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 over crypto

risks. and ge completes the spin ofspinof of its healthcare unit set to start trading today. we'll begin with salesforce's plans to cut about 10% of its workforce. marc benioff explained, "the environment remains challenging, and our customers are taking a more measured approach to their purchasing decisions i've been thinking a lot about how we came to this moment as our revenue accelerated through the pandemic, we hired too many people, and i take responsibility for that. total employee base, 79,000. you could be talking about 8,000 employees. >> yes, and also salesforce tower. i mean, the work-from-home has really left it so they have way too much real estate just back up for a second. this is the first of many, i think, and it's interesting that marc's doing it, but remember, he does have starboard in there. some people say they've been look looking for up to 20%

marc's the first person that says, look, we overhired it's interesting he's the first person because he's the one, as he says, it's family and it is very hard for him to cut the ohana. i do think that it got bloated they still have good growth, but people felt their gross margins weren't that good. this should flow right to the bottom line. it's brutal. i know marc. it's harder for him than most, because people are one, one, one, in terms of how much money they give away it's remarkable that he is the first. the other guys need to do it, and if they don't do it, they're going to see stocks going lower. we obviously, if you take a look at meta, they did it last year, and it's -- there's a remarkable move so, i think people are waiting for silicon valley to own up >> when you say the other guys need to do it, are we talking about -- we're going to talk about this downgrade of microsoft today.

we've been waiting on google we'll talk about amazon raising a little bit of debt >> think about what happened at google they were doing hiring right up to the moment that things slowed now, it takes a little time to be hired by google it takes many -- there's a big filter they have to figure out how to lay people off amazon when will andy jassy bite the bullet i mean, if you want to think about a company that overbuilt during the pandemic, i would say that amazon is the number one company that overbuilt where is -- where are the cuts they have to happen. apple, they have their own set of problems that have to do more with supply, i think, than demand where is the admission that the quarter was not what they wanted even though i think that the demand side, which is what i care about the most, is fine the demand side is fine for salesforce, by the way >> right although wedbush's take this morning is that they're girding for a bit of a market share battle, at least with microsoft

and cloud. >> i mean, hello that's been going on for ages. i mean, marc used to be, i would say, alive there was this -- there was this alignment, and then it broke up into an axis and allied where adobe went with microsoft and amazon went with marc. i spent a lot of time with marc, marc benioff, the ceo, and i know that marc was reluctant too make these changes if only just because he liked the way things were i mean, it was a gut punch i had him on the day that bret left, the excellent co-ceo, and it was one of these moments where i think that marc just said, all right, you know, complete reset i think that bret was, in many ways, the guy who handled a lot of this. marc's -- marc is -- i don't want to pin it on bret, but bret was away, a lot of twitter stuff, and i think that marc wanted to have a lot of kinship

with bret. they really, i thought, were working very well together look, the bottom line is that this was needed. it was pushed by starboard, who has peak position. i know that starboard would have liked double that, because that's how bloated they think that salesforce is >> right certainly a harbinger of what we may see in january across tech and by the way, jim points out that marc benioff is with him not too long ago, and you guys specifically talked about the stock price. here's what benioff said >> the third thing we saw in the third quarter was a more measured environment, and we realized that ceos are kind of buckling down. they kind of saw there's a storm ahead. they're not sure the stocks are down. you know, we're not the only stock down the market is down >> which raises the question, is this something you buy on? >> well, my travel trust owns it we've bought some right here before this, and i think that the key thing we have to recognize is salesforce was crushed by the strong dollar when you talk to marc, he's

always saying, listen, we had an okay quarter, the dollar had an amazing quarter. he's always -- he keeps his sense of humor other than when he was crushed by when bret left. i don't think he expected that but yes, i think the stock''s been cut so dramatically but this is the beginning. this is what i have been waiting for. this is what jay powell's been waiting for. we have to have more people who are jobless, and what a terrible thing. i mean, to root for an economy to go to 4% unemployment, but what jay powell wants are these people from salesforce sob loo to be looking for a job and not being able to get a job that's as highly paid and bring down the wage structure, but it only works if there's 30, 50 companies that do this >> we'll get jolts at 10:00. we'll get the fed minutes. the question is whether the data the fed watches is going to be ratifying some of the micro-snapshots we're getting out of companies like sierra

>> not this number i think everyone has to be braced for the fact that if we have an increase in wages, the market's bad the fed -- look, they have one on natural gas they have one on gasoline. they have one on wheat they have one on aluminum. they have one on lumber. they had one on housing. you know what? they haven't won on wages. i was with a group of -- a company this weekend that's one of the largest hirers of engineers, and the company -- i'm not going to mention the name of the company, but engineers are hard to come by, and, well, if there's layoffs, they're not, and we saw so many downgrades today >> oh my gosh. >> and so many of them were really about no leverage too many people, not enough sales. so, this is a watershed day, because salesforce is probably the last company that people felt was going to do this, but they did have starboard.

now many and would it shock me if amazon laid off 50, if google laid off 25 not at all >> 25% >> 25,000. >> oh, 25,000? >> absolutely. you hired 12,000 people when you realize -- i mean, those of us who have -- who are in the process of have kids who are in the process of getting a job at these places know that you are starting at march to be able to get the job in july, but july was when you had to fire people, so they couldn't just -- could they have stopped right in the middle well, coinbase did and all we ever heard was that panic. crypto's a whole other world >> the last question on this is whether or not this is a one and done or whether, like some, they have to revisit this and have a second round later >> i think that's a great call, because i know that starboard thinks that they should. i do think that if it's -- if sales are weaker, you're going to see another round i mean, salesforce does have fantastic growth, but salesforce

is -- remember what salesforce does they increase the ability to market but marketing's being cut back so, how do you increase -- your margins the way you have to lay off people but if people are going to continue to cut back on marketing, it's bad for all. we discovered that amazon was an advertising company, that alphabet was an advertising company, that salesforce was just a marketing company now, i think that all these are much more than that, but that is way -- that's the way people look at these things except for apple apple's not that apple's an app company, and people say the apps are bad. the long odds are out for mega tech, and they will be out for mega tech until they're not mega >> speaking of all that, apple and tesla, rising one day after that rough start to the new year apple closed yesterday with a valuation below $2 trillion for the first time since march 2021. tesla coming off the worst one hch day decline in more than two years after missing that delivery target for 2022, jim. today, wedbush cuts apple to

175, appears to be cutting orders on macs, ipads, airpods over the coming quarters >> we need this. once again, we had research that was in "alice in wonderland," hoping, hoping, and now we come in, in 2023, and the readjustment is occurring. now, should it have occurred earlier? we sure would have liked it going in apple's a 180. so now, you get the call 120 i say, apple, own, don't sell. maybe apple goes to $105, but then it starts climbing again. it was at $180 you going to get back in who is bright enough to get back in >> starts climbing because it becomes clear that that demand simply got shifted, not destroyed? >> shifted demand, and the recognition that a lot of apple's app store was gaming and china, and china is coming back faster than we thought, because i remember when we first heard of covid, they were -- a lot of people were hoping for herd

immunity that's not h-e-a r-d they're getting herd immunity exactly as you're not supposed to get it, which is that older people can't survive, younger people come through. lord of the flies herd immunity. but what will happen is that that particular slice of business will increase all these people say that there's no demand for apple. they don't know. i mean, demand for apple comes from t-mobile and verizon and att. they don't have those numbers. one of the things that upsets me is, you know, how do people know so, i'm friends with adam schefter at espn let's say the line is 14 for the giants what i mean, i hung around the eagles locker room, i was with them in practice, i know who's playing it's going to be minshew all lies all lies these people don't know any more than people who were getting 14 in the giants. i like these analogies because they show you the fatuous

nature >> there's a lot of bias in there. how about tesla? cathie wood's buying a little bit. >> well, she -- let's put it this way she can cause momentariy bottom, but they're momentary. she doesn't have the firepower that she did at one time and she's not after the stocks that i think fit the pattern of companies that make things that do stuff and stocks are valued at a reasonable level and have profitability. >> that's interest, because she did sell a little deere and a little cat >> those are mistakes. what i'm concerned about is microsoft. the downgrade in microsoft says this is ubs, that azure is slowing. one of the major themes of 2023 will be web services slowing now, who does that affect? that's google, because they're really trying to take share. obviously, microsoft with azure.

and amazon web services. and the long knives are out for web services i remember mark's in the cloud, everybody's in the cloud we had this great oracle quarter, and they have got cloud. but no one's thought that they had cloud, so they just -- they were away from this. but is the cloud slowing if you ask frank slootman from snowflake, he'll tell you, you can rent the cloud, why own the cloud? it's like, well, let's rent an apartment, not own an apartment, because the apartment might lose value. i think it's true, but not on the scale that people are worried about. i do say, carl, hasn't that been what's going on for months we discover, holy cow, microsoft cloud, not doing -- well, you discovered that, but a hundred points -- >> exactly right when was mcdermott in long lead cycle? september, october >> yeah. and i thought, why isn't the stock going up we're like, rule of 60 and doing much better, and i said, look. this is what's happening these stocks are coming down,

and they won't bottom until the analysts say, you know what? things aren't so good. i mean, you know when service now is the buy when people say it's a sell. >> well, certainly the ubs downgrade is making some noise this morning we'll get to more of the downgrades that jim mentioned. also, risks in crypto. take a look at the futures here as we accelerate the news flow this morning regarding data, some of the micro-news and of course the sell-side reaesrch. futures still green, though. more "squawk on the street" is straight ahead what's up, peyton? good morning, peyton. hold for peyton. they'd huddle.... welcome to the peytonverse. such a visionary. game plan... you go. no, you go! and call audibles... double our investment in omaha! omaha! omaha! omaha! or you could use workday. omaha. the finance, hr and planning system used by over half of the fortune 500. for a be-agile-like-an-mvp world. workday. for a changing world.

crypto's in focus again. yesterday in federal court, ftx founder sam bankman-fried pleading not guilty. that trial set for october meantime, regulators warning financial institutions that kroimt exposes banks to, quote, fraud and scams. that's coming in a joint statement from the fed, the fdic, and office of the comptroller of the currency. jim, how much in here is new >> well, i think that there have been a lot of people who thought that the banks would adopt it. fidelity adopted it. i think these statements are the beginning of what i have been calling for, which is that i think the s.e.c. is going to do a round-up of the ones who are not compliant. they said that -- they made this broad statement, saying, listen, if you do not go along with the rules, we're going to come after you. i follow john stark very well.

he's an 18-year enforcement s.e.c. consultant now, calling for a sweep. he says the s.e.c. is going to sweep everything, which is why i'm telling everybody, get out of these michael, in his excellent review, "eye on the market" was talking about some people were saying jpmorgan had a dalliance with this. i can tell you, personally, i went to the highest level, please, please, and they said, no, we're not touching this. and i think that that's been the way that it's not a shock. because the banks have been the leaders. they're anti- -- this is not even fintech i think a lot of people feel like john stark, that it's just a giant scam >> do you think bankman-fried will be material to that round-up >> very much so. i think everybody's in on it, and i know that's a very harsh charge, but if it's a ponzi scheme, and it's falling apart, i'm sure there's some honest people we all know honest people are in crypto, but i'm not calling for

a crypto collapse. i'm calling for collapse of the people in on the ponzi scheme that john stark talks about, and he's laid it out follow him on twitter. you'll read everything, which tells you, look out. people are bidding this up get it out of where you have it, but try to find a place that you can trust. >> why do you think it's been so resilient here in the high 16s >> i'll tell you what stark says because it's phony and a scam. being propped up by people who need it propped up and that's all there is. very harsh >> also raises the question of, we've for so long talked about institutional adoption of the technology, the back end, the bones. where does that go from here >> if blockchain were so good, why isn't everybody using it already? they're not. it's all smoke and mirrors now, i get a lot of hate for saying that, so i know i'm right. because that's what john stark says >> but those theoretical examples of housing contracts

and financial settlement, t-zero, a pipe dream >> it would be faster, and jpmorgan, they've written that it would be faster, and in some places, it's been dominadopted,t the people who are in crypto often come to you and say, do you not understand my ma, whom i loved dearly, who passed almost 40 years ago, always said, jimmy, harvard law school, if you don't get it, it's wrong she was in love with me, because she was my ma, but when these people tell me, you don't understand it, they're clowns. they're krusty the clown >> it's going to be interesting to watch >> bozo. >> sure. >> bozo the clown. >> that's a throwback. we'll get cramer's "mad dash." we'll count down to the opening bell take a look at futures as we're trying to be resilient after that reversal yesterday. more "squawk on the street" continues in a moment. ♪upbeat music♪

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"today" show anchor savannah guthrie and hoda kotb are here, celebrating their fifth anniversary anchoring the iconic news program together. they're going to ring the opening bell in a few moment, and we are so proud of those two. nobody does it better, jim >> they're so great. hoda was my daughter's speaker at tulane. no dry eyes. told a lot of stories that are truth. that's these people. these two people are so admirable, so terrific it's great to see them >> surrounded there by nbc personnel. tom mazereli, jennifer long, sara pines, a lot of the people that make that program tick, and it takes a lot it's a big production every day. >> to be a fixture, it takes a

village. >> yes indeed n'gowamont in a me dot ay.

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>> announcer: the opening bell is brought to you by nuveen, a leader in income, alternatives,

and responsible investing. time for cramer's "mad dash" as we count down to the opening bell to jim >> micron. you'll see it's up bloomberg has an excellent story about china hitting the pause button on giant chip spending. now, there is a great war going on between us and china about trying to get the equipment that you need to just to do this. and we don't want them to have it blocking asmlf, for instance, a dutch company, so they don't have much choice people are reacting by buying micron i think that's wrong micron's problem is samsung. samsung is the one that's causing the glut samsung's selling below what it should be. >> it's the opening bell is this the "mad dash" >> we heard it was cramer's "mad dash." we got to go >> we got two minutes. >> you got the semiconductors.

>> we thought the "mad dash" was us good-bye >> bye love you >> savannah, come back >> we can't. we have to go. >> we got to go. >> that's called storming the stage. >> that was a "mad dash" to end all "mad dash"s. >> they got two minutes to get upstairs and do this bell. they're amazing. love those two literally, what they do on the fly is incredible. we do a fair amount. >> people don't know how hard it is to do on the fly when you've got news that changes every minute but their intelligence is equal to their kindness. >> yeah. we love those guys, and congratulations again to hoda and savannah we'll see them in a couple of seconds. your point, though, about production, in chips, jim, and this sort of collective action problem we have. >> this is the beginning of the realization that we're not given the technology that they need. now, the -- people don't understand the intellectual property to make semis lies with applied materials, with kla, with lam research, with asm, not with

china. now, micron has had its -- all of its go-rounds with china. they have -- they have been cheated and stolen from. this big lawsuit but i want so much to say, yes, now you can buy micron, but the glut is not caused by china. it's caused by korea, so don't get that excited now, you should recognize that this -- if lam is hurt by this and kla, you must recognize that this is -- this was factored in months ago, so the story's a good story, but it is late when it comes to selling kla or the best one, which is lam >> you mentioned the downgrade earlier of microsoft and azure, and parking lot of their argument over at ubs is that seat count is going to come down, as we see head count come down that's going to have an effect on things like pcs >> yes charge by the seat but i would also say, look at salesforce now, their amazon web services bill, it's big, but they have

fewer people, fewer mouths so, i think that salesforce should be up much more than it is much more. and it is a club name. we have been buying it, so you could say, hey, we're talking charity, fine. speaking of charity, these two people use their fame for charity constantly >> yes >> they are inspirations to america. >> indeed. that's the opening bell, and savannah guthrie, hoda kotb, and the crew of the "today" show, no oppenheim, head of nbc news. >> started with me at "mad money. it's one of those guys where you say, you can't just stay here as an assistant but whoever thought that -- and the whole time, incredibly nice and humble >> at the nasdaq today, it's ge healthcare, and they begin trading today. the ceo, peter, is going to join us in about half an hour, jim. longstanding story we've been talking about. >> this is one of those stories,

you talk about mid-single-digit growth by the way, larry pope has higher multiple, high organic. this is organic revenue. here's what you need to know about these guys they are your mri. they have been more supply constrained than almost anybody -- they have so many more orders than they have machines so, it is an interesting thing, and there's a great chart that you can ask about, page five, page six, about what can happen. is it my favorite coming out i do think america loves spins i have always been marveling with ge's ceo, why didn't people like the spin more because it has to happen they're not understanding. it's theoretical construct so, i think it's good. again, i don't want to get too excited about the semis on this thing. people are very excited. i don't want to get too excited about the enterprise software companies off of salesforce. you have to do something like

salesforce, and i know people are going to predict and say, workday has too many people. i don't know they don't have starboard in there fighting them. >> that's interesting. salesforce, one of the big s&p gainers, and microsoft, the biggest laggard today. >> well, no one wants to hear that the principal reason why you may own microsoft is azure and azure is slowing there had been a sense that you could hide in microsoft, 25 times earnings one of the things that's happened is the great comeuppance of the price earnings multiples i did a piece -- you know, my nephew helps me write. i don't blame him. he was saying, there are stocks that are married and stocks that are divorced, and the divorced of -- are the ones that people got so excited about tesla, and now we find out, wow, maybe it's too high now people are saying, you know what maybe we were paying too much for microsoft 25 it's got to go down to a market multiple this is the whole process, the remobilization it's already happened to alphabet and it overly happened to meta,

although i will say meta has five quarters of negative free cash flow, which is really bad >> made today a top pick for '2 by stifel, the advertising market may be returning to growth in q4, they say, might be realistic. >> well, i think so, but you need to -- obviously, the first thing companies cut back on when they think there's going to be a recession is advertising they shouldn't i mean, the really great companies put more money in so they end up taking share that's not happening i do think that the tone in the nasdaq today, when you look at alphabet and amazon, that's just reversing what happened yesterday. microsoft is a big -- has been the bellwether of the group. you know, carl, it's the rebellion against the trillionaires. i think a lot of companies got to levels where people were just saying, i'm uncomfortable with the market cap size. we've been emphasizing correctly

on the network that $2 trillion apple finally moves in remember when they pass these levels and they passed these levels because of exuberance, and the exuberance is coming out of these stocks quickly, just like the air out of balloons i would caution people that the -- they're still growth companies. meta's not a growth company. my travel trust kept a position because we felt mark zuckerberg would finally say, uncle, i can't take it. i think it's happening but he's being aided by tiktok, which the governments all over the world have been rebelling against. i wonder if he'll pivot from spending so much time on the metaverse where you have to wear the goggles to helping reels, which as a former restauranteur, i will tell you, reels product is fabulous, but everybody's on tiktok >> a couple of the things on consumer today one is a downgraded target over at wells an upgrade of etsy over at needham where they say pandemic demand has essentially lapsed.

>> i have felt that josh silverman and i -- etsy is down the block from me in brooklyn. i have felt that etsy, more than any other companies, other than airbnb, of the new ones, has come through, and i'm not saying -- i'm saying doordash hasn't, probably, but etsy has come through sticky. people like to shop at etsy. people discovered etsy during the pandemic, they stayed. meantime mean meantime, etsy bit the bullet on what's not working target, brick and mortar, ryan cornell, a lot of people feel he's become the goat of the game, not g.o.a.t., greatest of all time, but the actual goat. it's at 27 times next year's earnings i would prefer tjx, because they buy the stuff that target doesn't want, and there's always a -- i remember my dad sold gift wrap, and he always would come home in january and kind of sit around, sometimes in his boxers, doing nothing, drinking the

cheap scotch he liked wild turkey it's like, nothing happens january is the month where nobody gives anything. i remember him saying, jimmy, if there was only some holiday in january, if only hallmark would come up with something we need one. and we have martin luither king, but that's a day of service. and i just remembered that you don't buy retail during january. we used to go to these big malls in january on weekends so that he would show me no one would go into any store it's tough to do brick and mortar it's not tough to do etsy. >> occasionally, you might go buy a coat, and burl does get an upgrade at loop. that's almost an eight-month hig high >> i have a burlington in brooklyn, and when you look at the pri prices, the prices for things are well below what a lot of stores can ever get anything. i think it's incredibly well run. i think it's a winner. i like tjx more.

but ross stores has been a winner too and this is all tradedown. now, universally, we saw a downgrade in kimberly. all the analysts are anticipating tradedown and recession. i will come back and say, other than apparel, where there is a tremendous glut, and they are frantically trying to get rid of everything, as is the case with target when i went to see one with brian cornell, there hasn't been much tradedown. maybe it will start happening, but there hasn't been. >> that's a good point kimberly gets cut at jeffries. they take sam to underperform. >> sam has been -- look, they were faddish, and i think that people have to recognize -- everyone's come into that market i got some topo chico azathat hs it it's late in that game i think sam is pretty much -- it's still not done going down, but i think it's a falling knife. i'll tell you what i think can

stop oil. i had an excellent commodity analyst who, when oil was at $120 and a lot of big firms were going for $150, this is carla, she said, listen, you got to get out of oil it's the most crowded trade. now, at $70, they're all short oil. there's the least amount of oil there's been in years. we have to make a bet -- i'm making a bet with the travel trust that oil bottoms between $67 to $70 and you got to start buying right here >> okay. on west texas. the other -- you mentioned nat gas. 50% off the summer highs >> nat gas is also something that i think you can buy we like kotera highly, highly levered nat gas that's a combination of cabot and simerex. we got five cold days, and you will say, why didn't we buy natural gas? cabot is the highest >> i was watching xop, the spidr

s&p. >> come on i mean, look, i think that if china's coming back, what are we thinking here? now, someone told me the other day, listen, china's coming back, means 2 million gallons of -- not barrels being used but i would say that oil could be in short supply very quickly. doesn't take much. and also, they're not drilling that much in the permian, other than the private equity people so, i just -- i like this level. my best commodity person hate it at $120 and likes it in the high 60s. what am i going to do? i find that we're doing, we have to recognize that the analysts got things wrong they're trying to readjust now, and that includes oil. it doesn't surprise me that oil is down right now. but remember, even -- these are reflecting recessionary prices i don't think we're going to see -- we're not going to see $2 at the pump. >> no. that would be a hard target to hit. >> yeah. >> there's been some reflection today on what it means for

russia and the cardinal sin that apparently he's committed, and that is becoming an unreliable seller of energy for countries like germany, which is now accepting huge loads of lng from us >> yeah, look, we're going to have a new -- there's a -- freeport is about to come back online, another two bcf. these are giant amounts that we're sending. one of the things that happened to the oil industry that nobody thought was that president biden had been very opposed to all these guys, and then he goes over to europe and says, we will be your source, and that green lights it, so everybody's trying to build pipe because there's way too much nat gas and not enough pipe capacity so, we have a lot of bcf, 15, we can do it. and that's going to solve europe's problems if they buy enough -- if they have enough room to take the trains. i think what's remarkable today is the decline in microsoft. the air is going out of microsoft balloon, and yet, microsoft is a fine company.

there's a level where that stock will bottom, not today, because once you see a stock down there, it tends to mean there's going to be sellers for a couple days, but that's one to watch. yes, azure is slowing, but everything's been slowing. that's why the stock has been going down what was 2022 about? it was people getting out ahead of the slowing, so now the analysts are telling you, you know what? there's a slowdown well, microsoft was at $320. so, they've just -- they loved it at $320 >> i know you expressed skepticism about chips, but do chips bottom before software does >> well, the problem with chips is that the glut is related to pcs, and there's no pick-up in the pc business. and it's related to samsung, which is selling below cost. and i don't think that's right nvidia's got a terrific ces speech coming up, but nvidia's 44 times earnings. we own it. and i expressed to club members

that i'm very concerned. versus amd, which is down a great deal already look, you can't own all these. you have small positions some of them are going to bounce back faster. amd, the glut, again, is pcs we're going to start hearing datacenter glut if azure is really struggling. i don't think -- i think going from 22% to 18% is not disrupting >> a few downgrades in industrials. i know jph hunt got cut. honeywell, downgraded. >> we own honeywell. give me a break. it's been a fantastic stock, but there's no reason why it shouldn't be a fantastic stock it's aerospace but also oil and gas. it's also climate controls these are fantastic. >> they're talking about warehouse supply >> so, they got one thing, you know yes, it's been -- it's not done well they don't have the amazon business go sell honeywell. i mean, you know

go sell it i just -- i would encourage people to sell it because i want them out i don't want any weak hands. another one where i don't want any weak hands is emerson. i mean, this is -- i mean, this man is reinventing the company these two companies have more optionality than any companies out there. the two that were downgraded, emerson and honeywell. you don't downgrade companies with optionality you don't downgrade winners. these are up and you don't downgrade stocks that are already down a great deal so, i find that the analysts right now are really active and meant to some degree not helpful. >> speaking of which, one name that's been near recent highs with an upgrade today is merck, b of a goes to buy, $130, talking about keytruda, still a bear risk, but they're trying to diversify away >> where were they i mean, merck has had this incredible run from $80 and now we discover that merck's good?

i thought that was -- look, a nice person did that 2023, i said i'm not going to call people montebanks >> no jokers >> i'm not going to do that moe, larry, curly thing, not even shemp. but i think if i now discover that merck's good, i remember once when i think it was curly asked moe, is that the sun and moe said, i don't know, i'm new in this town is that merck cheap? i don't know, i'm new in this town when you start quoting the greats, moe, larry, and curly, you know you're right up there with buffett >> that's good merck's one of the winners today, obviously let's get to bob pisani. hey, bob >> happy wednesday, and the important thing is, we've got a modest rally going on here, and

tech is battlegrorebounding wite of exceptions. we have had great moves in asia, particularly china the hang seng is up nicely on the week europe's been rallying we're up about 4% for the week the french cpi numbers were lighter than expected. germany was yesterday. spain was the prior week so, inflation expectations coming down a little bit over this europe. that's a very good sign. they've got a nice rally going here here in the united states, kind of a mixed bag remember, energy, the big leader last year. energy has been the laggard so far this year, so energy is to the downside real estate materials, financials, marginally to the upside as you see. the important thing is, tech stocks for the most part have stabilized take a look at the s&p 500 apple's on the upside. of course, salesforce, on that announcement from benioff is moving to the upside microsoft looks down to me that's a bit of an outlier right now. there's the s&p 500, 3,840 right now, and remember something. the santa claus rally is the

final day for that we'll take a quick look at that here the santa claus rally is the last five days of the year, the first two days of the new year, so this it is last day of the santa claus rally. on average, it's up an average of 1.3%. so for this to work, it has to be over 3,822 and as you saw there, 3,841 right now so far, the santa claus rally is in effect. we'll see if that happens at the close. the big debate amongst everybody down here was october the bottom or not remember what happened we're well off of that bottom here, but on october 12th , we bottomed 2023 earnings were very optimistic the pe ratio was 15. that's a below the average it's about 17. but still very, very rich if that is indeed a bottom. most of the time, when you have market bottoms, the market tends to bottom at 10, 11, 12 times, so it would be an expensive bottom if that happened. the s&p is 7% or 8% higher, at

3,824 is where we opened today 2023 earnings are down a little bit, not quite 7% like last time but still up rather notably, 4%, so prices are 7, 8% higher earnings, only 2 or 3% lower that means the pe ratio is a lot higher at 16.7%. i think the problem with this whole issue is somebody is wrong in terms of their opinion. right now, the market seems to be very clearly positioned for a very shallow recession what does that mean? look at what you've got here earnings are flat to up slightly and the multiple's about average at 17 times forward. that's not a railroad serious recession. at best, that's a very shallow recession. so, if indeed we get a shallow recession and the market is not crazy overpriced, but if we get anything more severe than that, stocks are very richly priced, and this is where you get to the debate about whether or not

we're at the october bottom. where are you on this side of the recession? mild or more severe? that's the terms of the debate right now. carl, back to you. >> bob, thank you so much. a quick reminder this morning. you can always get in on the cnbc investing club with cramer. sign up at cnbc.com or you can use the qr code on your screen let's watch bonds today. got some data coming up in about 12 minutes, manufacturing ism and jolts and the fed minutes later on this afternoon for the time being, ten-year, just south of 3.7%. your projects done right

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watching china names this morning. alibaba 6% plus on this wire story on approval for a $1.5 billion capital plan jim, not sure how much of this interests you. >> it does, because the government has decided let's let

stocks go higher, let's start helping real estate. i think it's significant i'm not a believer in these stocks i'm trying to get the government to be more peace talk. these are gestures every bit of this is a gesture. >> we're watching those today. the dow higher by ouabt 65 points we'll get "stop trading" with jim after a short break. ♪ imagine something of your very own. ♪ ♪ something you can have and hold. ♪ ♪ i'd build a road in gold just to have some dreaming, ♪ ♪ dreaming is free. ♪ accenture, let there be change.

it's time for jim and "stop trading. we talked about microsoft, 25 times earnings how about nucor, four times earnings one of the reasons, it's got 28 in earnings power and the analysts think it will go down to 13. so they're going after the cheaper ones and buying. for nucor to go up, you can't have a recession i think what nucor has is infrastructure every bit of this infrastructure we passed in washington is going to end up on their lap it's going to take a year. think about putting back in the bullpen. made a lot of money. still am i like the story i think it's a very attractive piece of business.

>> you keep coming back to industrial-led policy infrastructure. >> people are misunderstanding how much money is going to come into the system. we'll be taxed to find enough engineers and it won't come in until the fourth quarter they haven't even selected the general contractors first. that's first, and then the individual engineers and then finally the orders but if you're nucor, you're getting ready right now. you have to because you have to build inventory. >> cat and united rentals echo what's tonight >> we've been going through what's the best in the dow, the bottom of the dow. tonight is s&p it's a very shocking list i'm going to suggest to buy. shocking i worked on it all weekend my wife just said, go, do whatever you want. i sure did i worked on this. >> that's a tease. we'll see you tonight at 6:00. mad money with jim cramer, 6:00 p.m. eastern time. as we said, the ceo of ge health care with us

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welcome to another hour of skrooet. i'm carl can't nia david faber and morgan brennan have the morning off decent start here. all s&p sectors green this morning with the exception of energy getting clouded a bit by down grades in retail, industrials and financials got fresh data let's get to rick santelli >> first let's start out with the november read of job openings and labor turnover known as jolt. expecting ten million. 10,458,000, better than expectations, and 10,485,000 is actually the highest level since september. maybe what's most noteworthy is that september read and the following read in the veer view mirror, 10,512,000 these numbers take us back to

mid 21 we have improved just a bit and depending on what your thoughts are regarding how the fed will proceed, that may not necessarily be good news now, december, for ism, on the manufacturing side, 48.4, very close to expectations, and keep in mind that 48.4 right now is the lowest level going all the way back to 43.5 that was may of 2020 if we look at prices paid, and this is very important, we know services is moving higher on the inflation front, but the goods side is moving down. 39.4 39.4 is the lowest level in prices paid since april of 2020. now, that should be considered on every front, fed and investor very good news if we look at the employment, considering it is the week of employment, 51.4 51.4 is the best level unemployment going back to august finally, if we look at new

orders, 45.2 45.2 sequentially lower -- so is prices paid, but that ask is a good thing 45.2 is the lowest level back to may of 2020. adds we look at these numbers and we see interest rates right now all lower across the curve ten-year note yields hovering around 368 is a range we haven't intersected since the 23rd of december mike, back to you. >> rick, thank you so much we are 30 minutes into the trading session. here are big movers we're watching starting with ge healthcare, beginning its first day of trading as a separate company on the s&p 500. that stock right now showing up 4%, 58.50. it was trading in this general area in the when issued market

ahead of the spinoff today the ceo will join us later this hour plus salesforce shares are rallying in early trading. the company announcing a restructuring plan that includes cutting its staff by about 10% as well as closure of some offices. the stock up close to 4% we'll end with meta getting a nice bounce today, named a top 2023 pick. shares have now gained more than 40% since the november low, carl it's interesting, as we get these kind of january calls of the year, best picks for 2023, they fall into a coupleof categories one is big fall in mega caps like meta where it feels as if there's an opportunity there to essentially say this is still a relevant company, still got the longer term growth meta is in that category paypal yesterday the other one seems a very defensive feel to some of the other picks out there, basically

saying we don't think the economy is that great, but we're going to allow ourselves to play some defense again in 2023 microsoft did get a downgrade. this is the other side of it which is, the companies that still have the valuation premium like microsoft, folks are wondering how far that has to carry. you see here down almost 5%. >> that's going to be your biggest s&p lagarde. we talked about the downgrade with ubs with jim. i wonder what you make of the gap today, intraday between some of the software names, namely microsoft and the chip names where there's some renewed interest >> i think it's a matter -- they're out of sync in terms of how much pain has been felt. in terms of the semis, i feel as if people continually trying to anticipate, finally it's priced in, finally we have the turn the asia story, the fact that china is coming back online is another element of it. i don't think on a one-day basis it's really at odds with one

another. again, microsoft is in that apple category of safe haven, still maintaining a big premium valuation and people are wondering whether it can hold it now let's turn to tesla, the otherbig mega cap nasdaq decliner it's trading higher today. dropped double digits yesterday, the biggest in two years joining us is morning star analyst seth goldstein he has an overweight rating on tesla, $220 price target seth, good to have you this morning. that 220, that price target now says you think the stock is a double over a certain period of time i'm wondering what gets you there in terms of the fundamentals, the delivery outlook and everything else that filters into this price. >> it's a great question when we look at tesla, we still

see growth, just not at the historical growth rates that were in line with management's previous statements of 50% delivery growth each year. we forecast this year in 2023 a 24% growth rate, deliveries a little over 1.6 million. over the next ten years, that's about a 19% revenue growth in automotive so we still see growth and expansion and we think tesla will deliver over 5 million vehicles by 2030 however, it's a smaller growth rate than previously had been. so we still think growth is there. we think the cost reduction initiatives will help boost profit growth in excess of revenue growth,we like the long-term story here it's slower growth than previous i think the market is struggling to figure out how to price that in you have the twitter overhang and we've seen bears take a massive hit over the last year >> for sure.

let me frame it a different way. tesla, from the peak price in 2021 was up 1800%. since then down 75 or so percent. still up 4% from the november 2019 level maybe it became a mania on the way up when we created a fundamental story around it. maybe it had no business being a trillion dollar company. now it's the same as apple's multiple maybe that's not a mispricing. >> i think tesla will have a higher long-term growth rate as we look at a year ago, we thought tesla was overvalued we had a one star rating we thought the market was pricing too optimistic of a scenario assuming tesla would become the number one automaker, getting closer to elon musk's 20 million vehicles a year. we never thought that was realistic. we still see the growth, but

clearly i think the market is pricing this thing as if it's only going to get to 2 or 3 million vehicles a year, as if the profit margin is not going to happen, as some of the ancillary businesses and robo taxi aren't going to materialize as management expected. >> i was interested in the downside case that you looked at, potentially looking at a price of maybe 90. you argue it's largely contingent -- avoiding that is lrjly contingent on the cost reductions happening and making sure margins are protected. >> yes when we do look at the downside scenario, how we get to $90 is assuming tesla only sells about 2 million vehicles in a steady state. we assume they have to cut prices to boost demand so the cost reduction initiatives do not flow to the bottom line. we also assumed no extra value for autonomous driving software, no real growth in the insurance business and assume no ancillary benefits from things like robo

taxi or humanoid robots. when we construct that scenario, we see the current stock price is only about 15% above that level. we think a lot of the bad news is priced in and there's a lot more upside for investors looking at tesla >> all right at least it is now very much debate about the numbers today and this year. you don't have to necessarily go out ten years to really build your case. seth, appreciate it. thanks for the time. >> thank you back to the broader markets this morning as the dow and s&p have gone negative investors are looking ahead. this afternoon the fed's december meeting minutes steve liesman has more on what to expect. >> good morning, carl. quickly on the data. good inflation news in the ism with prices paid index coming down when you look at what's happening with labor, ism employment index went up which contradicts the idea that the manufacturing sector is softening, plus that jolts the

job openings at 10.4 million it does come down very slowly and incrementally. that's something fed chair jay powell is looking at ahead of the release of the minutes, minneapolis fed president kashkari revealing himself to be among the hawk kis members. he wrote this morning, i have us pausing, the fed that is, at 5.4% once we see the full effects of the policy, we can assess whether we need to go higher or remain at that peak level for longer that puts kashkari at the high member of members united in the rates going higher 17 of the 1 fed members forecast rates ending the year at 5% or higher compared with the current rate of 4.38%. you can see there kashkari is one of the five at 540 that means the average fed official has at least seven built in from here meanwhile the market has two

more 25 base point hikes and is less certain today's minutes will be scrutinized for any cracks in the consensus. the question is how much concern ability weakening jobs and slowing wages, declining growth and recession, monetary policy lags and, of course, financial instability given the aggressive rate hikes friday's jobs report, next week's cpi can move forward. if the rate hiking train stops before or after the station stop we have an exclusive interview with kansas city fed president esther george tomorrow >> i wonder if you found any other member who has traveled so far, going from hawk to dove or dove to hawk in his essay, his commentary about the fed's weakness in forecasting what he calls surge pricing and some of the ramifications that has >> i wasn't sure i completely bought into his metaphor about

surge pricing there. i do think it's important that the fed goes back and figures out where they got this wrong. i'm more interested in, carl, personally the idea of group think, that everybody kind of got their brain or became wedded to this idea of transitory meanwhile, there were many in the market who thought it wasn't transitory why weren't there people on the federal reserve. if they were thinking that, why weren't those voices heard and listened to. i think that's more of an interest question to me. i get the surge pricing idea kashkari traveled very far very faeft. i also look at mary daily who might have been a dove is now very hawk kish i think what's happening out there right now is the need for the fed to have tielter financial conditions, creating this requirement that they talk very much monolithically as if there is no break in the consensus. that's why we'll look closely at the minutes this afternoon >> exactly why they're increasingly important

steve liesman, appreciate it very much. take a look at the roadmap for the rest of the hour, includes this bounce from baba and other chinese names listed in the country we'll tell you why. the big freeze in manhattan real estate, posting the biggest sales plunge since the pandemic. ge healthcare completing the spinoff, now trading on the nasdaq, joining e p ths&500. ceo will join us after the break when squawk on the street comes back ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're

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ge healthcare getting a boost after completing the spinoff from general electric. joining us on cnbc is peter arduini. as a former ge employee, an historic day for legacy name talk about what you think this all means. >> thanks, carl. appreciate the time. if we step back from this, i think we're all super energized about this opportunity we had nasdaq come to wisconsin, the first in the state, we rang the opening bell today we're one of the largest spins to take place. ge healthcare, we're an $18 billion startup with over a billion patients around the world that we touch, and we're trading now as an s&p 500500 company. it's a catalyst moment for us. the team is super excited about our future and our purpose which is about creating a world where health care has no limits.

innovation has been a hallmark of ge and ge healthcare in particular we've got 125 years of innovations in ct, mri, x-ray. our services business, just to name a few as an independent company, we'll pull on that history, but also come out now as a more focused, faster, agile company. >> i know one thing we've been watching, adjusted eebidt margins. is a lot of that about trying to sluff off the past couple years, supply chain, inflation and the like >> carl, look, when you think about what we've been able to do for customers and patients this year, we've had a tremendous year of making sure we can ship and deliver products there's clearly someone-time related issues in '22 with covid related and some of the supply chain issues that everybody has been dealing with.

as we go forward from a snapback standpoint and our abilities to get back eebt that levels, we feel comfortable with our path forward. >> peter, it's very steady, relatively slow organic growth business you're in in terms of being an independent company, are there things you feel you'll be able to do strategically, m&a, other ways of operating that perhaps were somewhat different from how you were within ge >> mike, look, from that standpoint, it's interesting today is my one-year anniversary. literally a year ago we started the journey of things as a part of ge. some of these are me now as the ceo. some of these are part as a separate company everything from running the company with less matrix structure to actually integrating in more innovation on how we do things and really commercial execution it's a big focus we've been able to bring really strong talent into the org

things such as this, which is what i'm holding up, a handheld ultrasound this unit fundamentally has the capabilities of what our strongest unit did just eight years ago. this takes us into new markets it takes us into primary care. you go see your primary care physician, they're going to have a device like this that's some of the market expansion opportunities on top of our digital capabilities in ai which are growing >> what is the mix of business in terms of servicing and install base or new sales? how much of this is having to have customers sign up for a big ticket capital expense, and how much is just the normal run rate of procedures? >> that's a great question we have a good mix about 50% of our revenues are reoccurring. we have a large contract service base business. our pharmaceutical diagnostics business and software business are all reoccurring revenue.

our biggest growth area around digital and those areas are more reoccurring revenues so that's clearly part of our strategy going forward, is how we move more and more towards reoccurring and subscription capabilities again, with growth of our digital platform which will have higher margins, higher growth rates, it also happens to be reoccurring. >> what does that mean when it comes to american demographics, the aging of america, the baby boom working its way through an older age? how do you put that kind of long-term macro tailwind to best use? >> carl, look, it's a good question sometimes timing is everything for ge healthcare, when you take a look at the aging population, not just here in the united states, but around the world, rise of chronic disease. people living longer with disease that needs followup procedures many of 40ez procedures are imaging procedures where you may have two, three, four, five in a given year also the rise of middle class in

different parts of the world all requires more diagnostics. we saw this coming out of covid, an intake and up ttake in overa imaging pro procedures and things that support the capabilities of what we manufacture. >> fascinating look. nice to dig deeper into your business as opposed to another ge silo in the years ahead peter, thanks so much. congratulations. >> appreciate it, carl thank you. on the first day of ge healthcare trading on the s&p, a look at the index's biggest gainers. wynn, micron, bath & body works. dow is down 32 back in three minutes. even if you got ppp and it only takes eight minutes to qualify. i went on their website, uploaded everything, and i was blown away by what they could do. getrefunds.com has helped businesses get over a billion dollars

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u.s. listed chinese names on signs of a more relaxed chinese environment. dei deirdre bow is a joining us to explain. >> good morning. alibaba has the large stake in ant. it's one of the names leading the charge

fund-raising can be seen as one step back towards an ipo it got shelved a few years ago under regulatory pressure. the broader hope that beijing is ending the crackdown on tech that's helping to push it higher today. there's also loosening covid restrictions and potentially policy support for the property market that's also helping support these shares but as many china watchers and investors should know by now, beijing can and does turn on a dime just last week regulators took aim at online brokerages and what they called unlawful securities practices t fintech listed in the u.s. on that news. you can see what they do remember that ang group and jack ma had the running pulled out from underneath them very quickly a few years ago. there's also questions aside from regulatory risk ability consumer demand and the country's reopening. that continues to be bumpy

indeed those covid numbers, they are far from transparent there's a lot of risk there. you can see that outper formz not just the last year, but the last few months. you can see chinese stocks have massively underperformed the nasdaq. >> to your point, deirdre, the k-web at 103 in early 2021 it's now about one-third that, but it has doubled off the low you wonder from here on out, once you've kind of taken back the real doomsday pricing we had at the lows, what's the current read on whether, in fact, the chinese authorities want to allow these companies and capital to flow back into them and actually to have them flourish >> that's the thing. we don't have an answer. i don't know i don't think people on the ground know the answer to that question beijing and xi jinping, especially with the leadership he put in place at the last

people's congress shows he's valuing ideology over economics. even with the covid reopening, it's unclear, we don't have transparency from the latest surge and the number of deaths like i said, this could turn on a dime this is where it gets a little interesting. why the k-web has fallen so much over the last few years, i'm looking at a forward price for earnings valuation ratio it's still a little higher than the nasdaq that could tell you that even on a fundamental basis, these names are still looking a little pricey and growth, some of the names we talk about all the time like alibaba, that's actually come down quite a bit, too. >> no doubt about that deirdre, thank you so much see you next hour. we know you have a lot more in tech check as we head to a break, watch energy prices continuing to fall warm weather, worries about the strength of the global economy hitting the sector you see crude oil there, natural gas down 50% since the summer. the sle erengy spector spdr

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welcome back to "squawk on the street." the house of representatives failing to elect a speaker yesterday, heads into a second day of an historic flight on the house floor. ylan mui joining us. >> california republican kevin mccarthy is vowing to stay in this race for speaker of the house despite a stalemate with hard right conservatives who oppose his nomination. this morning, mccarthy got a boost from former president trump. on a social media platform trump called on republicans to focus on the fight with democrats and not divisions within their own party. he encouraged mccarthy to keep going and, quote, take the victory and run. mccarthy said he spoke directly with trump last night and framed the political chaos as a necessary step to moving forward. >> do i want to go through all this no at the end of the day it's better to go through this now so

we can be successful for this term >> the house already held three rounds of votes yesterday. as many as 20 republicans oppose mccarthy's nomination, and he can only lose four instead they coalesced around congressman jim jordan, one of the founders of the f can freedom caucus jordan says he's 100% behind mccarthy meanwhile this morning, president biden called the dysfunction in the house embarrassing he said congress has a responsibility to govern and that he has no idea who is going to become speaker. guys, the house will reconvene at noon and can begin a fourth round of votes there's talk that possibly the house could just adjourn at this point no one has enough support to become speaker, and no one is backing down mccarthy has even acknowledged this process could take several days let's hope no longer than that back over to you. >> yes, join you in that hop, ylan let's turn to phil lebeau, looking ahead at a big drop for annual auto sales expected

>> mike, the auto sale numbers that will be coming in today are december and full-year numbers we're still waiting for general motors, as you take a look at sales of gm. the stock has been under pressure whether or not gm had an okay december, which is what the expectation is or a little better-than-expected, the bottom line is all the automakers for all of 2021 did not have good numbers. toyota reporting december sales up 3.5%. then you've got hyundai, its december sales -- remember these are year over year so the comparison is with december of 2020, and you've got a lot of lumpiness in terms of production, that was up 40% for hyundai. what people are going to be focused on is the year-end total annual sales it's expected to come in at 13.8 or 13.9 million vehicles for some perspective, it was just over 15 million in 2021, and you have to go back all the way to 2011 to find the last time auto sales were this low. we'll get the total a little later today.

bottom line is this, guys, the auto industry is transitioning to what could be an upcoming recession and questions about whether or not demand is going to pull back demand has not been the question over the last year it's been supply that is shifting as we move into 2023 >> phil, that's exactly the interesting point. it's as if the industry was unable to capitalize on what seemed like a pretty strong, pent-up demand people being flush now they miss it what's an interesting bigger picture idea is that cars don't -- they don't just die that quickly anymore they're built to last longer maybe there's not an urgent need all the time to upgrade. >> correct and in the midst of all this, mike, and you and i have talked about this over the last couple months, pricing is going to be the big question they've been able to get pricing because in the past, if you or i six months ago were looking for a new vehicle, you had to pay

up the dealer adjustment that was often on a new vehicle, whether it was $5,000 or $7,000, you didn't like it when you were at the lot. but you were like, i need a car, there's not a lot of selection, i'll take it that's changing. as that changes, that brings into question whether or not automakers and dealers will have the same pricing power that we've seen over the last two years. most believe that's going to have to change >> phil, appreciate that busy year ahead. that's our phil lebeau talking about cars sticking with autos, the tough delivery numbers one part of the tesla story as shares continue to hit new lows. it showed signs of life earlier this morning amid brooader concerns about china our next guest holding $40 million in his future fund etf and arguing shares could go as high as 400, gary black joints us, future fund managing partner to discuss great to have you back i would love to get your reaction to the delivery data

yesterday. >> deliveries weren't great. you can't sugarcoat that there are some temporary things. obviously china covid was raging there was uncertainty about what you get under the $75 credit in the u.s. a lot of people are waiting. looking forward, the reason we stay with the stocks, a lot of the bad news is in it. stocks selling at 21 times consensus, 2023 earnings it's never sold that low lowest was about 28 times. even if you use consensus estimates and our numbers are higher than that we're looking at 30 to 35% unit and earnings growth over the next five years. i can't find in a mega cap space anything that has 30 to 35% earnings growth for 21 times it's an absurd valuation the volume numbers on the fourth quarter didn't help. >> how does tesla reclaim the premium it's had for so long relative to peers?

>> i think it still has the premium. i ask around, look at a lot of marketing research, i don't think all this noise you're hearing about tesla is impacting the business it's obviously impacting the stock. a lot of investors saying maybe the brand isn't as strong as it used to be, doesn't have the glamour. i don't see people canceling their orders for tesla even now that the wait time has dropped i think you still have a lot of innovation coming. we haven't talked about cyber trucks cyber trucks out in 2023 there will be at some point a 25 to 30,000 ev which dramatically expands demand for tesla you have a lot of innovation coming it drives people into the store, to the website they look at things. when you look at what people buy in an ev, they buy range, they buy performance, they buy safety and they buy technology.

they just buy a lot of charging stations tesla is number one in all that. i don't think it needs to reclaim being the premier ev brand. i think it already is. i think the stock is reacting badly to a lot of the near-term type stuff. >> gary, isn't this the future that, if you were a tesla believer for years that you were looking for tesla to attain, forget where the stock was at the high you have this company, it has scale. it's being priced maybe appropriately based on the growth rate. you say it's cheap, if 240ez numbers come through, fine i think people had this idea that because it traded above a trillion dollar valuation, that that had credence about what the fundamental story was right now and everyone is looking at it through that filter. i wonder why you believe, as i asked the analysts earlier, this is radically mispriced when it's a premium multiple for a company that still has cyclical exposure as we're now learning.

>> again, i would argue you can't find another mega cap stock that has 30 to 35% growth. we can go through the math if you want, trading at 20 times earnings the reason, and phil's comments are interesting, because you will see dampening of demand in 2023 if we go into a shallow recession, which we expect we will what you've got is this total surge in ev adoption ev adoption in 2022 was 10%. it should get, if you look at what's going on in china and what's going on in europe, it should get to about 35% by 2026. remember, tesla, unlike gm, volkswagen and ford gets 100% of its volume from evs. if they can just hold their share, their ev share right now is 19% if they can hold that and ev adoption goes from 10% to 35% over the next four years, that's a 35% tailwind that's all they need to do is hold on to shares. i would go back to, cyber truck coming, compact or sub compact

coming you've got full self-driving which is being launched nationally in the u.s., all that should help them at least hold their share. that's all it needs to do to get that 35% volume in earnings growth >> well, that sounds like it's a simple proposition to hold your share. when the rest of the world is now trying to get into evs look, kathy wood at arc has always said that tesla shares will go down over time that was built into her super aggressive bullish long-term target i don't know if that's something you can put in the bag. >> well, share has gone down one area it's gone down the most -- this is one of the reasons the stock has so underperformed in the last three months, tesla down 55% since october 1st, nasdaq is flat. up until that time tesla was beating nasdaq the reason is china. china, their growth engine and because it's been so successful

with lower-priced models, you've seen tesla share in china drop from -- ev share is about 8. you're right, tesla share could continue to drop a little bit. all they need to do is go from 19% which has already dropped in china, i'm saying the cheaper, 25 to 30 ev which is leveraging the brand, it's expanding the tam and you get cyber truck which has over a million dollars or a million pre orders, those are huge value levers that haven't been put into the stock yet. >> finally, gary, i know you own some crm we had discussions about the head count reduction, pressure on some to do more than 10%, the budding market share war with microsoft in enterprise software what do you make of this is this enough >> i don't know if it's enough it's obviously a good move it's one of the situations where

i think it surprised everybody, and the stock was up as a result it does reflect some underlying pressure but i think they're making the right moves to align cost with revenue. i actually think it's a positive >> certainly shares reflecting some of that today, up 2% plus gary, we're watching a busy couple months ahead. talk to you soon thanks >> thanks, guys. bye-bye. apple bouncing back from yesterday's drop, still down nearly 15% in the last month of trading. that's underperforming all the major averages we'll talk about the outlook for their quarter, especially the december quarter when we're back in three ♪upbeat music♪ ♪♪ ♪when the day that lies ahead of me♪ ♪♪ ♪seems impossible to face♪ ♪a lovely day (lovely day)♪

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apple shares trying to claw back some losses, up 1.2%. still down around 30% from the stock's all-time high in january of 2022, losing a trillion dollars in market value in about a year after its worst december

since may of 2019. david's tom forte has a buy rating of $67. hi, tom. >> hi. >> so, a lot of what seems to be going on with apple in the latest move lower is i guess a few things one being it's just surrendering some of the big safe haven premium that seemed to build up into the stock as the rest of the nasdaq fell away then some concerns about the earnings trajectory for the current fiscal year with what's happening in terms of iphone production perhaps where does it leave it situated in your mind in terms of the valuation and whether it's going to kick back into growth mode? >> sure. i can be very optimistic on apple, the argument would be that they're not losing sales. december quarter sales are being moved into the march quarter on china's supply chain related challenges and what has been a significant headwind meaning

exchange rates, starting to see improvement there. they're looking for a ten percentage point hit to december revenue growth because of unfair exchange rates i would say that's the most positive you can look at apple i do agree it's come back on china-related risks and is less of a safe haven relative to the other big tech rivals. >> okay. at this point, though, if i'm looking at how apple is situated as an investment proposition relative to the recent past, it's at the exact same valuation as the average of the last five years, 1.1, 1. times the dividend yield is half of the longer term average. it seems as though there are fewer things to grab for when it comes to saying that there's a little bit of a cushion in a valuation relative to other times when the stock has been down big. >> the good news is that it's not priced for perfection. we're not waiting for either a

virtual reality, augmented reality headset from apple or significant reality into electronics vehicles to push valuation from here. it's more about can they deliver on their promise of iphone sales over the course of the fiscal year, and then the stock can be more than okay >> tom, can you kind of describe or characterize the risks surrounding the phone cycle itself versus services and the degree to which consumers may, what, pair back on their subscription to icloud or something different? >> sure. the risk for the iphone sales is that we are seeing a combination of supply chain disruption and demand degradation, to the extent you have a global weakening economy, consumers may hold on to their current iphone for an extended period of time working in apple's favor, you see verizon, the other carriers heavily promoting new iphones to basically take advantage or exploit the billions of dollars

they invest in their 5g networks on the services front, i think they're okay as long as they continue to see growth in their installed units -- can iphone sales hold for this fiscal year and concerns of that are weighing on the shares >> all right the standing is that apple demand, it's like matter it's very difficult to kill outright because you're unlikely as a consumer to totally switch over to another ecosystem. the apple store is that sticky and hence demand has shifted in the later quarters is that opt misoptimism misplacd >> i think it's appropriate. concerns on china related supply chain issues and potentially weak demand including out of china. to the extent they're able to execute on their iphones for

this fiscal year, i think they'll be more than okay which is why they'll be buying at a pullback right now on the expectation that sales are being pushed later in the fiscal year out of the december quarter rather than being lost outright. >> all right, tom. stock is trying to make a stand here around 125. appreciate it. tom forte. >> thank you shares of coinbase are rallying, surging after reaching this $100 million settlement, pretty interesting $50 million fine for letting customers open accounts with few background checks, mike. another $50 million to improve compliance we've been talking about the crackdown within the space going far beyond ftx to have anything that appears like resolution at a time when you're willing seeing at the start of the new year the most obliterated stocks from the year

be before there's a debate about everything going on with ftx, making coinbase seem relatively stable they're advertising on that basis in terms of how they they're advertising on that basis. so whether you believe it's surviving ecosystem is one thing, but they're relative position within it is better than it was a year ago. >> a lot of moving pieces, obviously the plea by sam bankman-fried, the timing of that control trial later in the year and on ftx calling it fraud. the weather in manhattan may be warmer but real estate sales have gotten awfully cold we'll talk about details on that, a check on the markets this morning, a range 3840 the

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welcome back to "squawk on the street" i'm steve kovach, stocks are mixed at this hour

but seeing outperformers in consumer discretionary, in that name, casino names are firmly in positive territory with wynn up more than 10% in two days. elsewhere in travel, carnal, royal krcaribbean and norwegian are trading higher back to you, carl. still to come on "techcheck," how to trade the megacaps plus why one analyst believes that jeff bezos could eoturn as amazon's c that begins at the top of the hour

welcome back to "squawk on the street." manhattan real estate sales plunging in the fourth quarter one of the biggest drops on record, robert frank has more on that. >> manhattan closed the year with a record $28 billion in sales, but the last quarter suggests a lot more pain ahead in 2023. apartment sales falling 29% in the fourth quarter, the biggest decline since the start of the

pandemic in 2020 prices also falling for the first time in two years with the median price down 5.5% the average price for an manhattan apartment now just $1.9 million a bargain but prices are not falling enough to bring in buyers. brokers worry about what some are calling a deep freeze where sellers don't list because prices are soft and buyers are waiting for more dramatic price cuts so they're sitting on the sidelines. low inventory is holding back sales, too the number of unsold apartments rose a little bit about 5% but still below the normal levels, the high end is outperforming rights now prices at the top rising 4% while prices in the broader market declined. if you look at the deal pipeline, 2023 is off to a weak start. sales contracts in the fourth quarter fell 42%, the worst quarter for new contracts in a decade the good news, mortgage rates aren't as much of a factor in

the manhattan market more than 55% of the deals were all cash, that's an all-time record. >> a modest silver lining, i'm trying to think of what might thaw out this market that's at risk of a deep freeze, wall street bonus season not supposed to be a great one, when those checks hit in a month or so. i don't know what the global buyer outlook is for manhattan real estate at this point, so where does that leave us >> i think if there is an up size surprise next year it's going to be this is a cash heavy market, inventory is low, if you get more inventory on the market, those buyers may come back and as you mention, the foreign buyer we had a lot of middle east and chinese buyers come in december, brokers told me they bought a lot of apartments wait to see if that shows up in the january quarter but if that continues it could be another stablizer at least for this market. >> robert, thanks very much. looking at some of the

biggest stocks in megacap growth land the overall index s&p is up about half a percent from yesterday's range, weakness in microsoft somewhat offset by little bounces in apple, salesforce and meta platforms. that's going to do it for "squawk on the street" this morning. "techcheck" starts right now. happy wednesday welcome to "techcheck" i'm jon fortt with carl quintanilla and deirdre bosa microsoft downgraded, meta named a top pick salesforce surge on labor plans. details on the plans to cut a tenth of the workforce and will jeff bezos pull an iger maybe a second round as amazon's ceo? i don't think so >> find out what they mean we want to kick off this morning with two big calls on the street