2023. "squawk box" begins right now. good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen. andrew is off today. yesterday was a pullback for the markets. you saw with the mixed futures this morning. dow futures up 20. the nasdaq up 8. the s&p is flat right now. treasury yields as we have keeping track of these with the ten-year yield at 4.4%. two-year yield at 4.87%. we see pressure on yields from yesterday at this time. on the "squawk planner," we have the case-shiller report

coming up at 8:00 a.m. and bob iger will hold a virtual town hall at noon today with employees. that is expected to focus on the recent achievements of future building opportunities. that stock right now off 17 cents. also plenty of fed speak today. we have austan goolsbee and governors christopher waller and michelle bowman and michael barr. >> i have to brush up on my fed people. israel and hamas have agreed to a temporary truce for two more days. the fighting is s-- truce will until thursday morning.

shein files for the u.s. ipo and could begin trading in 2024. shein gained popularity with fashion forward designs which are cheap and broad selection and low prices and faced challenges that it used forced labor in the supply chain. it violated labor laws. the company is under investigation by the house select committee on kichina. shein is cooperating with lawmakers and denied forced labor in factories he visited. the company repeatedly knowknowledge knowledges that forbced labor hs been found and fixed the issues. and a judge orders binance founder zhao to remain in the u.s. ahead of sentencing.

he pled guilty tied to the cryptocurrency exchange. he is free on bond. >> interesting. they didn't want to release him because there is no extradition treaty. more fallout from the collapse of ftx. investors have been suing the company's celebrity promoters including tom brady and larry san sanders. they sued mlb in federal court in miami yesterday accusing of aiding and abetting or participating in the global fraud. the group is suing formula 1 racing on similar grounds. they want back any money that ftx gave them in the promotional

deals. >> the sports stadium. >> yeah. >> miami heat. i think. >> this would be the company trying to get back all of the funds. home depot founder ken langone will meet with nikki haley next week in new york as he considers backing her in the primary. langone says haley is the only person to give trump a run for his money. haley, former u.s. ambassador to the u.n. and former south carolina governor, is scheduled to be in new york on monday for a fund raising event. langone began to sour on ron desantis after he signed a six-week abortion ban bill in april. at 7:30, we will talk to rival

gop candidate chris christie. he will be on set. you know ken langone and stan druckenmiller go way back. >> ken will be with us coming up. we moved the date. i can't remember the date. coming up soon. >> guest host? >> on for an hour at 8:00 to 9:00. >> not many people get to do that any more. i feel special. we should tell you about stocks to watch. shares of irobot are rebounding after the 17% drop yesterday. amazon's planned $1.7 billion acquisition of the company raises concerns. that comes after the stock jumped 39% on friday following a reuters report that said the

deal was set to win unconditional eu anti-trust approval. the eu is expected to rule by february 14th on this deal. that deal is also under review by the u.s. ftc. the market authority said the deal would not result in substan substantial lessening of come pigs competition. i never wanted one before i saw the ininstagram. someone taped a knife and put padding around it and balloons in the middle of it. all of the family was there. it was rooting for one color. you wanted your balloon to be the last balloon standing as it went around and popped it. i need this thing. >> you know there were a lot of nfl games on thursday.

>> it looked like fun. this is the reason to get a roomba. that could work. >> i wouldn't want kids now putting it on there. >> they kept it controlled. they had pads to keep it in a controlled area. >> i'm not coming over. dancing and -- i'm not invited. doesn't matter. shares of zscaler are falling. the security software company with a 40% jump in revenue came in above expectations. they are scaling up several parts of the business to meet demand. you weren't star struck? >> by who we have in our makeup

room? >> yes. >> yes, i am. eunice yoon is here. >> in the flesh. >> all the way here from the other side of the world. we'll have her on. in the meantime, we'll talk stocks. tech stocks with gene munster. nasdaq is up 10% for the month of november. later, "sports illustrated" responding after evidence it published articles by fake authors with a.i. generated profile pictures. no word yet on the swim suit models. are they real? >> we had martha stewart in studio. >> that's right. she was one. they may all be a.i. generated. sorry, fellas. you are watching "squawk box" on cnbc. >> announcer: this cnbc program is sponsored by truist

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tech sector is on a run as we approach the end of the year. several of the magnificent seven are trading at highs. our next guest says there is more opportunity in the tech space. joining us now is gene munster.

nasdaq is up a lot this month. we are shocked to hear double digits, gene. before we talk about the ones you do like, and since it is a popular issue, magnificent seven, is it too late? would you buy any of them at this point? >> i would, joe. i think you put google and meta in that camp with apple. that is a select group. you don't need to own all of the magnificent seven. you should have some exposure. generally, the tech portfolio as we orient ours, there is a quarter in that magnificent seven. there is a shift in the magnificent seven which will be steady and continue to be part of the portfolio for most people and we think the sub will come from the companies which have been forgotten and i think we have seen a positive shift in

terms of investor appetite for this with magnificent seven up 4.7% in the last week. nasdaq up 4.5%. that is interesting with the nasdaq up fractionally. more impressive is the sub $50 billion group. we looked back to 2021 and a benchmark for the higher companies. they are up 3.5% in the past week. this is a shift in terms of sentiment. the reason is more steady interest rates just keeping steady gives investors an opportunity to step back and own a broader mix of tech beyond the magnificent seven. i see it as an encouraging data point. i checked my feed this morning and we think about what is

happening with cyber monday with the one piece related to this that i would caution. i'm bullish on the smaller ones. we saw cyber monday up 8% or % year over year. the concerns of the interest rates and what they are doing will linger. i think on the margin, 2024 will be a year of a shift in performance from the magnificent seven to some of the smaller sub $50 billion market cap. >> there must be a lot of them. how many have you looked at here and how many are you recommending? the ones you look back just to test your theory in 2021, there was no way back then? are there different opportunities now? are there different names that wouldn't have been as attractive a couple of years ago? how many are you looking at and

which ones should we buy? >> our short list or our watch list is 100 different tech companies. we own about 20 of those. just to give you a sense of the scope. in terms of the seven, most of them didn't have a.i. bid two yearsi ago. that is what was appropriate which was to really take the companies that didn't have a.i. bid and look at how they performed recently. if we would have selected companies with an a.i. flavor to them, they would have been up more. to answer the other questions is what are the companies excited about? cr crowdstrike. a $50 billion market cap. cybersecurity company. we are optimistic about that one. one company that you heard of, obviously, etsy, and what is going on in retail.

that rebounded up nicely up 20% in the last month. that continues to be an opportunity relative to an $8 billion market cap. that would be a bigger company. that is the general line that we're looking at here with companies to grow faster for longer. >> that's two. you have the universe at 100. you have 20 that you own. what else? >> other companies. zillow and what they are doing with changing how we are doing real estate. the next version of the app is going to bring in more meta data. they will have an opportunity. palantir has an a.i. bid to it. we own that one. they have done a lot. we are also investing with the list and we invest in private and public companies. on the private side, there is

redwood materials. this was founded by one of the founders of tesla's battery company and andro which does defense tech. those are five companies that we're excited about. >> you mentioned tesla. you didn't mention it when you were talking about the magnificent seven. do you have a hold on that? >> i think tesla is one that will continue to do well. i think what we will see with cyber truck here which is announced with the delivery event thursday afternoon. that will stoke investor optimism. i'm optimistic on tesla. the reason why i don't mention it as one of the five is because i don't see it having a 2 or 3x opportunity. i'll shooting for a goal with

more upside. i'm focusing on tesla because this is an important p week for the company. cyber truck will not have a big impact in numbers over the next few years. it will take time to ramp up manufacturing. i think from an expansion to multiple perspective, this will be an important event. they are showing the cyber truck at 15 tesla retail stores. people are lining up to see this car. this is what we saw when they originally were showing off the model 3. i think investors did not appreciate the pent-up demand piece. i think to answer your question expect to tesla, the stock will move higher in the next week as we see cyber trucks in the real wo world. tesla is more aggressive than other carmakers. >> you don't think the other magnificent seven are 2x or 3x?

>> we orient our portfolio to be more focused on some of the sub 50. >> the law of large numbers. none of the magnificent seven will be 2x or 3x. >> that is correct. we don't want to be all magnificent seven for the portfolio. we limit the number we have which is google and meta. >> gene munster, thank you. >> thank you. >> still waters run deep. is that far away deer have big horns. from the distance, something can look really attractive and good. >> you get up close. >> and then still waters run deep. >> that i know. >> quiet. >> my dad. >> axe murderer.

>> not an axe murderer. you are not showing every emotion. >> underneath the surface and it could be nuts and blood pressure far away deer. >> i showed you a picture. close up deer. more deer than dogs. >> they are fearless. i pulled up to two yesterday. come here. i want to pet you. i expected. >> the one i showed you wandered up to me. horns and everything. as i was walking into the middle of the street. i was in the street first. he faced me down. >> they do damage to foliage. >> they are cute. >> they are. when we come back, "sports illustrated" responding to the allegations of publishing

articles with fake authors and a.i. generated profile pictures. and we have andrew ross sorkin with the all-day coverage tomorrow. "squawk box" will be right back. in a crisis caused by a terrorist massacre. warning civilians to clear out, while hamas forces them back. allowing in food and water, which hamas steals.

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ill illu illustrated" for using fake authors and using a.i. head shots. they were available for purchase on a web site that sells a.i. head shots. another author bio also featured a head shot available for purchase on the a.i. web site. the arena group which published "sports illustrated" said it came from advent commerce. "sports illustrated" ended that partnership. there were others on the street which is a publication founded by jim cramer which was bought by the arena group in 2019. jim hasn't had an affiliation with the company since 2019. this shows you how frtricky it

will be to tell truth from reality. >> yeah. i'm trying to figure it out. it is weird. in a year, we are considering things like this that are happening. >> yeah. >> i was trying to figure out if i care. drew seemed like a nice enough guy. >> if you want to know -- >> do i? it is not made up. it may be better than the rea, if there were a real drew ortiz. if you pre-hesent it as an actu publication written by a person, you should not like that. just barely reading the article in "sports illustrated." i don't care. >> this is something that is used by students cheating on their papers. this is popping up in publication. >> this would disrupt us. this is the next step.

picture with an article is not much different than generating a computer. >> max headroom. >> you would stutter less. >> you would hit time cues. and listen to producers when they say wrap. >> whiter teeth. improvements on all of us. >> not you. coming up, several major u.s. companies urging executives to use burner phones visiting hong kong. that is one issue we are tackling with the bureau chief who will be on set next. eunice yoon. here is a look at yesterday's s&p 500 winners and losers as we head to break.

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good morning. welcome back to "squawk box" live from the nasdaq market site in times square. looking at the futures, the s&p is in the red. yesterday's market action was characterized as a slide in the averages. i took issue with that. nothing happened yesterday. it did break a pretty good winning streak. >> there are notes out this morning wondering if the november rally can continue and if we have seen the height of it. mohamed was on yesterday. he said he wasn't expecting a huge drop in the markets. >> mohamed expects a jets story every weekend. >> you have to have faith. two major companies,

deloitte and kpmg, are asked to use burner phones in hong kong. the issue is the risk of hacks and data theft in the wake of the beijing 2023 security law governing hong kong. joining us to talk about china is our very own bureau chief in beijing is eunice yoon. >> great to be here. >> good to see you. >> long awaited home vacation. >> you are not a.i. generated? >> i'm really here. i'm here. doesn't feel like it. >> is it going to be home? >> yeah. >> it has been a long time you had a thanksgiving. >> i hadd thanksgiving last wee. haven't had that in a while. >> she claims indiana as her state. >> all good things come from indiana? >> i was born there. >> both of you. i have empathy.

tri-state. the actual tri-state area. >> kentucky, indiana and ohio? >> really? >> southern indiana. >> the real tri-state. >> yeah. >> eunice, let's talk about the stories. including the idea of travels to hong kong, you should do what the fifrms are suggests and not bring your real phone. >> that has been around for some time. it depends on the level of awareness or concern you have about your data. maybe what is also new is it is hong kong as opposed to mainland chin china. now it is pretty much all of the same. a lot of people i talk to say the same thing. >> last night, i saw a really interesting story that you were covering on "last call." you talked about the rise of children's respiratory

illnesses. you had lots of pictures. >> no. >> hospitals s s that were jam. >> all over the internet. videos have come up showing the pediatric wards in different cities that are being jammed, like you said, with children who are sick. people are masking a lot more. they are worried about whether or not this could be a new variant of covid-19 or a new pathogen. the authorities said this is not a new pathogen. w.h.o. has taken that line. it looks like the w.h.o. said it is similar to what we have seen in other countries. like here, when i was in china over a year ago, you were worried about rsv. >> kids who got sick for the first time who hadn't been exposed to diseases. when there wasn't a lockdown, you see a rolling effect. everybody got it. we ran out of children's tylenol and the rest of it.

i don't believe what the chinese authorities are saying on this. >> that is a big issue for china. >> the case in the uk of swine flu. think about how we view these things. ah, sars. we always worry about it and nothing ever happens. now we know each one. >> now there is a big trust issue with the national health issues. >> i like to say i believe the w.h.o., but i'm not sure i believe them either. >> the w.h.o. is pressing whine on china on the origin of the coronavirus. and that cooperation. china has a big trust issue. >> you were over there after the bi biden-xi meeting. did you notice a really great shift in the way it was being

covered and suddenly we weren't horrible? >> the state media? >> they like president xi and we like him now. >> it is because we have been getting a barrage of anti-american messaging. just that the u.s. is always the competitor and in chaos and u.s. always the one that is trying to contain china. then suddenly around xi jinping's visit, it is all about cooperation and the u.s. has seen its wrong ways and now working with us. that was really different. it continues today. there's a lot of discussion now about ways in which the u.s. and china can work together. over the next couple days, president xi is supposed to be going to shanghai and talking about how can we get more foreign investors to come and what can we do to improve the

private business environment. of course, the issue is that you have the consulting firms or foreign executives who feel they need to bring burner phones into hong kong or worried about being detained. that is a real concern. >> we heard president xi was going to be sizing up president biden in anticipation if he were to be reelected for another four years. do they print that over there? >> no. there's a lot of black box going on here. >> the conspiracy theory here is that china still wants to supplant the u.s. in world order. >> that's clear. >> they still want to do that. he is seemed nice and conciliatory. the world is big enough for both of us and all that stuff. >> yeah. >> some people are saying we were too nice and president

biden is not, i don't know, is too weak to confront china in the way that china should be confronted. you wouldn't see that in print. >> i think there is a reality where both china and the u.s. are on the planet and there are a lot of businesses that do want to do things together and there a is a huge market and a lot of wonderful and creative private business. there the people in the government, too. >> how do you reconcile that with the south china sea and the military bases and spy balloons? how does that all work? do we have to cover our bases? >> i think with president xi, he is bringing in the country in a certain direction. you see there are other layers within china who does necessarily agree with that or want to see something different. it is very difficult because i think the way the structure is right now, it is allowing for

more extreme behavior because over one is paranoid and concerned about what president xi thinks. we don't know who kind of information he gets about what is happening. >> do you see huge -- >> the economy is doing poorly from a chinese perspective. people don't necessarily know if he is getting full information about what's going on ton the ground. >> do you pick a different unit to go home to every night? >> there are empty apartments. >> how? 1 billion people or however many, how can be there empty? >> a lot of construction going on there. >> that is still being dealt with? >> the people are concerned about the values of properties as well. maybe not as much as beijing or

sha shanghai. it's still a concern there. >> how effective is the propaganda push in terms of saying all americans are bad and we want to whip up the nationalist fervor and we are partners again. >> i think it is difficult for anybody to say. we don't have any polls. it's difficult to say. i think it is effective. i have just been surprised at how many times when i've gone out to talk to people about what is happening with the u.s. talking about fierce labor and the concentration camps and you talk to people and they don't get the same messaging. they say why does america hate uyghurs people? why do they hate it? we should be allowed to sell cotton and we support uyghurs.

>> does that hurt sales of apple? does it hurt? >> i find it conflicted. you can talk to the same person who says i love president xi and i'm a card carrying member of the communist party. and they are carrying apple. they are selling things to people that they don't need. if you talk to somebody who will talk about how horrible -- will praise president xi or the chinese system over the u.s. system and wondering why they want to keep chinese down. i'm going give you a visa to the united states. everything is opening up and then everybody wants to come. you can have two ideas in your head. >> you have more fans, nba fans in china, than total in the

united states. how does that happen? we now have early sunday games to watch that come from frankfurt on the nfl. what happens with the nba? can they visit? can they play? >> it is from -- >> 600 million fans. >> it's huge. from the consumer perspective, of course, everybody wants the nba to come. that would be beneficial for both. from the chinese perspective, they want to also from the chinese government perspective, they want to make sure the narrative is in linewith the communist party. the communist party and president xi is , in particular infallible and politics is in line. they do understand from the government perspective that chinese people do like the nba.

>> you know when you do stop doing this, you need to resun f office over here. you are going back. you answer all our questions. welcome back. i don't know. it's amaziamazing. you should run for office. right? >> to handle us. >> eunice, thank you. great to see you. coming up, new reports for holiday travel and spending. details after break. later, bank of america savita subramanian and how she sees the s&p 500 hit 5,000 by the end of the year. and you can listen any time to squawk pod. we're coming right back.

the end of the thanksgiving weekend saw record passenger volume with the tsa saying it screened 2.9 million passengers on sunday. that beats the prior record of 2.88 million set back in june and 10% more than the same day a year ago. also setting a record with cyber monday spending is u.s. shoppers spending $2.4 billion on monday according to adobe. they were telling us today is travel tuesday. it is also giving tuesday. giving back to charities.

check those out online. when we come back, new data in the use of buy now pay later. we will talk to an analyst who covers those companies next. reminder, you can watch or listen to us live any time. just check out the cnbc app. ou e your individual firmness and comfort. your sleep number setting. and actively cools and warms up to 13 degrees on either side. now at its lowest price ever. the all-new queen sleep number c2 smart bed is only $880. ends monday. only at sleep number.

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adobe analytics estimated an uptick in shopping. the company actually estimated over $12 billion that was spent, $72 million would be using the buy now and pay later model.

senior analyst of equity research in fintech and specialty finance, dominic, thanks for being with us today. a lot of people using this buy now and pay later, can you describe what the difference is between that and using a credit card? >> thank you so much for having me today. sure. one of the differences between buy now and pay later and a credit card is there are no late fees associated with the buy now pay later product in most instances, and it's a shorter term product, right? you can put balances on these buy now pay later platforms and pay them off in four installments, that could be a payment every week, however they are structured, and a credit card can be rolled over and left on there without going

delinquent until 180 days, and it's how much interest do you want to pay, and over 20%, and 30% on some of these store cards, and people are making a real choice of how to avoid some of those higher interest payments on credit cards doing this holiday season. >> the key is you may have to pay it off more quickly even though you are avoiding the fees, and i guess you also get into the question of -- i mean, do you think there are going to be problems with paying back the buy now pay later, or are people using them more smartly than they are credit cards? >> look, it's a really great question, because, you know, one of the things that we think is really important is that the consumer doesn't over extend themselves, and we are seeing people make tougher choices on what they want to buy right now,

and you know, the average ticket size is really only up by inflation, and so people are not really purchasing larger ticket items, and they are pulling back and i think they are using buy now and pay later this holiday season for smaller ticket items, and that's not what this product was being used for, and we are seeing delinquencies starting to rise more swiftly in credit cards right now, and we are closely watching the consumer. we think the consumer is beginning to weaken, and we wouldn't want to see buy now and pay later grow too much faster than an overall payment volume, but it sure didn't last week. >> this is the same as a layaway product, and you are getting the goods up front and the expectation is you will pay it

back, and if you are betting on things, there's not a credit score they are looking at, but you are going on good faith. >> and the other really important piece to mention here is that a lot of them are not talking to each other, so you can go and get a buy now and pay later transaction done at one company, another company, another company, and it's not like credit cards where they are checking all these things where you can't get a credit card or your line will be significantly lower, and consumers can get themselves in quite a bit of trouble quickly if they are not managing their own expenses. >> the problem also, though, is -- or the good side of this with consumers is you can do it with the crazy 20 to 30% fee on the interest you will be making some of these things, and it has

to be a huge threat to credit cards, like visa or mastercard. what do they do with this, do they watch somebody else take away their customers? >> we have seen a few companies, and one bought a small company, and it was called bread before they changed their name before the buy now and pay later transactions, and they have done it forever and they are one of the companies that pioneered sort of the layaway-effect using credit cards. what people need to remember, buy now pay later for a financial company really should be used to get folks into your credit card programs as a marketing tool almost, right, versus thinking that this thing is going to be really, really

profitable for the institution over the cycle, you know, and on its own. that has been my thesis on it, but i think that -- look, the credit card companies american express has instituted a buy now pay later for their higher consumers. >> thank you for joining us. we will continue to watch this. >> thank you so much for having me. coming up, former new jersey governor chris christie will join us with an update on his presidential bid. that and a lot more, coming up.

♪♪ we're not writers, but we help you shape your financial story. ♪♪ we're not an airline, but our network connects global businesses across nearly 160 markets. ♪♪ we're not a startup, but our innovation labs

use new technologies to help keep your information secure. ♪♪ we're not architects, but we help build stronger communities. ♪♪ we're not just any bank. we are citi. ♪♪ good morning. markets coming off of a losing day on monday. the modest retreat comes near the end of november's strong trading month, and we have an out look of what to expect for the markets this month, december. and then elon musk meets with top leaders in israel. will the move convince

advertisers to come back to x. plus, a closer look at how instagram needs to police itself better when it comes to searches and ads. the second hour of "squawk box" begins right now. good morning and welcome back to "squawk box" here on cnbc live. i am joe kernen along with becky quick. u.s. equity futures, we did have a little pullback yesterday indicating some flat early-morning action with the dow jones down -- well, down 2.5 points, and s&p indicated down about 3. treasuries, we did see yields backing up again.

the time is now for some squawk picks. the market is in favor of the ai sectors and health care, and joining us is a cnbc contributor, and we had to drag any bullish stock ideas out of this guy again -- again. i go back and forth with you, and it's good to see you. i thought you were too bearish to see you, and now the market made up most of the losses we saw from august, and now we are back in a bull trend and you still are not happy about the stock market's prospects right now, you still think it's going to end badly. i think you must think that. >> somewhat badly, and i would turn the question back on you

rhetorically, joe, what has changed since august? >> i don't think we ever know near term what is changing, and the market tells us what is changing. we have savita coming up, and she's talking about 5,000 on the s&p, and if we get 5,000 on the s&p,you missed 4,000 to 5,000. >> yeah, and i heard that before in january of 2022, and everybody was saying it was 5,000, and i came out with my target of 3,800. we have a couple unique data points that we extrapolated on, and i don't think we had the liberty to do that. >> inflation one of them? >> let's hold that one for one second. the first one was the jobs report. we got a number that was significantly less than

september's 297. >> right. >> but it was not less than june owe 107 or july, and 150 jobs adds is a healthy number. >> here's my question. you can flip that rhetorical question again, what changed in august from, you know, i don't know, three months prior to that, too? i don't understand the whip saws of the ups and downs. you can look at anyone of the extremes and wonder what happened, why now? >> right. i think we can idea what happened in august as well, and we don't know with certainty, but the yields started to move on their own accord. >> yeah, because we were worried about the national debt, which has not changed. >> right, and the yields have retreated, and the feds have a lot to worry about. >> they like it when the bond -- people worrying about the

long-term. you think that did some of the work for the feds. >> i think we all like it when somebody does the work for us, and they are no different. >> the reason i think you said it would end badly, is because you are talking about short-term duration fixed income, and the only reason somebody would want to do that -- and i don't want to do that, but the only reason you would want to do that is to have dry powder for the next time things get better. you are a guy that managing money for people, and they want to build wealth and you can't build wealth at 4.5% for two years or 5% for two years. all you do is you aregetting the return of your principle, but that's not a return on your principle when your friends are watching nvidia or the magnificent seven, so you phugs thin must think you can buy cheaper? >> absolutely. that's our job as professionals to make sure we are reinforcing the long-term view with our

clients, and some know we avoided a heck of a lot of down side in 2022 as well. >> right. >> there's one thing, and i want to go back to this that would make me change my mind, and hopefully i get out of this before i have been burned too badly, but this is the first cpi report where we have seen a meaningful inflation component, and if that appears to be a trend, that will make me reconsider my arguments. >> with all that said, if somebody held your feet to the fire and said i want to buy stocks, you do have things you would buy right now versus other things that you wouldn't touch? >> sure. >> which are? >> nothing is completely clean for me, but the financials, i think we started to see with this quarter the real power behind a more favorable net

interest margin, and what gives me caution, is i we will have runway before pwaz annual three kicks in. and they can pass along any increases and their demand is not affected by the macro environment, and you have pillar drugs that work with lily and nor sroe. >> you think if the long end of the yield curve holds up, to steepen you think the short end comes down and you think the fed cuts before it raises again? >> i think the short end can stay where it is, and as we saw

last month before we started to retreat, just the long end getting back with the short end ends up flattening. >> for financials, even flat? >> financials, too. >> then it goes back up to five. >> i think so. >> the rollovers are coming in, maybe not -- i think a lot of individuals are not worried about it, but corporations, commercial real estate there will be rollovers at much higher rates in the government? >> yeah, just like households took advantage of the near zero rates in 2021, so did the corporations and that's why we have not seen the weakness in the jobs market we thought we would, because they restructured their debt. but that has limited runway. i think we are starting to see

on the fringe corporate delinquencies, and we will continue to see that in 2024 and 2025. >> what would get you to say holy smoke, this is a screaming vibe, the s&p, if you moved it up to 38. 38? >> i don't change my target. >> most people in the markets never had a really crappy period. they really haven't. we had the pandemic, but that lasted like three weeks where it went down and then went immediately back up. you could be right. that's the thing, you can never definitively say one way or another, because you still have time. >> to be candid, i can't point out the singular pinpoint

catalyst that makes that happen, and i think it's a more gradual consensus coming -- >> i can see enough going on in the world right now, and i can give you a million reasons it could be at 3800. >> but it has to make those estimates, right? >> thank you. are you based here? >> i am going back to where it's warm after this. miami. >> that's the new new york. >> i am a new yorker. come on down. there's room for all of us. when we come back, elon musk visiting israel to meet with leaders after anti-semitism on x has grown, and we will talk about it after the break.

ri> later, presidential hopeful, chs christie, talking the economy and much more. "squawk box" will be right back. with powerful, easy-to-use tools, power e*trade makes complex trading easier. react to fast-moving markets with dynamic charting and a futures ladder that lets you place, flatten, or reverse orders so you won't miss an opportunity. e*trade from morgan stanley.

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musk, went to israel and visited netanyahu, and it may keep some advertisers who were on the fence about leaving from walking away. joining us is the chairman of tkezenhall resources. this could be a tour since elon musk has gotten so attacked from the anti-semitic posts that he retweeted and commented on. his commentary was moving. >> good move. elon musk is able to get meetings most of us can't, he's the richest man in the world and one of the most powerful, and getting a meeting with a prime minister in the middle of the war is impressive, and what his advertisers are looking for is

body language he's still alive and kicking. we talked about last time, there's a career deathwatch around musk that never happens. he beats it every time. i do think that this was a powerful visit, and it certainly won't cure things with everybody, but i do think it's going to help cauterize things with a certain percentage of advertisers. >> he tweeted himself as he was arriving, actions speak louder than words. what do you take out of that? >> i think people know, it's sort of like donald trump, people know that not everything he says is to be calibrated at the value of the actual words. i mean, elon musk, i think most people assume, is probably more of a troll than he is an anti-semitic. people know when donald trump one day says, yeah, i know mobsters, and then the next day he says, i never met a mobster,

that's what he does and that is built into his stock price. people are saying, watch what i do? do you think a real anti-semitic will go to israel? what this won't do, we have to keep in mind a certain percentage of his critics don't care about the anti-semitism, they want to knock him off because they don't like his politics, and anti-semitism is an excuse to do so and anti-semitism doesn't have the radioactive tea that racism does, and so musk is a smart guy and the advertisers are smart people, and they may know you can't come out and say anti-semitism doesn't carry the same weight as racism, but down deep they know it. >> how much is just a concern

about x, and how much is a concern about postings on the site, and if i was an advertiser, i wouldn't want to ties on a site that -- >> there are ways to tell an advertiser, we are doing these three things to make sure it doesn't happen again, and there's a way to measure it and people can check to see if it's true. i think that's something in the crisis management world where if you can quantify what you are doing, which is rare, you are going to calm a certain number of people down, just like if there's a product recall of a car and you say if you drive a toyota camry manufactured between 2017 and 2019 on the west coast, bring your call in for a recall. people can recalibrate that, and

people can say i don't have that call, it's not my car and not my problem so i don't have to worry about it. i think the advertisers will be able to do that. what they are worried about is what is he going to tweet or x out next, and what is that going to mean investment wise, and if you manufacture a tesla, is the same thing going to happen to tesla as what happened to a mercedes in the '50s and '60s. >> eric, there's a line that i think elon could cross where he would be cancelled, and i don't think he has crossed it yet. when i look at the retweet, i look at the repost of what he had on, on a scale of one to ten from an anti-semitism -- you can't say, look, because you did this, you brought this upon yourself, you can never say that about october 7th, and on a

scale of 1 to 10, what i see on college campuses in terms of anti-semitism is about a 12, and what elon musk was saying at that point was, if you embrace wokeness, one of the basic tenants of wokeness seems to be anti-semitism, and the far left seems to have almost -- they don't have a monopoly on anti-semitism, and the idiots in charlottesville with the torches, are there a lot of them around compared to what we are seeing on college campuses. >> but one is acceptable and one isn't. >> but why? why is one acceptable? >> because of ancient prejudices. >> what is susan sarandon thinking? >> there is no risk. there is no risk. the fact that you can go on

instagram right now and see professors and their posts about jews, and the fact that susan sarandon can do this -- >> progressives, right? >> yes, but in their minds they are doing something that is standing up to the man and that is not considered a violation. or you wouldn't do it on camera. remember, this stuff is happening on camera. most racism that you see is somebody quietly saying to somebody over a few drinks what they secretly believe. this is not what people secretly believe, and this is being filmed and people are not afraid to do it which tells you what the baseline is. elon musk knows this. i think that you are right, it was a boneheaded move for him to agree with somebody who made a boneheaded remark about what

jewish people are said to have engineered in some way. >> i never even heard of that crazy conspiracy theory, and that was a new one on me, and i am just saying i don't understand why liberals are invariably -- >> because -- because -- >> go ahead. >> because there has been in the university system, a concept, a paradigm of oppressor and oppressed. it's very binary. people only understand that way, and because the jewish community is perceived as having power, they must therefore be the oppressed, and never mind israel was occupied for 2,000 years, and you are combining that with an ancient prepjudiced. remember, you had united states presidents using certain ep

athets up until the 1940s, and even lyndon johnson said certain things in private, but it was in private. i think what we are talking about here is people feel emboldened, and a lot of things come back to whether you feel emboldened. when you are deal westing with client, somebody like elon musk, the rules, he doesn't think are different for him, until they are. and he has not crossed that line, and even though some people reacted to what i said last week about some people thinking there was a deathwatch over his career, that doesn't mean he is going to cross that line or has come close to it, but people want it to happen. i think he's sitting pretty well, although somewhat vulnerable, on his retweet. >> we know why they are on the deathwatch, too, because he took

a way a very powerful tool for the left, that they print everything they liked, and no laptops or wuhan labs, just all safe stuff, and now they hate him. >> right. i think in the news media there has been certain referees for the better part of the 50 years who are by and large part of a particular persuasion, and now they don't have power, and when people lose their power, they don't like it. >> eric, thanks for coming on today. >> you bet. and then andrew's deal book conference is tomorrow, and he has a huge lineup including elon musk. he has bob iger and many other names. you can watch the coverage here on cnbc. that's all day tomorrow. coming up, a presidential candidate, chris christie, and then later the canadian center

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welcome back to "squawk box." we will start with shares of zscaler. the company reporting better than expected revenues, and it did keep its billions guidance unchanged, and some investors are using the report to take a pause, and we will keep an eye on that down 4.5%. and then pdd holdings, the parent company of pin duo duo, and it reported better than expected quarterly results driven by part in a surge in growth because of the fees it

charges for services, and that is up 15%. and then shares of boeing are higher by roughly 2%, and the aerospace and defense giant is getting an upgrade to outperforming, and it was 200 before. they like better free cash flow in 2024 and 2025 amid sustained demand for commercial aircraft and defense-related products, and those boeing shares helping with the dow premarket activity, which is flat on the session, joe. i will send things back over to you folks. >> thank you. and presidential hopeful, chris christie, joins us next. and then laying out five reasons for the s&p to end next year at 5,000. that's aonway lg off.

savita subramanian joins us to layout that case. we will be right back.

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we are going to talk about what you saw, and we were just talking about it off camera, that it's difficult to have -- or to understand the opinions that we see, and now that you have been there and seen -- >> yeah, i held the opinions before, but when you go there and you see the brutality of october 7th, people just in their homes in a kibbutz, terror storming in and a father took his eight and 6-year-old sons under each arm, put them in a bomb shelter, and the father jumped on the grenade to save his two kids, and was killed. some shrapnel got into one of the kid's eyes, and the two boys go out covered in blood, and

they go back into the house, and the terrorists come back and say, yeah, we killed your father and get into the fridge and take out two cokes like they were invited guests. >> we're smack dab in the middle of everybody's conscience. you are not sure what to think. you don't obviously -- you don't obviously want more civilian casualties and deaths, children, but if you believe israel has a right to exist, and if hamas says we are going to do this again and again and again, and if to go and get hamas, they are holding civilians in front of them as you are trying to do get them, what the hell is israel supposed to do? >> israel cannot have people go back to the kibbutz which is 600

yards from the gaza border, unless they eliminate the threat, and if people can't go back to their homes, you don't have a country. >> the pr war is right in the middle of it, and we have another two-day extension, and we love to get the hostages out, but to get 16 hostages that didn't do anything wrong, and some of them are three years old, and we are letting out 40 criminals that were arrested and put -- so it's three to one, and they have totally innocent people on one hand and you are letting out -- >> yeah, it's a totally lopsided deal that plays upon israel and the united states' treasuring of human life. >> they don't have that problem. >> yeah, and that's unfortunate. i say to any protests in college campuses around the country, go to israel for 12 hours, and you

will come back and have a completely different opinion. >> however they were raised or whatever they are hearing on college campuses, when they say to go to israel, and they have a problem with you calling that land israel in the first place, and you go back that far -- that's a question for the right. if you question israel's right to exist -- >> well, then you are siding by hamas. and we judge you by who your friends are. >> what is your path to the nomination? new hampshire? >> yeah, first path is through new hampshire. absolutely. all the polls post the last debate, some have me rising and some have me in second and some at a close third, and my job is to go after trump, and one thing that came up that concerns me

about the process, and as long as you say the same things everywhere, that's fine, but we have recent examples of where governor desantis says he's for a six-week ban and he signed it, and then nikki haley said she wouldn't do it in iowa, and then just said she would sign the six-week ban. there's no consensus after a six-week abortion ban, and i wouldn't sign it if i were president, and that's putting the decision in the hands of the politicians over real people. roe took this choice away from individual people in each state, and that was wrong. so we win in dobbs. and then the supreme court said that was wrong, and then you look at what happened in michigan, ohio, kansas, and

certainly ohio and kansas, red states where people are voting differently. let that democratic experiment go forward. let all 50 states make that decision. look, you saw what happened in the house when they were trying to pick a speaker, or in the senate when you are trying to get to promote military people, and do we want to put abortion in the hands of those people. i am pro life, so in my own state in new jersey, you know, it goes up to nine months you can get an abortion. i don't agree with that on a personal and moral level. but the people that each state should make their own decision, so i would not sign a six-week national ban. i think governor haley and governor deesantis said they would do that, and i don't think it's good for the country or our

party. >> so what, trump is ahead by 20 over you or haley? >> correct. i said to you over the break, what is interesting, when you look at the detail of the poll, they tell you that nearly three quarters of donald trump supporters say they could change their mind between now and primary day, which is 57 days away. from my perspective, that's what you have to do, go out and change minds, and we are spending our advertising dollars in new hampshire, and we have to nominate somebody who can win the general election. donald trump, by the time we get to the general election, will have been convicted by a jury in washington, d.c. mike pence has met with the special counsel and is going to be a witness. i did this for seven years. you don't give somebody immunity

if you have not committed crimes, and meadows will accuse donald trump of committing crimes under oath. >> you did this as a former prosecutor, we should point out. >> right, as somebody who prosecuted crimes for seven years in the fifth largest office in the country. if mark meadows takes the oath and says i committed crimes in donald trump's name, and he committed crimes, too, you can't blame that on a two-tiered process, and -- >> it's still possible for donald trump to be the candidate. >> and that will lead to joe biden being re-elected.

>> would you vote for joe biden instead of donald trump? >> i could not vote for joe biden. >> you wouldn't support trump? >> no, i can't support a convicted felon. but joe, now this has become a certainty in my view with meadows' testimony, and now they are asking somebody like me, who is a former prosecutor, to support a convicted felon for president. think about this. he can't even vote for himself. if he is convicted in april or may, which i expect he will be, he will not be able to vote for himself in november. that's who we are going to put on the ballot. what do you think the democrats will talk about from that day to november? all they will talk about are the crimes he committed to try and overturn the election, and they

just submitted a brief, his lawyers, saying he never took an oath to support the constitution. well, man, i was there, i heard him say, preserve, protect and defend the constitution of the united states. i heard him say that. and they are even denning that now. if you don't think that will be the main thrust of the democrat's campaign, you are living in fantasyland. >> if somebody is to challenge donald trump, there has to be a consensus of who that would be, and you have had any conversations with either of nikki haley or ron desantis about teaming up or supporting each other down the road? >> i have not. and i suspect knowing those two, they have not had conversations with each other, either. all of these polls, and let's think about it, and i will give you some perspective.

in 2007 at this point, mitt romney was winning the iowa caucuses in the polls, and mike huckabee who won was at 4% at thanksgiving. and newt gingridge was winning at the polls, and rick santorum was at 6% on thanksgiving, and in 2015, ben carson was beating donald trump by ten points, and ted cruz was at 6%, and he ultimately won. i think, becky, when you are in the business, you look at it and say, okay, i can't make decisions today based upon polling, and over the last three competitive cycles has been so faulty, and -- >> iowa, new hampshire and south carolina, those were the three? >> after that, the voters are going to speak. when i ran eight years ago, and i didn't do well in new hampshire, i dropped out. >> i mean, the three you just

listed, there could be a different winner in every one of those, or a different second place winner, i should say, in every one of those. >> or a different winner. i don't preclude donald trump could definitely lose in new hampshire, and i think -- you see the way he's campaigning in iowa, and he's obviously nervous. he knows what i know about these polls, which is they are a sugar high. there's not real substance underneath it that matches the extent of the lead right now. i will give you an example. before thanksgiving i did a town hall in new hampshire. it was the single biggest crowd we have had, and i understand nikki haley had a similar one that day, and iowa people are starting to focus now. there was a poll that recently came out that said over 50% of the voters in new hampshire said the campaign has not started yet, and so for them, for real

people, not for us who focus on these issues, but for real people, they are like, they get through their thanksgiving dinner and get done eating the leftovers, and they look up and say, oh, man, i have to vote for president in 57 days, i better start to focus. so we will see if there's movement or there isn't. i am running because i think our country needs better leadership and our party needs better leadership, and if you sit on the sidelines and sit on the couch and do nothing about, you are barking into the wind. i want to try and bring this country together and move our party in a new direction, and i don't think it's being led by a felon is the winning strategy. i am not 100% sure what the winning strategys and nobody is until it happens, and bg eing l by a felon is not it, and being divisive on abortion, and i

don't want politicians making this decision, but the people making this decision. this is a very emotion ul decision for people. it becomes less emotional if you want them to decide, and nikki haley and ron desantis want to decide, and i want the people to decide, and that's a major difference. >> thank you. >> you know two of your biggest fans who you nominated for president, she's watching. everybody should go to chris christie.com. >> andrew is not here this morning, so i don't have to comment about that. >> yeah, he's frying huge fish. believe me. >> yeah. >> did you see that list? >> yeah, the list and the big advertisements in the newspapers

and everything. that's a disturbingly big picture of andrew in that advertisement. >> he's got the lineup tomorrow, definitely does. >> yeah. yeah. >> thank you for having me. appreciate it. before we head to a break, let's get a quick check on where the markets stand right now. the futures, things are flat. nasdaq furutes down by about 15. "squawk box" will be right back.

value is around experience, and experience is driven by data. we are left with the tension between lots and lots of data but not enough connections where brands and retailers know how to delight consumers. >> how can businesses use data better? >> it's around data analytics. we are helping our clients think about which kind of data, what types of technology, like predictive analytics could

really drive data insights to build those experiences. the brands and retailers that come out of this will be the ones that really nail this in the near term. >> thank you so much for sharing your expertise. >> thanks, it has been fun.

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tests conducted by "the wall street journal" and the canadian center for child protection found that major brand ads could be served alongside sexually explicit images when they aim to replicate the behavior that a child predator might engage in on instagram. namely, searching for images of child gymnasts, cheerleaders, and similar content while also seeking out adult sexual content. in a response, meta says the prevalence of inappropriate content on instagram is low and that they're invested in continuing to reduce it. a statement saying, these results are based on a

manufactured experience that does not represent what billions of people around the world see every single day when they use our products and services. we tested reels for nearly a year before releasing it widely. in 2023, we auctioned over 4 million reels per month across facebook and instagram globally for violating our policies. joining us right now is jeff horowitz, who is "wall street journal" technology reporter and author of "broken code," inside facebook and the fight to expose its harmful secrets. jeff, i want to thank you for being here. >> certainly. >> all right. clear up some of the confusion that i have on this, at least. i look at this and it sounds like there are multiple layers of potentially bad things happening here. the first would be, is there child pornography or child pornographic content on instagram? >> so, i think the right way to think about instagram's role in that really unfortunate ecosystem is kind of the top of the sales funnel. in the sense that, you know,

what we were running into wasn't people actually posting child sexual exploitation content directly on the platform. it was people advertising that stuff. and basically recruiting for it. because i think the thing that our tests come down to and that nothing that meta's comments there really sort of addressed is the tendency of the platform to serve users who are interested in that content as much of it as it can find, from any source whatsoever. so this isn't just, you know, our test accounts followed some bad people and saw some bad things as a result. this is the literally just following young gymnasts and cheerleaders on instagram, like we're talking, you know, 12 to 14-year-olds here, is enough for the platform to start trying to see if the user wants to start looking at adult porn. >> what?! >> and that's because they know that the -- that a large portion

of the followers of these kids are adult men who are interested in kids and sex. and possibly a combination of the two. >> wait a second! back this up. that's a problem. if the algorithm is looking at me, that i am interested in watching 12-year-old to 14-year-old cheerleaders and gymnasts, they're going to start pitching me adult porn sites? apps? what are they pitching me? >> that's exactly what -- so it will be promotions for adult content creators, it will be pictures of, you know, teens in bathing suits, it will be -- and then if you connect with the people who are actually following the gymnasts, like, you know, which is, again, a population very heavy on adult men, you end up with getting these recommendations from instagram that has recognized what the user is interested in, or at least believes it has, and will begin serving up promotions

for child porn trading groups, it will begin serving up -- >> how do they even get -- the idea that they are serving anybody child porn groups, that in itself is a problem. >> this is a recommendation system, right? so i think something that we haven't really gotten into in the social media world as much as would be good is just the distinction between what you host on your platform and what you recommend on your platform, right? and this is a recommendation problem. they are literally scouring billions of posts on the platform for pictures of kids in their underwear, for the demographic that wants to see that, and that's obviously -- >> the idea that they're serving this up is insane. the idea they even allow it on the site is a problem as far as i'm concerned. it's not -- you know, they're saying that it's not a large portion, it's a very small portion of what's out there. but if you had, let's say, three pedophiles hanging out at a

chuck e. cheese that would be three too many. that would be a zero tolerance -- >> a small portion for them, of course, keep in mind, is hundreds of thousands if not millions of accounts. and i think the thing that our test demonstrated is that this isn't something slipping through. this is what the algorithm is intentionally doing. >> so they know it's there. if they know it's there instead of serving it up, why aren't they shutting it down? >> the idea if you can recommend child exploitation content, why can't you not recommend child exploitation content is a completely fair one. the answer is that their recommendation systems are kind of black boxed, they're blind. they don't know what a content is. it's actually much harder to tell what content you're recommending than it is to successfully personalize. because that's just based on network behavior, right? all of the pedophiles on the platform -- >> so their excuse would be that they are -- they are not actual purveyors of this stuff. they have no idea that it's child pornography that they're serving up to you?

>> they -- yeah, i shouldn't -- i shouldn't speak for them. you know, you've sort of stated their statement at the beginning in terms of this. but they are -- i mean, they have a system that is functioning recommending this stuff. and recommending it from users you don't follow, right? i think that's a very key distinction, that this is literally just scouring for content on the platform that might be of interest. and it leads to some pretty jarring and unfortunate things. and also directly next to major brand ads. that's one thing we haven't talked about, is just that this stuff is being subsidized by ads for apple, walmart -- >> which may be the thing -- >> for disney, walmart and, you know, dating sites, in fact. and some of those companies have pulled their ads. >> jeff, i'm really sorry, we're out of time on this, but it sounds like the reason that the advertisers are important is because they're the ones that would eventually have sway and be able to convince instagram to

change the algorithm, or at least try to police it better. thank you for joining us today. >> thanks. coming up, bank of america's is a vita subramannian joins us next. plus, a can't-miss interview with the legendary film and television producer, brian grazer. "squawk box" coming right back

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good morning! wow, this is a really big word on the teleprompter. let the prognostications begin. took three lines, almost. we're getting first look at high-profile market calls. savita subramanian joins us in moments from now with her bullish take. pretty bullish. 10%, maybe, by the end of next year. the ipo market heating up. sources tell cnbc that fast fashion giant shein has filed to go public in the united states. and taking stock of hollywood in the post-strike area. super producer brian grazer will join us for a wide-ranging conversation as the final hour

of "squawk box" begins right now. good morning and welcome to "squawk box" right here on cnbc. we're live from the nasdaq market site in times square. i'm becky quick along with joe kernan. andrew is off today. u.s. equity futures so far, a little bit of a pullback this morning, ever so slight. dow futures off by about 15. s&p futures down by 7. nasdaq indicated down by 30 points. you have seen treasury yields that are a little bit higher than where they closed yesterday, but still below where we were yesterday at this time. ten-year right now, yielding 4.4%. the two-year at 4.88. and we've been watching some of the pig stories, as well, joe. >> and among them, some of the big stories we're talking about, chinese fashion juggernaut shein

filing confidentially to go public. the company was last valued at $66 billion and could begin trading on the public markets as soon as next year. the company has faced accusations of using forced labor in its supply chain and lawmakers and 16 republican attorneys general have called on the s.e.c. to make sure that shein is not using forced labor before it's allowed to start trading in the u.s. and shares of roomba maker, irobot bouncing a little bit in the pre-market, after falling more than 17% yesterday. the stock got hit when the european union's anti-trust watchdog issued a warning that amazon's planned $1.7 billion acquisition of irobot raises competition concerns. a ruling on that deal is expected by mid-february. some people like vacuuming. a lot of people.

>> present company included? >> there's a feeling, if you make the lines straight that you're accomplishing -- not that i do it a lot. but, you know, it's a satisfying feeling when you look at the floor after you finish. i'm not sure just having something running around you that you don't control is the right way. i can't believe it, there are anti-trust concerns. >> it is a little surprising. >> anybody else make that? >> i don't know. >> and on a similar note, britain's competition regulator saying just a short time ago that adobe's $20 billion bid for design platform figma would harm software innovation, but the uk's market authority says its findings were provisional and it was opened to consultations before making a final decision. right now, we want to get a look at some of this morning's top pre-market movers. and for that, we'll get over to dom chu. hey, dom. >> good morning becky.

let's kick things off with a check on boeing, that's up a over 1.75%. doing its best to try to keep the dow in positive territory, as we head towards the opening bell. the aerospace and defense giant getting an upgrade to outperform over at rbc capital markets. the target price goes up to $275. it was $200. they like, amongst other things, better free cash flow, generation trends this coming year, and the year following, amidst sustained demand for commercial aircraft and defense-related products. those shares getting a nice help, a little boost from rbc capital, up 1.5%. our next two stocks focus on consumer spending angles. shopify shares are down roughly 2.75 -- now only 2.25% after a 5% gain yesterday. this is the provider of ecommerce providers and infrastructure for online merchants. it's getting downgraded to underweight from neutral over at piper sandler. the target price gets cut to 56 bucks from $58.

they cited among other things a massive valuation. even in their words, that the company still a commerce platform juggernaut. so shopify shares down nearly 2%. and we'll end with shares of affirm, which are brown up 1.5%, building on yesterday's nearly 12% gain. this is the so-called buy now, pay later consumer finance provider, getting upgraded by jeffries, it's now a hold from an juunderperform. the target price goes up, basically closing out their sell call since february of last year, which has largely played out. they now see stabilizing cost of capital, stabilizing capital markets activity and better momentum for the consumer use of buy now, pay later programs. so affirm holdings up 1.5%. it's up triple, becky, over the course of this year. i'll send things back to you. >> tripling their price target. nice call. thanks. >> to be fair, joe. they called it back in 2022. the stock was triple what it was

right now. >> it went down, but they never changed it. >> it's kind of mea culpa, kind of not. they got it largely right. the stock was way up there in triple digits. >> and it came down. >> right. it came down to like $9 here. >> and they're raising their target from $9 now to where it is. >> so where it is. so they're saying it's sfrair fairly valued where it is right now. >> dom, i didn't get the chance to ask you the other day, looks like your jacket is buttoning just fine. >> it is. becky, i didn't get a chance to see you on black friday, because i finished and we were kind of done, but i did wear the same jacket, just for you. and i wanted you to truthfully, it did still fit. this is another jacket, but it still does fit as well. >> well done. restraint. dom, thank you. >> you got it, guys. bank of america anticipating next year will be a stock picker's paradise with the s&p 500 hitting 5,000 by year end. next year, not this year. joining us right now is savita

subramanian, she is bank of america's head of u.s. equity and quantitative strategy. there are a lot of people who are now staggerting to question we've run a long way in november, maybe we'll see a pullback on some of these things. you're pretty convinced that things will go up from here. >> i mean, not in a straight line. i think there is a high probability of pullbacks next year around various areas of concern, but i do think that we're in a healthier market set-up than we've been in, in a very long time. so i'm actually feeling pretty good about the market. i mean, if you think about it, it's not even what the fed -- we're not bullish because of what we think the fed is going to do. >> in terms of -- you don't expect any pullbacks in rates? we don't necessarily have a view that's predicated on a big drop in rates. it's really more about what the fed's already done, which is, you know, i mean, the fed has done a lot of the painful work already. and chances are it's close to over. the market has handled it so

far, sure, there are defects of monetary policy, but if you look at consumers and corporates, when we look at things like delinquencies and worry about the fact that they're rising, they're actually just coming back to more normal levels from pre-covid lows. so i think that we're in an environment where the u.s. consumer and corporates actually look pretty healthy. consumer confidence might be a little bit rattled by the fact that rates have moved higher. but the bulk of consumers have been able to withstand this pressure. and where we're seeing the pain is more in millennials, which are the prime spending group. but i think even there, the bull case that i don't think gets a lot of air time is the fact that the baby boomers are right at the cusp of this massive wealth transfer. so if you look at the average age of a baby boomer, it's the average life span of a human being. grim statistic. but that means we're at the beginnings of this wealth

transfer from the wealthier generation that's sitting on $80 trillion worth of assets to the more strapped millennial generation. >> wait, they're all going to die and give their money to the youngsters? >> okay, one way of saying it is, yeah, we're at that point where that wealth transfer begins. but then on on to have that, there's also the idea that baby boomers are spending more on services and goods than they used to. so it's not just baby boomers are taking over all the wealth and they're never going to spend again. i think that there are cross-currents that are actually pretty bullish for consumption. yeah, so in the u.s., i think that u.s. consumers are actually in a pretty good position. >> we have never seen the fed raise rates by 500 basis points and have it not result in some pretty severe dislocations. why do you think this feels different? >> i think this time is different for a number of reasons. one, we were at almost too accommodative rates at the beginning. we were at zero. going from zero to five is different than going from three

to eight. so i think the fact that we were going from super, ultra, too accommodative to more normal is one facet of this. i think on top of that, you had corporates preparing for a rising interest rate environment. they locked in those rates. i don't think it will be gravy from here, but the one positive where we are today versus where we were a couple of years ago is we know how the fed is going to get off from ground zero in terms of interest rates. we were already past that point. we've seen massive inflation volatility and inflation volatility, we know inflation isn't going to be zero. it's not going to be ten, but it's going to be somewhere in between that range. and on top of all of this, we also have an environment where u.s. companies have a process of

moving ip, tech, you know, equipment out of china and less friendly regions of the world back to the u.s. so i almost feel like a lot of the work is behind us rather than ahead of us. >> we were at 4800 in 2021. >> we were. >> so you're big, bullish case gets up to 5,000 by the end of 2024. so three years later, we have a total s&p return of -- >> not that much. >> 3 or 4%. >> exactly. >> that's not -- >> and what's surprising -- >> that's not a very crazy call. >> it's not a crazy call. >> that's only 10% return next year. >> a little bit above average. i think we could do 20, depends on the shape of the consumer. it depends on confidence. but i think the idea is, we're -- you know, one of the higher forecasts on wall street, but we're not that aggressive. i think most strategists are

quite bearish at this point. >> that's a really -- most people have not experienced what you're looking at right there, since 1980. it's been almost straight up since -- 1982, basically. this has been -- what would you call that? a secular trade range? >> yes, it's a big, fat trading range. and maybe we stay in it -- >> it's only for a couple of years. it's not over. >> yeah. it's kind of -- >> ten years would be the scarier. >> could be. >> could be the -- you have to start with two. >> i don't think it's going to be a trade range for the next ten years. i'm bullish on equities for the next ten years. >> $34 trillion in debt. >> okay, that's government debt, right? and government debt is not anathema for u.s. stocks. even if we're an emerging economy now and we're going to be downgraded -- >> higher interest rates could be an anathema -- and that's the

3rd it will. >> have been marked for this environment, what i worry more about is all of the stuff sloshing around in private equity, private credit. you know, the shadow lending machine that's been taking place for the last 10, 15 years. but public equity right now is marked to exactly what's happened. and that is a high interest rate environment, we all know what refinancing risks are going to look like, unless rates double from year -- >> but i can connect some dots for you between when the government owes that much, they have no money to spend it on anything else they want to spend it on and they don't spend less, they try to take more in. none of that is good for stocks. >> one of the ways the

government has been able to navigate high deficits is by outgrowing that deficit. and the u.s. economy is actually at a good point at which we could see tremendous surprises in gdp growth going forward. think about it. >> hope so. >> we're at a point where we had underspent on manufacturing. we have the best technology. >> maybe ai. >> ai could be part of this productivity boom. i mean, we haven't really seen a productivity boom in a very long time. we've mostly seen earnings from cheap capital globalization. now we're at a point where we could actually see productivity kick in, efficiency gains. i hear the music, i know you want to kick me off. >> you know how that works. >> but the most bullish part of our call is this productivity story which is a great theme for the u.s. >> savita, thank you. >> thank you. thanks for having me. >> i can see you believe it. you're excited. >> exactly! there's a lot to be excited about. >> that's great. all right, coming up, an interview you don't want to miss

longtime hollywood producer brian grazer, lots to talk about including takeaways from the writers and actor's strike and the future of ai in the entertainment industry. much more. and we're going to bring you up to speed on a supreme court case that the business community will be watching very closely, depending on how society could upend a big chunk of the u.s. tax system. can you imagine taxing realized gains? really? that story is next. stay tuned. you're watching "squawk box" on cnbc.

big chunks of u.s. tax law could be thrown into question, depending on how the supreme court rules in a case set to be heard in a new days. robert frank joins us now with more. robert? >> good morning, joe. this could be the biggest tax case in decades. it's called moore versus the united states, and the supreme court scheduled to start hearing arguments next tuesday. at issue is a provision of the trump tax cuts that imposed a one-time tax on bringing foreign profits back to the u.s. the moors, they're a couple in

washington state, owed $15,000 in taxes because of an investment they made in a private company in india. they said they never saw a dime in actual earnings and that their profits were retained by the company, so they shouldn't pay any tax. a ruling for the moors could undermine large sections of the tax code, especially for informerses, partnerships, and corporate foreign income. paul ryan said a third of the tax code could be scrapped if the moors prevail. it would also require tens of billions of dollars in refunds to companies who already paid that tax. and it would effectively kill any idea of a future wealth tax. that's the big one. u.s. chamber of commerce, lots of other filing briefs in support of the moors. the biden administration and many conservatives like ryan have filed briefs defending the tax. so, this could have huge ramifications if they rule in favor. >> that's so weird. i can't -- so it's not split right along conservative versus -- >> no. >> you've got -- you've got

conservatives arguing both sides of this? >> well, the conservatives like paul ryan -- paul ryan is a tax geek, right? he really understands the tax code. his point is, this could cost over $100 billion a year in lost revenue, if you say, let's say, a pass-through that retains its corporate earnings and profits rather than distributes them to the owner. >> doesn't have to pay taxes. >> that's the problem with the pass-throughs, right? this is not a question of not getting those profits. not getting them back if it's a pass-through. if it's a pass-through, you're just a person pretending you're a corporate entity. >> and someone like him -- >> it's an abuse of the pass-throughs. >> it's not to say paul ryan wants to tax unrealized gains. >> absolutely not. absolutely not. his point is that if you have a broad ruling in favor -- it could be a narrow ruling, which they say, this particular tax, which is the component of the 2017 tax cuts, would have to be annulled, that's one thing. if they broaden it to say any basically retained profits, unrealized gains don't count

some income, therefore you could never tax it. >> the moores didn't see a dime of profit from this indian company and they have to pay taxes on it? >> now there are questions about his actual story, because he did receive compensation from a loan they gave him and he was a member of the board. >> that is not a clear-cut case. >> my bigger issue is the pass-through issue. if you say it was never passed through to you, but you're the only entity, the only part of the owner of the pass-through. >> and the fear would be that you keep retaining those earnings within the pass-through and never pay taxes. but it also affects just broadly foreign income for all of these companies that have foreign earnings that they would just keep overseas. and never have -- >> but they never have to pay taxes on it because they keep it in an entity that is also theirs. it's like a bunch of shell games. >> that's right. and that's why we would say, conservatives like paul ryan say, you can't do this. >> that's why paul ryan says, this is not about unrealized taxes, this is about shell kams. >> but a lot of people say the

reason the supreme court agreed to take this case is because they want to shut down a wealth tax. they wanted to shut down this idea of taxing unrealized gains. >> that's how perceive the current court as -- well, it has a majority of conservatives, obviously. you would think that they would put that -- i mean, that is the most ludicrous idea -- i know that there's property tax, but it's not the same thing. and it -- let's get to -- >> this sounds like it's way more complicated. >> it does. but i'm already ready to -- if we can get the other one off the table, do it. joining us now, once and for all to talk more about next week's supreme court case and the possible outcomes, former democratic u.s. senator, john bro. he's now a spokesman for saving america's family enterprises. so longtime democrat doesn't want a wealth tax. none of this is clear, clear-cut, i don't think. and daniel bunn is the president and ceo of the tax foundation. are you guys on opposing -- have opposing opinions on this? let me start with you, dan.

what should the supreme court do? >> thanks so much for having me. i think what's at stake here is very similar to what paul ryan described. i'm not in favor of a wealth tax, but you could below up significant portions of the income tax if the supreme court rules too broadly on this issue, putting at stake billions, if not trillions in u.s. tax revenue. and a lot of this boils down to the complexity of taxing income. and when you've got definitions in the tax code that attribute earnings to shareholders, attribute earnings to closely held business owners, you've got to be able to tax those earnings, if you're working within an income tax. and i think this case could blow up a lot of those issues and create mountains of litigation, if not decided more narrowly to forestall a wealth tax. >> senator, you, obviously, represent a lot of small businesses. and we've heard what would happen if there was a wealth tax or a tax on unrealized gains.

i don't know the consequences, unintended of that would be significant. but are you -- do you understand what the other side is saying about how it would disrupt current tax law? or is it worth it to get the wealth tax off the table once and for all? >> well, joe, our association, the safe coalition believes everybody should pay their fair share of taxes. but if we want to raise more revenues, there's a lot of ways we can do it that are constitutional. and one of them, we would suggest, is the tax gap. that's $680 billion a year in unpaid taxes on laws that are illegal and constitutional and are already on the books. but the 16th amendment was very clear, joe. it said simply that the congress can tax individuals on income that they derive. and the moore case, they never got a dime. the company they invested in got a lot of money, but they kept the money in india. and the moores never got a dime from their investments at that point. and the ninth circuit court of

appeals said, well, we're going to tax it anyway. you can't tax people's income on income that they haven't received. it's kind of a guess tax. we're going to guess what you owe and tax you on it. >> what do you think of that, daniel. we heard they did have a loan or benefited in some way from the companies. is it more complex than what the senator just described? >> it's both more complex and more simple. this is a passthrough entity. the moores owned more than 10% in shares of that entity. and u.s. tax code says that they should be attributed income from that entity. now, prior to 2017, they were able to defer taxes on that income until it was repatriated. but as part of the 2017 act, there was a discount rate applied to accumulated, deferred earnings. and that was the rate that the moores had to pay. and this is just the challenge of saying, well, it's income, it's offshore. well, congress decided to include that income as part of

the 2017 reform and to be able to go forward with a different system and different treatment of foreign earnings. >> what about that, senator? >> well, the law that they passed in 2017 ever in the trump administration is unconstitutional in the sense that that portion of it that says that you can tax people on income that they've never received. can you imagine people saying, i'm going to have to pay taxes on money that i never got? and the 16th amendment was very clear, following supreme court decisions also substantiated that you can only tax income that an individual received. they got a loan from the company, they paid it back. they were reimbursed for travel expenses that they had already paid. they never got a dime in income, and you can't tax what you don't have. and they never got any money. that's the principle of this case. if there are other laws on the books that failed to meet the constitutional requirements, well, they should be taken down. but in this case, this specific case, i think is very clear that

what the courts did, the lower courts, is unconstitutional, and i think will be declared so. >> so, dan, you're not for a wealth tax, obviously. do you have a way or any changes in the tax code that gets out, that would get at some of that money that's never been touched? people that have never paid taxes on billions that they've accrued? >> so, i'm not in favor of a wealth tax. a wealth tax is economically harmful. there's all kinds of research that tax foundation has done on that issue. and i think when it comes to the deferred earnings, the u.s. tax system for a number of years allowed companies to defer taxation of their foreign earnings. and this created incentives for companies, not saying that the moores did this, but a lot of companies, to put their earnings offshore or keep those earnings offshore, rather than bringing that home and our 35% corporate tax rate encouraged that behavior as well.

but the reform, as part of the reform, you had to tax those earnings, unless it was -- otherwise, you would be essentially forgiving deferred tax for a lot of companies. and the reform provided a reduced rate to tax those deferred earnings. you know, i think a lot of this boils down to the income tax. i'm in favor of moving the tax code to a consumption tax rather than relying on the complexities of an income tax. but these were earnings that there was taxation deferred that congress then said, no, the tax is now due at a reduced rate. >> oh, boy. all right, the consumption tax would be easier, i think. i don't know. there are some billionaires that don't consume anything, but i don't know, those yachts are expensive. that would be a nice chunk of change. thank you, both. "squawk box" will be right back.

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u.s. treasuries scheduled to auction $39 billion worth of seven-year notes today. investors are paying a lot more attention to these auctions lately. to talk about why, let's bring

in our steenown steve liesman. i don't want to be in the middle of this and rick santelli. gentlemen, take it away. who want dshs i don't even -- this could start an argument. who wants to start? >> i was wondering if the guys in the treasury hang around at 1:00 and listen to rick's grade, if they get a high grade, they high five each other. the problem is, we're talking about this at all. the treasury auctions should be something that rick comes on and in 30 seconds reports and the grade should not be important, but the fact is there's a blank-ton of bonds coming down the pike. they're affecting the stock market. we have to talk about it. i don't know what you're thinking, rick, but so far, so good. a better five and we're looking at the seven-day. i'll let rick take it away. >> to me, this is a very easy topic to discuss. the numbers don't lie, so 39 billion seven-years to date.

the high water market is shocking when it was $62 billion. ten years ago, it was $29 billion. that pretty much sums it up. if you look at twos, fives, tens, 30s, it's the same dynamic. a. ten years ago was $32 billion. covid high was $60 billion. in 2019, it was $40 billion before covid. these numbers don't lie and steve, thank the lord we are talking about it. i think if there's anything that people in treasury would like right now, is that we weren't talking about it, because these numbers are insane. and the base line of spending keeps going up, we're going to go from insane to crazy insane. and i think that people need to pay attention here -- >> i want to play devil's advocate. >> let me just finish one thing.

one thing! when i heard the president talking yesterday about crazy maga and getting rid of your medicare and social security benefits, all i could think of is, somebody ought to buy the dude a calculator. >> i agree. we have to address entitlements. but i'll play devil deekts here. if you tell the tape, in august, we had a big problem that was more bond issuance that the market expected, there was the fitch downgrade and everybody came out of the wood work and said, this is all about the long-term. and yet, as we go through day by day here, rick, we are selling the bonds. the bonds are getting placed. yields have come down. just to play devil's advocate, it doesn't seem so much about the long-term. seems more short-term. the shorts have been wiped out to, you know, and the longs have taken a position here so it seems like we are able to sell the debt and it's not necessarily about the longer

term solvency or ability of the u.s. goflt to place its debt. >> that would be what i would think a third grader would think about it. i'm not insulting you, but that's how many in the market think about it. if we can do it today, we can do it next week, we're fine, don't worry about it. but we'll have to keep doing it. what's going to be the new players. bigger and bigger size, fewer and fewer players. i can't find a way to square that. >> there a deal with them taking it on the chin. at some point do they repel and say. i'm just not going to lose money on this they take the paper, and i'm assuming they're making some money.

but these numbers that are being taken down by the dealers, they seem to be relatively high. and the indirects do not seem to be stepping up here. and that seems to me to be something worth watching. >> i completely agree. basically, dealers are dealers because they're required to have a certain presence and takedown at every auction, and as a group, they're supposed to make sure it moves smoothly. we had almost 60 primary dealers, then it dropped down to small double digits. it's moved back up a little bit but the answer to your question is, most likely they will slowly drop out again. we've seen it happen. in the end, the treasury and the federal reserve really need these players and there's a variety of things they can do to help them out, but that doesn't make me feel all good and fuzzy either. the real answer is simple.

imagine if you had a $500,000 balance and spend $50 grand every year. that's where we're at. >> if i have a $100,000 mortgage and make $100,000 a year, i have a debt-to-income ratio of $100,000, that's 100%. >> and what's the house worth, steve? what's the house worth? >> well, you're going to lose that argument. i'll tell you why. if you look at the u.s. as a credit-worthy entity, we are extremely creditworthy. that's not the problem. the problem becomes, "a," how much we're spending on the trajectory, but the political will to pay it. >> talk to moody's and fitch. >> it's about political will. but it's the ability to tax and

cut spending. >> so you're saying political will has no desire to address this and it still works. >> we should agree and leave it there. >> you guys are getting better. >> we both agree, it's too much debt. >> for me, it's getting worse. but you definitely could have gone. >> you want a last word? i think i could still get this going. >> you sound so sad. >> the last word is easy, if we don't bring baseline spending down, our kids and grandkids will remember us in a very non-fond way. >> if you get some people to pay their fair share, that's my favorite thing. >> thanks, steve and rick. we all know what their fair share is. it's more. coming up next, a can't-miss interview with legendary film and television producer, brian grazer. a programming note, andrew's

deal book conference is tomorrow. look at the lineup that's not a mistake. there's zaslav on the right, the vp iger, jay monahan, think about that and all the golf stuff with the saudis, et cetera. elon musk. a pretty staggering, what's happening. jamie dimon. rehtcan watch coverage rig he on cnbc, all day tomorrow. we're coming right back.

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our next guest is one of the most pro horrific and successful filmmakers in hollywood. we want to welcome academy award-winning producer, brian grazer. his film and television credits include "a beautiful mind," "arrested development," and "splash." so many we can't even list them all here. his latest film, "candy cane lane" premieres this friday on amazon prime video and brian is a best-selling author. his new book is out today. it's called "a curious mind expa expanded: the secret to a bigger life." brian, i want to thank you very much for being with us. it's been a while since we've seen you. >> i see you in shrine all the time. i'm delighted all the time to see you. >> let's talk about curiosity. you've talked in the past about how curiosity is your superpower. it's how you've done what you've

done in hollywood. maybe give people who are familiar with this concept about how curiosity led to one of your films. >> i meet someone who's expert or renowned in in everything i do. science, technology, all art forms so i do this once every two weeks. i do everything possible to disrupt my comfort zone, or steve jobs or hundreds of noble lawyer yates. speaking of hundreds of noble lawyer yates, i ended up making a movie called a beautiful mind based on john nash who was a noble lawyer yat. so it's not always with the

designed of tension of telling a movie, but with the designed intention of expanding my life and my real life, in fact, and by doing that i gained insights into people and subjects that i wouldn't ordinarily know anything about. and i think it's given me a competitive advantage in hollywood, a competitive advantage in life and in business. and i think it would do that nor anybody else and that's why have this new book coming out that is, as you point out the expanded version of a curious mind and the face-to-face art of human connection. >> brian, you get to open doors that most people don't, people like former presidents will sit down with you, business leaders. people -- average people would not be able to get ahold of, but you started doing this without being able to open all of those doors. and i wonder for most people, how do they go about doing this? i think back to "backdraft," the

film that you produced about firefighters and how that came about, with too. is this something that works for everybody in everyday life? >> becky, that's a perfect example. i had no power in hollywood or anywhere and i would just write letters to to individuals, in this case, it was firemen at a fire station that was nearby saying i would like to come in, i only want five minutes of your time and i would like to see and understand what the brotherhood of firemen is, what that is. and of course, i got the response, yes, but often the answer is "no," or they push you off and you have to keep on being persuasive and case building, usually for the assistant of the person you're trying to meet. in the case of "backdraft," it was a little bit easier because

there were firemen nearby in my neighborhood. eventually, i learned a lot about the fireman and why they do what they do and the selfless nature of firemen and the unity of that brotherhood and that turned into the movie "backdraft." about the strikes in hollywood. i think the last time i talked to you about it was when things were kicking off. the deal that's been struck or we think will be eventually finalized, what does it mean for the studios, for the actors and oerps involved in the production of movies? >> i don't really know all the details and the nuance of the negotiation. i just know that our company, and many companies, are covetous of artists. i think the studios appreciate that the hard work that writers -- the 18 hours a day of

loneliness in writing a script can be very, very difficult. it takes a tremendous amount of discipline and talent. i think that the studios were always very appreciative of that. they know it's the essential ingredient to have a script, and so they wanted a raise. therefore, that was the circumstance of the writers strike. the actors strike, which went on longer and was more perilous actually was tough. but, again, it's the actors that give of themselves and risk themselves emotionally and professionally all the time, every minute to either get the job -- when they have the jobs, they're the ones on the camera. they were very appreciative of this new contract i'm sure. so we're all thrilled to go back to work. >> ai has been a big sticking

point. it was for the actors. in fact, something like 14% of the votes in one of the actors -- the national board of screen actors guild fell short because of the ai component in a lot of ways. ai means -- with this new part of it coming up, that the existing actors will have to sign off and be paid for any of their digital images used. i think younger actors are a little concerned that it means they'll be harder to break in, that those older, well-known actors will be the ones to get the coveted roles and will be able to be replicated all over the place. it might be tougher for younger actors coming through. what would you say to those undiscovered actors at this point? >> well, look, there's been so many changes over the 30 years i've been in showbiz. we always find a way to be resourceful and figure it out. that sounds very simple.

what i'd say to young actors is use your iphone to communicate in that you should always record yourself, shoot short scenes, know what your superpower is and always punctuate what that is. that's the best thing i can give you right now. >> brian, we appreciate your time and appreciate you coming on to talk about the new book today. today is the first day for that. we hope to see you soon. it's "a curious mind expanded." "squawk box" will be right back. thanks, brian. meet gold bond daily healing. a powerhouse lotion that moisturizes, heals, and smooths dry skin. with 7 moisturizers & 3 vitamins. and... new gold bond healing sensitive. clinically shown to heal & moisturize

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the stats today are kind of boring. sometimes boring is good in terms of a diversified approach. >> absolutely, joe. one thing i'm saying is you can still own the fabulous seven, but you have to look at other areas, too. especially as yes go into year end. boring is good, stocks out of favor. people selling for tax loss reasons. these are stocks on a valuation basis we find very attractive. companies like freeport. if you look at the supply of copper for the next decade, we just don't have enough

production there. as demand increases for many things, not just evs, but globally you want to be in a stock like that. if you look at a boring utility like aes down double digits for the year with a 4% dividend yield, that's a company that's got earnings growth for the next three to five years. parent of cnbc, comcast, here is a company with steady cash flow, growing dividend, strong management team, and you know there are a bunch of catalysts coming into the future. these are the stocks that people aren't paying attention to. it's been, hey, let's look at what's growing, growing, growing, and i think you'll get some opportunity if you put capital in these areas. >> if you're good at what you do, sarat, would you ever need to buy a bond? do you still do that? do you still put a percentage in there just as sort of a base? it seems like you can find stocks that have not quite the

same yield, but almost, almost the same yield, and the dividend will go up over the life of a bond, five or ten years. the dividend goes up over five or ten years. if you've got that time, it seems like such a much better place. you're never going to make more than what you put in -- you might make less with a bond if you sell it early, but you're never going to make more. >> you're absolutely correct. i think the answer to that question comes with the client's objective. if you have somebody close to retirement or in retirement, that's no longer an accumulation stage but really needs capital preservation. we've had this conversation the last couple years. the bonds are 1% to 2%. you're much better off at dividend growth. today, if you've got clients in that area, they just don't want the volatility in their portfolio. if you're getting 5% to 7%, for a piece of your portfolio, that's actually pretty good. you are seeing that come out, but what i also am saying,

you've got dividend growth stocks keeping up with inflation or better than inflation and you get the capital appreciation, too. the other thing you get benefit with a tox, especially in a taxable portfolio, you get a taxable benefit because corporate bonds and treasuries are taxed as ordinary income. in a regular account, you're absolutely correct. i would buy bonds for my clients who need it, who actually want to preserve capital. if you're young and accumulating and you've got a high-risk tolerance, stocks are the way to go and we've seen it for the last 100 years. >> it is possible you can get the wrong company at the wrong time and you end up losing 20, 30, 40%. nobody needs that. i understand the rationale for a bond. if you're good at what you need to do -- >> and what you do is create a diversified basket of stocks. you don't just say i'm going to have 40% in one sector. just the stocks we mentioned,

energy, utilities, media, health care, that's what you want and do top-down, bottoms-up. >> you're like gordon gekko, that's a nice office. you're not like gordon gekko, but he had a nice office. thanks, sarat. >> you've got to come visit one day. >> make sure you join us tomorrow. "squawk on the street" is next. ♪ good tuesday morning, welcome to "squawk on the street." i'm david faber with jim cramer. carl is on assignment this morning. let's get a look at futures as we get ready to begin trading 30 minutes from now. what do you call that? not much of anything. >> flopping and chopping. >> there you heard it. let's go to our roadmap this morning. we're going to start with consumer strength. new spending records reached as retailers cap th