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 that five-day

holiday shopping frenzy, plus the energy effect. gas prices dropping for ten consecutive weeks and opec is now on tap this week. we're also going to keep an eye on shares of boeing. it is amongst the biggest s&p gainers, at least ahead of the open. got an upgrade this morning, rbc. we'll talk about that. what can i say? crap about having forced you to sell the snok. >> stock. >> i didn't force you to sell boeing. >> the piece does say that supply chain troubles have been a nightmare for them, but those are through, and i think -- when you got boeing, you were constantly hit by bad news. i think it makes it an easier

stock to own. i think people are always looking for new industrials. ingersoll rand ringing the bell today. there's only a handful of true industrials left. people want to own anything that is just plain vanilla infrastructure. >> entinteresting. >> let's get to retail and consumer. where we started things yesterday. this time of year we get so many different data points from different providers. adobe, for example, saying online shoppers spent $12.4 billion yesterday, cyber monday. up 9.6%. >> which is meaningful. what you try to do is say how much was buy now and pay later? how much was credit card? how much are people defaulting on credit cards? you put together this mosaic that says before you get too buoyant about the consumer, how is the consumer paying for all of this. i think it falls on the idea

there's a low-end consumer that's being hurt. bloomberg had an amazing piece about everybody being up 119 versus 100 in the basket yu put together which over the last four years. i was thinking, i don't want to be political, but i think that maybe the presidency, the contest is going to be about the people who can't afford being in america. they had their salaries increased, but things are gone up in price. the president talked about supply chain issues. he was, i felt about a year and a half too late. what about if you ran for president based on the fact on how you roll back prices in this country? >> how can you do that? you can't. >> don't you think they're doing that in pharmaceuticals saying, listen, here are drugs that made care is not going to pay more for? >> that's true. >> that's a rollback. >> that's price gouging to a certain extent. in fact, it's funny you

reference it. we have the president discussing that yesterday. take a listen. >> let me be clear, any corporation that's not brought their prices back down even as inflation has come down, as supply chain have been rebuilt, it's time to stop the price gouging. >> that's what made me think of it. when you're gouging, that is true populous rhetoric. because if you go to costco which has had unbelievable numbers and done incredibly well, they're saying that inflation is coming down. david, it's coming down in the rate. it's still not reduced. walmart did reduce prices. that was very impressive. >> to your point, things cost a lot more than they did four years ago without a doubt. >> as we all know, given that we focus on this endlessly, the rate of inflation has calmed considerably, maybe running it by 3.2. still not at the rate that fed

is targeting. >> what can you do? homes, 10% of the economy, have gone up 35%. what are you going to do? file a lawsuit against lennar and kb holmes? they don't fix prices. >> there you've got a lack of supply. >> right. it's not fair fault -- >> they're building what they can. people can't move because they can't abandon their low rate mortgage. >> right. that's an aberration. think you're doug yearley from toll brothers, and i tell you we're about to have the fastest rate cycle increases in 40 years. would you want to put up more homes or fewer? these guys are actually pretty bold. they put up a lot of holmes. >> pulte got recognition yesterday. i see a situation where these prices are intractable. people are wondering why is food intractable, why can't food come down?

if you look at tyson foods, they didn't make their numbers. you think someone is getting hurt. i don't think people want to go to the supermarket and feel there's anything even remotely like it was. i think that the autos, the used cars are just so much higher. so these things have to come down. >> so much higher than they were -- >> what, pre-covid? >> even though they have been coming down. >> they have been coming down. remember, again, we always have to put that point out. coming down from a very high level, but nowhere near where you would expect the trend line would be. >> right. we have disinflation, but not deflation. >> don't you think if you're a presidential candidate --. if the president follows up on the idea of who is gouging -- congressional hearings on gouging. >> less than a year away. he's getting low marks on the economy, regardless of how strong it may be. to your point, on the lower end -- >> that's why i'm focusing on

it. we or looking at an unemployment rate that seems to be stubbornly low. the american people are looking at a supermarket that's stubbornly high. >> that said, jim, back to the headline we just shared, 9.6% is a big number. it's a big jump. so there is still demand. there's obviously very low unemployment and, therefore, people do still have money to spend, it would seem. the lower end may be pressured, but frankly not to be dismissive. that's not necessarily what drives the broad economy. >> i one of the things i find i okay, who are these 30,000 new businesses? who are the 13,000 new businesses that got their start at the beginning of cyber monday? who are these people? are they people who already have jobs? are they people employing other people? i want to know who these people are, because this could be the secret to the new economy, people who are opening up so

many small businesses and that's employing people, but it's a risky thing. a risky thing to open a small business. there's a lot of moving parts. every time i try to put together the master card kdata, shopify data, i can't figure it out. >> what do you mean? >> you said is the consumer strong? i said at the beginning of "mad money," i'm taking a pass on that. i can't make a judgment. how can you make a judgment without knowing what walmart is thinking? walmart is the biggest retailer. i'm not going there. i'm going to try hard to find out what amazon is doing. that's not easy either. i just think for -- i see so many people drawing conclusions on the consumer, and i think they're just plain wrong. >> again, back to the endless conversation, the consumer may be weakening, it's also not necessarily a bad thing when you think about the fed. >> we're not going to raise --

wow, micron just dramatic. sees revenue 4.7 billion. i did a piece yesterday at the top of the show about how the pc cycle is back and you have to get long on these stocks. let's see what they do. some might say that's not enough. it's not worth it. i keep thinking the pc cycle is coming back. we have to talk again about ai. i was checking in with ben who has the highest numbers from nell yus on nvidia. i said how is that possible? he said i'm an ai analyst, not a semi analyst. find where there is price increases, ai has the highs. >> what do you mean by that? sorry. >> a lot of people feel that jensen huang is gouging. i don't know if you read the nch new yorker" piece which is extraordinary about jensen huang. >> is it the most recent? >> came out in the december

issue, talks about how he's able to charge what he wants. the first line of the piece is he's a quiet monopolist. i'm trying to figure out who is really raising prices here and who is not, david. i don't think everyone is raising prices. if you go to csx, they'll tell you they're rolling back prices. >> i want to come back to micron. >> it's confusing. >> it just hit in terms of the company announcing updating gross margins. they are saying thaich previously got to revenue of $4.4 billion, non-gap gross margins of 4%. they're saying as a result of the supply and demand balance and improved pricing. they do expect revenue will approach 4.7 billion and non-gap gross margins will approach -- >> -- >> i think there are some people whispering it's better than

that. micron has been a vicious whisper. >> a fireside chat i believe today. >> get the fire going here. we'll do the chat right here. >> in scottsdale. >> everyone is giving fireside chats. is it cold somewhere? >> yeah. it's cold here. >> i'm on the hunt for companies that have actually gouged. i think the idea that micron at 4% more engines, they're not gouging. the idea that nvidia is not gouging because they have a lot of intellectual property. >> what is gouging? if you have what everybody needs, shouldn't you be able to price what the market will bear? >> the moment you buy it, you can make money. the payback he says is instant. i think we'll go back over and over again to what the president said yesterday. i think this is the beginning of his most biggest concern, is how

to be able to convince people -- he can't convince people the economy is strong. it just doesn't work. the first friday of every month seems to have no resonance -- he has to get prices down. he has to go to the supermarket and say, okay, the sprebread is high, meat is too high. that's what he's got to do. >> it's a difficult task he has ahead for him given at least the polling numbers at this point. >> maybe go to ollie's -- >> -- despite what are numbers that show relatively strong economy in terms of 4.9% gdp growth. >> why are they paying music? we haven't even begun the conversation of who is gouging and who is not. >> because we have things to do, ads to sell. >> i'm pro that. i saw someone talk positive about comcast -- >> somebody may be sitting on a gold mine. you got to know. >> i tell you david, you take

your life insurance and i'll buy it from you. >> when we come back, we'll have a look at how money is flowing out of china and where the affluent in that country are putting it. >> not in condos, david. >> i'll just call that maybe a somewhat lower -- >> it will resolve in about 18 minutes. >> okay. 'lgeit. knock, knock. number one broker here for the number one hit maker. -thanks for swinging by, carl. -no problem. so what are all those for? uh, this lets me adjust the base, add more guitar, maybe some drums. -wow. so many choices. -yeah. like schwab. i can get full service wealth management, advice, invest on my own, and trade on thinkorswim. you know carl is the only front man you need. (phone rings) oh, i gotta take this, carl. it's schwab. schwab. (feedback rings) have a choice in how you invest with schwab. (vo) this is more than just a building. have a choice in how you invest it's billion-dollar views. perfectly located. an inspiration.

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in the wake of sluggish economic recovery in china, that country's affluent are sending some money overseas according to a "new york times" story. chinese families spending fon everything from gold bars to apartments. june eunice yoon is here. good to have you in country, so to speak. what do you make of this story in terms of what you see on the ground and what it may say otherwise about the sentiment of many wealthy chinese? >> i was checking online to see what type of advice property agents are giving. it is true that there are several agents as well as other people who are advising those who are interested in growing their money and property to go to tokyo, hokkaido, as well as osaka. they're saying this is a better investment than here -- well, not here. that's usually what i say -- in

china. the other trend that's entering, you mentioned the gold bars. this is something we've been tracking for a couple of weeks now, young chinese, gen z more interested in buying gold. they're buying about $50 to $80 of gold, usually in the form of a gold bean or a coy fish. sometimes it's jewelry as well, because they see this as a way to save for their future and something that's manageable. chinese have traditionally loved gold. this is something they're seeing much more. it's interesting because it's among young chinese. when i think of gold, it's usually the older set. now you're starting to see a bit of a change. >> eunice, great to see you. gr get to see you later this week which is trefk. executive order 6102, fdr, may 1, 1933, confiscated your gold. you're an american, you have to

turn over your gold. i find it hard to believe that the prc -- >> the prc would want to make sure there isn't this huge outflow of money. we have seen this with capital controls and other ways in which they'd track downon illegal money changers, for example. in terms of the gold, it's something relatively new. it's not necessarily something we're seeing this huge out dloet flow in terms of real nuts and bolts of people opening up their luggage and there's tons of gold in there. one of the benefits i've heard, too, of doing -- investing in gold is you can take the little beans of jewelry and kind of sprinkle it around in your luggage and head out. now that chinese can travel much more, it's seen as a more palatable way to invest. >> costco has gold bars you can buy. i wonder if they have chinese costcos. i'm confounded by the government there. we did the resolution trust, rtc

in our country. our government seized all knees ne'er-do-well lenders. i often find the prc is considered to be anti capital lift. our government seems like it's done things not even capable of doing. when are they going to seize this property developers and say, listen, you're out, and we're going to take it. the basis is new and we're going to distribute it to wealthier people who can buy these things and bring these developers to their knees. >> that's not happening just yet. the government hasn't wanted to take on that much of the responsibility and know there's going to be a whole lot of debt that they'd be taking on when they're trying to make sure that they don't have the same experience that they've had several years ago after the financial crisis where they kind of got dinged by all of the investments and debt that they had racked up. so still kind of waiting to see what the government is going to do about the real estate sector, but, yes, just anyone's guess at

this point. >> eunice, great to have you over here. sometimes she gets blocked out by the authorities there. >> already got blocked out today and i'm not even there. >> i don't understand, how can they do that when you're here? >> i was talking with joe and he was asking about xi jinping and now that i said that, i'm probably blacked out. >> i thought they didn't have the power to do that when you're here. it doesn't matter for our viewers. we hear it all. eunice, great to see you, thank you. >> may be the most important story in the world. this is a country we felt was going to be out to outgrow us. maybe they outgrew us by building in a lot of places that are unnecessary. david, would you like to buy nine buildings in some town that's tier four? >> you've got to get money out, sure, find a way. >> you want to buy a condo with one wall? >> you got one for sale?

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revenues grew 40% year-over-year, almost $500 million. i guess the lack of guidance is what seems to be upsetting people. >> let's go back a few weeks ago to palo alto. billings weren't as good as remaining performance obligations. i listened to jay last night.

this stock was up 70% coming in. this is identity software we know is incredibly important right now, and i was very happy with the quarter: billings may not be the most accurate measure. billings tend to be year-long. right now the billings cycle is not that good. there's no doubt in my mind, this is the hottest area of cybersecurity. it was down 14 points last night. go back in, go back in because cybersecurity is still the hottest area in the u.s. economy. i saw a note saying crowd source, upside limit. david, i wish it were played out. we had microsoft on last night. >> right, on "mad money," you had the leader of their cyber. >> 3 billion hacks in email, now up to 30 billion. they're going to keep trying until they get the safe open.

china, north korea -- i wish microsoft would talk more about china. china, they put out a paper, david, that would make you think they are in a cyber war and we're not. >> listen, i started reporting on chinese cyber espionage, i don't know, 12 years ago. >> burners. the two places you need them is baltimore and china. >> it's not stopped. it calms for a while. it's a focus on stealing intellectual property. >> look at marc benioff. it's about how they figured out how -- >> we'll keep an eye on zscaler. >> jay shaudry. >> you can catch us any time and anywhere by listening and following "squawk on the street" opening bell podcast

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z. consumers may be getting a

bit of a holiday lift, given relief at the pump. gasoline prices have fallen for 60 consecutive days, the longest such streak in more than a year. according to aaa, gasoline in the u.s. now costs about $3.25 a gallon. we started the show talking about the consumer. you were talking about price gouging. the president's remarks we played. what about this positive impact? >> i think it calls into question whether oil wasn't manipulated higher. there was a big short squeeze in the oil pits in the 90s. it looks like there was not enough demand there. we know that the u.s., which people thought wasn't starting to produce more ifs -- >> we're at all-time highs in production. 13 million barrels. >> we can go to 14. i also think by the way, david, russia can finance the -- war is

pumping as much and china is buying everything. india has been taking advantage. so i come in and say, as long as we're pumping and people don't realize we can be the marginal seller -- [ bell ringing ]. >> they want to keep above 70 but below 90. don't let us open up marginal properties, and certainly in the balkan. you don't want to do it, if they can keep it below 90. >> opening bell, realtime exchange back at our headquarters. see how that sort of ends up. kind of half and half. industrial company ingersoll rand, jim mentioned them earlier. >> over at the nasdaq, the exchange is celebrating giving tuesday in collaboration with givingtuesday.org and gofundme. any thoughts at the opening? any keys to this market as you

and i like to discuss? >> yes, broadcom. when we've got broadcom, this is now broadcom and vmware -- >> broad.com has completed the acquisition of vmware. that took place last week. >> okay. so what? >> we're beginning to get the revisions and estimates that i ex expected. this is a company very fast growing, broadcom, but with a consistent long-term growth that is not cyclical, vmware. i always expect the company get a higher price-to-earnings multiple when you have non-cyclicality. people are trying to pay for different stocks. this is not an expensive stock. >> it's not expensive. >> we've talked often that it's been run by a gentleman named hock tan. he's been with us on the show, although not quite some time.

roane, through his ability to execute and taking costs out, it is worth noting this company has a $440 billion market value now. one of the largest companies, extant, it is not an insignificant player. >> very bought up in nvidia's world of artificial intelligence. it has straight-up business the way you could think of texas instruments. david, this makes it so it's much more the networking which i really like. it does have -- like i said, a very big ai business. i was hoping to bring up with eunice, there's an article today -- i don't know if you saw it -- the cost of doing business with china. dinner with xi and hock tan next to him. >> referring to the summit a couple weeks back, the big dinner where ceos paid as much as $40,000 to attend.

we noted at the time the seating arrangement of hock tan. there was a great deal of question as to when the vm wear deal would be approved. that talks about that's only the beginning in terms of what you actually have to be doing. it also discusses the fact that frankly, many u.s. businesses are withdrawing from china. >> yes, yes. >> and/or taking a lot of cash out. >> a lot of people feel the supply chain -- we're very intertwined still, but would like to break away from the stranglehold of china. >> although that's not going to do much for helping inflation. >> no. china is a price cutter. so is mexico, for that matter. and it's easier to get here. there were many people at the dinner who paid money. >> it's not like he paid money to get his deal approved. his deal was going to be approved, at least he thought it was going to be approved. that's why they held everybody in that election for weeks. they thought it was going to be weeks earlier.

it was notable in timing. it was. they also referenced master card as well, getting something approved in china, having attended the dinner. >> i think it's the other way around. i look at this and say, okay, china is trying to show us they're not as hostile. i think this is not the way to show it. >> whether xi was deserving of two standing ovations is more of a question that he did receive during the course of the dinner. that seems a little odd. >> there are always american companies where it's very important, places to do business. we know neek key, starbucks, apple. >> i want to get to the name of micron, then we'll talk pdd. you and i were questioning what seemed to be positive news where they increased their guidance. what i'm seeing here is some elevated expectations for gross margins had been ahead of this morning's presentation. they're giving a presentation. that's why the updated guidance, they will be presenting at an

investment conference. so, jim, it does appear to be that. a lot of the hedge funds and the like had gross margins that were perhaps even more than what the company is now guiding to. >> if you want to make money on this situation and you don't want to be hurt by the gross margins of micron, buy amd. a big december 4th analyst meeting. the wind at your back with amd not micron. the jensen huang piece talks about intel. runs away from intel. >> who runs away from intel? >> jensen huang. >> oh, "the new yorker" piece. >> i love "the new yorker." i typically continue refers the pieces. this is a great piece about the zeitgeist of ai. i think there are some things that i felt portrayed jensen a little too glib, which he's not,

about what can happen -- >> about the dangers of ai which came into focus a bit last week with the turmoil around open ai. >> right. >> and continues to be certainly a concern for many of us given there's not a full understanding of the technology itself. the vast majority of those believe it can be safely developed. there are still plenty who also want it to be safely developed, wonder where it will go. by the way, let's not forget, back to our endless conversation or running conversation about china and/or others wlor trying to prevent from having the ability to develop it faster than we are, their intent may not be the same. >> no, no. i would say, yes, i think they can -- the microsoft piece about china. if they want to imitate us and find out things, that's game one for them. in this piece i will no longer reference because i've done it too many times, there's a moment where jensen is asked about

whether the report will be replaced, because it's something you talk about. he says, no, it will come from fiction first. i think it's interesting. speaking of fiction, there's a series of articles about what happened with "sports illustrated" at thestreet.com which i founded. >> who owns these titles now? >> they're owned by arena group run by ross levinsohn. they did put out a serious attack on the attack. this was done by a third party, about si. it did not say it was done by a third party about street.com. it did say there's an article -- this is a little embarrassing, because if i worked there, i would resign today. >> you want to focus on what you're trying to explain? >> let's use the street for a second. this is very hard for me. they have a writer, domino

abrams, a stay-at-home dad, pro at home cleaning and maintenance. he was expunged from the site because he didn't exist. he was ai. >> ai generated as was the text that was being delivered from him. >> yeah. they used ai-generated head shots. denise mcnamara, the information analyst, her extensive personal experience with electronics allows her to share her findings with others online. >> also not a real person. >> yeah. >> a lot of these well-known names of the past are no longer what they were. a lot of the companies have bought the names, as in "sports illustrated," but it was not what we all grew up with -- >> there's a union very upset about this. that's where i'm going. david, you covered the writers strike. this is their fear. >> it's not just a fear. it's going to be a reality. >> right. >> it is a reality. >> it's going to -- >> domino sugar? what's his name? >> i want to move on.

i know you're very focused on this. >> i started the darn thing. domino abrams. >> we've got to break away. it was a long time ago you started it. you've done a lot of things since then. i want to talk about pdd holdings. more importantly, temu. it connects customers directly with cost efficient producers allowing for competitively priced goods. eliminates multiple middlemen and shipping directly from factories to consumers, factories typically from china and customers benefit from lower prices. let's say you see a pair of crooks, $30, $40. you go to temu and you get the same thing a lot cheaper. are they made in the same factory? i don't know. this is growing enormously. in fact, some would say even

faster than sheehan, a company we've reported quite a bit on. it is still private. it did file to go public. perhaps we'll see it on the public markets in the next nine markets or so. p dfrmentd, operating profit up 60%. as you can see from the reaction in the stock market this morning, investors like it a lot. >> there's always a chinese stock that people get enamored of. we've seen the movie. >> you can get to temu via other sam bankma social media and buy stuff. >> i thought it was landfill fashion. >> a lot of the stuff probably does end up -- there's sheehan which you just mentioned which is -- has factories all over the

world. >> how did this become -- >> -- >> you can see what that's meant for pdd, an enormous company. >> i have to buy five other chinese companies. i can buy the next one. that's actually what managers do, faux managers, i might ad. >> faux. >> faux managers. >> we fall in love with baidu. remember they were going to do the incredible spinoff of their cloud business. wow, is that exciting. >> pdd holdings which is the parent, moved from china to ireland, moved its headquarters. ireland is a very popular location as many knows. the economy doing pretty well there, much better than the u.k., for example. northern ireland is doing okay in part because of its connection to ireland.

>> i like that. >> you like that? >> i like that. my wife is an irish citizen. dual citizen. >> jim, would you like a faber report? >> if it's hollywood and disney, no. >> no. on u.s. steel. remember that? >> pass the telephone, david. >> i can't talk until they roll my animation. that picture is a younger me at this point. >> good haircut. >> we have a new animation coming i'm told. let's talk a bit about this. we've been following this. who new u.s. steel would be such a desired property? it appears to be the case. final bids are due for u.s. steel which put itself up for sale essentially, you can see when the stock moved -- due friday. they're due friday.

from what i'm being told by people close to the situation, five separate parties are expected to pay -- we know, of course, cleveland-cliffss and -- their bid is simple, we want to buy all of them. the others get a bit more complex. i've reported on the argentinian company, might need a partner. would nucor. i've been told there are five bidders. even though bids are due friday, final bids, there had been an expectation that we would have a conclusion or buyer known. it's going take a while. >> they did clean it up. remember, what's left of u.s. steel, it's a good property.

cleveland-cliffs is a good property. >> they are aggressively there. where does that mean we end up? i'm not getting a great deal of guidance when it comes to the price. you can see the price is reacting a bit to what we're saying. don't expect this to conclude next week. i'm told no. it may play out a bit longer. you've got to go through five bids, the complexity of those bids, if there's partners, obviously you've always got to examine the likelihood that the business will be able to succeed. the more complexity, the more difficult it might be to get there. there's always going to being antitrust, unions, so many things laird on, it's just going to be a process. a process that, as we've reported consistently has been a robust one in terms of getting interested buyers. >> absolutely. bite-size company, 8 billion, nu core is america's champion. i think it would be highly unlikely because they do a mill

strategy where as cleveland-cliffs has a similar strategy. cleveland-cliffs has done a fabulous job and pretty much own the auto steel. >> cleveland-cliffss expires december 1st. there's some focus of you have to get it done by then. that's not the case. again, expect bids friday, but not word on who the winner is. perhaps it will be -- we'll see, a couple of weeks. one would expect they'd try to get this thing done prior to the holidays. >> i do find people want to be in the steel business because of the infrastructure. cleveland-cliffs in 2020, they bought ak steel and bought -- they've done business already buying arcelor. arcelor is back buying this property you think? >> i do. i'm not questioning whether at

all. they're aggressive. they're in there for sure. >> david, we haven't talked about this stock that i -- we haven't done enough justice to the company i interviewed last night, microsoft. this is the one that no one seems to have a price that they're not willing to pay. there's a level -- there are two pieces about apple today, tepid sales and also a piece about, oh, don't worry about china. therapies about amazon. a good piece about international sales. there's a level people won't pay. obviously tesla. not this one. not this one. it just seems like microsoft can trade wherever it wants. at 400 they're buyers. high multiple stock, extremely high multiple stock. >> where is the multiple right now? >> i think it is copilot. >> it is copilot. >> which is working.

>> i'm ieplooking through my no, i had a couple of conversations with owners that were positive. talking about what they believe is the enormous potential for copilot. you're going to price the thing at almost 30 bucks a head. you've got to have an organization that has at least 300 people in it, i believe, if i recall. just an expectation based on what we know at this point in terms of how it's helping productivity that it is going to be an enormous product. >> enormous. >> going to add billions in revenues. there does seem to be enthusiasm, certainly amongst those who already own the stock but trying at a granular level understanding the impact of copilot. >> other tech companies. what's amazing, david, this thing didn't exist a year ago. so microsoft numbers look like they were expensive, and then, boom, it turns out that microsoft's pe -- >> they do need to keep a lot of access to open ai and they have

it. obviously played it pretty well last week, nadella. they've got to get on that board and make sure -- >> i'm very impressed -- we'll find out micron's estimates are way low and that's why people are paying now. kept this despite your negativity. >> microsoft is alone -- tesla is up, too, amongst the magnificent seven. those two being the two stocks in the green. a quick bond report before we take you to a quick break as well. take a look at how treasuries are sfaering. the ten-year low 4.4. you can see it right there. the 10 and 30 ever-so-slightly higher in yield. the ten-year below 4.4. only a few weeks ago we were pushing 5%. we're back right after this.

all right. shares of gm you can see are down. tomorrow mary barr is going to join us. >> fantastic. >> i bet you'll have a few questions for her about cruise, if i'm not mistaken. >> yeah. not there anymore. >> when jim is speaking soto voe chey, you know there's a struggle, when he mumbles. up next, jim will be a lot more understandable because he's got stock trading.

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bar set by salesforce in the summer is going to allow them to report a terrific number tonight or tomorrow. >> anything else around the call or -- anything you're looking for? >> if he talks about einstein, their ai, and how it fields trillions of queries, that's okay. we have to start hearing that ai is now so bottom line oriented that we are able to raise numbers 2024. that's what must happen. and they have to be substantial. last year, we thought they woul. they earned $12. it wasn't multiple expansion. it was $4 to $12. that's what you'll hear from these companies, and that's what i think you'll hear from microsoft because of co-pilot. >> the first for the business. >> i want mark benioff to talk about it, because if you're

going to pay high multiples for stocks that have ai, you better see numbers going higher. adobe will do that. >> what have you got on the show tonight? >> i've got dell. we're forgetting about the real economy. the real economy is softer when it comes to industrials. numbers coming down. but just basic industrials, just not doing that well. that's why it's so shocking about you reported on steel. >> yeah. unique assets and regardless of when. >> but you're saying to the auto cycle. don't forget, if the future is now, musk is using other things. coming up, the strategist who has a year-end s&p target of 3,800. hu? yeah. keep it here. >> what?

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good tuesday morning, and welcome to another hour of "squawk on the street."

i'm itzsara eisen with david fa. carl is on assignment. take a look at stocks here. not a ton of action. we've seen the bid continue in treasuries over yesterday, and that's been helpful, but the s&p 500 is down just a bit after a little mini sell-off yesterday as well. there's the 10-year, just below 4%, so you can see how much they've rallied as those lower yields sink in. the 2 jere lower today. we're 30 minutes into the trading session. shares of micron are under pressure, one of the biggest drags on the nasdaq 100. the memory chipmaker raising its first quarter revenue outlook but warning of higher operating expenses ahead. z zscaler reporting a beat. and watch boeing getting upgraded to outperform at rbc. price target raised to $275 from $200. rbc pointing to better free cash flow generation trends next year and for 2025.

boeing is up more than 20% in the last month. it's ban good month overall. >> it has been. consumer confidence out just moments ago. let's get to rick santelli, who has that for us. >> these are surprisingly weak numbers for our november read from the conference board's consumer confidence. on the headline number, 101 is what we're expecting, and we had 102.0. that doesn't sound so bad, right? normally, i would say that was the weakest since november. however, here's the problem. the problem is that last month was revised to 99.1. that is the weakest since january of 2021. now, let's move beyond the headlines, shall we? present situation, 138.2. normally, that would be the lowest level going back to april of 2021. but once again, 138.6 in revision the last month, so we're starting to see the groupings of how much weaker the

rear-view mirror all of a sudden is getting to be. on expectations, 77.8. that would be the weakest since may just of this year, and in the rear-view mirror, 72.7. that would be of course the weakest also since may. but it goes to show 75.6 becomes 72.7. this has been a complaint in the market on a lot of revisions, whether it's in the labor side with nonfarm or some of the confidence numbers. it seems as though some of the revisions are rather large. richmond fed. these are november reads on activity on manufacturing, minus 5, the weakest since august. and if we look at the services side, minus 9. we were expecting a number around minus 11, so minus 9 is a bit of an improvement. however, it's still the weakest since last month, which was minus 15. it represents three consecutive

minus signs in a row with respect to what business conditions on the service side are doing. and i would look for yields to potentially reflect this. of course we're hovering at the lowest level since mid-september on long-duration treasuries. back to you. >> rick, what did you say on expectations? 77? it was a little better than -- >> the revision, 75.6 from last month becomes 72.7. that is the disturbing side of the equation. >> got it. rick santelli, thank you. the reason i asked about expectations is because we were having this conversation with bob pisani about watch what they do, not what they say. this is a confidence number. does it have any bearing on spending? that's why i made a chart from pantheon for consumer expectations. there is a direct correlation to consumer spending. it kind of broke down around the, i don't know, 2016

trump-era time, but has reasserted itself pretty well. expectations are leading indicators of what real spending does. it was weak last month. it was a little bit better this past month. but, you know, still coming in on the weaker side. so i think the expectation is we could see a continued softer spending, which everyone was expecting anyway, but just as far as the how correlated are those things, it does matter. >> right. >> the trend has been lower yields, david. that's important. we got two options yesterday. we'll get a seven-year later today. pretty well received, especially the 5-year, and that caused some relief. this trend is still in place of buying treasuries. and just lower volatility in the rate space, i think that's been really helpful. it's leading to some funky things happening. there's so much demand right now for long duration and not a lot of corporate credit supply on that front. someone was telling me that

40-year paper issued by google back in 2020 was trading just four basis points over treasuries. usually, it's a lot wider than that. it shows you there's a lot of demand there. they're trading pristine credit. >> speaking of rates, we got some news come ought on the fed or from fed officials. let's get to steve liesman with some headlines. steve? >> good morning. fed governor chris waller saying he is increasingly encouraged that monetary policy is well positioned to slow the economy and bring inflation down to 2%. waller had been saying in the summertime and before that one of the most hawkish members, now he's sort of neutral, a little dovish. he says monetary policy is restrictive and is contributing to the decline in inflation we've seen. he's proven couraged by the october decline in inflation as well as the jobs report, which also showed a cooling of the job market. the latest data he says shows inflation moving in the right

direction, but it is gradual. don't take out the party hats just yet, because he says inflation is still too high and the slowing needs to be sustained. he pointed out there was a reversal of progress in a revision to inflation data earlier this year, so the fed cannot be sure that it's done enough now to bring inflation down. but he makes a bunch of other encouraging remarks as the economy is cooling, according to his expectations, from those strong numbers in the third quarter, indications there's been a significant modification in the fourth quarter. manufacturing of the service sector slowed in october. he's going to look through this, but he does point out a number that is worth talking about that the auto workers' strike could shave gdp by as much as a half a percentage point. in terms of future inflation, he thinks it will be moderation and housing costs as well as wages bring do you think the service side to ease the inflation numbers we're going to get. on the issue of how low is too

low when it comes to the 10-year, he says even though yields have come down, financial conditions are still tighter than they were a year ago. but it's a reason for the fed to be careful to not rely on the 10-year to do its work for it. finally, the fed he says can't rely on higher productivity to push down inflation. i'll leave it there. david, if i could make a remark, i loved the conversation you had with jim cramer earlier this morning where he keeps looking at the consumer and looking into the numbers and coming up empty. i'm kind of with him on that with these lower or toed inest expectation numbers. but we seem to be getting pretty strong spending numbers from the beginning of the holiday season. >> what do you mean coming up empty, steve? explain that. >> you keep trying to figure it out. i just want to make a definitive comment and say how weak is the consumer? are they about to give it up? but you can't come back with a definitive answer. that's kind of what i think jim was talking about.

sara's got a great chart she put up that mostly expectations follow consumer spending, except for who knows? maybe coming out of the pandemic it's different. i'm putting together what i think about consumer spending, those unbelievable travel numbers, because that's consumer spending also, together with the goods numbers, and i come up with a pretty robust consumer still. >> yeah. i used the word "fine" yesterday. trying to dig through the adobe numbers online and the black friday numbers. >> right. >> they're fine. they're not showing any decline. steve, i wanted to ask you on the central speak beat, christine lagarde has been talking recently and made a comment overnight that is strengthening the euro today. she was talking about speeding up the balance sheet drawdown by ending bond purchases a little earlier than expected. it feels like there's a communication strategy here to try to talk the market away from getting too easy or getting too

loose when it comes to policy expectations around the ecb, because, you know, they still have an inflation fight on their hands. they may want to be pausing interest rates, but they don't want the market to go the other way. i wonder how much you think the fed is going to do. i was surprised waller wasn't more hawkish today. >> yeah. i've been following waller and his kind of turn, and, sara, i've been focused on the bias of the fed. in other words, doesinflation have to prove that it's coming down or does it have to prove that it's going the other way? i think these guys are kind of into this mode of i feel like we're in a good place and inflation is going to come down if we don't do anything else. as for lagarde and bringing down the balance sheet, i think you're right, there could be more of a communications than an actual event there, because i'm pretty sure that fed chair powell would not want to speed up the reduction of balance sheet here in the state because i know how much he's worried about another event like we had

in 2018, 2019. i think he would look at what's going on with the balance sheet and say we're bringing it down as scheduled, good enough, i'm not going to mess with it. we're having success in that regard. >> and ecb is behind the fed on that front. they stopped buying, but they're investing the proceeds. thank you, steve. steve liesman. >> sancthanks, sara. >> apollo global management's chief economist joins us now. what do you think about the market's expectations are around the fed? is it done? it will cut rates as early as may? a few rate cuts next year? that's certainly helped the overall mood. >> absolutely. i think that's a reasonable outlook that the fed begins to cut by the middle of next year. it's fluctuating between may and june, but the bottom line is we should expect rates to stay at these higher levels for at least another seven, eight months. the key question is some of the

trends that we are seeing in rates for loans, will these trends continue to create more pain, if you will, both for the consumer and also for corporates? in that sense, the lack of the fed keeping rates high will continue to weigh on the economy. that's why the consensus still has growth slowing down quite substantially over the next three-quarters. >> it all hinges on the consumer and what we were talking about. as rick brought the consumer confidence expectations, they went up. maybe that's because gas prices have eased. that's generally, you know -- that helps expectations and consumer confidence. but what do we make of where the consumer is going? >> remember, also, walmart gave some somewhat worrying signs about where the consumer is at the moment. we're seeing a little bit of a mixed messaging if you will in the data, including also as i mentioned the risk that if we

still have more people falling behind on their payments because interest rates are very high for households, that will continue to be harder and harder. from a fed perspective, they're trying to slow the economy down, and if they don't succeed with slowing consumption down, because there's still excess savings left or, as you're saying, maybe gas prices coming down, that would then imply that the market should be placing that rates will be higher for longer than what fed futures are pricing at the moment. maybe we need to get to q3 before the fed begins cutting. >> do you think that that is what's happening? >> well, i think what's critical also here is we are running out of excess savings. that's a very important debate. fed working papers are debating this. the san francisco, the new york fed, the board of governors. i think in the next several quarters we'll run out of excess savings. and student loans starting in october, retail sales for october was not great. it is a mix of things hitting

the consumer at the moment. with the same combination of rates staying higher for longer, i think a downside pressure on consumers will continue. i think consensus is right with the expectation that consumption should be slowing in the next several quarters. therefore, the fed will succeed with slowing the economy down with the ultimate goal of slowing inflation down. >> when we talk about consumers, it's not all one big brush. just curious about the buying power, what we call the low end, which may be under more pressure, versus the middle and towards the top. is there any data that kind of shows the impact on the economy from a slowing at the lowest end, perhaps, is not that significant? >> well, if you look at how much money people have in their checking accounts across the income distribution, the data shows that the top 20% of incomes, they are essentially the income group that has almost all of the excess savings that we are talking about. in other words, remember the 20% highest incomes in the u.s. account for 40% of krenconsumer

spending. so this is the case that there is more tailwind to consumer spending for upper-income households. if you combine that with delinquency rates going up, you to see more of a bifurcation when it comes to consumers. they almost have a tailwind for the other income, and you have a headwind for the low-incomes. it's that combination of when will the scales tip, is it riskier for the macro that we'll see consumer spending slow down as the fed is trying to achieve the goal of slowing the economy down. i think we should be monitoring this difference in what consumers are doing at the moment. >> i know that housing isn't as important as consumer spending for the overall economy, but i think we should mention it, because it is important for the inflation number going forward. we got the s&p's kay schiller price index this morning. it's all the way back to september, but still, 3.9% rise year over year is a record high, which is not what it's supposed

to be doing at this point in the hiking cycle. the month-to-month number was lower than consensus, so might be a good trend. but the high home prices are a problem. what's happening in housing? >> exactly right. the inflation, 40% of the basket is housing. if house price -- there are a lot of nuances to how it's measured. but the bottom line is 40% part of the basket starts to go up, and the kay schiller today suggesting that might begin to go up again, that would createa lot of challenges for the fed because the fed has been arguing for a very long time that home price inflation is coming down, everything is settling in nicely. if home price inflation starts to accelerate again, the fed might come to the conclusion that we have to hike even more. from that perspective, you're right. that's why housing is a very important key ingredient in inflation. so far so good, but if the fed

puts up the banner of mission accomplished too early, it's going to create a lot of challenges, including easing financial conditions. but also if we have another rebound in the housing market, that will create problems. >> it's a risk. but you don't expect another hike or anything like that, do you? >> no, i don't. i think it is reason to believe that. but there are a lot of challenges. people say inflation is no longer a problem, because if financial conditions ease, if housing starts have another run, the fed might have to raise rates potentially a lot more than what markets are expecting. >> i don't think you'll hear anybody at the fed say mission accomplished anytime soon. thank you very much. as we head to break, here's our roadmap for the rest of the hour. zscaler kicking off a big week for cyber names. we'll break down the numbers with one analyst. and we'll give you an

outlook on mergers and acquisitions. and shein is filie to go public. ♪ ♪ ♪ be ready for any market with a liquid etf. get in and out with dia.

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of young people who feel they can thrive. ♪ ♪ welcome back to "squawk on the street." we're keeping an eye on companies that do cybersecurity this morning. zscaler is falling. that's a cloud security company. it did beat estimates, but operating expenses jumped.

crowdstrike reports after the bell. not because it had a good run. dan, an outperform on zscaler, raises its price target, and outperform on crowdstrike. dan, some investors seem to have been bothered by the lack of guidance with zscaler. you're not amongst them. >> no. they'll continue to i think underpromise and overdeliver. in my opinion, this is really the start of a golden age for cybersecurity led by zscaler, crowdstrike, palo alto and others. any of these sell-offs, we're strong buyers. it's a table-pounder sector going into 2024. >> why, though? i mean, listen, it's not as though this is a secret that this is a need for so many corporations, and the stocks perhaps reflect that in terms of their multiples. just saying they'll have the wind at their back doesn't necessarily mean the stock will go up, dan. >> yeah. great. so, to that point, i think the street's underestimating numbers

as you go into next year by 15%, 20%. in our analysis, less than 50% in the cloud. what's happening is there's a push. we see it from of course the trophy case in red momond, at google. as all these work goers to the cloud, they need to be protected. if you look at crowdstrike, you get zscaler and palo alto, it's all coming to them. i think this is $200 billion of a market opportunity up for grabs in the next three to four years, a bonanza we see of cybersecurity. >> do we have numbers on how much companies are already spending on cyber and how much more they need to be spending? is there some sort of data where we see when that is saturated? >> yeah. sara, we talked about 3% to 4% of budgets are actually cybersecurity. we think that potentially doubles over the next two to

three years. that's why for cybersecurity, even when you look at cisco, i think this is going to be just a tidal wave of m&a that happens in cyber. more and more strategics and financialing are looking at this sector. rock of gibraltar in terms of the spending levels. i think what you saw from zscaler you'll see from crowdstrike, and the table pounder is palo alto where many bears doubt what these companies are going to do. >> you're just saying buy them all is what i'm hearing. >> look, i think cybersecurity is a golden age. if you -- you could fret about valuations. in my opinion, when you ultimately look at what's really happening here, we're talking about growth 30%, 40% next few years. a lot of these companies will double their revenue in the next two to three years. i view it as more of a moment like 1995. i think it's the start of a new tech bull market, cybersecurities front and

center. i think 210 for zscaler or 200 for crowdstrike is the starter to where these are ultimately going. >> all right. dan, kept it short today, but we'll see you again soon. >> thank you. >> i talked to the crowdstrike ceo two weeks ago in vegas, because they sponsor one of the formula one teams, and there's a whole new era of dark ai. they're just starting to protect the cloud. that will be another whole thing. >> without a doubt. my ai versus your ai. >> yeah. i'll try to steal your ai. you don't want people stealing it. >> just don't steal my ip. still to come, shein finally moving forward with a long-awaited ipo. we have details to g y ady.etou

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e-commerce giant shein officially filing to go public. could be one of the biggest ipos in years. we don't know when it's going to happen. >> it's going to be a while. >> could be. some reports saying 2024. >> could be nine months. >> they've been preparing for this, though, for a while,

laying the groundwork, communicating both with the media -- we've had a number of conversations here on cnbc -- and with washington. just to get you up to speed on what shein is and why it's such a big deal, and whether it's a chinese company or not, people are confused. it was founded in china, but it's now based in singapore. has been there for a few years. that's where the ceo is and the founders are. most of the production is still in china. however, none of the sales are in china. they sell to 150 markets and have zero sales actually in china. the biggest market is in the united states. and this could be a really huge ipo, the likeses of which we haven't seen in several years. this company was last valued in may of this year at $66 billion, which was a big step down from where it was in 2022, when it was valued in private markets at $100 billion. here's what we know about the financials according to an investor letter that went out that i got my hands on in october. the first three-quarters of fwooe, they delivered record revenue and a net profit on a

year-to-date basis. they've been making interesting moves. they recently acquired a stake in forever 21, for instance. they'll have exposure there for the first time in brick-and-mortar stores. they're building stores within stores in forever 21 to sell shein-branded clothing. and hired marcelo claure and fran townsend. so they are trying to paint a picture of a global company, and they are trying to move production closer to consumers, like brazil. >> secret sauce, though. >> two secret sauces. one, it's the on demand fashion model, the algorithm that they have where they zero in on what consumers want. so, they do have a team of designers, but they also have a sort of secret algorithm that is able to predict and see in real time, and now they have more than 300 million customers, what

those customers want. the second is the factory production and the fact that consumers order it, and then it gets made. they have this network of factories, mostly in china, that they contract with, obviously at much better prices, and that's why you can pay $5 for a skirt and get that shipped out. they don't have any inventory. that's how they think they are totally changing the model of fashion. but there's controversy, david. some people say it's a chinese company. there have been questions about the supply chain and forced labor that shein has denied. and the copyright infringement as well. i talked with marcelo and donald just about a month ago about these issues. listen to what they said. >> i had a chance to be in washington speaking to different politicians, and, you know, i think in the u.s., people are willing to listen. we've had a chance to visit with many different congress people, congressmen and congresswomen. i think they're all -- you know,

when you go in, part of the misconception, but once you have a chance to explain the business model, business practices, and where shein is going, i think they all turn to positive reference for us. >> what about some of the legal questions, donald, around copy right infringement, getting sued by other brands or other designers for copying? how are you dealing with some of those issues? >> we're building more and more robust control programs to make sure that everything we do is based on transparency, accountability, and enforceability. that's how we are. we believe we're the first in class. >> these are the kind of questions they'll face from investors as they gear up for an ipo. >> something else to be asked about is competition with teemu, which i've been talking about because pdd, which owns them, similar businesses, but they sell even low er priced,

typically. they blew it out in terms of the top and bottom line, did the company. temu is one of the largest advertisers on meta. you can see it there, order it, and it comes. they'll -- it's manufactured in real time, i guess, in factories typically in china. this is an ireland-based company now. but certainly going to figure into a lot of the conversation, one would expect, when they're on the road, these guys. >> especially because a lot of the growth is coming from the u.s. shein is also moving into the marketplace space. it's going to be selling -- it does sell more than just the shein brand. you can buy a cooking mixer now on shein and temu. fierce competition and fast growth, i think from both of them as they ramp up marketing spend, especially in places like tiktok, where shein has 8.6 million followers. temu also has been super aggressive. but temu semis in china, and they've had a lot of growth in

that market. follow that race. >> i know you're following shein. >> absolutely. >> every single move. when we come back, the outlook for stocks of one of wall street's longtime bears. why he says bet on netflix and old dplin i don't know. we're a week away from another cnbc work summit, this time on the peril and promise of ai when it comes to work and your business. scan can qr code on your screen. when you think of investment risk, do you consider climate risk? changing weather patterns are impacting the way we live and the value of businesses large and small. this can mean disruption to supply chains, changing demand for products and shifting regulation. what does this mean for your business, your clients, and your investments? ice offers data and markets that can provide critical insight.

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welcome back to "squawk on the street." i'm bertha coombs. president biden's son has agreed to testify publicly before the house oversight committee. but the committee says not so fast. the gop-led panel subpoenaed hunter biden to appear for a closed-door transcribed interview, but biden's lawyer

proposed opening the door in a letter sent to committee chair james comer today. he responded saying the deposition must be private and that he'll have an opportunity to testify in public later. a russian court extended the detention of wall "wall street journal" reporter way waiting trial on espionage charges. e e evan was detained. gesh coe vits has denied the charges, which carry up to 20 years in prison. the white house calls the charges ridiculous. indian rescuers are started pulling trapped workers out of a collapsed tunnel in the himalayas. they have been stuck inside for 17 days now but with access to food and water and medical supplies. crews had to drill through rock, concrete, and earth in order to reach them.

back to you, sara. >> thank you, bertha. back to the markets, stocks are a little improved an hour into trading. the dow is up 30 points right now. our next guest has a year-end s&p target of 3,800, which would mark a pretty big drop. piper sailor chief investment strategist joins us now. the market is set to end much higher than you originally expected. what was the big surprise? >> well, i think some of the big surprise was how much some of the magnificent seven stocks and the bifurcation within equities lifted the index this year. it's been a year where there's been haves and the have-nots, and the haves been the larger components of the index. so clearly we don't think -- well, i'll say i don't think the market is going to end at that low level. i think it's a bit disingenuous to change the target with a couple months left in the year.

but we continue to tell our clients and institutional investors to remain in higher quality, higher profitable, higher interest rate companies that can withstand the continued backdrop of macro volatility and macro uncertainty. >> is your price target next year reflective of the fact you don't think it's going to be the megacaps and tech leading again? >> we haven't put out an official number for the year for 2024 yet, and i think in general you're going to continue to see further crowding into these magnificent seven-type stocks across different parts of the market. this is not just a story within tech. companies with similar attributes, within financials, within industrials, have been the leaders within their space as well. so, sure, you know, the larger names are where we've continued to advocate being overweight, and if they continue to hold up the index, so be it. but, again, we're looking for

areas of the market that will lead and lag. we would -- we've been kind of broken record, talking about not getting into the recovery trade, we're trying to go long small caps and other cyclical areas of the markets like regional banks, retail, and autos. >> all right. so, i mean, the market right now, the s&p is around 700 above your year-end target. i would assume going into next year you're not going to be particularly positive. >> yeah. i think we'll be seeing further insight of the lag effect from policy continuing to work its way through the system. we now have an unemployment rate up to 3.9%. so i think while everyone is debating whether or not we'll have a hard landing or not, we have a lot more conviction in that we are not going to see a broad-based earnings recovery. so, again, the market is where it is because of the construction of the index and

because of the faw ew names up , 80%. i think the s&p is up 3% this year. i think this bifurcation will remain very much intact and widen further unless we see miraculous stimulus put in place that helps to lift the economy in a broad way, which is not something we have seen really since 2021. >> all right, michael. thanks for joining us to talk through the thesis. appreciate it. >> take care. coming up, the merger and acquisition market at all-time lows, but is 2024 ripe for a rebound? citi's investment banking head, he runs investment banking at citi, will join us next.

deal-making has seen what is it worst november since 2011. global volumes for this month hit $177 billion versus what was a pretty decent month in october, $408 billion. joining us with his outlook for not just m&a but credit markets, capital markets overall looking to 2024, tyler dixon, held of investment banking and vice chairman of banking and international at citi. good to have you here. >> always great to be here. >> let's start with m&a and try and get to some other things. i keep hearing talking to the practitioners hope, hope, hope. it's going to come. are you amongst them? and if so, why? >> i am. i think we're cautiously optimistic. you cited we had a slow november but a near-record october. the m&a business and deal business is lumpy. as we look forward, we get excited about the trends we're

seeing that will drive activity. first i think equity volatility and credit volatility is stabilized. i think we've got a normalized outlook for the higher-for-longer interest rate environment. with the ceos and boards we're talking to, that's building some confidence. we have activism coming our way as we reach the 2024 proxy window. we also are seeing with the financial sponsors wanting to monetize assets and with over a trillion of dry powder being ready to add to 2024. >> they've been sitting on a lot of stuff they want to sell and/or potentially buy. it's harder to get returns when rates are as high as they are than they had been previously. >> people are starting to get comfortable that we're at a peak in rates and things will start to move the a positive direction. that gives confidence that debt markets should be constructive in 2024. >> regulation has been an impediment to deal making in the last couple of years, the fear that you're going to potentially get blocked or at least delayed

by whether the ftc or the doj. how is that playing in boardrooms? is there more bravery, so to speak, amongst boards to say we'll take them on? >> i think regulatory and geopolitical issues are always hard to fathom and calibrate. they'll always have an impact on big deal making. we'll look at some of the deals closed recently as evidence that big-deal activity can go forward when it makes sense. we'll look to sectors like technology, industrials, health care, areas we see being active many 2024 and 2025. we've been lucky enough, as we look at 2023, to be in some of the biggest deals in those categories. >> why those industrial sectors? >> i think underneath it you have trends we've talked about before such as onshoring and friend shoring, driving activity in industrials and manufacturing. we look at technology and look at the amazing dislocations created by new technologies, ai, the cloud, digital infrastructure. we get excited about the future of health care and how that's

changing dynamics. those three megatrend are things we think will influence 2024 and 2025 m&a activity. theyed a influence on the low volumes we've seen this year. >> the stock market, ceo confidence always plays an important role. plus, you know, sort of adjusting both sellers' expectations and what buyers are willing to do. are we getting there? >> it's a process. when you go through significant change and outlook for interest rates from 2021 to 2022 and 2023, that adjustment is not a normal process. i think we're through the better part of it. i think we're in an environment where you look at rate volatility and the vix, equity volatility being really low. i think that gives confidence not on overall economic activity, but it creates a foundation to do more deals. >> let's get to the credit markets in terms of financing those deals. are the financing markets open right now? >> they are. i think we've seen the debt markets be the most constructive markets in 2023. we'll see more of that in 2024.

investment grade has always had a strong bid. i think when we look at the levered part of the markets, we see an opportunity, right. we see banks in a position to do syndicated lending. we see the private credit market in a position to put money to work. when you look at the outlook for refinancing, you have a big wall of maturities in 2025 through 2027, maybe as much as a trillion dollars that needs to be financed. defensive financing and refinancing will make the market an investment grade and the corporate and sponsor market in the less than investment grade category be a bit more active in 2024 than we saw in 2023. >> you think so. a lot of the talk these days is about the incredible growth of private credit at perhaps the expense of some of the big banks. are you seeing on aa concern ab loss of share? >> there's a lot of focus on both markets. we see an opportunity for both the bank market and the private

credit market to do v cco-exist. we're seeing different ways both markets are partnering together. i think you'll see more of that. >> not necessarily at the expense of citi and/or any of the other big banks? >> ultimately, i think there's room for both. we work together now, and we look for opportunities to work together in the future. >> some of those firms don't face the same regulations that you face. >> i think that's okay. there are an appropriate set of deals that fit within the confines what syndicated banks should be doing, and the private credit market has advantages for companies that want to use that marketplace. the key is how both those systems work together to solve client problems. i think you'll see more activity and more creativity in 2024 along those lines. i look forward to keeping you up to speed as we think about those punts. >> i'd love to get a sense within the bank or some of the things you oversee in terms of the impact of ai and how and -- you see the bank using it.

we talk often here about, well, it may replace your junior analysts someday. is that a possibility? >> it will complement and complicate human ingenuity. there's plenty of room for bankers over the cycle, but we do like ai as a technological solution solution that should improve. it's great at analyzing data, aggregating data and we're being careful about how we think about using it. we have to do that in an appropriately regulated fashion and make sure we maintain the trust of all of our clients and customers. but we're hard at work at finding ways to make us a better bank through the use of a.i. as a user of a.i., we're out talking to a lot of our clients and it's obviously a hot topic. unlike a lot of technological changes in the market that help technology companies, a.i. is going to help all of our clients. that's whether they're corporates, sponsors, governance around the world. it's a hot topic. >> to the extent you're developing it inhouse or perhaps testing, maybe not rolling it

out within citi's own operations, at what point do you see it having an impact on productivity? >> i think over the next several years you'll start to see that. i think we're going quickly but carefully. testing, making sure we're doing it right. i think it's going to be a great tool to make investment banking a better business in the short term. but over the long term, too. >> are you still going to hire young people to actually do it or have generative a.i. doing all that stuff? >> we'll have the best humans and best technology to bring the best ideas to our clients. >> tyler, thank you for coming by. >> great to see both of you. >> tyler didickson, head of cit >> is anybody going to say, no? >> i didn't say i would have less humans. >> more productive humans. thank you, tyler. let's get back to steve liesman. we're getting more headlines from the fed. we have michele bowman, another one who has been long-time

hawkish, steve. what's her tone? >> yes, yes, but first i want to bring you additional comments from fed governor chris waller who seems to be moving the market right now. he said if inflation continues to fall for several more months, the policy rate could be lower. he also said if inflation consistently declines there's, quote, no reason, end quote, to insist rates remain, quote, really high. so, there's a key fed official talking about the idea of possible rate cuts. you can see the market reaction. it had a dovish reaction initially to his prepared remarks, but there's that shoot up you can see in the dow. look at the ten-year. you can see it came down a bit as did the two-year. both in reaction, i want to say, to waller's comments before fed governor bowman came out. she's on the other side of this whole debate, saying she's willing to raise the funds rate at a future meeting if inflation progress stalls and her baseline is for another rate increase.

though, she adds that policy is not on a preset course. she's full of all kinds of risks that concern her. she's unclear if the supply side will continue to lower inflation. she said there's a risk that lower energy prices could reverse, labor supply could be limited. she talks about a series of risks to inflation coming down, including the lack of fiscal restraint. guys, i'll leave it there. maybe the market is a little less excited with these bowman remarks but waller, i think you'll agree -- by the way, goolsbee also talking about inflation progress. sara, i think you'll agree, waller is, i guess, more of a heavy economic hitter than bowman, who is really in charge of bank supervision among her committee duties at the fed. whereas waller was the research director of st. louis and probably one of if not the preimminent economist right now on the federal reserve board, among the governors. >> i would say maybe just more

goes with the center. she's been hawkish and warning about inflation. she was actually early about it, and right. but has kind of separated, distinguished herself a little bit. >> she's maintained -- right. she's maintained this, we're going to do another hike for a long time, whereas waller has pivoted. did so towards the end of summer and in the early fall. and now he's talking about the possibility of a potential rate cut, which is not something fed officials really wanted to talk much about. >> no, no. i wonder how long he'll be talking about that. steve, thank you. steve liesman. >> okay. let's get the results from cnbc's latest cfo survey. they're out and they are increasingly pessimistic, according to one measure. kate rooney joins us with the details. kate? >> good morning. so, there were some pockets of pessimism. among those cfos when it comes to the economy. more than half of those respondents say they expect the u.s. to experience recession in the first half of next year.

more than a third of respondents, though, say fed policy will create the conditions for a soft landing. so, controlling inflation without pushing the economy into a recession. that was a slight increase from the previous quarter. when asked about the impact of higher interest rates, 60% said it's been fairly negative for their businesses. about 20%, though, say there has been no impact. still when they were asked to grade the fed, central bank's efforts to tame inflation with higher rates, more than half say, quote, it's been good so far. on the fed's 2% inflation target, the majority of cfos say they don't see that inflation target getting hit at any point next year. less than 15% say they see it as a 2024 possibility. on the bright side, though, more than 90% of these cfos say inflation has now peaked. they were also asked about the biggest risk to their businesses right now, about a third are saying it's consumer demand, tied with overregulation. fed policy coming in third. cyberattacks and inflation are still seen as a risk.

they do say it's now easier to find talent at this point. 60% say it's gotten easier. the sector they're seeing with the most upside is tech, overwhelmingly, more than half say that's the area with the most upside at this point. back to you. >> so, on inflation they're not so convinced it's going back down to target in the near term. just to the points steve was just making from michele bowman at the federal reserve, warning there's still inflation risks out there. she talks to a lot of businesses. it sounds like these cfos, although they think it's peaked, is not going back down. >> that's right. it is echoing that. they say 2025 is the overwhelming target for cfos when the fed will hit that 2% level. almost none of them say it's really a next year possibility. less than 15%. at any point next year, they broke it down into first half versus second half. overwhelmingly they're looking at 2025, but 90% say it has

peaked. it's just a matter of when they'll get back to 2% at this point. >> kate, thank you. kate rooney. thought it was interesting, 6.7% do see cyber as one of their key -- >> they always see -- >> it's hard for us to know because they don't have to reveal all the cyberattacks they're getting. >> no. and when they're being ransomed. it's almost a daily occurrence at this point. something we obviously continue to cover. as we also continue to cover the markets with the s&p up 0.9%. "squawk on the street" will be right back.

when someone tells you who they are, believe them. stealing their basic supplies.

good tuesday morning and welcome to another hour of "squawk on the street." i'm sara eisen with mike santoli. northwestern mutual cio on why he's skeptical of the current rally and says to brace for a hard landing. the chairman of ubs warning of growing risk in the credit market. there is an asset bubble forming there. he joins us to explain. plus, we'll get to an upgrade of boeing and why rbc says it still has room to run, despite a 20% hike the past month.