move this country forward, and pass bills that we think present a better direction for the country that what president biden has offered the past two years. >> is it hard kind of watching this play out? are you shocked by what's happened to this point

>> i'm sorry, could you repeat that, becky. >> are you shocked by how this played out a lot of people anticipated this would be a difficult vote for congressman mccarthy to pull but i think a lot of people have also been surprised that after three votes there is no consensus. >> well, yes, it's frustrating i'll say that. we have families here in town that want to see their new member we have over 70 new members who want to see their new members sworn in for the first time. it's a hallmark of their lives, and look, we want to get in work going in the house we can't get our work going in the house until we have a speaker. we have oversight to conduct, economic policies to promote we have a border to secure we have policies ready to go now that we need to move on the house floor and discuss with our senate colleagues and president biden, and we cannot do that until we elect a speaker so the really sad point besides hurting those families opportunities

celebrate yesterday is the fact that we can't get our mission going forward and meeting our commitment to america. >> and that is an argument that falls on deaf ears with these 20 people >> i would say it's an argument that they don't find convincing yet. i don't think it's deaf ears because they're listening very well, and very attune to the situation. the dialogue is continuing, and they recognize that this is a real frustration the democrats have elected their leadership the democrats have selected their committee members, and we have done none of that as we continue to listen to those members who are not yet prepared for a speaker mccarthy, and so that's why these meetings today are very important that we try to move this decision forward, elect speaker mccarthy by majority of our conference, and then press on with the american business of conservative direction in this country to counter what president biden is offering the american people >> congressman hill, i know you

have a long day ahead of you, we appreciate your time ahead of it >> you bet, becky, great to be with you happy new year. >> could be pizza involved >> makes for long nights, right. >> i might delay a few more. that could get my vote depends. >> pepperoni, thin crust, thick crust. >> i like the thin crust, don't you. i don't need to load up on more carbs. >> if it's a real like, you know, like a grandma. >> like a deep dish. >> i love that >> you have a hollow leg as we know from the doughnut episode coming up, former barkley ceo bob diamond shares his outlook for the crypto industry in the year ahead. do you want to get rid of doughnuts too? >> i don't know. fears of a market freeze in the nation's largest real estate market, that's right here in new york robert frank is going to join us with his latest segment of "frankly speaking" i'll get

somebody to take that. join us with that story on "squawk box. we'll be right back.

welcome back to "squawk box," we're getting new numbers on the real estate market here in the big apple and things, sadly, don't look too good robert frank joins us with the bad news good morning >> yeah, andrew, there was a lot of bad news in this quarter, starting with sales falling 29%

in the first quarter that's the biggest decline since the start of the pandemic in 2020 prices falling for the first time in two years with the median price down 5.5% the average price for an apartment in manhattan now just over $1.9 million. that's a bargain prices are not falling enough, though, to bring in buyers brokers worried about what some are calling a deep freeze. that's where sellers don't list because prices are soft, and buyers are waiting for more dramatic price cuts. low inventory also holding back sales. the number of unsold apartments rose a little bit, just 5%, but still well below normal levels more than 55% of the deals in the quarter were all cash. that is an all time record the high end is outperforming with prices at the top rising 4%, while prices in the broader market declined. if you look at deal pipeline, 2023 is off to a very weak start. sales contracts in the quarter falling 42%.

that was the worst quarter for new contracts in over a decade brokers, though, well, they're always optimistic. they said wealthy buyers from china and the middle east, they came to new york in december, and along with their luxury shopping, also bought apartments we'll see if those deals show up in january the pipeline showing a weak start this first quarter >> i can't -- we deal with those brokers so often, and they're optimistic is this a situation where buyer are coming back in or is this happy talk. >> prices are not aligned with reality. the price of an apartment in manhattan is 21% higher than it was pre-pandemic are you telling me that the value and experience of living in manhattan is 20% better than it was pre-pandemic? so a lot of it like stocks was fueled by fiscal and monetary policy, and huge wealth created by the stock market, wall street, so i think prices are

elevated they're going to come down i just don't know by how much. >> that's the question if your guide is pandemic. >> right >> pre, post pandemic. and you think new york is not as good as it used to be, is that 10% less and then there's the time value of money, meaning how the world has changed. >> right >> the challenge is inventory. i mean, new york is a bizarrely tight market given, you know, what we see on the street, and what we hear about all the people moving to florida the inventory of unsold apartments is around 6,000 right now. normally it's 8,000. so we're still under inventory >> is that because people are sitting on property that they want to sell or would otherwise sell in a hot market but in a weak market, nobody wants to do anything, because nobody wants to have to price themselves down. >> bingo, and new york is a discretionary market there's a larger share of

investors who don't use it for shelter. if you're a discretionary buyer and seller and you don't have to sell right now, you're not going to sell while prices are declining. they're holding back on the listings, and listings have fallen dramatically. until we see that rise in inventory, which could take a long time, and we are seeing new development, there's a lot of new apartments still being built. until those come on the market and sit empty, we're not going to see prices drop. >> same with the housing market across the country. >> just with an extra zero in new york. >> there are still tax implications of anything you do in the city. >> over 14% combined city and state. >> how long -- it's the amount of time you own the property it can be, you know, a big number, and it's all -- >> the llc that bought the most expensive apartment in the fourth quarter was called albatross llc. i thought that was like the perfect name for buying a manhattan apartment. they paid $72 million. >> white elephant. >> they need all the taxoffs to

keep the streets clean and crime free you need -- >> really appreciate it. >> this morning, i was listening to music, and i was thinking, i should do a video. it's almost reminded me of taxi driver, driving along, seeing people tearing apart garbage cans, looking for stuff, trash everywhere this is like some dystopian nightmare, sorkin, i blame you partly. >> robert frank, smartest reporter in the country when it comes to all things wealth, new york real estate and more. >> thank you, guys. >> good to see you. a special interview with former barclays ceo, bob diamond, he'll tell us what he's watching in the markets in the first day of the year, and we'll ask him whether crypto can recover from the big black eye in 2022. more premarket movers as we head to a break etty upgraded to a buy at. etsy has done a good job of holding on to pandemic era

customers. wells fargo downgrading target to equal weight from over weight wells is worried about the potential for a sustained period of comp weakness comp store sales weakness in general merchandise. you can see target shares off by about 1.8% stay tuned you're watching "squawk box. and this is cnbc

welcome back to "squawk box. ftx founder sam bankman-fried pleading not guilty. a trial date set for early october. in 2022, it left the crypto industry with a black eye, but there are still plenty of believers out there. according to bernstein, if history is an indication, crypto prices will rally exponentially when the current winter isover others are bullish on the technology, underlying digital securities, and that includes our next guest bob diamond, the former ceo of barclays, a spac to buy circle, i want to talk about that as well at a time when a lot of people are skeptical and perhaps even more skeptical, you are more b bullish? >> in terms of the economy,

andrew, the markets? >> i was going to start with this idea of crypto, bob, just in terms of how you think about it, because i think there are a lot of people who are remarkably skeptical. you have been a long time bull of sorts or at least excited about the technology piece of it. >> it's a very very broad term, crypto as you know, we have been working with and investing in circle for quite a while, and that's really about financial technology, about digital currencies, about block chain technology, all three of which we are very very positive on you know, to put it simply, do wenl the we believe there's going to be a digital version of the u.s. dollar over time, absolutely do we believe there's a way to have the central bank do it or the private sector do it we believe strongly in what circle is doing, the most conservative, the most embracing of regulation. a dollar is a dollar, backing

the steeple coin has been proven day in and day out over a couple of years, and they maintain 45 billion in outstanding so andrew, we think that there will be real winners in the space, but crypto is a very very broad term our focus is very much on the technology of block chain, and the excitement of having a digital version of the major fiat currencies. >> right but if we were to be talking about this in two or three years from now, given all the skepticism, given where the prices are of various coins, what does the space look like to you? >> it's going to look very very different. i think the significant thing, andrew, we have to get over is what has happened with ftx it reminds me a lot of what happened with enron, right you had a tiffany type brand ftx was, like, the go-to brand in the crypto space. it had incredibly smart people it had taken very very large,

very ill liquid, and frankly bad in the crypto winter and had crypto accounting. all four of those are similar to the situation we had with enron, and i think as we come out of this, there's going to be a lot more focus on things like payments, technology, block chain, and i think that we really need to get away from what happened during ftx, and to me, the other big, big lesson in this, andrew is offshore versus on shore circle operates within the regulatory perimeter of the u.s. ftx is operating in the bahamas, and i think one of the lessons here has been, you know, the -- you and i talked about this during the financial crisis, strong banks want strong regulation we saw that so clearly during the financial crisis well, strong firms in thecrypt space want strong regulation, and i think part of that is

operating within the u.s. perimeter, u.s. regulatory perimeter. >> but do you see big banks, for example, big financial institutions investing in the world of crypto, creating crypto desks and the like and all of the things that we were talking about over the last call it 24 to 36 months as we saw the prices creep up. we saw a lot of big institutions start to talk about it, maybe not do it. what happens now >> i would argue that that investment from the big banks will increase. this is an opportunity for them to get in. but again, crypto is a very very broad term i think we saw announcements yesterday from standard and charter that they were expanding their presence in the crypto services that they provide i think they were very very early to provide those kinds of custody services and whatnot clearly j.p. morgan has been investing significantly in technology, including block chain technology i think this is a great opportunity for the banks to see

this as an opportunity in the areas that they think are important, whether it's custody, clearing, exchanges, or whether it's more around digital currencies and the block chain technology and i think we're going to see a significant increase in investment from the big banks, absolutely. >> let's go broader in terms of where we are in the economy, and what you're seeing for the year ahead and how you're thinking about making investments in this climate. >> you know, i think if you and i sat here having a discussion a year and a half ago, this is what struck me where, you know, we're talking about inflation is going to absolutely soar it's going to go over 9% the fed is going to put on the brakes they're going to raise rates 425 basis points, in nine months, and mortgage rates are going to double or triple to 7, 7 1/2%. we would not be thinking that the economy feels like it does today. the resilience in the labor market, household and business

balance sheets are still pretty strong housing and autos have been resilient, and you saw a lot of numbers today in terms of inflation turning over a large part of that has been energy prices. and they're back to kind of prewar levels. so i think we're going to have a very challenging year in 2023. i believe we believe that inflation has peaked and 2022 will be a challenging year for the economy as it adjusts to the incredible rise in interest rates. but i think the fed has to feel pretty good about the progress they have made over the last nine months and the state of the u.s. economy >> in terms, though, of private equity, and the bidsusiness that you're in, is this a year where people just hang on? this is not a harvesting year obviously, but is this an investment year? >> yeah, i mean, i think in 2022, much to our pleasant surprise, we closed four new

investments. we had realizations, those were good numbers for us in atlas, and we think that that difficult environment was a benefit to private investment and we think it will be the same going into 2023. so we do see better and better investing opportunities. i will say, to be perfectly frank, in 2022, all four of those investments that we closed were in the u.s. and i think we're looking for -- we'd like to see some more activity in europe over the next year remains to be seen i think their economy has more challenges than ours but we would love to see some of the opportunities that we're pursuing in europe come to fruition in the private sector. >> bob diamond, we appreciate it always good to see you thank you. >> thanks, andrew. coming up, jim cramer's first take on the trading day ahead. a reminder, watch or listen to us live using the cnbc app "squawk box" will be right back.

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all right. let's get down to the new york stock exchange and check in with jim cramer jim, been watching the futures this morning, and they're actually picking up a little bit of steam, up to almost 145 points up for the dow. i know you're a little concerned about the overall mood out there and what you're hearing in the research on wall street. >> well, what's good, becky, is we're finally getting the

reckoning. people are actually downgrading or cutting numbers for the mega caps which have been immune. everyone is feeling that's a place to hide. obviously it has been a place to hide for months. people cutting industrials at the same time we have things like salesforce where we have been waiting and waiting and waiting for some sort of rationalization, and then we get it, and it's remarkable, and it's important for the trust so, becky, i think what's happening is that we're finally seeing what the analysts have been waiting to do, which is cutting numbers on the big guys. but they also seem to be out of sync with what the future is doing because most of the futures are, you know, futures are positive, while the analysts are negative. >> it doesn't always, even though we start off positive, doesn't mean we end positive as we saw yesterday. >> the market killed people, and you know what, you know, becky, you kill crypto, and you kill stocks, the money is just going

to go to the three and five year, and i think that's the biggest enemy of stocks. >> salesforce was up 3, 3 1/2% last i checked so you're in favor of what the company is saying just in terms of this rationalization. that's a big number if you're going to lay off 10% of the staff. >> i think would have preferred 20%. there's a lot of -- you hate to say there's fat at star root because marc benioff has built a great company, do it with a lot fewer people and get a lot of leverage this is the beginning of what i think could be that moment when you have this great subscription business, fewer people, and flows more to the bottom line. and marc admits in that letter he over hired. i think so many over hired and it's interesting to see perhaps the guy i expected least to be letting people go making the moves, and you know a lot of other companies have to make moves that just haven't done it. >> you think that's going to be

the tone of the new year over the next month or two? >> i sure do, and i think that marc's recognition, marc was the first stock to really get crushed, and now he's just making the move that's going to make it so you want to own salesforce >> jim, thank you, we are going to see you in just a good to seu by the way, programming note for you. tomorrow on "squawk box," kansas city fed president esther george will be our exclusive guest. that's coming at 8:30 a.m. eastern time tomorrow. we'll be right back. ♪ ♪ a cyber-attack can grind everything to a halt. cisco security keeps your company moving forward. because if it's connected, it's protected. cisco.

welcome back to "squawk box" on cnbc. among our top stories we've been talking about, twitter now saying it's going to allow more types of political advertising on its platform. it's an apparent reversal of what was a 2019 global ban on political ads on twitter that had been made by jack dorsey meantime, the estimated jackpot for friday night's mega millions lottery now drawing $940 million, coming in close to a billion dollars. no one matched all the numbers last night, so the opportunity's still upon us,folks. remember that only two months ago, someone in california won a record $2 billion by playing powerball. officials haven't announced a winner from that drawing one person won that.

and i know, you say it's a tax -- >> i'm not saying it was a shock it wasn't you, because you were sure it was you. last time -- >> i didn't think it was going to be me i just enjoyed the dream >> you were pretty sure. >> i was not pretty sure >> you were pretty sure. >> it could be andrew. we don't know who the winner is. >> my kids were pretty sure, but we have lots of great conversations around the table >> awesome think dreaming about vast wealth that you're never going to have. unless you listen to cameron dawson, a little more than a half hour to the opening bell. she's going to help us joining us is cameron dawson, a new edge wealth chief investment officer. it's a new year. it's a new year, cameron it's a new year. you've got a chance here to not be such a debbie downer. >> well, not much has really changed. >> i know. i know i saw your note. and there's plenty to be worried about, so we saw you probably

two weeks ago, and you have been right about the sort of just churning, the sickening trading range we've been in with a downward bias, i think you would still say. >> yes, and we were looking for signs that we could be primed for some kind of relief rally like we had back in october or june, but if you look, we still aren't at that point where this market is so bad that it's good, where it's just incredibly washed-out and set up for a big rally. so, all the technical statistics that we look at, things like percentage of names above their 50-day moving average or 200-day moving average, they're just kind of in middling territory, so that means that in the very near term, we don't have the kind of set-up for a big rally, and it means that, really, the eyes really will be focused on the pressure from both valuation, from higher interest rates, which are being driven by better growth tatistics, and then on the earnings front, which we'll hear more from as we enter earnings season in the next couple of weeks >> so, earlier, we had a

gentleman on from jpmorgan, says turning around, first half of the year, as the fed stays tight and earnings are pressured by continuing inflation in margin, so we test the lows, get to at least 3,600, maybe lower, but by the end of the year, we end up above 4,000. 4,200. do you take issue with that? i mean, anything's possible. is that a possibility for you? >> i think that's very plausible. i think a lot of this rests at the feet of when we start actually seeing weaker data, because for us to see a big rally from here, you really do need to see support by the fed, a pivot to actual accommodation or being a little bit more easy in policy, and really, the only thing that's going to get the fed to be more supportive of this market is much weaker data. so, if we continue to chug along where we see the labor market remain tight, even if inflation

falls, the fed really won't have those degrees of freedom to become more supportive of markets. so, we do think that there is earnings pressure, but our idea is that actual lower inflation is bad for earnings,because it creates less revenue growth and lower revenue growth usually results in lower margins, and margins are still a hundred basis points above where they were pre-pandemic. so, in this world where growth stays okay but we see less inflation, you actually could see earnings risk even without the u.s. economy slipping into a recession. >> i ask everyone this too is the leadership -- if we ever do get to a point where stocks are a buy, would the leadership be similar, different -- similar in certain regards, different in other or totally different value versus growth? no tech, industrials what do you think finally emerges as the leadership? >> i think that's such an important question, because the

world we live in today seems wildly different than the set-up that we had going into the last cycle, which was all about quantitative easing, zero interest rate policy, and really a support for those growth names, and without that support from central banks around the world, we think this leans more towards value, and if you think about in today's world, even before we're trying to take the ultimate bottom, we do think that value is set up better than growth, simply because of valuations, that growth still trades at a 60% premium to value, usually in the last cycle, that was about a 10 to 40% premium. so, there's still risk to growth valuations, and even growth earnings, because growth companies were the ones that pulled forward the most earnings, pulled forward the most hiring into 2020 and 2021, and so that's really where the reckoning comes when we think about that growth versus value >> what would be best for the stock market, a slight short

recession or a continued growth? >> well, i think it depends on your starting point, and we ran the numbers of the you had a deep recession today and then climbed out of it or if you just had a mild recession and then had mild growth on the other side, and as you look -- you get to about the same place. >> you do? okay all right. cameron, thank you cameron dawson, we decided, were you the boston dawson? you're not the chippewa falls dawsons. you're the boston dawsons or the dawsons from the creek >> we'll go with the creek, but i can never let go >> that was good >> from the creek. we don't -- you know, the other one's from "titanic. >> i know. >> you remember? >> yes >> chippewa falls, jack. >> yes i watched. >> okay. you like to watch?

that's also from a movie >> i know, i know. >> all right, never mind >> if you don't know, it sounds -- >> that was the point of the movie. shi shirley mcclain. join us tomorrow we're up 122 more movies from before 1980 >> when is the show over >> "squawk on the street" is coming up right now. good wednesday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer david faber has the morning off. premarket is green amid softening signs of recession in europe and oil markets we'll get some fed minutes this afternoon. our road map begins with tech's troubles, though, salesforce announcing cuts and both apple and tesla seeking to claw back those losses from yesterday. plus, fraud and scams alert. regulators delivering a joint warning to banks ove