good morning. welcome to "squawk box" here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick with mike santoli. andrew is joining us from d.c. >> hello. it is snowing here. >> is it really? >> yeah. >> it's raining here. good weather up and down the east coast, i guess you could say. it is 41 degrees. no threat of snow here yet. just lots of pretty rain. joe is out today. mike is here. mike, great to see you. >> great to see you. >> folks, of all of the things you may notice today is our screen looks different. this is part of the big new look

across all of cnbc. some information that you are used to looking for is in a different place on the screen. over time, we hope it will make it easier for you to understand the market and stories we are br bringing you. in the meantime, we will leave some things on the screen longer. we are looking for things to flip around. we hope to make it a cleaner look and easier to navigate. it may take patience on your part and ours. we will call for the u.s. equities and see where this is right now. equities in the red as you can see. s&p futures off by two points. dow down by two points. nasdaq off 25. this comes after a really big run of six weeks of gains for the markets at this point. on friday, you had what was the s&p and dow closing at 52-week highs? >> above 4,600 for the s&p.

it goes back to march of 2022. not far from the record on that better than expected jobs growth numbers. >> you can thank november for the big runs. people think going the november gains would be given back. the economy played along with the rally to this.. if you want to check out what has been happening, yields, the ten-year yield is 4.62%. two-year yield is now above 4.7%. the yields are the story and why we have seen every other market move to this point. >> they have bounced a little bit. they were prime to do so. the ten-year yield was 4.1 at the lows. we have a sized treasury auction in the next few days. maybe we will get tested on the equity rally. under 4.5% is okay.

take a look at bitcoin. every market has been playing off what we have seen with the yee yields. bitcoin is lower. $42,385. that tells you how far we have run in the first couple weeks. >> i think it cracked lower overnight. down 7%. sources telling cnbc that an investor group has made a bid to buy macy's to turn it private. it partnered with brigade management on the proposal submitted on december 1st. tho offering to buy for $21 a share. macy's board has met to discuss the offer. it is not clear how the retailer views the proposal as you see the stock lifting toward that

bid of $21. this is a blowout premium relative to where the stock has been. you know, becky, this story has been around a long time. real estate assets of macy's are the valuation cushion. >> 20 years that people have talked about the real estate play and what would unlock things? a private company could do a different thing. >> that would be the argument. we have been talking about that. you remember the other question is is this a real estate play? i go back to thinking about even kmart and eddie lampard and turning the challenge plays into the real estate play. it is hard to actually identify one that has. i am cautiously optimistic >> it seems to be pinned on a

very small number of stores. if you have a $5 billion or $6 billion equity cap for macey's and harold square, but a premium on that location. >> do they own the san francisco location? >> i don't know. >> i used to cover macy's years ago at "the wall street journal." one issue you have in the retailer situation, eddie never invested in the stores. kmart was still using 1980s ncr systems. never fixed any of the stores up. it was just the slow decline. you have to figure out how to do this and really turn the store so it is not continually losing customer traffic. >> yeah. macy's once was the subject of the lbo. it went into bankruptcy and out of bankruptcy and acquired by a

company. >> federated. >> i covered federated. >> federated bought it. cigna has abandoned its pursuit of the merger with humana. cigna stock has been down 10% since the first report the companies were discussing a combination before today's rebound in cigna shares. now sources say the companies could not come to agreement on the frprice and financial sterm. cigna announced yesterday it plans additional $10 billion of stock buybacks related to that pop in the stock as well. it is a $75 billion market cap. significant buyback. meantime, mike, thank you. the news over the weekend and talked about is liz magill resigning on saturday over criticism of the testimony at the congressional hearing which

we talked about on "squawk box." she struggled to answer the question of calling for the genocide of jews. she will remain the tenured faculty member as she steps down. the chairman of the board of trustees, scott bok, will also step down. he runs green hill investment bank which has been taken over by mura at the moment. lots of questions of what comes next at harvard which is having a board meeting. it may have that meeting bleed into today over its own president. the president also at m.i.t. and how she responded. that board has publicly supported her. and the larger question about what kind of, you know, culture has taken place at these universities and how deep some

of these issues run and how easy or very difficult generationally they may be to change. >> this has been the slow roll train wreck to see what happens. i think a lot of people looked at the testimony before congress as something that was almost a seminole moment of what was happening. that is when youyou saw the fur rise up. if you have been watching bill ackman about this and one person said he went full-on activist on the university presidents. watching how that has played out and he was going through all this and tweeted that harvard was having a board meeting last night, too. we'll continue to see what happens. i think it has been eye opening for somebody who hasn't been on a university campus in a while,

quite a while, to see it. my eyes were opened to some of this for sure. >> the actual testimony seemed to be very much informed by specific legal framing. there are liabilities. it just didn't play. >> they didn't sound like humans when they were testifying. >> so much of this began when mark rowan came and sat at "squawk box." this was even before what we saw happen on october 7th. this was originally in the context of university of pennsylvania about palestinian l literary festival and what was taking place there. the donors began then and ramped up. to put it in a business context, you almost saw a bear hug letter or takeover parlance.

the board last week of the wharton school, inside pennsylvania, but not the board at the university. it wrote a letter to the board saying they want to nominate people to that board and wanted her to resign. it was a very interesting complex. we saw the donations. >> it came at the same time the $100 million donation to the wharton school to the finance program that was going to be revoked based on what the donor saw as rampant anti-semitism. that pressure ramped up with the three university presidents and their comments before congress. coming up, key inflation data on the way before this week's fed rate announcement. we will tell you what to expect with the "squawk planner."

and roger ferguson will tell us how soon he expects the fed to begin cutting rates. "squawk box" will be right back. across the globe, industries are transforming and businesses need to navigate the changing landscape

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time for the "squawk planner." we get the november read on prices tomorrow and producer prices on wednesday and then on thursday with the jobless claims and retail sales and import and

export prices. the fed kicks off a two-day policy meeting tomorrow. investors will watch when officials pencil in the economic forecast for the coming year. that will be released on wednesday. it is a light week for earnings, but adobe, costco and darden restaurants on are the calendar this week. joining me to talk about this is former fed vice chairman and contributor to cnbc is roger ferguson. go to see you. >> good morning. nice to be with you. >> we mentioned, of course, no changes anticipated in terms of rates this week. there seems to be a call for a nuance message from chairman powell. you have to acknowledge progress on inflation. it is not at the target. you leave the option open. what is the prevailing theme of powell's remarks? >> i think the prevailing thing

is three things. one, the point you made which is making good progress, but not yet done. we will hear the question of wanting to be convinced before moving in a different direction. secondly, they will indicate when they he move in a differen direction, it will be further out than the market expect. the notion they are pushing back on cuts in the first half of the year. then finally, they point out the recent data suggests the economy, while slowing, is not falling off a cliff. it is handling higher interest rates well which will give them the ability to continue to talk about higher for longer. i think it will be a so far so good message, but with the push back against expectations of a pivot to a cut early next year. >> those are implied in the markets right now. they actually moved on friday, it seemed, from the likelihood of a first rate cut interest

march to may. once you get several months out, this can swing on the data. i guess, how do you view that positioning in the market? it seems just if we know they are done hiking and we know the next move is an ease, you lay the bets and probabilities and hedges out there because a lot can happen phenbetween now and no matter what the fed's i inte intention. >> you are right. some will look at history and say on average it is about seven months from the end of the hiking siecycle to the beginninf the easing. i think what people might be missing by the markets focused on every piece of data is the fed has got a strategy. to date, they are feeling good about the strategy. you know, in their heads, why they are data dependent, it will not swing as much as the market

swings on every piece of data. i think the fed's theme will remain the same for a period of time. as they have been thus far, they will be consistent in telling the markets to not focus on every move and don't think about cutting rates until the second half of the year. a bit of a disconnect with the fed staying where they are now. >> roger, we once had alan greenspan tell us the thing he watched the most is the ten-year yield. what piece of data do you watch most on the screen? >> look, right now, i think it is the ten-year yield because it is telling a combination of supply/demand story for sure. what i found interesting is the ten-year yield is supposed to build in term premium inflation expectation. it seems to tell us the economy is in good shape, but slowing and slowing a bit more than the fed is expecting. i would watch the ten-year yield

although there are cross currents. >> the yield, not the price? >> yeah. the yield. that's exactly right, becky. >> roger, one reason the market seems to have felt emboldened to start to project ahead to cuts is the comments. we had governor waller say if inflation keeps going down, you have the ability to cut the policy rate because you don't want to become incrementally tighter in real terms. there is a sense that the fed may have concluded they don't need to raise unemployment that much or cause economic restraint than they already are in order to achieve inflation. we don't know if that is true. is that the current thinking? >> well, if you listen to what chairman powell has been saying throughout the episode, he has been talking more about the opening of jobs and job openings

coming down with the likes of supply/demand in the market. there is some truth he is signaling they don't need to see unemployment rate rise to feel their job is done. i think vis-a-vis what governor waller had to say is it is a conditional statement. people are also ignoring the other side that i heard him say and the other reserve bank presidents say which is if inflation is sticky, we are prepared to move higher. i think the market tends to ignore that other conditional statement. right now, i think the fed is very much as they heare saying a wait-and-see mode. powell said it is premature to talk about cutting. that's where the fed is right now. >> the markets don't do well with no change expected. they want the inflection point.

to your point, it is the inflation numbers that seem to dictate everything. if the inflation numbers are still going in the right direction, they will not necessarily have to look to influence other variables as a kind of second derivative of the actual job which is getting inflation down. >> i think that's a fair point. you know, they say that very clearly. they are comfortable that things seem to be moving in the right direction. they add the caveat which is it is still too high. if you look at the average hourly earnings, one of the i influences to the last six months, the average hourly e earnings, it has increased with a four handle. that is not consistent with inflation coming in at 2%. more recently, things have gotten a little better. depending how you look at it, the fed is right to say so far

so good. still has a way to go. in the end, it translates to higher for longer and we are not thinking about a pivot as quickly as the market would like for them to think about the pivot. i'll continue with one other one. patience is important. one other point is they are not sure what the so-called neutral rate is and i think they'll edge along here and the market has gotten too excited about the move down when the fed's framework is not consistent with the framework down. >> you have to see the effect in the economic numbers to know where it is now. roger, i appreciate the time. thank you. roger ferguson. >> thank you. at least people are noticing. lots of feedback about the screen graphics. feel free and tweet us. we love it. we will look at all of it. this is a new look. we are trying to get used to it ourselves.

we hope to clean things up and make it easier for you to see things on the screen. tell us what you think about it. when we come back, macy's shares are soaring. investor group has offered to take the retailer private for $21 a share. we will talk to dana telsey about this after the break. the stock is up 18%. later this morning, guti scott gottlieb will join us to talk about gene editing and more. "squawk box" will be right back.

ark house management is offering to buy macy's for $5.8 billion. the stock is up 19.6%. joining us is dana telsey. dana, does this make sense to take it private? >> an offer does make sense. who is the right buyer? we have seen what has happened with real estate or splitting off ecommerce. what is inherent about macy's, they are close to the customer. they pruned the doors over the years. who wants to be close to the customer? it has to be a strategic that makes sense. >> if you were to take this company private, are you doing it because you want to do things that you couldn't do as a public company? invest more and getting close to the customer? are you doing this because you want to harvest and this is a

cash flow company and take and harvest things and pay as little as you can to keep the stores open and milk it for all its worth? >> look what they're doing with investing in private brands. look at the small format strategy. look at digitalization. they are doing it in the face of the consumer under pressure. it is hard to get a multiple and valuation if your top line is not growing. that is what investors want to see. investors put multiples on names because of growth. top line is stagnate. >> are these investors in it for the long haul? they are not somebody who is a private equity? >> i don't know them. when they said it is about the real estate, you need strategics about the operations given the framework the company has. >> hethey say they can line up e financing. the offer came december 1st.

macy's board did the not come out to say they got the offer. in the absence of a bid, what do they need to do? department stores don't get a multiple. they are valued as a no-growth business. what should macy's be doing? >> i think what they have done in pruning the stores and continuing to do that, sell off the stores that don't mean as much and invest in the traffic with the hybrid and outdoor malls. get same-store sales above the average in the stores. in addition to the merchandising, where they bring nike back or ugg or investing in luxury. now a new leader at bloomingdales means it is interesting to see the merchandise that drives sales. they have to continue to gain share of the consumer. >> dana, a question of the real estate and real estate value. i was looking at alexander, where k-mart did not look and

alexander's did. there is an argument in the case of macy's that it is not like you can turn the spaces into apartment buildings or large office spaces because in new york city, it is unclear if new york city would allow you to tear it down. if you don't tear it town, how much value is in that space? given what has happened to brick and mortar retail. someone sent me an email. real estate may be considered overvalued. >> i think overall in the real estate side, we are talking about fulfillment. the goal to be closer to the customer is what the stores are all about. you may not need all of the stores, but once you leave locations, the fact there is a lack of new development in retail real estate is what they have. they have the supply and they are able to fulfill. i think you will see them close stores over the next few years.

they have less than tenthey plan to close in 2024. i think they will upgrade the retail real estate and be where the traffic is. >> i am trying to understand. you don't think the strategy would ultimately be to selloff the key prime real estate? the question is how much would you get for the key prime real estate? on 34th street, i know that is the flagship store, there is only a handful of places that create effectively the potential true underlining value with the buyout price. >> exactly. when you think about the stores they have, it is the macy's 34th and bloomingdales. the stores that lack investment will look at those and say what should they be used for here?

the value of today's real estate may be different from five or six or seven years ago when starboard was out there. the assessment of the real estate valuation hasn't been a lot of trades going on. the prime locations is something you don't want to give up. i don't think you get the same valuations with the residential. >> dana, the stock is down 21% for the last five years. is this something that is the not a melting ice cube? >> it is a melting ice cube. it has been a melting ice cube. you see the earnings guidance below last year. when you think about next year, you do not have did he tell you n did he telebt you need to pay d. >> thank you, dana. coming up on the other side of the break, we will talk about the house of representatives as

four more sessions scheduled for the year with the looming deadline of january 19th for key funding bills. we will talk about the negotiations live from washington right after the break. >> announcer: executive edge is sponsored by at&t business. next level moments need the next level network. e. let's check it out. says here it gets plenty of light. and this must be the ocean view? of aruba? huh. this listing is misleading. well, when at&t says we give businesses get our best deal, on the iphone 15 pro made with titanium. we mean it. amazing. all my agents want it. says here...“inviting pool”. come on over! too inviting. only at&t gives businesses our best deals on any iphone. get iphone 15 pro on us. (♪♪) power e*trade's easy-to-use tools, like dynamic charting and risk-reward analysis help make trading feel effortless. and its customizable scans with social sentiment help you find and unlock opportunities in the market.

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good morning. welcome back to "squawk box." we're live from the nasdaq market site in times square. it is a rainy monday morning here in new york. the dow futures are in positive territory. up five points. s&p futures down two and the nasdaq down by 30. >> remarkable given everything going on. let's talk about what is happening in washington. funding for israel and ukraine in limbo. lawmakers have made little progress. joining us is former senator

heidi heitkamp. we have former congress member jeff hensley. curious how you think this is going to play out given where things stand today. i think i know where both of you stand on whether this should take place. senator heitkamp, what is your take here? >> i think the more interesting play is really in the senate right now because mitch mcconnell's longstanding we need to do more for ukraine means we have not been able to deliver and now it is tied up in border security. there are good-faith negotiations going and we need to pass it to jeb sand say how o you manage in the house? you are losing more members. your majority is narrower. i think that this is a real test for speaker johnson. >> that may be.

let me follow-up with a question about the border. why have the democrats not been more supportive of what the republicans have been trying to do at the border? when you look at the polls on border security, it has shifted among democrats . >> i think mitch made the statement. this is good for the president if we get a package that ti tightens security. the question is how far does it go? if you shutdown all asylum claims, that is an issue for the democrats. will it go far enough for the house? that is the question. >> congress member hensley, what do you make of the pressure points on the party over what heidi was talking about with the number of members? >> andrew, there is very little pressure on the republican party at the moment. i do agree with heidi that the actions in the senate at the

moment and i must admit three senators engaged in the process, heidi would know better than me. they have good reputations as far as being able to negotiate in good faith. having said that, given today is monday and thursday is looming and i can tell you from experience there are few legislative matters that will keep members away from the families during the holidays. i think something happening by thursday is not good. the pressure is off now we have spending bills that go through january and february resp respectively. the pressure is on the president for the reasons you articulated. i think he could do himself a lot of good. he may have to enter into the negotiations himself on the democratic side. on the house side, when you say it is a test for speaker johnson, if something good comes out of the senate, he, frankly,

will be a rock star and not suffer the fate of his prede predecessors. >> congress member, let me follow-up with a different question which relates to the election year. i don't know if you saw mitt romney on "meet the press" over the weekend. how do you think the republican party feels rs right now, inclug yourself, about former president trump? how does that play into the discussions about israel and ukraine and border funding? >> there is not a lot to be said or known about president trump that hasn't been said and known. if it you ask my personal opinion, he lost me on january 6th. his place in polls is hovering 50%. there is always a lane for anybody but president trump's

candidacy. that could be governor haley. she looks like she's coming on strong. we will have to see what happens in iowa. on the democratic side, there has to be a lot of panic. i don't put too much side on any one poll. andrew, you saw the poll where president biden dropped to the lowest approval rating ever. trailing the president by four. i'm sorry, winning over the president by four. the president trailing. nikki haley was winning by 17. there's going to be a lot of pressure on the president to do something. again, he's got an opportunity to show he was the negotiator and compromiser that he was in the senate and what he told the american people he'd be. >> senator heitkamp, speak to this if you can. majority of americans back israel as democrats split over the war with hamas.

"wall street journal" poll finding. it is an interesting one. it reflecting the country is supportive of funding for israel and what's happening or the approach that israel may be taking, but the democratic party is not. >> i don't think you can say the democratic party is not. nobody has been more full-throated in funding than the president. the president is still the leader of the party. is there a group of people who say we ought to take a second look at this? i don't think they will not be successful. i think the support is not is there israel funding, but the funding for ukraine. volodymyr zelenskyy is coming to down. is he the best sales person to move ukrainian funding? i have been to ukraine twice this cayear. these are freedom fighters. the dysfunction of congress and not stepping up and supporting funding for ukraine and doing it by the end of the year will be a

tragedy for democracy across the world. i hope they get it together. a whole package that includes border security. i think the people are concerned about a border that doesn't seem very well regulated. >> we have to leave the conversation there. senator heitkamp and congress member hensarling. thank you. mike. coming up, boeing's succession plan. they are setting up a date for calhoun's successor. get the best of "squawk box" on the "squawk pod." you can listen any time. we'll be right back. ( ♪ ♪ ) ♪ (when the day that) ♪ ♪ (lies ahead of me) ♪ ♪ ( seems impossible to face) ♪ ♪ (a lovely day) ♪

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"the wall street journal" reports that boeing is promoting stephanie pope to coo. david calhoun is nearing re retirement age. pope served the services unit of boeing. she took over the services unit which generates a quarter of the revenue and is the only unit gaining a profit. mike, thank you. apple shutdown third-party applications to allow android to

use the imessage to communicate with iphone users. it blocked techniques to exploit fake credentials to imessage. one service stopped working on friday and i don't know if you have been following this, but a number of technology companies have tried to create a sort of android imessaging system to allow them to log into a third-party server using icloud to appear you had the blue rather than the green on the imessage. >> such a status symbol. >> we're not doing that. >> i will say it is difficult if you have a family chat group and 20 people all have iphones and one person with the android. it creates problems. that status symbol for younger kids is the other issue. >> it should get easier. apple has said they will adopt this other standard. it is possible within the next 12 months or next time they

update the software that there will be more compatibility with both services. >> update the software? >> genuine last security update. >> they moved a bunch of things with the last update. nobody likes change. in the meantime, tucker carlson is launching his streaming service. the service is expected to go live today. it will cost $9 a month. the network will be home to five shows, including interviews and short videos and monologues. the network will be available through carlson's web site. i think when they say the network, they are all tucker carlson shows, that is my understanding. >> literally him hosting? >> yeah. that's my understanding. when we come back, we will talk about the latest updates in a.i. with apple and google.

that's next. "squawk box" will be right back. bu fisher investments re clearly different. (other money manager) different how? you sell high commission investment products, right? (fisher investments) nope. fisher avoids them. (other money manager) well, you must earn commissions on trades. (fisher investments) never at fisher investments. (other money manager) ok, then you probably sneak in some hidden and layered fees. (fisher investments) no. we structure our fees so we do better when clients do better. that might be why most of our clients come from other money managers. at fisher investments, we're clearly different.

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welcome back, everybody. google announcing that its g gemini ai model, just in the last week. joining us with who's winning in the ai arms race is steven levy. did these new entries really shake things up, or are we still looking at the same old open ai as being the king of the crowd? >> i still think open ai is at the top of the heap, but certainly they don't have the invulnerability they seem to have. their loss weekend i think will have repercussions for some

time, and while they're still the head, they're vulnerable. there's so many competitors. and as you mentioned, some of the competitors are the biggest companies in the world. >> what -- when you look at the race, at who can do what, what is the metric that we should be measuring all these companies by? how can we tell who's winning? >> well, i think besides users, you know, you have to look at how these companies are getting into products. right now open ai has a thing where you can go and, you know, basically just ask questions of gpt. you pay extra, you get the more powerful version, but i think the next thing we're going to see in the early part of next year is products that are tailored to use generative ai. google released one just last week i wrote about it, called notebook lm, which is kind of an amazing way for writers and anyone who produces reports and

written documents to take all your source material and then have a little gpt based on that. open ai introduced its own little mini gpt framework, but they have developers working on that, and you have to wait for developers to come out with that. google has it built in. you can download it, and it's free. >> steven, with the rollout of the gemini model with google, the idea that they eventually had to admit that they edited some of the demo. does that mean it's just not ready for prime time or does that mean this stuff is going to be a work in progress the whole way through? >> google keeps stumbling over itself. it really should have owned this space. google is an ai company. it always has been. they've worked very hard. the big breakthroughs that created generative ai have come from google. there were eight people who created this idea called transformers, the t in gpt, and

they all left google. so i do have to think, though, that google is going to write itself here, even with the silly stumbles like we just saw. gemini is sort of advanced and multimodal ai meaning things like one application can do the visual and the text and movies and a lot of other things. so i think gemini will be a power. >> real quickly, though, sergei bren i hear is entirely energized and really looking to try and win on this front. is that what you're hearing, and ultimately is this going to be who gets to hire the rare number of these engineers and computer designers or computer programmers who are really good at ai? that's a pretty rare commodity. >> google's always going to be attractive in recruiting talent. if you look at the people who contributedgemini, google

released a long list. sergei bran he was writing code for gemini. i don't think he's leading it. i don't think sergei is ready to go back into the executive suite and do all the stuff you have to do to be one of the leaders of google, but definitely he's in there, people still listen to him and care about what he says. >> we framed this as a race but it would seem we're not talking about a competition where there's going to be one industry standard or a winner take all type of product. is it? it seems to me everyone's finding their own approach and then all products will kind of get faster and better as they always have but maybe at an accelerated rate. is that the wrong way to think about it? >> i think that's right. no one company is going to dominate. if you look, the one company that might be best placed, we haven't mentioned microsoft yet, and i want to correct that because microsoft gets access to

all of open ai's products and doesn't have to be open ai. they get the benefit without the cost. so that's great for them. their investment was $13 billion, and it's going to pay off many, many more times than that. >> thanks, steven. >> thank you, bye bye. very, very busy week ahead in the markets. we're going to get you ready for some key inflation data coming up and that big fed meeting, all of that straight ahead. the futures right now, dow looking like it would open 24, nasdaq going to open 19 points lower. we're coming back two hours, big ones after this.

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seeing you carry on our legacy— i'm so proud. at vanguard, you're more than just an investor, you're an owner. setting up the future for the ones you love. that's the value of ownership. good morning, stocks riding a six-week winning streak as investors turn their attention to inflation. jay powell and the fed in the week ahead. we'll take a closer look at the markets technicals. with just two weeks to go before santa arrives, new data on the holiday shopping season and how people are feeling about the economy. and shohei ohtani hits the new contract out of the park. we go insides business of baseball and what his

$700 million deal means for the world of sports. second hour of "squawk box" begins right now. ♪ good morning, and welcome back to "squawk box" right here on cnbc. i'm andrew ross sorkin along with becky quick and mike santoli this morning. i'm in washington, d.c., but you might notice something different this morning. our screens look a little bit different today. it's all part of a very new look for cnbc that we're all quite excited about. some information and data might be a bit different it might be in different places than it was the last time you joined us, over time we hope it will make it easier for you to understand the markets and the stories that we'll bring you. in the meantime, we do plan to leave up some of the screens for a little longer than we normally do until you get adjusted. and we thank you for your patience and also your feedback,

we've been getting it on twitter. some of you love it. some of you have other views, and we're going to take all of that feedback into consideration as we're trying to improve things on the screen for you. but talking about the screen, take a look at futures where things stand right fou. you're looking at the dow jones industrial average up about 20 points right now. nasdaq looks like it will open down about 11 points. s&p 500 up just marginally. take a look at treasuries, when you think about the ten-year, the two-year note. the ten-year at 4.256, the two-year at 4.726 and oil at wti crude it will cost you on a per barrel basis $70.88, and then let's also flip it around and show you where crypto stnands right now. bitcoin has come down a bit from its highs recently. we've got breaking news just hitting the wire, occidental is buying oil and gas producer crown rock in a cash and stock

transaction valued at $12 billion, which does include debt. that deal will boost occidental's production by 170,000 barrels of oil equivalent per day and expand its footprint in the permian basin. this acquisition the company says is expected to close in the first quarter of 2024, maybe not a huge surprise because of all the activity that we've seen. there have been some reports written up recently about this potential deal that occidental was in the hunt for this company. the permian basin has been such a hot area, and you did see exxon mobil make a huge move into this too with their purchase of pioneer resources. that really kicked things off. it had kind of a hunt going for what would happen with these areas too. you can see that stock right now, occidental down by 1%. i'm looking at the terms of this. they're calling this a $12 billion. that does include debt. they're going to finance the purchase with the incur reince

of 9.1 billion in new debt, 1.7 of common equity and the assumption of crown rock's existing debt. take that $1.2 billion factor out if you want to see how much this is worth, get closer to $10.8 billion in how we would measure that deal. occidental saying that it's going to be able to make some moves with this too. >> yeah, saying it's basically additive to free cash flow on a diluted share basis, about a billion dollars. that's based on $70 oil, so basically where oil is trading right now and yeah, supporting a 22% dividend increase, $0.22 a share, so rebuilding that cash yield as well. the issuance of shares maybe as part of the financing of the deal, not sure if that was necessarily known, but it's a pretty modest amount, $50 billion market cap, occidental. >> 9.1 billion of new debt. $1.7 billion of common equity. occidental's ceo vicky hol lop is going to be joining us in the next hour to talk about this

deal and much more, and we have seen this race for deals with the big oil companies recently, not just that exxon mobil bid for pioneer. you had chevron's bid for hess at $53 billion. we'll talk to her about a lot of things we've seen out there and the transition to this company too, which by the way has been a very strong performer in the s&p 500. i know as recently as september, it was the top performer in the s&p 500. i don't know where things stand right now. >> yeah, i mean, occidental, it's down on a year-to-year basis. all of energy has pretty much given back a lot of last year's gains. you go backfarther and it's up quite a bit. >> sticking with energy right now, we want to speak with dan yergen, s&p's global vice chair, energy climate and the clash of nations, and then welcome, good to have you here, and great time to be able to ask you what you think about what's happening in the permian basin. >> i think the permian basin is

sort of sent to number one is and what you've seen is obviously bulk up as companies are seeking to get scaled and become more efficient, and you know, the proof is in the pudding. a year ago people thought u.s. oil wouldn't increase very much. it's increased by about a million barrels a day. companies really want to be centered there and be in a big position there and gain those effi efficiency. >> a big part of the reason is i think that occidental was able at least in some of the areas of the permian basin to be profitable at $40 a barrel for oil. even though oil prices haven't gone to the highs some people had been anticipating, right now this morning, wti is just above $70, $70.89 a barrel, this is the place where it's a lot easier to be profitable and as you mentioned, the ability to really scale up. i know that was a big deal for exxon mobil with pioneer, the idea they bought all this

additional land, brought in all this additional land that was very near their existing areas where they operated, that's what you're talking about, those efficiencies of scale? >> efficiencies and technology. the rig count is down, and yet production is really going up showing that people have become -- are able to achieve much greater efficiencies than they were even a few years ago, and you know, of course you just mentioned the oil price, and that reflects the fact that you have this huge surge of new oil coming from the united states led by the united states, canada has had a record, brazil set a record. guyana, which is in the news for other reasons right now, is come down very fast and all of that is weighing on the oil price. >> all of this is dependent on where things go. the occidental move that vicky hol lop made to buy anadarko, then you had covid and energy

prices plummeted, went negative for a while, and that raised a lot of those things into question. is that a one-off, though? we look at oil prices down a little bit to $70 because of the concern about global demand as we're heading maybe potentially into a slower time. what we saw with covid, i don't think anybody anticipates that -- something like that. >> we're certainly hoping that covid was a one-time event. this is back to supply and demand, and of course the anadarko purchase by occidental seemed controversial at the time, but it's really been -- made occidental even a stronger player among the major companies. >> so dan, what is happening right now with demand around the globe for oil? the central thing is that demand is growing. china's reopened. it's not going to reopen again. demand next year is expected to be about a million barrels a day less than growth and supply, and

as long as -- as long as supply and demand dominate, you're going to have that downward pressure on price. the opec plus country, they have been cutting and said they'll make further cuts. the choice for them is do you keep cutting or do you do what happened in 2014, developing supplies. but becky, as we talked before, there's still the question of risk out there, and we've seen it in guyana, we see it now in the red sea, starting to attack sh shimg. >> you bring up guyana too. that is where exxon and chevron have placed big bets. exxon as the developer there and chevron with this bet on hess made a big deal about hess's assets and the part about what was happening in guyana, but we have seen some concerns about what venezuela is going to do there. last week people were saying -- the people we spoke to at least

were saying it'snot that big of a deal. you sound a little more concerned about what could happen there. >> so far it's more bluster. i mean, nicolas maduro who's the dictator president of venezuela had this farcical referendum where maybe 10% of people voted claiming two-thirds of guyana. what really piqued his interest was oil. including by oversight -- guyana is very important because it is the fastest growing offshore oil development in the history of the world. maduro's in a weak position, a quarter of the people of venezuela have become refugees and fled the country. the risk is that he will do something. he might see a piece of territory, plant a flag, and of course you have to keep in mind that maduro's close allies are

russia, cuba, and increasingly iran. >> so geopolitics is going to be the most important thing driving the oil price market over the next year, or is it going to be supply and demand? >> i think it's going to be supply and demand. the area -- i think in terms of venezuela and guyana, the view that it is probably more words than action. i think the area to be concerned about is a straight that people don't normally talk about which connects the red sea to the oceans. about 9 million barrels a day of oil pass through that, a lot more because of sanctions on russia. russian oil going south, middle east oil going north to europe, and they seem to feel that they're invincible, that they can attack u.s. naval ships. so i think that's the thing to watch for geopolitical factor that could affect it. otherwise you're looking at supply and demand and, you know,

not great economic news coming out of china. >> dan, i know this is a fool's errand but trying to forget where prices go over the next year, what would your guess be with everything you know? >> well, i think that in the first -- let me put it this way. i think in the first part of the year, barring a geopolitical problem, you're going to see a lot of downward pressure in oil prices. big exports . their bet is in the second half of the year, demand comes back more strongly and the market is more in balance, but right now we're in a time downward pressure in the markets and it's one of those times when it's supply and demand calling the shots. >> dan yergin, thank you, dan. >> thank you. coming up, where the market's headed from here, from stocks to bitcoin, we'll read the charts with katie stockton next. and later, pharmaceutical companies are fighting fraud across the nation.

a special cnbc investigation is straight ahead. quk x"ilbeig bk."sawbo wl rhtac

joining us now to look at the markets and read the charts, is katie stockton, fair leads strategy founder and managing partner and a cnbc contributor. good morning. >> good morning. >> so set the scene for us, we got a little bit of a breakout in the market last week, the s&p 500 gets above i guess 4,600, back to march 2022 levels. is this decisive? what do we think about this? the market had really been going sideways for weeks before this. >> it's a level we're watching, it's 45, 95, we've been rounding up. with the close about ten points above that last friday, we have our first weekly close above. we, as you probably remember, always wait for two decisive closes above a resistance level to call it a breakout. so it's not decisive yet, and we do have indications that we could see some consolidation or more consolidation really, and this week for more of a macro perspective, we're looking for yields to bounce a little bit. we're looking for the dollar to bounce, especially against the yen. that would be very natural

normal price action for equities as well if they did consolidate. not convinced we'll get that breakout necessarily here this week, but we do ultimately think there's a very good chance of it and it would be a bullish long-term development. >> we were talking about yields and how they went down almost 1 percentage point in ten years and down to 4.1, and felt like they were overdone maybe, and now we're lifting a bit. we do have these options coming up. what's a critical point to look at in terms of where the yields should go? >> yields have already broken a couple of tiers in support in our work, so the next level for the ten-year is about 393. that's upside resistance is closer to 455. there's a widespread between support and resistance. we have downside momentum across that time frame, and as we've discussed here in the past, we had some signs that it's going to be a lasting corrective phase

for yields. this is on the monthly bar which are thes -- bar charts. we know that we've been in this treasury bear market cycle for some time. this suggests this is a counter term move within that scope. >> yields would have this downward bias but as kind of a counter to the long-term trend. >> newthat's exactly right. >> if we do get a further pullback in stocks, more consolidation to the downside, what would be normal in terms of how low we would go and you'd look at that and say that's routine? >> the 50-day moving average is an easy gauge of initial support. we feel like that's something to watch perhaps, but we don't feel like a significant pullback even to the 50 day moving average seems to be in the cards for the market, and it's just simply based on our short-term momentum gauges which have wavered a little bit, but that's natural

after such strong, strong ganin that we saw in november. we see this as really a healthy consolidation. we'd love to see the vix get the support it's testing around 1270, and that would be another bullish indication for equities. so we're looking for more consolidation versus an actual pullback. >> i'm just looking. so the 50 day is just under 4,400 in the s&p at the moment? >> that's right. >> so in a way it would be somewhat significant on the downside. with that being initial support, we did move to a neutral short-term bias last week because of that spread, again, resistance being so close by, but we feel like we're going to probably just be there tem tempo temporarily. if we see the s&p 500 falter here and unable to confirm that breakout and it shows up in the intermediate term gauges, unfortunately that means we're going to have. >> there has been a bunch of internal rotation. you've seen the average stock outperform the mega caps to some

degree, banks have done well, small caps have improved. is that something that seems like it's a real leadership change or just kind of trimming al around the edges along the way? >> we did have financials last week to overweight, and this is for a long time we had not been overweight. really just at an equal weight for some time. it's simply because the ratio is looking at things like xls, the financial spider versus the s&p 500 have come out of what appear to be basing phases. this is an intermediate term bias we're asserting here. the banks do show some promise. these are signaling that we have, so it's a little higher risk to express a view there, but we do feel like there's real potential and with financials having such a huge footprint in the s&p 500, if they participate and lead even on the upside, well, that's what could get the market out of this big, wide, long-term trading range. >> yeah, that would definitely be a change in tone, katie, thanks so much. >> of course. >> good to see you too.

>> coming up on the other side of this break, inside the shadowy world of drugs. big pharma is fighting back. aud ext, the cnbc investigation frin a bottle, don't want to miss it. come on right back after this.

pharmaceutical companies are fighting fraud across the nation. perpetuated by criminals who tamper with life saving prescription drugs. so who's in on it? patients, pharmacies and wholesale distributors in one sophisticated scheme, hundreds of millions of dollars were stolen and stick taxpayers with the bill. here's contessa brewer with a cnbc investigation, fraud in a bottle. >> at the casino cage, wads of cash in hand, the security camera captures a real player, a larger than life gambler with

luxury boats and private planes, lazro hernandez fashioned himself as a high flying high roller. turns out he was a mastermind of a $230 million drug counterfeiting operation. these thousands of bottles were all originally prescribed and filled for patients. now they fill an evidence room in northern california. every single bottle was discovered in a complex criminal drug diversion scheme. >> we are playing a bit of a game of whac-a-mole. >> laurie mayoff fights to find the counterfeits every day. she oversees global product security at gilead, which manuf manufacturers hiv medication, drugs at the center of hernandez's fraud. >> upwards of 80,000 bottles of counterfeits were entered into the supply chain. >> what would those be worth if someone was paying full retail price? >> those bottles would be about

$230 million. >> here's how drug diversion works. a patient fills a prescription for a medication worth several thousand dollars, but turns around and sells it for a fraction of that in cash. the buyer, known as an agg aggregator, removes the patient's information, alters the bottle and sells it to a wholesale distributor who sells it back to the pharmacy at a discount, so the same bottle reenters the supply chain. this bottle doesn't even contain pill, just rocks. >> all they need to do is make the sale, and that's what they care about. >> and this man, let's call him julio, who agreed to an interview if we concealed his identity said it was easy to persuade patients to sell their bottles. >> they have aids, cancer, and they don't have any money, so for $100, they'll sell it every

day. >> so they'll forego the medication. t >> they won't take the medication. >> licensed distributors buy from aggregators like julio, sell to the pharmacies and give the whole process the sheen of legitimacy. >> they're a critical cog in the scheme. >> reporter: and the distributors have relationships with thousands of independent pharmacies across the nation. steven mahmoud is assistant special agent in charge at health and human service office of inspector general. >> the pharmacies that are on the receiving end of these diverted prescriptions, do they know? >> some do, some don't. medicare pays out to pharmacies a lot of money for these kdrugs because they are expensive and life saving. >> this hidden camera video has never been seen in public shot by an undercover informant, it shows a woman, her husband and son claiming prescription pill bottles in a south florida apartment. >> the individual in the white

shirt in the middle, you can see what appears to be lighter fluid. he's using ta lighter fluid, a harsh chemical to clean the bottle and remove the pharmacy prescription label. >> gilead sciences and johnson & johnson have sued distributors and pharmacies throughout the country. their investigations and litigation are still unfolding. these three were convicted in connection with a prescription drug counterfeiting operation. lazaro hernandez's jet setting days ended abruptly, he was convicted in that $230 million drug counterfeiting operation. he pled guilty to conspiracy charges related to distributing adulterated and misbranded drugs and money laundering. he is serving a 15-year prison sentence. >> and you know who has largely escaped any kind of responsibility? the wholesale distributors. none have been criminally charged, the ceo of scripps wholesale base instead brooklyn was indicted in june for buying

more than $150 million of prescription hiv medication, which had been illegally diverted. prosecutors say he then resold it to pharmacpharmacies. he has pled not guilty and his attorney declined to comment to cnbc. >> so contessa why have those critical cogs escaped blame at least in criminal terms? >> we know that there are investigations ongoing into these wholesale distributors that gilead and johnson & johnson are pursuing civil litigation against them, but federal authorities and the pharmaceutical companies say, look, the fact that these distributors are licensed to sell other kinds of medications. they do it legally. it muddies the water and makes it more difficult. >> that's insane, i'm thinking from the consumer perspective on this, how do i know that my medication is real if i'm getting it from somewhere. is this a problem only with the did independent pharmacies? is this a problem that pops up with the cvss of the world and the walgreen's?

>> i asked that very question. cvs and walgreen's and rite aid and target and walmart, no, they have their own relationships with the pharmaceutical companies and other distributors that are doing this. so this is mostly an issue for independent pharmacies. and they actually found out, the reason why gilead got onto this is they got reports that bottles that were supposed to contain hiv medication contained theraquil used to treat mental health problems. there were bad reactions, people ended up in the hospital. >> it's insane. >> it is insane. if you're buying from a pharmacy, double check those actual pills. they say on there the code. did i really get -- >> that's what i was going to ask, how much of it is, you know, sometimes like a fake watch really looks like a real watch. how evident is it in terms of

just how good the labeling of everything is and how can people tell? >> well, in some cases what happens is you'll get the patient information and then it will be all torn up or misprinted or misspellings, and then it's a clear warning sign this was not a legitimate drug. but for instance, ozempic now is a big target for counterfeiters. they're actually trying to come up with drugs that seem like ozempic or they're using other things. they have found that in more than a dozen countries counterfeiters are trying to make money, and where can they make money? the hiv drugs, the cancer drugs, and now weight loss drugs are a huge target for counterfeiters. yeah, buyer be ware. >> look, i hate the idea that it's targeting independent pharmacies because i love some of the independent pharmacies i've used too. but this is a serious, serious issue. >> one thing that was pointed out to me by the federal investigators and the pharmaceutical companies is that there are no deals to be had on

hiv medication. you're not going to get it for 5% off or 10% off. so pharmacies that are willing to buy discounted drugs, there's a higher likelihood that there's a problem with those drugs, that somehow they're not entering the system in the mainstream. >> how do i know that as a consumer? >> it's about double checking and knowing your pharmacy. >> that's crazy. i still would love to see additional criminal proceedings against these people. these are criminal problems preying on people. check on the pulse of the consumer, how people are feeling about the economy. big news in the sports world, shohei ohtani signing a record contract with the l.a. dodgers. we're going to talk about the economics behind that massive, massive deal rht aerigft the break as "squawk box" returns.

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a family trip to the team usa training facility. i don't know how to thank you. i'm here to thank you. beautiful live shot of the white house there, i'm live in

washington, d.c., myself this morning, and holiday spending i should say off to a very strong start according to the latest cnbc nrf retail monitor. the question now, of course, is can the momentum continue through the holiday shopping season? and for that we go to cnbc economics reporter steve lease han steve liesman who joins us with the latest. >> retailers enjoyed a strong black friday and customers shared robustly in november, they were helped by lower gas prices and discounts. this according to the cnbc retail monitor powered by the data from affinity solutions. retail sales auto and gas, up 0.77%, compared to a cle del decline in the prior month versus 2.57 in the prior, and now the core retail, our restaurants, up strongly 0.73%,

4.17% year-over-year. now, looking at the november gains represent a strong rebound from the past several months of more lackluster sales. they could represent consumers stretching for the holidays. could be responding to discounts or perhaps a bit of both. the ceo of nrf since november makes up half of the holiday season, these numbers are a positive indication of what we can expect for the full holiday season. i'll point out that last november and december were bad seasons or bad months. gas stations down 1.5, that really helped. building and garden supplies also down, part of what's happening with homes these days that we've been in, but clothing and accessories was up, sporting goods up, general merchandise also doing well, leading to the best sector of all, health and personal care up 6% month on month. we looked at black friday, which was strong. friday was 5.8% above the same

day a year ago. cyber monday up 4.8%. these were strong gains throughout the weekend in part also powered by arm line sales were good. these numbers were stronger than the consensus for the retail sales report on thursday from the census brur. the cnbc data correlates best with revised census data, not the first print. but a big number like this would likely cause another upward division in the gdp outlook and more questions about how soft the consumer and the economy really are. >> you and i have talked for many, many years about sales and big sales that take place oftentimes before the holidays and whether those are just sort of pull forward sales, meaning people are buying stuff earlier in the season than they would otherwise. is there any indication that that's happening this time around? >> we can't really tell.

what we do know, andrew, if you take the estimate for inflation on -- which is coming lay they are w-- later this week, it is zero. so if the gain was really -- in november if the gain was really 0.77% it does represent an inflation adjusted increase if it comes in flat. co we can't really tell. i do know that matt shay in his commentary, he says in his consumers responding to discounts, that could be a big part of it out there. we don't know if they're pulling it forward. last year was super weird. october positive, january positive, november and december both negative. >> okay. steve liesman, our eyes all on it. thank you, sir, appreciate it. >> thanks. okay, when we come back, shohei ohtani hitting a home run when it comes to the contracts. he will discuss the economics behind that deal next. "squawk box" will be right back.

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big news in the sports world, shohei ohtani signed a record contract with the l.a. dodgers, $700 million for ten years. the largest contract in u.s. team sports history surpassing the $426 million, 12-year deal for mike trout. joining us now with more on how this monster deal impacts the economics of baseball is patrick reish, washington university and st. louis director of sports business program and sports impact's founder and president. patrick, great to have you here. if any player is worth it, ohtani's worth it, right? he's kind of a singular talent. put it in perspective in terms of what it means, is it a good deal for the dodgers? how does it fit into current major league baseball economics? >> it's certain lay great deal for the dodgers, and more

importantly for major league bas baseball. i'm actually in los angeles now, and i can tell you being on the ground here there's this enthusiasm. i think great for major league baseball. you had a star in mike trout who was kind of buried in anaheim. anaheim is kind of a graveyard for major league baseball stars. and now that ohtani is with the dodgers a few miles away and yet what a world of difference it makes for the entire league. every time he goes on the road, he's going to be a mar kequee. the dodgers have a history of working with japanese stars. this is where the dodgers will see the greatest increase in their revenue going forward is in international revenue growth and corporate partnership growth. dodgers, they have sold 3.7 million in ticket sales the last several years, thompson baseball, about 82% attendance capacity, and i think that's going to be closer to 90% waysed on the enthusiasm here in this market for shohei ohtani. >> and presumably visiting -- as a visiting team, the dodgers will draw really well as well. now, people looking at this saying, look, $70 million

annualized oaf thver the life os contract. there's some adjustments here where the payments are going to be spread out so tell us about that and, again, is it not just a case of the rich teams getting richer here? >> i'll tell you, that's what i thought at first. talk about two things. the deferred payments. mookie betts, freddie freeman, two of their other stars and likely future hall of famers, they've engaged in those kinds of deferred payments. the locals tell me they need relief pitching. hopefully some of that money that ohtani is deferring they can spend elsewhere. the other issue here is truly, if you look at last season, when money is spent like this, you worry that the big market teams are dominating. but last year of the 12 teams that made the post season, six of them were either 17th in payroll or below. they were in the bottom half of league payroll. two of the teams were 28th and

29th in payroll. and the world series participants arizona diamondbacks were 21st. you have to spend your money shrewdly and scout and develop players. >> yeah, there is a bit of a sense out there that good draft picks over years and a lot of the good analytics can help out he. and you know, there have been a couple $200 million payroll teams as much as a decade ago and only two last year. i agree with you in general. are the overall economics going to break eahere at some point? baseball does not necessarily have the richest tv packages. in terms of how much there is to go around for the league itself, is it not going to shrink? >> it's always a concern for me. again, i don't anticipate other teams are going to be throwing this kind of money because truly ohtani is a unicorn with his ability to hit and pitch. babe ruthian. so you're not going to see that kind of money being paid to other players in this free agent season. when you look at the economics of baseball, especially the regional sports network have crumbled. you don't expect that the money is going to come from there.

i think ultimately you will see the next national media rights deal will be an increase. but baseball has fallen behind the times as it relates to football and basketball. it will never again in this country be one of the top two sports. football and basketball now have that firmly, firmly cemented. >> now, quickly, i mean, i imagine part of the rationale here is ohtani's a global phenomenon. >> yes, absolutely. ohtani just captures the imagination. we already know there's a rich history of japanese ballplayers coming to this country and succeeding, and so they're seeing that as an opportunity, all of these sports, right? all of the professional sports leagues want to grow internationally. let's not forget about private equity capital. that's flooding into pro sports. >> a little bit . thanks so much. appreciate your perspective this morning. >> thank you, mike. still to come this morning, dr. scott gottlieb on the approval of a powerful treatment

for sickle cell disease. that is next. the futures this morning are a little bit weaker, at least for the nasdaq and the s&p 500. the s&p is basically flat at this point. nasdaq indicated off by about 15 points. dow futures are up by about 8. "squawk box" will be right back.

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merck and mrn moderna launching a treatment with certain types of lung cancer. the company plans to continue the xplangs of their development program to tumor types as well. andrew, part the focus trying to push into additional cancer therapies. >> it is. we'll talk to the doctor about that and so much more. the other thing, friday fda approved the country's first gene editing treatment with sickle-cell disease. about a decade after the discovery of crispr technology for editing human dna. first for its use in practice. on the board of pfizer and cnbc contributor, good morning. how big a deal and what should we take away not just from what this drug is and others that may come from it? >> i think a watershed moment in particular because it's the first they're put ish based on the cast nine g9 editing system.

you said at the outset the original paper describing that system published in "journal of science" published in 2011. no 2014 crispr therapeutics discovered series a followed by series b that same year. about $68 million including capital and associates. eventually they licensed that compound, put it into clinical patients. five years later and potentially very dramatic treatment for those suffering from circumstantial cell disease. fundamental discoveries through transition to effect a drug in patients. seeing it across the board in light sciences, quickening between time it takes to go from a fundamental discovery to something that can affect patients. >> if you were to look out now at other drugs where crispr can

be used meaningfully in the next two, three years based what what you've seen, where's the greatest opportunity? >> i think the big opportunities when it comes to gene therapy platforms in particular. crispr used in many of the same places people use viral vectors to replace whole genes are in pediatric disorders. diseases inherited. you have diseases that cause disability in very young patients. in a time talked about reimbursement. in a time with therapeutics that can literally alter a destiny, alter a life, determine whether or not they live a life with disability or one largely unencumbered access needs to be accessible and timely. other categories, gene therapies more broadly, not seeing timely and equitability assets across

market. struggling to provide therapies. i don't think it will happen in this case with sickle-cell disease. these companies have been working with state plans for years getting reimbursement. at least large states coverage in place in a timely fashion. other gene therapies, these state medicaid planless struggle. things to do from a policy standpoint to alleviate that and need to think about that doctor, pivot the conversation. last week a lot of big news how cvs will remake their business model how they sell drugs what it looks like, how people are reimburses. trying to level things out in a way. everyone's trying to make sense what it really means. what does it mean, in your mind, for the consumer? what does it feenmean for drugms and the entire ecosystem? >> it means cvs and other health plans will reimburse pharmacies based on what drugs actually cost.

what pharmacies pay wholesalers for the drugs and not a formula what the drugs are actually getting reimbursed by drug companies taking in rebating representing a move way from reliance on rebating schemes. more just straightforward reimbursement scheme paying the pharmacies an element of cost-plus. it's going to mean for the patient at the pharmacy county a much more predictable experience. they'll have a better understanding what their drugs will pay, cost, because just have to pay some element of what the acquisition cost was, which is more predictable in the marketplace. it means for health plans and cvs in particular, effectively discounting the value of those rebating schemes, because by not paying pharmacies based on contracts saying the contracts aren't as important. saw writing on the wall. recognized congress was going to put downward pressure on ability to extract rebates and trying to take out of the system places

where they're paying people based on those concessions. >> right. and the model -- what does it do to margins? for cvs longer term? by the way, do you imagine everybody else tries to follow suit? i assume they're trying to protect the margin at some level? >> well, trying to improve the margin in pharmacies. this will create more predictable cost to the pharmacies. they're going to probably in the long run lose some margin on rebating schemes they were engaging in, but a think recognize that anyway, because they're basically devaluing the, the value of those contracts by not paying pharmacies based on them. this is a tilt, in my view, towards farm sis recognizes they could potentially be a bigger revenue driver and getting more foot traffic in those farm sis. create competitive advantage relative to others that don't pay based on cost-plus and less predictable relationship with patients. pay more for certain drugs less

for others but know what drugs cost at the pharmacy counter and face fewer surprises. that experience in cvs pharmacy could be more predictable than going into another pharmacy that doesn't adopt these payment schemes. cvs is rolling this out in all farm sis. obj obligated to do that. >> doctor, always good to see you, get your perspective, thank you. meantime, joining "closing bell" later this afternoon. don't want to miss that. still to come this morning right here on "squawk box," occidental petroleum ceo vicki hollub join us. bring you that interview right after this break. and then kyle bass talking china, markets, and much more. "squawk box" will be right back.

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streak. moik,eanwhile, buying crown for $12 billion. speaking with the company's ceo in a moment. and told macy's buyout. straight ahead as the final hour of "squawk box" begins right now. good morning, everybody. and welcome back to "squawk box" right here on cnbc. we are live from the nasdaq market site in times square. i'm becky quick al with andrew ross sorkin and mike santoli. joe is off today. andrew's on assignment in washington. he's here with us all morning, though. folks, you might notice our screen is different today. part of a new look for cnbc. some information and data may be in a different spot than it was

the last time you joined us. over time we hope that it will make it easier for you to understand the market and stories we bring you. we're getting used to the new look, too. check it out. let us know what you think about it. watching u.s. equity fautures. treasury yields, big story, i would say, of 2023, looking now at the ten year at 2.476. two year up to 4.76%. those higher yields definitely driving some of the other markets today, too. meantime, macy's share sharply higher. cnbc told capital management offered to buy the department store operator for $5.8 billion. sagging sales and a lot of online competition macy's recently has become a potential target foracquirers.

sources tell cnbc might be willing to bid higher than the higher offer base and due diligence and other factors. already stock up 16% to $20.19. andrew? >> thanks, becky. meantime, health insurer cigna ending pursuit of humana after not agreeing on a deal. saying increasing stock buyback program by about $10 billion. same time previous full year 2023 and '24 outlooks for consolidated adjusted income from operations. so keep your eyes on that stock. cigna up 14% on back of that news. over to mike. checking things out. got stocks at 2023 highs. he's been taking a look whether it's finally safe for investors to relax. is that a rhetorical question, mike? >> it's not entirely rhetorical.

there's decent reason to be less caution. hovering around a flat line sitting right at about a 20-month high. goes back to march of 2022. a failed bear market rally. go back two years, in the final melt-up of a great year in late 2021. market peaked. 4100 s&p january 2nd or 3rd of that year. earnings higher, economy's big fed is done as opposed to a tintint i tightening cycle, likely done. a lot of things have maybe fed the idea a soft-ish landing in the economy seems more plausible than for much of the last year. a look at asset class horse race this year. all stocks. total stock market etf. eti up almost 20% year-to-date. total bond market flat, coined

back to the flat line. a loss. whether this causes rebalance out of equities into other asset classes for people who want to keep balance, see about that. relaxing? in respects the market relaxed. volatility, how volatile the market is next 30 days. down around 13. last week hit around 12.5. four-year low. bull markets not unusual, but this is a five-year chart. covid crash there. basically it's back to where it was in late 2019 as the market was relatively comfortable about the outlook. it's not unusual for it to be down here, but shows we might be vulnerable to a little jolt here and there if the economic data comes in, in a way something different than the soft landing that's now being bet on. >> do you feel less stress, less concerned as you're watching this stuff, too, mike? >> i do. in a sense.

right? i look at the dashboard of things that i -- i kind of pay attention to as to whether i should be worried. credit markets look okay. seems as if you have actually a broader equity rally, maybe, in the making right here. we still are in this late cycle psychology. i don't think you'll ever get to a moment in time saying, uh-huh, got the soft landing. it's here. don't have to worry. you're always anticipating that the cycle's going to end, unemployment low maybe trending 4 higher. all staying in the mix. a good thing. keeping expectations low usually not a bad formula. >> are you intentionally channeling tom jones with that hit? it's not unusual? ♪ it's not unusual ♪ >> i wasn't. a bonus. >> in my head. thank you for the earworm. thanks. see you in a minute. breaking news this morning. occidental buying oil and gas producer crownrock fors 12ds billion. the total includes $1.2 billion

occidental assumes strips out to $8.10 million deal. joining us first on "squawk box" occidental's ceo vicki hollub. >> thank you for having me on today. >> thanks for coming on with us. vicki, why do you want this asset? what happened? how long have you been looking at crownrock and why do you think it makes sense? >> it makes sense for a lot of reasons beginning with a part of our transformation. about ten years ago we started transforming our company by exiting out of the lower margin assets that we had here domestically and internationally. pacing out lower assets increased our port follow and now have best assets ever as a company and lowered geopolitical risk went from a company with 50% production in the u.s. to 80% production in the u.s. the acquisition of crownrock further strengthens us in terms

of adding incredible inventory. they actually have 1,700 well locations add to our inventory. 1,250 of those well, less than $60 break even. inventory is important to us. also highly creative to our free cash flow. that's important for ow value proposition, for shareholders. because of the fact that for the last few years we've been delivering value to our investors by increasing value per share through debt reduction and the repurchase of shares. now this acquisition, because of the free cash flow adds a step-change difference in terms of the value per share for investors. that's important. then the third thing is that it provides scale. scale to our midland operations and important for people to know the permian basein is a huge

basin. aerial extent is about the size of north dakota. when you break that down, middle, central and delaware basin. in delaware basin we have scale we needed and able to use that scale to improve and optimize our operation there's. we didn't have enough scale, we felt, in the middle basin. having this acquisition come along to us and have the opportunity to do this, again, is the high free-cash flow, it's the scale, the inventory and all of that has helped now for us also to step up our dividend. we've, we will, in our april dispersion pay a dividend because of this acquisition. a go-forward position this

acquisition allows to us stainably grow our dividends at a more meaningful pace. we're excited about all of that. >> trying to figure out the dividend increase as result of this. you say because the cash flow being stronger as a result of this acquisition. why not use that cash flow to pay down the debt more quickly? you all have done a good job paying down the debt. i think paid down about 50% of the anadarko debt taken on. why not pay down even more of it? you still have more debt than most of your peers and with addition of this new debt that will increase, too? >> the anna dadarko debt, still working on that to get that down to arounds $15 billion. still have that same goal. so with the debt we'll pick up now, our goal is to get it down to below $15 billion. the reason that we can grow the

dividend is because we are continuing to downgrade our portfolio and have as a result of this acquisition some assets here domestically that we feel we can now divest of and it's that divestiture and exiting out of those assets, which are not key to our port follow yo, given the acquisition of crownrock, we will use those funds to pay down the debt, and our goal, to do that with the next year. >> 9.1 billion in new debt issues as a result of this purchase. if you take that into account with the existing debt you still have from anadarko and divestitures what's the debt picture look like overall? >> the debt picture in three, two to three years is actually about what it would have been without the, this acquisition, because we'll use the combination of cash flow in

those divestitures to work the debt down. metrics about the same as they would have been. >> exxon mobile made a big bid for pioneer. $60 billion deal. a lot of people speculated that that would kick off a huge round of acquisitions. especially when it came to the permian basin and people looking for additional assets there. is that what happened here? were you already looking at this before the exxon deal was announced? >> we kicked off our eck ka zigs and consolidation back with the anadarko acquisition and weren't driven by what anybody else is doing but driven by what we believe the right path to further improve our portfolio. this came up. we continually look at opportunities. this came up at the perfect timing for us to get the scale, as i mentioned, we need in the midland basin. it wasn't driven by what anybody else is doing. >> no mention of berkshire

hathaway in this press release. barren's speculated if you do this go to birth sh-- berkshire hath away. a jet seen speculating that. was berkshire involved in this deal? >> we didn't need them to be. berkshire and warren buffett were helpful with the darko acquisition. we wouldn't be in the position we are hadnot been for berkshire and warren buffett. we didn't need help with this deal. we had divestitures needed to pay down the debt that we'll raise to close on it. >> vicki, fair to say your way of running the company at this point, the way you've laid it out, sounds a lot like you are betting on what you think are the very best assets and double down, triple down, quadruple

down on area us like best and get rid of everything else? >> exactly what we want to do. maximize value to return to shareholders and for any company, it means you have to have high return, high quality assets, but you also have to have great people and we at occidental are fortunate we have great people that can execute and do things that other companies can't. but what we noticed with crownrock, they also have great people. so we're looking forward to the combination of bringing the crownrock employees into o objeoxi. an amazing job putting together a portfolio of assets high quality and put together an organization also high performing. combine that with our incredible high-performing teams i think we'll definitely end up in a better position. >> you said no layoffs coming from crownrock. people usually look at synergies talking about these deals.

of course that is a way of saying, yeah. lay people out and do more with less. what synergies do you find here, if there's not any layoffs? >> rather than do a little bit more with less we do awhole lot more with people. it's important to keep the people, keep the culture. layoffs are, to me, a, an easy way for people to try to find synergies, and what we do, we go way above and beyond. put people in the right place, right position to add more value. people cost are relatively low compared to the massive amount of department has it takes in the oil and gas industry to develop assets and return value to shareholders. >> what do you think about oil prices right now? you've got wti trading. not many beginning of the year would speculate that looking at

issue wis russia, with ukraine, additional war in the middle east between israel and hamas. a lot of people thought we'd be up triple digits potentially. where do you think oil prices are headed, and what price do you need them to be to make money on the permian basin drilling? >> you know, a lot of others had forecast $100 or above. we never were there. we've always gone back to our belief that wti will average around $80. it's averaged $80 since 2004. we think it will continue to be around $80 and think it is where it is today because the fact the u.s. is producing more oil that i think most people expected. we were forecasting about 12.8 million a day. it's about 13.2. it's higher than expected. the sanctions lifted on venezuela and on iran. russia producing more than some

had expected. i think that's all created a surplus of supply situation that i think will go away by the end of next year. and as you know, prince abdul al sease of saudi arabia trying best to balance the market through opec+ and prudent of u.s. producers to be careful in terms of putting too much supply into the market. but with respect to where we are, we're at $40 break-even, and so we have the capability to continue to deliver value, to keep our production and even grow our production modestly and that's one o of 2 to 3% and deliver to you in terms of dividend to shareholders. >> berkshire hathaway not involved but 25% stake and $8

billion in preferreds and additional warrants additionally. did they sign off? know about it? was barren's right the jet was there? >> barren's right. jet was there. i'm not always there to talk about business. i talk about other things with warren buffett. he's an amazing person to get the opportunity to speak to and i feel grateful and fortunate that i'm able to go and have opportunities to speak to him. what we try to do when we're making big decisions like this, we try to make sure our shareholders understand what we're doing. try to make sure that we're talking with all of our large shareholders to ensure that they know what our strategy is, and this is very consistent with what we're trying to do with our value proposition, and so this shouldn't be inconsistent to

them, or to any of our shareholders, how we're approaching delivering value over time. >> vicki hollub and the big deal occidental announced today for crownrock. vicki, thank you for your time. >> thank you. okay. coming up after the break, security funding in focus in washington. speaking with a senator about israel, ukraine and how america's southern board sir playing intothe ghngfiti congress. stay tuned. you're watching "squawk" about this is cnbc. you got this. let's go. gobble gobble. i've seen bigger legs on a turkey!

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washington, d.c. security funding battle here. next guest saying it's important to stand with israel and ukraine but like many other republicans pushing for aipac overhaul of the border policy. and here vice chair of the senate republican conference. good morning to you. >> good morning >> where do things stand right now, and do you have any hope that things are going to shift given what seems like a standstill? >> well, i always have hope, and i do have hope in this case, and right now our main negotiator for the republicans is senator lankford and senator murphy and from connecticut, they're working on the democrats' plan.

i another they're in active conversations. i think they do have areas of agreement on the border policy issues, but there's still a lot of sticking points. our position, our republican position, is we need to bring these numbers down have more accountability. figure who's coming in. seems as though the other position is to just cycle people in quicker, put more money at it. but i think the president put this in his initial package in terms of where we need as we're looking at ukraine, israel and taiwan and this is an actual part of that essential security package. >> right. as you know, democrats have pushed back on this idea in large part because what's been proposed appears to prevent, in certain cases, folks seeking legitimate asylum from crossing the border and immigrating? how is that all going to square itself? >> you know, i heard senator murphy on sunday say that the republicans essentially want to

close the border. that is absolutely a wrong characterization of our position. we want legitimate asylum claims to be adjudicated at the beginning rather than eight to ten years later. i think that we can have a system and policy changes that will make it so that people who are at the border as they're coming in, you can tell they are fraudulent charges and send them back rather than send them back to the country to await additional hearing. we want accountability for who's coming. over hundreds are coming in from the terror watch list. the numbers are astounding. every week there's a new record set. so i -- shutting down the border is not the objective. it's the accountability piece and pulling the numbers down. >> senator, help educate our audience. you probably can't see it but we have a banner up that said "international aid versus border funding." everybody looks at it and says just border finding is the

issue. walk through the actual fault line what's the issue is with the border funding between republicans and democrats? it's not just border funding overall. not that democrats don't want anything happening at the border and republicans only want to. something else is going on here. >> a difference, andrew. way to explain it the difference is money or policy. you see repeatedly secretary majorca coming from congress saying fix the border policy. in other words, for them to be able to enforce. although i don't think they enforce strongly as they need to, to be able to enforce to bring the numbers down. have deterrence. as you look at it when you see the border funding you're talking about funding more people that will take your paperwork and get you into this country quicker. that's the funding piece. or what we would like to see funding is more internal enforcement. more turning back to your original country. more deterrence so people won't

see it's an open door when you come in and can stay eight to ten years without interference. it's a policy change rather than throwing more money at a problem that's growing every single day. >> let me ask you about the pay for the for this. as you know on the congress side of this situation, on the house side, there is an effort tying irs funding -- defunding, to this bill. it may look like it is a pay-for in a very short-term way but look at other scoring and appears whenever you defund the irs, some cases you can fund the irs, can you over time actually collect more money. >> you know, i think the pay-for issue while needs to be a part of the conversation, i think the security issue overwhelms that. we see ukraine at a pivotal point. i support ucukrainian funding. israel is fighting something we

never could have imagined and see china encroaching every day into taiwan and unmitigated flow into our southern border. in the end pay-for issueless fade away and the speaker made a good statement to say that there's a new guy in town here over on the house we're going to start paying for things. i think that's where the initial emphasis was to pull down the irs funding. i'm all for that. i mean, funding going into the irs is ridiculous. we can do that with technology. >> senator, leave the conversation there and thank you, and look forward to following the progress of this. >> thank you. >> you bet. >> okay. this morning we dig into china's real estate sector and big losses that country is experiencing. hedge fund manager kyle bass joins us. stay tuned. you're watching "squawk box" on cnbc.

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welcome back to "squawk box" this morning. i'm live in washington, d.c. elon musk reinstates alex jones suspended what wa known as twitter in 2018 for violating the company's abuse behavior policy facing a defamation lawsuit for spreading lies that

the sandy hook elementary shooting was hoax. this just days before the 11th anniversary of that 2012 shooting. lifting of the ban musk reneging on a statement made last year, the ban on jones would not be taken away. under musk's x hemorrhaging big advertisers. late last week reported that x was working to lure smaller brands but unclear how much musk lifting the ban on alex jones can affect brand affinity. and then a conversation with vivek ramaswamy and -- it raised my eyebrows. >> leaning into it not just making a little administrative fix. yeah. i agree. big shift. all right. coming up, a.i. surprising potential chilling affect on m & a. why this is paralyzing board nser. in a way maybe not

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welcome back to "squawk box" on cnbc.

futures hovering around the flat line. dow peeking into the green. nasdaq looking like it might back off. treasuries lifted off their recent lows in the yield. about 412 low in the ten year and you see it picked up to about 427. a couple treasury options this week as well. meantime, a.i. has been flagged at a likely disrupter for industries of manufacturing and education. add mergers and acquisitions to the list. leslie picker joins us with that story. >> reporter: hey. good morning, andrew. even withthe trickle of deal news this morning, got to take over offer for macey's and occidental $12 million deal to acquire crownrook, on pace to be down 20% thigs year off a low base from 2020. things from everything, from rates to geopolitics to economic uncertainty.

add to that list, though, artificial intelligence. yes. the a.i. frenzy has some would-be dealmakers on pause, because finding it hard to diligence how the technology may disrupt potential takeover targets. i asked jpmorgan the head about how these discussions are playing out in the boardroom. >> to be clear, just the advent of a.i. and its u bick dis, risk of its ubiquity is causing a perilization in boardrooms in terms of doing deals? >> yeah. a lot of people want to analyze it, understand it, and then say, well, what impact will it have on our business? pretty hard to answer. pretty hard to definitively answer. you get a range of scenarios, or looking at some business saying, can they outdo this? say a technology capability. probably. so should i pay this much to buy this? or should i wait and find

something better, some better capability that is cheaper or better or faster or something like that? >> to be sure, a.i. also has been a driver of m & a as well with databrick inking a deal with mosaic over $1 billion in june as well as thomson reuters acquisition of case text and an a.i. legal assistant creating an uncertainty cloud around potential targets as well. >> i ask you this. with less potential m & a do you see companies turning to buybacks, cigna, now doing that after its deal with humana fell apart. is that what happens to all of this cash? >> certainly there's more certainty doing buybacks as opposed to m & a because you presumably know more about your company and the bet you're making's in case of cigna, their stock declined i think about 10% when that news became public they were looking to do the

deal. it does make sense for them to potentially redeploy that cash towards buybacks. that said, buybacks overall are also down about 20% this year. and that's in part due to the higher interest rate environment as well. companies are kind of making this calculus, well, sitting on all of this cash. i could actually park it in treasuries or something risk-free, and generate a return of, say, 5%. you know, i don't know what it will look like if i redeploy that capital into the stock price given the unsicertainty o there. a similar dynamic and a similar trend in terms of buybacks and m & a. that said, executive on a board may say we feel more certainty around a buyback than doing a deal. >> okay. leslie, thank you. appreciate it. back to the market. what we should be watching.

fed skoshescheduled to meet sta tomorrow. ceo of diamond hill. $26 billion in assets under management. good morning, heather. thanks for coming in. >> thanks for having me. >> the story this year, start to write it i guess. 20% gain in the s&p 500. more resilient u.s. economy, expected. inflation coming down fast. fed's on hold. where dom you think that leave is with macro and -- an uneven stock performance this year? >> situation very hard to make macro calls from here. why add diamond hill we focus on bottom-up investment. looking for company opportunities that look attractive regardless what the overall environment looks like. >> the idea now markets anticipate feds cutting rates in the next several months. who know you how solid that projection is. that doesn't really come into play in terms whether you feel as if individual companies are

valued correctly? >> long-term interest rates, huge implication how everybody looks at valuations, of course. when you look at cash flows a business generate, discount back to the present figuring what the company is worth. doing that, you need to know the discount rate to use. we're talking about next year a shorter-term potential pause or even decline in interest rates relative to a longer-term trend. interesting we've seen so much moll tilt volatility that's backed off. most activity lyn vesting never invested in a rising interest rate environment until the last couple years. looking at longer-term trend, we think that rates, you could look where rates are now, use that as a reasonable proxy for what longer-term interest rates might look like, regardless what happens next year. >> where does that bring you in terms of those companies that either have been left behind in

the market this year, by a.i. excitement and growth stocks. although equal-weighted up almost 8% not as though left in the dust. where in terms of sectors or individual companies are getting your attention? >> interesting. looking at valuation discrepancies. not as big as you would expect. clearly, big seven tech companies trading on average 27 to 32 times depending how you look at it. if you look at individual companies trading over 50 times earnings. compare that to the opportunity to invest in some more cyclicly oriented industrial companies, even some companies in auto parts value chain, you can get them for single digit pes in cases. looks like a great opportunity for us for companies that are fundamental parts of the economy that will continue to do well even if they do have some sort of shorter term, for example have a recession next year. >> and any of the auto par

strikes and -- new cost starts? a reason things wind up -- >> absolutely. so ultimately just short term. absolutely rational in the short term. have a one-year time horizon, a lot of issues to walk away from. longer time horizon that's when the opportunity rises. that's how they with about it at diamond hill. looking past what's happening at this moment. >> you mentioned these types of companies, yeah. the entire auto space is valued, not growing anymore, or valued maybe as if some recessionary risk is priced in there. do you think we'll go through recession or just a constant concern it's hovering out there? >> i'm not an economist. not claim to know whether we will definitely have a recession. i will say we look for companies with strong balance sheets. if we go into an inflationary environment they can withstand and make investments to come out

the other side stronger. look at companies with too much leverage, can't make it through recession and not able to take advantage of dislocations that happen in a period like that. >> what about other areas besides those types of industrials? what now is -- >> one of the companies we think looks interesting now is texas inter instruments. interesting example. one there's been some slowdown in demand for analog chips. their area of expertise. we think that's really short term. long run secular trends are towards increasing analog chips. t.i. is making a huge amount of investments to try to lower costs of manufacturing. moving to 300 versus 200 focus they and their competitors are using right now. which gives them a 20% cost advantage, implementing that successfully. there's execution risk. t.i., normalized earnings levels to recover to looks like an

attractive opportunity. >> a company through plenty of transitions before not getting as much of the focus now. heather, great to see you. >> thank you for having me. when we come back, hedge fund manager and china hawk kyle bass joins us. a lot to talk about including chinese debt, real estate losses and impact they could be having on the country's banking sector. stay tuned. you are watching "squawk box" and this is cnbc. ♪ ♪ (♪♪)

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welcome back to "squawk box." our next guest warning china's experience of banking system collapse investors should pay close attention to trillions of dollars in real estate losses. kyle bass joins us. good morning to you. the implications of this, in your mind, are what? geopolitically, economically? just what, walk through the dominoes here. >> glad to be here, andrew. i think it's important to understand the architecture of their system and what drove the great chinese miracle in the economic side. it was unfettered growth and even speculation in the real estate markets. upwards of 100 million apartments or condos vacant today in china and, again, architecture of their banking system is important to understand. they've got roughly, using dollars, but it's really r & b,

$50 trillion in banking assets. $2 trillion in banking equity and local government financing vehicle market, which financed all their real estate local markets into $13 trillion markets where 90% of market's in default. think through the numbers, andrew, that darwarves what the u.s. had. receipt estate losses $4 trillion at least and we don't know the bottom to the other market is. to have a properly functioning capital market you have to understand the banking system and that's in free fall right now. >> stipulate, assuming you are correct. sort of two larger questions. one you obviously, what are the issues for multi-national companies doing business with china? what's happening to their earnings, all that? talk about that. >> yes. >> also the geopolitical question and maybe the political question about what this does to

the power or lack of power to president xi jinping? i ask that question because i spoke just last week, or a week and a half ago now, with president of taiwan who actually said because of the economic challenges that xi sees china facing, he doesn't believe, for example, that china would go forth with an invasion, for example, of taiwan? >> yeah. you know, i also know the president of taiwan, and i think publicly she xi has to say things like that. thinking through it jit logical. xi jinping backed a into a corner, disillusioned youth, real estate market collapsed, wealth management products that aren't paying. his regime is in real risk if he doesn't refocus the national narrative. my view on that is, a move on taiwan would refocus the national narrative more than

back-pedaling in finance markets. while i understand her desire to not be invaded and we all hope that doesn't happen, but if you were to look back over the last 50 years and choose, a date and a time at which you thought america was its most vulnerable and had and had the worst leadership it's had in the last 50 years, i think you would choose 2024 as maybe one of your strike points. so, i think all of those factors come together, whether it's financial, political, or geopolitical all together, i think all of the arrows, unfortunately, point to something never happening in the near term. >> and what does -- so, what does that look like? i understand the argument that, politically, if you're having these challenges, there's a little bit of a, let's don't focus on that ball, focus over here for a little bit, and i see that. but also, by the way, if you're having massive economic challenges internally, it also

creates a genuine complication with pursuing some of these other objectives for them politically. >> you've seen them -- xi jinping and his comrades -- move around the world, trying to -- begging the middle east to settle oil and rmb because if this were to happen and the u.s. were to actually sanction someone, you know, our sanctions on russia were not even a 5% sanction. we didn't touch the energy business. we left their banks on swift. we let russians freely travel around the world. we really didn't do anything to russia to inhibit their ability to operate, but if we were to properly sanction china on this maneuver, they need 12 million barrels of crude oil every day, and they need 8 bcf of lng every day. they import 40% of their food every day, and they buy it in dollars. they have to figure out how to piece together willing global trading partners that won't

adhere to sanctions. if you listen to kxi jinping, just read his speeches since 2017, he tells you what he's going to do. >> let me ask you a different question. given the number of american businesses that have large enterprises in china, dependent on china, do you think -- let's put aside the taiwan piece for a second, but just straight earnings, straight economic growth in that country and what it's going to do to these companies if, in fact, you think it's as bad as it is, is that built into the stock prices? if it isn't, are you shorting them? what are you doing? >> we haven't been shorting anything in china since 2016, so that i could give you what would deem to be an unbiased report on what we're seeing over there. but i think when you look at multinational businesses, i meet with these ceos behind the scenes, andrew, and i think it's important to note that many of them are doing all they can to move their supply chains out of china as fast as possible.

some can move quicker than others. they're not going to publicly declare it until it's over, but i can tell you that the majority of them are moving as quickly or as much as they can, and in the end, some are going to get caught with too many assets, too many revenues, too much supply chain in china when the music stops. but it's clear where the music's headed. it's just how long is it going to take something really negative to happen? >> okay. we're going to leave the conversation there. kyle, thank you, sir. appreciate it. >> thank you. >> take care. coming up, top stocks to watch on the way to the opening bell. take a look at the futures right now. indexes are pretty steady ahead of the open. sitting on that six-week win streak, s&p 500 just down fractionally. the dow, just above the flat line. nasdaq, off by 12. stay tuned.

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a little more than a half hour to go until the opening bell on wall street. dom chu joins us with a look at some of the morning's premarket movers. dom, i have a question, but i'll save it until the end. >> i'll wait until the end. we'll start with the merger news in oil and gas. that's occidental petroleum,

down fractionally right now. the exploration and production company has inked a deal to buy crown rock for $12 billion, including debt. that deal is expected to add around 170,000 barrels to occidental's petroleum production per day. it's expected to be the next step in sector consolidation that focuses on that permian basin in west texas, america's biggest oil-producing region. occi, by the way, will also raise its quarterly dividend, so those shares on the move. a couple of analyst calls getting some attention. consumer-focused names. we're talking shares of nike, just about 1.33% higher, 35,000 shares of volume. getting upgraded from buy to neutral at citigroup. they're more optimistic about trends and gross margins, streamlined inventory, and new products coming to market ahead of the summer olympics, amongst other things. we're going to end on best buy, up nearly 2%, just around

20,000 shares of volume. getting upgraded to buy from hold over at jeffries. the target goes up to 89 bucks. they think there's a replacement cycle for personal electronics coming soon to replace the stuff folks bought during the covid pandemic. they think there's tech linked to consumer interest in artificial intelligence. up 2% right now. back to you. >> okay, question for you. that thing that you tweeted out that looked like a really cool holiday pay sstry, was it a twie inside or a baby ruth? >> turns out it was just a twinkie-shaped pound cake that was in holiday icing, but thank you very much for noticing. i noticed that you responded to it. thank you for taking an interest in my pastries. >> you tweet some good stuff or x some really good stuff. dom, thank you. andrew? let's take a quick look at shares of macy's once again. stock moving on the back of this report. people familiar with the matter

telling cnbc that ark house management and brigade management have offered to buy that department store operator for $5.8 billion, of course, facing sagging sales and a lot of online competition. macy's has become a potential target for acquirers. macy's shares were down about 15% this year. sources telling cnbc ark house and brigade might be willing to bid higher based on due diligence, so we might have more room to move as i'm looking at that stock up close to 15% right now. >> okay. andrew, i like the pocket square. good luck. >> thank you. >> very nice. >> you know, we don't wear blazers on the show. >> you don't get to see the pocket squares. >> you could if i -- i don't have shirts with pockets, but if you had a shirt -- you couldn't put a little pocket square -- >> that would look like a napkin. >> yeah. >> no. no. only in the jacket. but i like it in the jacket. let's take a final look at where the markets stand as we

get ready for the opening bell. dow futures up. s&p futures have been flat all morning. the nasdaq, in the red, but only down by about 7 points, and six weeks in a row of gains. >> six weeks in a row, s&p up about 12%, at a new 20-month high. >> monday morning, got that going for us. that does it for us today. right now, it's time for "squawk on the street." and by the way, mike, thanks for coming in. bye. ♪ good monday morning, welcome to "squawk on the street," i'm david faber, sara eisen, post nine to the new york stock exchange. cramer has the morning off. bulls trying to extend this rally. futures choppy as yields are up to a one-week high ahead of cpi and the fed on wednesday. s&p coming off its highest close since march of '22. the stock set for a muted open. plus we got deals in focus

this monda