jeopardy, a judge blocked the kroger albertsons deal over competition concerns and president biden will reportedly block nippon steel from buying u.s. steel. it's wednesday, december 11th, 2024 and "squawk box" begins right now. ♪ good morning. and welcome to "squawk box" right here on cnbc. i'm andrew ross sorkin, with joe kernen and becky quick with is off today. dow looks like it will open down about 57 points, the s&p 500 up about 8 points, 7.5 points. treasury yields, you are looking at the ten year note seeing just at about 4.2, the two-year treasury at 4.168, joe.

>> back to back days in the dow. >> yeah. >> the weekly chart is not looking too good. >> that is true. >> the dow. >> don't remind me. >> yeah. federal judge -- yeah. >> only wednesday. >> federal judge has blocked kroger's $24.6 billion acquisition of albertsons, she sided with the ftc ruling that the takeover would lessen competition for u.s. grocery shoppers. the ftc had argued that the proposed tieup violates antitrust law and a divestiture of hundreds of stores wouldn't do enough to replace the lost competition. kroger and albertsons say now they're reviewing their options. later this hour we will talk to a merger specialist from td securities. i don't know. it always seems simple to me that they were missing the real place where the competition lies. >> which is? >> walmart and amazon. and that the margins are so

small that this is probably something that would actually help kroger and albertsons compete against these behemoths, not to dominate the market but merely just -- >> i think part of the problem -- and i don't disagree with that. food costs -- you know, people are still paying 20% more than they were, you know, we talk about four years ago. >> 22% more. >> i think part of this, again, whether you think it's real or you think -- >> could be misguided and ill conceived for what really -- >> the question is why are we up 20% with food costs across the country. >> we know why. >> i think there are a lot of reasons why. >> there are, but if you have a supply-constrained world post-pandemic and you pile a lot more stimulus on -- >> that's a huge component. the second question is there are markets that don't have a walmart and that don't have an -- and that's the sort of part of the albertsons/kroger conundrum. i don't know what you do about

that. >> you i go to a superintendent where it's convenient and there is a reason i go, i guess, like you say, don't criticize my name, but compared to a place that's not that much further, i mean, i pay -- like grapes, i can pay like $13 for some grapes and it's specific to this -- it's kind of a high end -- it's in short hills. >> fancy. >> yeah, high end. >> foo-foo. >> it's like whole paycheck markets. >> i know about those markets. >> whole foods, same kind of thing. and it's convenient, it's great, i know where everything is, but i know -- >> you know -- >> i'm probably paying 40% more than i would at the nearby stop and shop. meantime biden flannel to formally block the $14 billion sale of u.s. steel to nippon steel. the deal will be referred to him by the committee on foreign investment in the u.s. later this month, that's when that's supposed to happen.

the report saying that u.s. steel and nippon are ready to pursue litigation over the process if president biden does decide to block the deal. and the thing that i wonder about in all of this is where president-elect trump will ultimately land because -- >> he said the other day, didn't he, he would block it. >> he would block it, too. but the question is is there any world in which a deal like that gets sort of brought into this grand negotiation that we seem to be happening around the world with lots of different players? i don't know. >> you go and look at the globalization and do your ben franklin clothes, all the bad things and all the good things. it may be anti-globalization wins out, i don't know, maybe it does when you add everything up, but there's like 15 things on each side, positives and negatives, and there are positives to -- >> i think there are huge positives. >> there are huge positives and this probably should go through in sort of the nationalistic

tendency here might be counterproductive and have unintended consequences. we want to be able to buy things at other places. >> the question is do you think steel is a -- >> national security -- >> national security. >> is japan a national security threat? >> not now. right? >> they learned their lesson. let's get to the latest staffing -- they barely have a military at this point. >> that's true. >> get the latest staffing moving from the incoming trump administration including his pick to replace lina khan as ftc chair. and this is what we look forward to in our jibber javers segment. >> i look forward to it, joe. >> it's nice to have a branded segment, to be that high profile, i think. >> yeah, no, i'm going to go to the trademark office later this morning -- >> you didn't do that yet? >> no.

no. >> get cracking. >> let's talk about what people want to hear about which is donald trump's selection for chairman of the federal trade commission. it will be a sharp departure from lina khan. he's promising to repeal regulations and stop what he calls a war on mergers. andrew ferguson is a current republican member of the commission which means there won't have to be a confirmation process on capitol hill before he can assume the job in january. his announcement -- in his announcement trump said ferguson would be the most america first and pro innovation ftc chair in our country's history. ferguson is seen as a sharp critic of big tech companies such as google and amazon and in a pitch deck obtained by punchbowl he promised to go after what he called collusion on diversity and equity initiatives as well as environmental and social responsibility initiatives. he also promised to, quote, fight back against the trans agenda and investigate certain doctors and hospitals. separately trump announced

antitrust attorney mark medder to be a commissioner on the ftc. he is a former staffer for senator mike lee, a republican on capitol hill. also seen as someone aggressive on big tech like google and amazon and earlier this year he co-authored a bipartisan a.m. a can you say brief in support of the biden administration department of justice position on banning tiktok. guys, the former president and future president rounding out his economic team and diplomatic team last night with a whole host of names, a flurry of activity last night. we're getting a much more robust picture of what he intends to do next year. back over to you guys. >> still talking about albertsons, actually, off camera. do you know how -- or sorkin, what's the next step? is it done, over, finished because of this judge? >> i think it's finished unless there's some weird way to resubmit, eamon. i don't know if there would be under this new administration some way to bring this deal back to life. >> yeah, i don't think so. i don't think there will be a way to do that. the question is as you look at

antitrust going forward, you know, especially with, you know, ferguson now as the pick to replace lina khan there has been this idea under trump there would be open all the floodgates in terms of m&a but maybe not. maybe not in certain sectors. grocery is one you can look at, the president-elect has been talking a lot about grocery price toss your point, andrew. would he allow a similar merger in the future? that's a question mark. certainly big tech has a problem in terms of m&a, in terms of ftc scrutiny. i would think media also probably has a problem in terms of big tech -- or antitrust scrutiny. international, you guys were talking about nippon steel, i think trump would approach that very similarly, any international component, particularly chinese, i think will be under very, very intense scrutiny from this new administration. you break out your sectors in terms of the m&a boom you think may be happening, in some

sectors probably not n other sectors, energy in particular, they might be able to have a bit of a field day here. >> thanks, eamon. andrew, you can judge whether there's gouging by the profit margin. i'm looking at an entire list of net profit margins and albertsons is low. >> struggling. not albertsons -- >> i'm talking about albertsons, 1.25%, kroger 1.85%, casey's general store 3.4. there are some 3.4 and 5%, but albertsons and kroger's are both over three and five years 1.25 -- >> if there is margin at all it's been on the agriculture and food side. think about where pepsi is, for example. >> you would say that you can't really -- if you are the biden administration you can't really say that kroger's and albertsons is responsible for the 21, 23% higher prices because they are not -- it would be reflected in their margins. >> i'm not disagreeing with you. my question is do you think the

trump administration would allow -- >> i have no idea. >> right? does he like the ceo? i don't know. today on capitol hill president-elect trump's pick for treasury secretary scott bessent will meet with members. yesterday he spoke about fed chair powell serving out his term. >> as the president said on sunday, and i am in complete agreement with him, that jake powell will serve out his term and leave the building as fed chair on may 26. >> you know, when i spoke to jay powell last week one of the things that he commented about was that historically i think the last 75 years the treasury secretary and the head of the federal reserve have had a breakfast or lunch together almost every week. >> yeah. >> that's part of the job. and i thought -- and i said, well, that first lunch may get -- be kind of interesting because scott bessent was the

one who very publicly in barron's suggested that trump not fire him necessarily, but create this shadow fed chair by effectively nominating somebody else. >> right. >> long before he could ever finish out his term with this idea that somehow through forward guidance, if you will, that the investor community would sort of see through or discount anything that powell was doing knowing that in two years from now you are getting this other person who was going to do whatever you think they were going to do. so i don't know. powell was very adamant that he thought that there would be a relationship and that they figure out a way and, you know, he's somebody who believes deeply in the institution, the independence of the institution and clearly i think maybe bessent is getting on board with that as well. >> you know, a lot has happened since trump used to sort of verbally try to influence jay powell. i don't see how anyone could have been more dovish. i mean, trump could have looked

at what happened, and be like this is my guy. how can you -- you think putting -- jay powell may be trump's guy at this point. he would be my guy if i like lower interest rates jay powell would be my guy. things can change. things can change. >> obviously a lot more hawkish about -- >> things can change. be careful what you wish for. president trump. coming up, key inflation data, this could have a lot to do with all of these discussions. we get you ready for the cpi report due at 8:30 a.m. eastern. and we will give you today's cpi report. we decided any of those other ones we had in the past, those aren't the ones we are going to be talking about, we are going to be talking about today's. later we will talk to senator rick scott about the incoming trump administration and the legislative agenda for the rest of this year. "squawk box" will be right back.

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>> on today's squawk planner, a key inflation data head will get the november read on consumer prices at 8:30 a.m. recent and forecasters expect an increase of 0.3% and that would be 2.7% year over year. today's cpi and then we get ppi

tomorrow. the final reads on inflation before the fed's december meeting, which is next week. joining us now kevin cummins, chief u.s. economist at nat west markets. that's a pretty good number. is that a friendly number if it's 2.7, 0.3, kevin? >> yeah, i mean, i think that sort of number really probably doesn't change the odds of 25 basis point expectation for the fed next week. it will be, you know -- some members of the fomc will look at it as a stalling out of progress that they've seen in the deceleration core. if we get a 0.3 rise in the core it will be the fourth straight month and the prior three months you had gains of either .1 or .2. we've seen inflation reaccelerate a little bit over the course of the last couple of months here that i think it

would signal kind of a hawkish cut by the fed next week, and probably dial their expectations back for how much easing that we're likely to see next year. >> maybe that's -- maybe that's warranted at this point. 2.7, kevin, is not 2, and it sounds like, you know, when we talk about most things, who is going to quibble with, you know, 0.7 of a percent, but that's like 35% higher than the fed wants and it's on top of what's already in there from, you know, when we were at 40-year highs a couple of years ago. so prices are still rising above what the fed wants, so i don't -- do you think that's -- do you think the labor market is showing enough signs of softening to where we need the cuts? the stock market certainly doesn't act like it needs cuts. >> yeah, i mean, i think there's a lot of uncertainty with regards to the labor market.

you know, so far we've seen a pretty much the fed's expectation for a soft landing come to fruition. the data have held up pretty well both on the growth side. the labor market, last week's labor data you did see a tick up in the unemployment rate and, you know, if anything it almost rounded up to 4.3%, it was just a whisker away from that. i think the fed has got to be pretty careful. you know, as of september, the last time we saw the fed's dot plot, it did show 100 basis points in cuts this year, so i think they will follow through. i mean, markets at this point are pricing in almost, you know, 85 to 90% odds of another rate cut in december, but the inflation data should give policymakers some pause here as we go into 2025. so i think that's kind of their base case now is to dial back the expectation of how much easing next year. i mean, as of september they

showed 100 basis points in easing for an expectation of next year. i would think they probably cut that into about half. so they would only show maybe 50 basis points in cuts next year. i guess, you know, there's obviously a lot of rhetoric on the campaign and the wake now of president-elect trump about tariffs, so that's another consideration for the fed that they, you know, should be pretty watchful here with regard to inflation. it may be temporary and it may be an effort to negotiate with other countries, but, you know, if anything, you know, tariffs are a tax on consumers and prices will move higher. so, you know, there's a lot of uncertainty with regard to how much, and it is temporary, but, you know, they need to be careful here. and i think that, you know, opens the door to maybe a pause in the first quarter of next year. but, you know, we will see how the data come in. if it allows them, which so far

it has, you know, you don't have to go back very far when the fed was expected to be kind of aggressively cutting, moving down toward a more neutral stance and obviously markets have repriced a lot that have because the inflation data have remained stickier and the growth data have held up and allowed them to kind of feel their way probably more gradual than most expected a few months ago. >> kevin, there is a strategist -- i mean, there are -- i can name four really significant policy initiatives or uncertainties that we're kicking around that are going to happen after january 20th. i don't see how you can make any determinations about anything as the fed or as a strategist, and i will tell you which ones i'm talking about. i mean, i don't know what deportation looks like or the immigration issue. i don't know how that plays out.

you mentioned the tariffs already. talk about elon musk and vivek ramaswamy and doge, and then just talk about the extension of the tax cuts and it's not divided government. every time free election we always -- every person who comes on says, well, you know, i'm optimistic that it's going to be divided government. well, it's not divided government. it was a sweep, even though it's a narrow margin in the house, but you've got one party that's going to be able to basically, perhaps, do what it wants to do. these uncertainties, they don't make you nervous at 22 times earnings? >> yeah, i mean, i think one level of uncertainty was replaced because we know the outcome of the election, and now it's been replaced by, you know, there's, as you mention, there's concerns about immigration, about tariffs, and the overall outlook in general going into any year there's always a lot of

uncertainty and then you layer those in. i mean, there's always pluses and minuses so i'm not only worried about down side risks to the economy from, you know, any sort of hit to growth or to inflation from there. there are offsets, you know, and the last time trump was in office oil prices averaged somewhere around $50 a barrel. so you will have some potential offsets to, let's say, for example, there is, you know, a 60% tariffs on chinese imports, you know, that will certainly filter hrough to the core inflation data, to headline inflation, but then if a more energy friendly policy and administration, if oil prices were to go down, that's going to offset some of that. so there are a lot of, you know, possible pluses and minuses when looking at this to consider. you know, there's a lot of discussion about a much friendlier business environment, less regulatory policies.

>> all of these offsetting -- >> -- as well. >> right. >> but to your point the level of uncertainty is -- and we've seen it in policy uncertainty indexes are up, they're up in europe as well. so, you know, there's more uncertainty going into a new year than there's probably been ever before in the last several years. >> kevin, we're going to have to end it there. there will be a lot to try to take in. you might ask for a raise, i think, based on next year. >> doesn't seem like wage inflation is coming down. >> not too big a raise. we don't want that, either. >> you may need to talk to my wife about that. >> yeah. i hear you. see you later. coming up on the other side of this, general motors pulling the plug on its robo taxi program. we're going to tell you what's going on there. and then later white house economic adviser jared bernstein

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box." gm pulling the plug on its robotaxi operations, the company cited the high cost to develop the technology and build out a fleet of cars in multiple cities, instead gm now is going to merge its self-driving unit cruise into its operation was scaled back goals including developing safety systems and autonomous driving as a future in the future. mary carr said we looked at the amount of money to deploy a robotaxi business and maintain that business and grow it it's quite a bit of capital.

gm will now focus on its core business, but what this really means it's a boone to elon musk and tesla and a boone to waymo and the folks at alphabet. so interestingly when i talked to sundar last week at deal book one of the questions i asked is do you ever see waymo being such a big business that you could spin that off and he was open enough to that. i could see one day waymo being its own company. we were talking about even artificial intelligence and just sort of the success or the perception that chatgpt and these other guys are doing ai and he sort of looked at me like waymo is the most real world ai machine that exists. so it's interesting to see those two now pull ahead in a big way and cruise is now -- gm unfortunately has spent an enormous amount of money. >> i know. and did we ever really think that one of the legacy auto makers were going to be the lead

when you're up against these incredible big tech companies? >> that's the question, though. do you think that legacy players can ever get out of their way? >> do they need to? in saying something positive about mary barr and gm, the stock has done incredible. in areas where they can still play i think they can succeed. would i want to go up against tesla and, you know, waymo in terms -- i'd let them do it and then i'd like license it. >> look, that was the model or at least the way people thought about like stellantis. they never really invested in any of this stuff, never even tried to play in this game. their view was, you know, we're great making a jeep wrangler and one day if, you know, waymo, the google guys ever figure it out, we will just license the technology from them. maybe that's the better way. >> i think of a lot of different -- like would you go

to, i don't know, pick your -- ibm or something for the next generation cloud maybe? probably not. the baton gets passed it seems like. >> it does. >> you need a bunch of 25 year olds instead of people like me thinking -- you know, thinking the way we used to in the '80s. coming up, an almost $900 billion defense spending bill is up for a vote today, it's a key step towards passage of the government funding bill that must be passed by december 20th. we will bring you those details live from washington next. as we head to break here is a look at yesterday's s&p 500 winners and losers.

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>> good morning and welcome back to "squawk box" right here

on cnbc. we're live at times square. the dow off about 17 points, the nasdaq up about 55 points, the s&p 500 look to go open about 9. we can round up and call it 10 points higher right about now. he key defense suspending its pending bill up for a vote today, it's the first step in a legislative process for funding of the government before what will be a deadline on december 20th. emily wilkins joins us with the latest on all of it, she's in washington, d.c. this morning. good morning. >> good morning, andrew. yeah, congress is set to vote this afternoon on a major bill that could have serious implications for some chinese companies. under $95 billion defense authorization act would force lobbyists to choose whether they want to serve defense contractors or companies linked to the chinese military under this new law they would not be able to do both. the bill also includes $3

billion for u.s. telecom companies to rip out and replace equipment made by chinese companies, that includes huawei and zte. this bill is not all bad for chinese organizations. several tough on china measures that congress has been working on this year did fail to make this final package. that includes prohibiting american investment in chinese technologies that could pose a threat to national security. listen to senator john cornyn, he said yesterday that lawmakers are going to be trying to continue to work on that legislation. >> from advanced semiconductors to quantum computing to artificial intelligence, it's high time that the united states becomes serious about limiting the flow of u.s. dollars into the arsenal of our biggest strategic adversary. >> the defense package is set for a vote this afternoon. it is expected to pass before going to the senate and then, of course, we are also waiting to see if we get some details on a

longer-term funding bill. government funding runs out at the end of next week. we are expecting lawmakers to kick the can down the road and extend current funding into mrch and that of course gives a fully republican government the chance to set the spending levels for 2025. guys? >> emily, joe was just lamenting as i was lamenting in my mind this phrase "kick the can down the road." >> it's coming back. >> the return. >> it's all we ever do. >> do you remember many years ago we were sent ties, do you remember this -- with a little can. this was literally 2011 or '12, during the simpson bowles era when everything was talking about kicking the can. emily, thank you to reintroducing us to the kicking catten phrase. >> endless. >> there's lots of can kicking coming. i can feel it. there will be plenty more. especially when we get started

next year. >> as long as there is a washington, d.c. it will not go out of style, i don't think, can kicking. >> emily wilkins, thank you, with the can. coming up, a look at how president-elect trump's proposed tariffs could hit major trade ports. think about that, across the country. dangerous places. i mean, in terms of if you work there. man, it's so heavy, big cranes and everything. it's not for me. i've got to hand it to those people. and a reminder, get the best of "squawk box" in our daily podct, floasolw squawk pod on your favorite platform and listen anytime. (holiday music) a puppy! everyone loves to find surprising presents under the tree. i love him! and weathertech gifts are always special too. vehicles are protected with laser measured

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welcome back to "squawk box." president-elect trump's tariff plan could put some $3 billion in tequila and mescal imports into risk according to a review of mexican customs data highlighting the risk for

products like tequila that can't be made elsewhere. diagia imports products from mexico. parent can have of cuevo with a similar amount next year. >> what did you take in high school? not spanish apparently. >> not spanish. french. >> why do i even ask? why would i even ask. >> we always have paris, joe. >> we do. you know what i took, brilliant. >> did you take latin. >> yeah, in case i ever go to latinia. >> my son takes latin and i think that i should have. >> do you want to hear my sum total of four years? [ speaking in a non-english language ] >> you start to understand the english language. >> no you don't. >> i feel like i've had in-depth conversation was my son about latin words i didn't realize --

okay. joining us right now we will talk about what's going on in mexico and the tariffs and everything else happening in our ports in gene siropa. >> what did you take in high school? [ speaking in a non-english language ] >> see, that would have been smart. >> see, that was valuable. >> i worked in china for about four years. >> damn. >> still rely on those guys a lot as we've talked about before. >> see. talk to your kid. >> okay. so explain what is your expectation as it relates to tariffs just broadly? you've been watching this whole thing play out, you are at the literal epicenter of it all. what is at stake and what do you think could happen and will happen. >> great to be back with you guys on the set. what i've learned is there is a long way from the campaign trail to public policy. while we are not dismissing anything i think industry, the workforce and ports like ours want to know where and when so we can begin to plan and adjust.

we are doing all kinds of simulations trying to figure out if cargo ship is here, if it goes there what do we do, how do we respond? let's get line of sight on what's going to happen from a policy standpoint and then we go to work. >> right, but everybody doesn't know what the line of sight is. >> that's the question. >> and there is a secondary question which is it's not just what the line of sight it is when do you learn what the line of sight is. how quickly will it take to you rethink plans if you get that line of sight? >> we're going to have to pivot quick and we already have some experience in this. when the first round of tariffs went in back in 2018 we saw a movement away from china sourcing and manufacturing in southeast asia, vietnam, et cetera. we closed out 2022 with about 57% of our portfolio being trade with china, today it's 43%. if we put more tariffs on china we will see that percentage go down as well, but, again, how quickly can it happen? some experts are saying by summertime, by third quarter, maybe fourth quarter, and what

the key is going to be is our speed component. that's how we've done so well with north asia cargo coming over to los angeles and distributing across the country. if we have nonstop services like we've seen over the past couple years start up in southeast asia we can maintain our competitiveness. >> anecdotally we hear that there are some companies that are trying to get ahead of this situation and that they're trying to ship as much stuff over here as humanly possible now in an effort to get ahead of a potential -- do you actually see that physically? >> yeah, we do. >> you do. >> we do. the volume has been elevated. this will be the second best record from the port of los angeles from a volume perspective. >> how much of that is a function of hopefully a great economy versus folks sort of trying to -- i don't know if they're overthinking but as it relates specifically to the tariff piece? >> the underlying economy is strong and has been continuing longer than some would have thought. we're still buying the manufacturing sector, doing

pretty well overall. then three big geopolitical issues, the dock workers negotiation back on the east and gulf coast which is set to expire january 15. >> oh, boy. >> the drought conditions in the panama which seems to have settled down but there weren't as many ships going through and they weren't loaded to capacity. and the ongoing security concerns with the houthi rebels in the red sea. canal crossings are down 80% to 90%. now, in the last quarter plus you've seen retailers, footwear, clothiers front loading inventories to average that cost down in the event we see a widespread tariff implementation, whether it's 10% in all $3 trillion of american imports or more targeted like 60% on china, impacts on mexico and canada trade, that's -- and it's a repeat of what we saw in 2018. >> what do you think the chances by the way on the east coast that we have a strike? >> i think it's stuff. it comes down to the discussion on robotics and modernization and the most polarizing

discussion we have in our industry today. >> can you do -- i would think that the future has to be robotics. no? >> if we don't leave the workforce behind. there are models like in hamburg, germany, which flourished, grow capacity, top line revenue, margin play and don't cut back the workforce to big time levels. if we can find a way to double capacity which is what robotics can do but not cut the workforce by 50, 80% at that individual facility, i think you have a conversation starting right there. >> here is the question, could you do this without the people? with a meaningful cut in the people? or no? >> in my opinion, no, because you have communities, you have policymakers and politicians who have jumped on this discussion point, making sure that their communities are healthy from an economic standpoint. >> i want the community healthy i'm asking from a pure technical perspective, you know, if elon musk was building a port, would the port have people -- how many people -- how many less people

would be in that port? >> from what we've seen so far we've seen terminals automate cut 80% of the workforce on that facility, and the results have been mixed on the west coast thus far. now, you can work longer hours, your cost of unit per throughput becomes cheaper but the level of service because we are a gateway going from ship to truck to train is a little bit intricate. that institutional knowledge i don't think can ever be put to the side. >> thank you for coming on this morning. great to see. >> you good to see you guys. >> i mean, they have so much leverage, i think. we heard last time i can shut -- he can. >> i remember he said that. >> he can shut the country down. because you go into a place, if any of the shelves are bare it's like what's happening? you take so much for granted that it comes off the ship, on to the truck, into the rail. yeah. so january 15th. and they're not going to go quietly. >> i don't think so. no. no. i think they're pretty far apart and while we have the tentative

agreement back in the third quarter -- fourth quarter, this automation concept is really going to come down. that's the biggest thing. >> thank you. coming up, we will tell you why shares of walgreens surged 20% yesterday from low levels obviously. and then later florida senator rick scott is going to join us to talk doge, the formation of president-elect's cabinet and much more. "squawk box" will be right back.

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walgreens shares jumped about 20% yesterday after a "wall street journal" report said that the company is in talks to sell itself to pe firm

sycamore partners. the report said a deal could be completed early next year. stock was down about 60% year to date before yesterday's move. can you explain that to me? >> harder. >> huh? >> harder. >> harder what? >> to explain. >> harder to explain? >> yeah. >> if it was me -- >> yeah. >> -- based on my visits -- >> you can explain? >> that stock should be soaring. that stock should be soaring. there's more in that place than i need at this point -- i'm not going to go into it. do you need to go? you must need to go, you are a hypochondriac. >> i'm a total hypochondriac as you know. >> the front of the store? is it competition from other ways of doing it? >> walgreens. >> by the way, the real money for them -- >> front of the store.

>> is front of the store, not at the drugstore. >> okay. >> i'm just saying. coming up, a bad week for m&a with two major deals facing road blocks, we will speak to a merger specialist when we come back.

a pivotal week for regulatory action. a judge did stop the $25 billion merger of kroger and albertsons. now reports say president biden plans to block the sale of u.s. steel to nippon steel. joining us now aaron glick td securities mergers specialist. aaron, you have a fascinating job, you kind of look at what the markets are telling you about the likelihood of these deals rather than the likelihood

of these deals to decide what the market is going to do. what's the market telling you about kroger and albertsons? is it dead? >> yeah, market is really not pricing much chance of a positive outcome here on albertsons which is not a surprise following the oregon decision, but i would say there is a lot of optimism going forward that there is another action that can be taken by albertsons and we could get into some of those. u.s. steel, on the other hand, still pricing some hope. >> it is. and what would that hope be? and you used the term trump art of the deal resolution, so even though he's saying -- he's saying, no, he might be saying, well, let's talk? >> so this is a theory, the stock is where it settled around $35 yesterday, i still think there's probably about 10, 15% in deal premium, risk premium

left in the stock for actually the transaction completing and one of the theories investors have is that, you know, trump says he's going to block the deal, but just think about the trump art of the deal, he is a dealmaker. maybe there is a path forward, you never know. everyone has different opinions. there's not a lot of hope priced into the stock at this point, but there is still some. >> going back to albertsons or you can talk in general, how about do you have a feeling of what antitrust looks like in the next administration and is it clear given the ftc nominee? >> yeah, so andrew ferguson to lead the ftc as chairman, he is a tough enforcer from historical perspective, maybe not relative to lena kahn. i think what we're hearing is there's going to be much more focus on bringing actions that -- there's going to be a lot more focus on the budget and resource constraints and bringing meaningful lawsuits. i don't think we're going to see

frivolous second requests or in-depth regulatory reviews on transactions. slater who was nominated to run the doj and ferguson no, ma'am flated to run the ftc, these are enforcement oriented regulators but not necessarily in the same vein as what we saw from the biden administration which really had an agenda to kind of halt or slow all types of m&a. i think this is going to be much more targeted, any comp tiffs deals still will be challenged but they don't have the same anti-merger mindset. >> aaron, what's your sense about just how cfius will be used and to the extent that will be used as some kind of larger negotiating cajole against potential other countries and like. we are all watching, i know it's not a deal per se but we are watching the future of tiktok in the united states and whether ultimately president trump tries to do something there and allow it to be used here, but maybe will try to extract something from the chinese. >> yeah, i think it's similar to

the way investors are thinking about u.s. steel and based on the conversations we're having with our folks who have worked in cfius and other agencies, it seems like everything at the president's disposal is going to be used as part of his tool kit for negotiating deals, at least that's the expectation. >> you mentioned some other outcomes for albertsons. what else could happen? and this is done? it's hard to believe that -- i guess so. the biden administration opposes it, they get a judge to back them, so there's no one -- there's no higher power to appeal to from there? i don't know. what would trump say? >> it may not be done. the vote to block this deal was three democratic commissioners at the ftc, the two republican commissioners weren't in place yet. so potentially there is a settlement that could happen with the trump administration based on some conversations we have had with former ftc officials it gets a little complicated now because it's being pushed into what's called their administrative law

proceedings. so it may not be -- it's not clear that actually the new ferguson and the new republican ftc could actually take action to settle that right away at least, but there are other things that could be done even if it's not a settlement. for example, when walgreens was essentially blocked from buying rite aid they terminated that deal, they acquired, i think, over half of their locations. so there could be other things that albertsons can do or they can do to monetize their stake. >> we've seen this movie before, walgreens down 60% after -- i don't know if that would have saved it, but now it might be up for sale. all right. aaron glick, thank you. >> thanks, guys. it is just past 7:00 a.m. on the east coast. you're watching "squawk box" on cnbc. i'm andrew ross sorkin along with joe kernen, becky is off today. president-elect trump naming his pick now to lead the federal trade commission, in a truth social post he announced that andrew ferguson will be his

choice for the chair of the competition watchdog, he's currently an ftc commissioner, was appointed by president biden. shares of power giant ge vernova lower this morning, the company raising its four year sales and profit margin guidance but the outlook coming in below street estimates, the company also initiating the first ever quarterly dividend and unveiling a $6 billion share buyback program. and then the man charged with killing unitedhealthcare ceo brian thompson remains in jail in pennsylvania as prosecutors work to try to expedite him to new york, appearing in court yesterday. his lawyers said that his -- their client will fight extradition. they're going to fight extradition. it's crazy. and instead want a hearing on the issue of extradition since the killing of thompson last week shares of united health, cvs and cigna have fallen 6% as

insurance companies face a wave of negative rhetoric on the other side of this news. shares of macy's falling after the company reported earnings of 4 cents a share on revenue of $4.7 billion roughly in line with estimates. macy's is lowering its guidance now for the full year. we do have november cpi set to be released at 8:30 a.m. eastern time. steve liesman joins us with a preview of what investors can expect. do you have anything different than 0.3% and 2.7 for the year? is that -- >> that is exactly what i have, joe. do you want to do the rest of the -- core -- >> we've got a lot of stuff going on. if that's all you can just -- >> yeah, i mean, that's fine. but here is the thing i wanted -- >> your thing is making news. >> the computer is making some noise. it's thinking. >> i will quiet it here. hold on a second. >> do this before you come on. >> i didn't know you were going

to be -- are you a little nervous this morning? >> am i ever nervous? am i ever nervous after 30 years? >> a lot is riding on this inflation numbers. we have fears that inflation is stalling and questions about whether the fed is at or near the end this have round of rate cuts. the number 0.3 as mr. kernen said up from 0.2 and the core also 0.3 unchanged from the last month. there's 2.7 which by the way i head in the last hour you thought that's -- that's not really missing because you kind of take off a half a point on the headline of cpi there. it's the core that remains kind of stuck above or higher than the fed wants it here. the trouble for the fed is that this would be the fourth month in a row you can see one, two, three and then if you add the next one four at 0.3% giving rise to concern the progress that we had so far is stalling. look at that nice dip we had in the middle of the sum there are and that came after the tough time we had at the beginning of this year. but fed chair jay powell has characterized the recent round of cuts as a recalibration,

bringing the funds rate down to reflect the past progress with inflation suggesting that the fed is looking through somewhat the current data, and that's what the market appears to be thinking as head. there is an 85% chance of a cut next week followed by a pause next month -- sorry n january and then a two-thirds probability of another cut coming in march and then a little bit more in may of the same quarter. all of that said there is a vocal contingent that thinks the fed is wrong to be cutting here, uncertain potentially inflation and or stimulus policies on the way. i think that you see there is a couple, maybe -- >> they all know in the back of their mind that that's something that is voiced by other people. they may not agree with it, but certainly isn't clear-cut. especially we don't know -- we were talking earlier about there are four really huge uncertainties starting january 20th, whether it's the

immigration and what happens, whether it's extension of the tax cuts, whether it's doge and what happens -- >> government efficiency and spending. >> and then tariffs. how can you possibly know what to do with interest rates or where inflation is going when you have no idea on any of those? >> okay. but what do you think about a federal reserve that is essentially supposed to be apolitical, prospectively doing policy based on things that might or might not happen? is that interfering in the political process? >> they have a dual mandate, i think that inflation is still a risk, we will see today, but if they know for sure that the labor market is softening then i could understand a cut. >> my concern is that the fed and even most economists have no idea how this stuff plays out. even if you know what the policy is -- >> you don't even know if we are in restrictive mode right now anymore? >> i think we are in restrictive mode. >> i thought some people were questioning that. >> some people question that but

i think it's still evident to some extent the fed is restrictive. >> where do you see it in the stock market? >> i don't see it in the stock market. you see it in some of the rates being paid, the nfib survey they were 8.8% with small business paying for loans right now, credit card loans, mortgage rates, those are restrictive. >> you would -- you would think inflation -- we are not at 2, we're 35% above 2. >> right. >> it could come back. if wage gains continue and we were just talking about the port strike on january -- not a strike, but, you know, negotiations -- >> can i say one thing before we go which is smart investors know this, you've got to take today's cpi together with tomorrow's ppi to get the calculation for the pce which is the thing the fed follows. so today's hot cpi is supposed to be a little cooler tomorrow, so smart people know that it's a combination. >> see, i didn't know that. >> i wasn't trying to say -- >> that's kind of what you're saying. you're saying people other than

you are thinking about -- it's okay. it's all right. you're getting back at me for what i said at the beginning when i was going to let you just -- >> i'm not getting back at you, joe. i was trying to be -- >> it's okay. >> good to see you, sir. you will be back, won't you? >> i don't know now. maybe not. >> we can probably handle it. >> no, we can't handle it. we need the professor. coming up, a lead edge capital founder mitchell green is in town, he will join us to talk ai and tech ipos. later president biden promoting his economic success in a speech yesterday at the brookings institute. white house economist jared bestn rneiis going to join us to discuss that and more. "squawk box" rolling on right after this. don't go anywhere. ♪ (agent) we've always said never sell a house in the winter. well, that's not exactly true. with opendoor, you can skip the showings and get a real cash offer. and if you close before the holidays,

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ipos in 2024 so far have raised more than double since last year's listings and another tech company going public tomorrow joining us right now on the ipo window and so much more that's going on in tech and everything else. mitchell green is here, the founder partner at lead edge capital which is investing in companies like uber, spotify and alibaba. year is almost over, my friend. >> almost over. >> it's almost over. >> almost vacation time. >> they're going to get one more in. >> the question is what do you think 2025 really portends here? >> it's going to be better than '23, better than '24. it's not going to be a blockbuster year. >> it's not? >> i don't think it's going to be a blockbuster year. i think the issue you have, and if you actually look at the data, we have looked at it at our annual meeting like a long ago and the last -- i think there's been about ten tech ipos over the last 12, 18 months. nine out of ten of them were above the ipo price at a pretty good amount. i haven't looked at reddit in the last couple of weeks but

those ones soared and arm. the biggest issue you have is the best companies raise so much money in '20 and '21 they effectively completed ipos already. >> as private businesses. >> as private businesses, correct. >> yes. >> and, therefore, you're going to get into the same kind of situation that stripe is in today? >> correct. i mean, companies such as grafona labs who just did a big secondary that was announced, stripe. if you think about it, between 2005 and 2019 when a tech company went public it would raise 100 to $500 million, forget ibaba and facebook some of the giant ones. fast forward to '20 and '21, 100 to $500 million. there's probably 10 to 15 stripes if you ask morgan stanley you will get there's 10 to 15 companies like a stripe or things like that.

now, there are hundreds of other unicorns that raised that are, you know, 100 to $250 million of revenue. the issue is they're not going that fast and they're all negative 10 to plus 10% operating margins. if you look at the way public companies are trading right now on a rule of 40, which is take the revenue growth plus the ebitda margins, if you grow 50 and have a negative ebitda margin the rule of 40 -- >> explain that again. the rule of 40 is -- >> the rule of 40 is a metric that a lot of investors use to just describe what is a good business. and a good businesspeople like to say is rule of 40. that is revenue growth rate in the current year plus your ebitda margin. so if you are a rule of 60 business, if you have, you know, 40% growth -- >> right. >> -- and 20% ebitda margins, you are a rule of 0 business if you have 30% growth rates and

negative 30% ebitda margins. what you have a lot right now and a bunch of these unicorn companies that raised, look, they all missed their financials they originally thought they were going to hit. you have a bunch of businesses growing 20%, 25% a year that have negative 10 to positive 10% operating margins. >> rule of zero. >> rule of zero to rule of 10. >> right. >> those businesses if you look at the way they trade on the public markets and just look at how like segment all of the software companies by rule of, start at like rule of 90, you know, the data dogs, snowflakes of the world and take them down to rule of 0 it is directly correlated with very high correlation and a rule of 10, rule of 20 business trades on average at two times revenues or something. >> those become zombies? do they become acquisition targets? >> zombies for a while. at some point they will become acquisition targets, the challenge for them is -- not

challenge -- is they have so much cash. >> right. >> they themselves have hundreds of millions of dollars often on the balance sheet and venture capitalists and private equity investors love to waste their time and sit on boards forever. why take the mark and sell it at half the value you have it marked at when you can sit on it and try to convince your investors for a decade it's worth what it is and try to grow into the valuation. there's all these people -- it's hopes and dreams. we're going to make this one dream and it's going to grow again and we will take it public. the amount of companies that reaccelerate after they get to like 10% to 20% revenue growth is so share. and i think the other issue with the ipo market is you get the venture funded companies and then you have the big buyouts. >> right. >> the companies hellman friedman, blackstone. they have lots of debt, they don't grow that past and, third, they own the whole business. when you take them public -- we were an investor -- we did some on the public side, owned a

business instruct tour that had been taken public. it went public, post deal he owns like 90% of the company or something to that effect. if you are fidelity, t. rowe, please explain why you want to buy a position down from 90 to 80 to 75? there is a wall of selling in front of you. the challenge becomes getting these big institutions interested in wanting to buy the positions in like massively concentrated -- i think it's a big issue. >> before we go, what is your sense -- the market has moved, obviously it's been a huge move this last year. >> god bless donald trump. >> right? and my question is if we had this conversation again same time next year, where do you think things stand? >> we are not experts in the market. have steve cohen doing things like that. the economy is pretty darn good. our companies are hitting numbers, i talked to colleagues, private equity funds and venture funds, things are doing well. there's still -- i don't know

what the concentration -- you have more of a rally in the last four or five six weeks in smaller cap companies so that started to adjust. i think warren buffett has this ratio he uses of market cap to gdp or something and i think it's pretty high. you know, look, what i do know is that markets don't move -- markets move in the ways that cause the most amount of pain to the greatest number of people. people appear to be pretty bullish right now if you look at leverage ratios and hedge funds and things like that. and you're probably one geopolitical event away from something big happening, but who knows? i have no idea. >> one geopolitical event away. >> mitchell, those look like taylor swift bracelets. >> they are taylor swift bracelets. i have daughters who are giant taylor swift fans. >> did you go to a concert? >> of course, but i have -- i haven't made those, but i have seen people make those and they made me one that said -- i think mine said red because i like that song or something. yeah. and the tour just ended so that

really is -- >> they are taylor swift bracelets, yeah. >> three daughters. >> three daughters. >> for your daughters. >> i still wear them. make them happy. >> whatever you say. >> amazing phenomena. >> mitchell green, taylor swift fans of our team, everybody here -- everybody is a fan. >> mitchell green. still to come, stocks on the move this morning. up next, though, as nuclear power comes back into vogue a lot of -- uranium is needed. cnbc's pippa stevens traveled to orthern saskatchewan for a look at the world's highest grade uranium mine. >> reporter: 1,600 feet yund ground is the world's highest grade uranium. we got an exclusive look. up next on "squawk box."

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>> nuclear energy seeing renewed interest fueling demand for the uranium that's behind all the reactors. our pippa stevens -- i don't know what happened -- did you -- who did you make mad, pippa? she is in northern saskatchewan with a look at the -- you're going to have to tell us how you

even got there. what was involved, pippa. actually, it looks pretty cool what you did up there. >> yeah, good morning, joe. so we are at cameco cigar lake mine and this site alone supplies about 11% of global annual uranium dee planned and we got a look at the one of a kind drilling process the company developed in order to access this high-grade ore. this is a jet boring system developed for cigar lake, this is the only place in the world where this type of machine is used and the reason is that the sandstone above the uranium-rich ore is unstable so they can't access it from above so they have to do it from below. the second reason is that this is the highest grade uranium deposit in the world so you can't have people in close proximity to that uranium which is why they developed this jbs system. you see that orange drill, that is drilling up into the ground and accessing the uranium-rich

ore body, then you see these pipes, those are inserted in order to bring all of that slurry back down before it is sent for processing. and you can see here that this area has already been partially drilled because of those concrete-filled back holes where the jbs system has already accessed the uranium-rich ore. we went all around this mine and this is not an easy operation to get up and running, it took about a decade to come online from first construction to first production and so looking forward into the future some are saying with all of this renewed interest in nuclear energy, demand might not -- demand might start to outstrip supply. >> we've never seen supply/demand fundamentals like we're seeing today. all of the drivers, we are talking about decarbonization, electrification, energy security and now big data, the hyper scalers coming, looking for clean electricity. and they are all looking at nuclear. i've never seen it like this.

>> and i've got to tell you, joe and andrew, it's pleasant down here, relatively balmy 40 or so degrees compared to outside where the real feel is negative 25. >> i'm wondering -- i don't want to know why it's warmer down there, but you can't get anywhere near there, near the uranium, right? i mean, the rems must be unbelievable in terms of the radioactivity. i mean, just doing this there's so many logistical concerns. did you -- where did you fly into, pippa? did you go into saskatoon or -- and then you had to take a smaller flight -- >> that's correct. >> you did? >> that's correct. we flew from saskatoon. yes, we flew from saskatoon then took a smaller flight up to cigar lake. we are about 660 kilometers north of saskatoon. joe, to your point, there are concerns because this deposit the concentration is 17% that's

about 100 times greater than your average uranium deposit. so that is why the company developed this specialized jack boring system so the workers don't get anywhere near that radioactive ore. i'm wearing a meter right now and the reading is 0.66, that's the same as what you get background radiation walking around in your average life and i'm right in the middle of this uranium mine so this operation is entirely safe. >> okay, it is, but do you have like a little film thing that measures how many -- whether you would get more than you're supposed to get? i used to have to wear one in a p-3 lab because of radio isotopes. do you have anything measuring the amount of radiation you're getting right now, pippa? >> yeah, so right now i'm getting 0.66 micro see verts. the last 24 hours i have got a total of 4.9 and that's the same

as what you get as background radiation, all of the employees wear sensors read on a monthly basis. they take it very seriously. >> that's fascinating. you probably wanted to do this. i was kidding, you know, if someone tells you, yeah, i've been assigned to a story up in northern saskatchewan, but this is actually very cool and kind of -- it's not quite a miami beach, you know, basil art show assignment, but very interesting, pippa. thank you. >> it's a good one. a good shot. >> i'm not going 1,600 feet down and i don't like up or down. i don't like places where you can't either, like outer space or down -- >> in the water. >> in the water. i'm a wimp. >> i can't believe you are right here. coming up, a look at the stocks moving in the pre markets and then we will talk to white

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take a look at the future right now, dow up about 7 points, the nasdaq up 43 points,

the s&p 500 up 8.5 points. i want to get over to dom chu who has a look at the morning's premarket movers. >> good morning. we will start off with shares of dave and busters on the fun and game side of things. down right now about 14.5% after reporting disappointing quarterly results after yesterday's closing bell. sales growth at established locations also came in below expectations, those so-called comp store sales. the company announced the resignation of ceo chris morris, kevin sheehan will serve as the interim ceo until a permanent successor is found. game stop is higher right now by about 2.5% after reporting a mixed third quarter she had. reported better than expected profits helped along with by cuss cussing initiatives. also at the market stock. said it doesn't expect further similar stock sales for the current fiscal year. it's holding more than $4.5 billion worth of cash, cash

equivalents and marketable securities. shares of boeing, dow component moving up half a percent after jpmorgan named it a top pick, citing the built up inventory after, quote, minimal deliveries this year. reports yesterday that boeing restarted production of the 737 max jet. they have a tumultuous year plagued by safety concerns and the machinist strike. shares are down 37% year to date. for more on that and top analyst calls of the day head over to cnbc pro as cnbc/pro you get the full detail of all of the big calls of the day. back over to you guys. >> dom, thank you for that. we will see you in a little bit. up next, white house counsel of economic advisers chair jared bernstein is going to join us. in the next hour, reaction to the data point of the morning, november's cpi, the latest test for the fed and its

continuing fight against inflation, fred mishkin will join us. actually, his name is rick. but who is counting? "squawk box" will be right back.

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welcome back to "squawk box." in a speech at brookings yesterday president biden addressed his economic legacy when he leaves office next month saying the following, he said, quote, i came to office with a different vision for america that's been consistent with my record, good, bad or indifferent, since i've been a senator. grow the economy from the middle out and the bottom up. four years later, we have proof the playbook is at least now working. joining us right now with more on the president's economy white house council of economic advisers chairman jared bernstein. good morning to you. i'd love for you just to try to assess -- and i read the piece in the "times" where you did an interview about this -- if you could assess how history will look at the biden economy, but also in the context that clearly

biden lost, i think largely, for better or worse, on the economy. >> well, thank you for inviting me to talk about the president's legacy. i think history will remember this administration and the president's economic policies really quite favorably, especially when you consider a set of foundational investments standing up domestic industries' production in many of the products that are going to dominate the future, whether we are talking about evs, electric batteries, clean energy production, of course, semiconductors. bringing that production back to our shores. we now have a trillion dollars of private investment flowing into those areas, building thousands of factories across this country and a lot of that is foreign direct investment as well, countries -- and the president talked about this in his speech yesterday, countries like south korea and japan deciding to build plants here.

if you then add the infrastructure work that has been neglected for so many years, the disinvestment that preceded us i think history will look favorably on how those investments play out. >> jared, i don't disagree that history may look fondly upon this period on a relative basis to what had obviously happened during covid and the like. my question to you, though, is this, politically the game -- and i don't want to even call it a game -- but if you are one political party or the other is to stay -- is to win and effectively stay in power, not just to stay in power for the sake of power, but for the sake of being able to actually see through the policy choices that you begin. the truth is a number of policy choices that have been made in the last four years may ultimately get unraveled in some kind of way in the next years. so my question is if you could do it again, what would you do differently? >> well, first of all, let me just start by saying that some

of that unraveling might be a lot harder than you think. i don't care if you are a d or an r, if you have a set of computer fabrication plants in your backyard that's already employing thousands of construction workers and soon will provide jobs for manufacturers who are non-college educated workers who can make $100,000 a year -- the president covered this in his speech yesterday also -- i think you're going to be pretty hesitant to take that down. in fact, republicans were already sending letters to the incoming administration saying don't go there. also think about some of the cost cutting around the health measures that we've passed to cut the costs of prescription drugs, insulin and so on. you make a fair point. winning is definitely one way to keep yourself able to -- keep being able to generate this kind of progress and we faced a lot of headwinds in that regard, not least of which of course was the elevated price level.

that was a global problem, one that's -- >> do you think if you could go back in time and you could advise president biden from the beginning, is there something you would have said that would have been different? i will give you some examples. if you said, do you know what, actually the sort of regulatory posture that the ftc and the doj are going to take towards companies, that's not going to work in this environment given how far down the rabbit hole we are here and where inflation and so many other issues are factored. we need to unleash the business community in that regard. you may say this is a terrible idea, by the way, because you could argue competition may help with inflation and the like, but on a short-term basis i'm just questioning some of the scenarios. would you say, do you know what, maybe we wouldn't do the full, you know, package in terms of how much money was going to go to the inflation reduction act. i just wonder whether -- if you could go back in time, get in

the time machine, what you would have done that would be different today. >> well, i think in every case you're raising, as you yourself just suggested, there's, you know, two sides to that issue. so, for example, if you did less on the rescue plan, our economy might not be the envy of the world that it is. when it comes to innovation, productivity, growth, job creation, i just came back from europe and trust me when i tell you they are looking at us and trying to figure out how we got where we are relative to where they are. in terms of how businesses have done, you know, perhaps you have a point, but on the other hand we're seeing highly profitable businesses that are fueling a stock market that's at record highs, helping 401(k)s stay pretty healthy as well. so i think if you look at the record and i actually heard you tick through some of this yesterday, andrew, the record speaks for itself and it's extremely strong. we were hit, as were incumbents across the world, with a global inflation and those elevated price levels in a world where people could still remember what

things used to cost despite our work to help lower costs -- >> jared, i don't disagree but i will just say politically -- look, here is the political question. the political question is, yes, i do think if you go back in time and rethink the regulatory posture, the business community, which clearly turned on this president, might be in a different place, right? you go back and look at how an obama or a clinton dealt with the big tech back in the day -- >> let me stop you there -- >> -- a situation where they would praise tech publicly and then bring them into the white house, have conversations with them in private and give them a hard time. i don't know if that's the right approach or the wrong approach. >> here is my deal on what you're asking -- >> and then i would go to the elon musk of it all. the truth is that elon musk should have and could have been -- i would have thought -- a biden supporter, a natural biden supporter, but the administration almost purposely tried to use him as some kind of

a boogie man to use against the unions -- >> i don't think any of that -- >> -- and had turned him into not just a trump supporter but one of the most vocal and wealthy and big spenders against your own campaign. so to me i look at those things and say if you could go back in time, if you were -- if you were advising him then, you'd say, okay, let's rethink this. >> no. so, look, let me start with a seasonal reference. if some butts were candy and nuts then every day would be christmas. you have given me a lot of counterfactuals, things that could have gone this way and could have gone that way. i would stipulate that none of those would have made a difference in the political outcome. there is no way of knowing that, but all of the things that you're mentioning to me sound like pretty small potatoes at the end of the day when it comes to what people were experiencing in the economy. and i also think if you go down that rabbit hole, you kind of lose the thread of what we're

trying to talk about in the last couple of days. i mean, this legacy is important not just because we want the world to know how we got to where we are and how middle out, bottom up growth is a much more effective set of policies than trickle down economics, but to also make sure folks realize the seeds that we've planted for foundational transformation of this economy for years to come. this is the economy that the incoming administration is inheriting and it is the envy of the world and if they nurture those seeds we've planted we're going to have a much better economy than if they don't. rather than the if's and but's i'd rather look at where we are, where we're headed, the legacy of this president, the foundational investments he's made and the bottom up, middle out growth that got us to where we are today. >> in a nutshell -- we are still arguing about reagan, i argue all the time about his legacy, bill clinton's legacy and

depending on your partisan lens how you view what happened, but i guess to push back on some of the things you said, we were in a supply-constrained world post-pandemic, the additional stimulus that many people now agree probably was over the top caused 40-year highs of inflation to come back. it may have been global, but it did happen here. >> it was global. >> okay. but still we spent a lot of money here, we're still spending -- we have a $2 trillion deficit, which is double what it was pre-pandemic so we're still spending so much. so that caused inflation to go to 40-year highs and ate up all the wage gains that you worked so hard to get so that no one felt like they were getting ahead, everybody felt like they couldn't make ends meet and it resulted in losing seven swing states, 312 electoral votes, losing the popular vote and actually losing the house and divided government. so, you know, you can put as

much lipstick as you want on it, but that's what the jury of the american people decided on the economic record. >> you definitely make a fair point, okay, so -- and i am acutely aware of the outcome of this election, so i hear what you're saying, joe. at the same time we need to check some facts here because i still think facts are important. in fact, reagan, your -- i know someone you greatly admire. >> right. >> you know, facts can be stubborn things, but they're still facts. so, in fact, real wages are up for the past year and a half. >> a four-year presidency, jared. >> okay. since the president got here -- >> are we finally back to above where it was when he took office? >> hold on. >> okay. >> let me have my say here. since the president got here real average incomes are up almost $4,000. >> that's not wages, jared, that's income. that's from -- that includes the stimulus that people got post-pandemic. >> it took the stimulus out of that calculation, it includes

jobs, wages and other income sources but not the stimulus. so, look, we can have that argument all day, there is no question that there were economic headwinds in people's minds as they went to the polls. you are right about that. but there's also no question that this president presided over 60 million jobs created, the lowest average unemployment rate of any administration in 50 years, a record 20 million new business applications, the smallest racial wealth gap in 20 years, more americans with health insurance than ever before. we talked about the stock market a minute ago. and a trillion dollars -- a trillion dollars in private investment flowing into this country to stand up foundational new investments. what you said is true, joe, in terms of the political outcome. it's undeniable, but what i'm saying is also true and i think we have to square both of those realities. >> and i hope all -- we needed infrastructure obviously, it's been neglected for a long time.

i want the -- some of the industrial policy to work out in terms of bringing important industries back here. i don't know if we can pick winners and losers. i'm thinking about intel. was that the right company to get -- we won't know for a while. >> you know, something the president said in his speech yesterday, we now have the top five chip manufacturers investing in this country. it's the first time it's ever happened. i think that's a great sign for the future and, again, the incoming group needs to take care of those investments, needs to nurture them, as well as the cost-cutting measures we've implemented to try to help people with high price levels they face. a lot of this -- >> i know how hard you work. i know how hard you worked and how hard the whole team worked and obviously there's certain things, like you said, that are indisputable, the stock market, the unemployment rate, the gdp and everything else. >> thank you, joe. that's true. >> yeah. all right. thanks, jared. >> jared, thank you again.

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welcome back to "squawk box." barclay's downgrading major home builders from overweight to equal weight projecting a new ceiling on the sector partially due to rising land and labor costs. take a look at those weekly mortgage data out just a short time ago. want to get straight over to diana olick who joins us with the latest numbers. good morning, diana. what have we got? >> good morning, andrew. mortgage applications -- mortgage rates, actually, fell again last week, not a huge drop but enough to push a little surge in refinance demand, the average rate on the 30 year fixed for conforming loans fell to 6.67% from 6.69 for loans with 20% down. not huge but the third straight week of declines. as a result applications to refinance a home loan surged 27% week to week and were 42% higher than the same week a year ago. the percentages are large, likely because the base volume is still so small. most borrowers today have

mortgages with rates well below what is being offered today, from 2020 through the first part of 2022 rates were below 4%. applications for a mortgage to buy a home fell 4% for the week, but were 4% higher than the same week a year ago. demand from home buyers has been gaining over the last several weeks as more inventory comes on to the market. mortgage rates did gain 10 basis points to start this week, that's according to a separate survey from mortgage news daily. that erased last week's drop but they could swing in either direction today with the release of the monthly consumer rice index, the last piece of the economic puzzle before the fed decides what to do with rates next week. andrew? >> very good. i don't know if it's very good, but it's good. it's good to see you. thank you very much. when we come back. up next, trump bump or slump? that is the question morgan stanley's 2025 big bang predictions it is out and we're going to speak to their analyst isout all of thirit te s ghafr

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its latest large cap bank upgrades and downgrades heading into 2025. joining us now is betsy grasick global head of banks and diversified finance research at morgan stanley. good to have you on. >> thanks for having me here. >> let's start with did anything change based on the election outcome for how you're monitoring things like this? >> look, the election outcome does have an impact on how we think things are going to roll from here, right? >> so it did matter. >> yes. yes. and especially going into the election, i don't think the expectation was there was going to be a republican sweep. >> right. >> so the r sweep definitely adds a layer of differential relative to where we are today. that does, yeah, drive some outlook changes. >> i have almost seen across the board that when they look for the trump trade financials are almost always included. i've also -- we have also had

guests in that said that it's going to be the dawn of a new age for community banking because of less regulation. do you view that? is that true or who does it benefit the most and what are your favorites? >> okay. so on the u.s. large cap bank analyst i'm going to -- >> you don't care about communities. we are really looking for stabilization and large-cap. that is a positive.

elimination of a negative is a good thing. >> yes. excuse me. when you take that onto account, with all of that in mind, who does it benefit the most? who are your favorites based on your change in your past outlook? >> i would say the three reasons why we are over the u.s. large-cap banks, as part of the rebound. is a quantitative ending in 2025. it is a positive for to understand we are going to have stabilization, as opposed to creepy, not sure how tough. everybody benefits from that. in our outlook, regulations stabilizing the most positive,

for citigroup, wells fargo, goldman sachs, citibank has a significant amount of excess capital. understanding that rules are not going to get tougher, gives them more flex ability in buying back stock. this is from the conference this week. that's really powerful for the stock. that is because it is trending below the book. >> you did a great northern trust. you downgraded the bank of america regions. there's a reason. what you like one and not the other? >> is it too much in the weeds? >> not at all. it gets into something else about the election. this brings within our opinion. it the stabilization. it also brings with it tariffs, and immigration change.

when i think about how that is going to roll in 2025, it is obviously very certain. we are not sure how immigration is going to impact the economy. we have a base case, a bull case, and a bear case. in our base case, we have got modest impact. very minimal impact. because of the tariffs and immigration, i have an equal probability going into 2025, for the base. if this is he first time i have been equal in going. how do i set up for that? i want to have the overweight stocks. they can do well on the base case. this comes with capital market rebounds. very significant capital market

rebound. don't have as much skew as goldman sachs, citibank, and others. that's where they got the downgrade. on the bear case, the tears and immigration, some pressure on the economy. this is in the second half. i want a little less exposure to credit. that's why reasons couple down. >> even the downgrades are equal to the weight. how far do you have to travel to come down? >> my next gig, is right across the road. i would just like to say, if i have a second, the capital markets rebound, that piece of the equation is really important. we were at 30 year lows, in terms of equity capital markets. relative to gdp. >> now he is interested. >> i was interested the whole time.

>> you love the capital markets. >> it is up and into the right. it is came on for 2025. we have been coming off of this extremely low period, of activity relative to gdp. 30 year lows, just in 2023. we have had a couple of good quarters. equity capital markets, half the cycle average. this is where the juice is. especially in the first half of 2025. >> thank you. >> just after 8:00 a.m. it 8:04 if you are on the east coast. you are watching squawk box. a bunch of big stories to tell you about. literally happening right now. it macy's, falling. annual profit forecast.

missed third quarter revenue estimates. look at that stock. it unfortunately off. more than 10%. they are stable this morning. the following close to 10%. that happened yesterday. president joe biden, will be killing the acquisition of the company by japan. the white house say that president joe biden, opposes the deal. he's going to wait for the national security review, before he makes that decision. we think that president-elect donald trump, might make a similar decision. that is the presumption. there is this. german headquarters, in connection with a years long tax investigation. confirming the cnbc spokesperson. authorities are investigating customs, and tax regulations. there is that. adidas. it hasn't moved the stock. >> cpi is coming.

anticipation, ahead of that, nothing. nasdaq continues to trade. for the dfw, i don't know. was the beginning of something? does it pause and refresh? >> it feels like a pause in the majority of stocks. market breadth has been under some pressure. that was after the very strong november. 1% from record highs. it is also back essentially to where it traded the monday after the election. in the month of november, one month ago today. it just a quarter of a percent. above right now. no real harm done to the trend. it shows you a lot of stocks below the surface, have been cooling off. take a look at one of the more dramatic relationships. the momentum stocks. these have done really well over recent times.

cracking this week. the s&p itself has done okay. final point, ahead of the cpi number, market expectations. breaking inflation rate. nothing too much to report here. around 2.3. three year chart. a little bit of a lift after september. it is percolating a little bit here. not at alarming levels -- at levels on a long-term scheme. >> cpi could change a lot of stuff. coming in right around expectations. >> pretty close to forecast for a while now. >> more on the markets, as we count down to the data, i want to bring you the chief investment officer. december 11th. we don't have any days. 20 days basically for the rest of the year.

where do we land? where do we land one year from now? >> not much time to go. we think that here and now, we are originally in a honeymoon period. following the election. maybe not on the large-cap side. essentially not what we were talking about. other areas of the market, certainly we are seeing that there is a continued sign of optimism. investor's best interest, to regroup and train -- trim a little bit of the excess. they can avoid a tax hit in 2024. i'm thinking ahead of that for those that can, makes a lot of sense. as we move into next year, we could have a more normalized return. there are a lot of things to focus on. one is on the corporate

earnings aside. we absolutely need to see another strong year of earnings growth. in order to see more appreciation in large-cap stocks. in particular. we also need to have clarification, on a lot of things. on the policy side. there are still unknowns that could have an impact on the economy. donald trump, is really based on his cabinet picks, trying to disparage a lot of government. it could be a lot all at once. it could be somewhat disruptive. our view is that there is likely to be more volatility next year. 5% to 8% return. it is important to remember, what that feels like. up and into the right, for as long as we have been here, it can be pretty jarring, to see a pickup in volatility. >> we are waiting to hear what the president is ultimately going to do, and what congress

is going to do with him. part of any job, is to predict what he is going to do, and get ahead of it. when you think about the big items on the list that you were describing, are you trying to suggest that you shouldn't even try? >> it is our view. you think about donald trump's style. he loves to shock with these big statements. when it actually comes to reality, i don't think his intention is to leave a legacy of harming the u.s. economy. i think we will likely see more of this in a measured way. with that being said, if you look at the economy today, it is quite healthy. we are in the midst of two potentially transformative growth drivers. there certainly are reasons to be positive. not investor's best interest,

to come -- become too cautious. we have this huge detrimental impact. rather focus on the fundamentals of the economy, and the fundamentals of corporate earnings. and position them accordingly. that means slightly being overweight with the equity. we think there is more opportunity on the small-cap side. this would be the beneficiaries, as we see deregulation, corporate taxes, ongoing health in the u.s. economy. >> thank you. i appreciate it. >> thank you so much for having me. >> very interesting. elon musk, talking about healthcare problems. talking about a threat. this is prosperous. why we are spending enough. we consume everything. we have more healthcare. that is more expensive than

anywhere else. more healthcare that you are able to contribute. the reason the outcome is not good, is because of where we are sitting. >> should be cheap. could solve many of our issues. could solve all of our problems. drug addiction, and things like that. coming up, we are going to ask goveorrn rick scott, president-elect donald trump's initiative. initiative. squawk box, will be right back leo! he's there when we wake up, he's there when we leave, he's there whenever we come back home from school, he's just there always. mash it up doofus. ever since we introduced him to the farmer's dog,

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less than six weeks until president donald trump, takes office. next guest, joined the senate caucus recently. elon musk. joining us now to talk about wakonda spending he thinks should be cut. what makes sense for enator rick scott. it has been a while. good to have you one. we are thinking re-election. >> this is exciting. this is an exciting time. i guess if you just read the headlines, there are a couple of issues that keep coming up. number one, what you can do with executive orders. what they will have the ability

to do. how much of the federal deficit or budget, is the stuff that you can do anything about? the discretionary is so small. numbers like chileans, hard to imagine how you would do that. are those preconceptions or misconceptions wrong? >> absolutely. business guy, what was frustrating to me, was the regulatory environment of all government. local, state, and veteran. -- federal. when i became governor of florida, i reduced the regulatory environment. is going to have a bigger impact on business success, things like that. more than anything else that we do. actually the cost of the regulations. president joe biden's four years, the regulations are up $2.6 trillion. number one is, we are going to

reduce the regulatory environment. that's going to have a pretty big impact. we have had a 2% increase in the population over the last five years. 53% increase in spending. that's not medicare, that's not social security. that's just wasteful governments. everything i spent over the last four years. what we are going to be doing, going through each department like you do in a business. 4000 lines of the budget in florida. could we do this less expensively? we are going to find ways to do that. we are not going to cut medicare benefits. we might figure out a way to provide healthcare at a more efficient way, and it should not cost what it costs. never in this country. i'm excited. reduced regulation. we are going to reduce the deficit. my goal is to reduce the balance. we have got to work at it.

>> so much included in all of this. do you think this is fixable? does that stay? does the president have another president elect? it talks about the repeal and replace. >> the way you have to think about it, how can we provide healthcare? americans can afford it. they have actions to it. we don't have to worry about what the position laws are. what would you do to make it more efficient? there are efficiencies in every industry in the country. including healthcare. we have to figure out how to do that. we will do it in government too. >> do you have the ability? do you have the authority to do that? will you need legislation?

will you count on the house if it has a very small margin? >> first off, it is always hard to reduce. they love all of this funding. america knows that the inflation is tied to government spending. so many people engaged around the country. $36 trillion in debt is too much. 53% increase in spending, population spending is too much. going to be a lot of ideas. i'm very excited that we are going to be able to figure a lot of things out. coming up with ways to reduce the waste to government spending. >> do you think that all of the tax cuts that president donald trump talked about, is this from the same time? are we trying to deport a lot of the illegal immigrants, maybe if it is them committing

crimes? is it possible to do all things? it seems like a lot of balls are in the air. >> we are going to secure the border. we are going to stop the flow of drugs. criminals and tariffs in the country. we are going to be enforcing our laws. in the meantime, we are going to figure out how to say, what should the federal government due to be involved? this is going to be a very good reset of what the federal government should and shouldn't be doing. americans are fed up with inflation. if you talk to people all around this country, they are sick and tired of everything costing more money. wasteful government spending. you have to live within your means. your government is going to have to do the same thing. it is all doable. >> i saw them talking about president donald trump, needs

to get all of his appointees confirmed. i couldn't tell whether he was foreshadowing these appointments or not. will there be any more? what else happens in your view? >> first off, we are going to get donald trump's nominees confirmed. if we have to do recess appointment, we have to figure out how to do that. look at these nominees. mike wells, doesn't have to be confirmed. national security advisor. chief of staff. wonderful people. here is the combat veteran. he has led the troops in battle. he knew people that lost their lives. that's the type of person that we want to run to the department defense. i'm excited about the donald trump nominees.

we are clearly going to change perception. i just got off of the campaign trail. people do not trust the federal government right now. they don't trust the fbi, the doj, or homeland security. we have to bring trust back to the federal government. >> were you in talks to do anything else? did you do the most good where you are? >> i have been on my own. starting the company since i was 25. i'm way better off. >> doesn't take any time for that answer. >> we were out of time. senator scott, thanks. thank you. coming up, brand-new inflation data. don't go anywhere. we are going to speak with a veorer federal reserve gorn. squawk box, returns. with a number that could move

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coming up next, the numbers from the morning, november cpi. it you have to combine it with tomorrow. we are releasing it. this is a different trail update. squawk box, will be right back. we're here. (♪♪) surprise!!! the future isn't scary. not investing in it is. car, were you in on this? nothing gets by you james. nasdaq-100 innovators. one etf. before investing, carefully read and consider fund investment objectives, risks, charges, expenses and more in prospectus at invesco.com

we are just literally seconds away from the november cpi. happening five points on the p.o.w. doesn't look like we are going to advocate for you. looking at the monitor over here. they moved in. what is it? the numbers? >> knows and duties november consumer price index. up three tenths of a second. coming up exactly as expected. 1/10 hotter, at least until revisions hit the wire. last month is up two tents. this is up. up three tenths. april is up at three tenths. up four tents from a present. finding some higher numbers. if you subtract food and

energy, it remains up. equally, our last look at it and it is now the fourth consecutive month up. 3/10 of a percent. find the higher number. the low read from the air, is up one 10th. up 2.7. one 10th hotter than the reviewer. as expected. 2.7 is the warmest since july. this is the high watermark. 3.5 for march of this year. at least the high watermark for 2024. in my opinion, the most important of all, expecting it up 3.3%. 3% in a row, the high watermark. january when it was 3.9. for lois this year is 3.2 several times.

now, 1913 is when the cpi headline index was created. last month, we were a little bit lower. 315.49. we broke history. we were a smidge below the index. 1957, the high watermark is this month. 322.657. you look at the indices, you know we are very close. this is a new all-time high. this really goes to the just of higher prices in the public read this is where they were, and where they are now. about the rate of change, and in both cases, they are definitely on the warm side. joe, back to you. >> i like your word choices. if you want to say hot, you

would say hot. your choice of words, depends on the numbers themselves. on the other side, it could be cool, it could be cold. it could be lukewarm. think about that. good hands on that. it's not really a panel. they have a market strategy for all alternatives. this is the head of investment strategy. investments are in line. could you think about it? >> they're talking about may be a headline. this is interesting. maybe we have been waiting.

0.2%. i didn't have a chance. basically, back in line with where he was before the pandemic. year-over-year, still a little bit hot. bigger numbers are in the background. that is helpful. this is not as helpful. this is food at home. this is a unique celebration. i don't know where that celebration is coming from. worth pointing out. from my friend, who does like used cars, they apparently have the large garage full. up 2%. following the 2.7 number. these have been negative for a while. they seem to be coming back up. the other thing worth talking about, is around the negative. up 0.2%. you did get a nice decline and energy that you had in the prior month. 2% on energy, with gasoline up

0%. we have got that big decline. prices below three and a little bit about the country. that's where we are at right now. the rent number, is something that i think the fed would watch. >> the big question i think, at least in my mind, is inflation under control? can we cut? can we feel no problem? bitcoin, this is a new high. gdp, surging, unemployment, very low. we are cutting. >> is inflation under control enough to be cutting? >> we are still giving the real rates. it is unmistakable that the last four months, are up 3.3%. this is a comfortable trend.

i think it really speaks to what the fed is going to do next year. we are still high. i believe we are restrictive. i think the question is going forward, 100 basis points are built in. the fed had room to cut from within. i think going forward, we had the question. if we have a booming economy, and we have inflation, it's a little bit more warm. how much room do we have for 2025? that is the question in space. >> we continue to believe that this level of interest rates, is when we got to the 5.5, failed to deliver the kinds of restrictive effects that i think the fed and a lot of the market had expected. now, the fed is cutting those already tariff restrictions. did we see the business activity? now, we are seeing the stock

market. we are seeing some higher highs over time. we have a strong employment figure. we have a very all-time low risk in credit. we have inflation stabilizing, at a higher level. this is how we would like it. i wonder if it is going to be higher than target, for the numbers and how they are going to take. >> does that mean not cut? >> they are facing a very real possibility. having to take some of these cuts back in 2025. forced to do whatever they are going to do this month. i think as we go into 2025, with the dominance that we are continuing to see, from the economy, this is going to be by extension. this is a false rate. we are thinking about tariffs or taxes. it integration. this is the expectation.

i think we are staring at a very real possibility having to take some of these cuts back. >> i think you and rick are probably going in on this. >> do you feel more comfortable with what they are saying? is it crazy to be cutting here? >> i do think it is crazy to be cutting. our job isn't to try to put an adjective out in front of cutting. our job is to let the iewers know that it is pretty much baked in the cake. this is to a quarter point. i think this is the most important discussion to have. how the markets have responded. we are getting warmer. it was my definition of warmer? hot. this is with regard to where we are in inflation. cooler and as expected of course. we would start to see zero, maybe some inflationary infections in the rate of change. warmer. it is one. it is kind of hotter than it has been. or has been expected.

interest rates, they went down we went down two basis points in the 10 year period we rallied the preopening deal w jones. the question we should be asking, why are the arkets rallying out from inflation? to me, that is the biggest issue of all. the fed has a bias. whether they admit it or not, they want to lower the rates. the market isn't giving you any justification to do so. market participants only worried about surprises. in the end, the stickiness of one duration, treasury yields. this is where they seem to want to answer it. we can see why they are stubborn. just because they are as expected, the stickiness of inflation, and the possibility of not only being sticky, but going up and down the road, is what is keeping the rates higher. this is where the dust is settling for these numbers.

the market is so unresponsive to inflation. certainly, we know the feds 2%. >> this is somewhat in the following way. if you have a situation, where there is a dramatic change, and the fed has to reverse course, and the fed has to reverse course. >> we are elieving in the central faucet. they were restrictive. we can do something where they have to change their mind. >> i'm more interested in this idea that you wanted. of course what you wanted, you are going to back it. you always want to act prospectively on the potential policy. i don't know that i want the fed to do that. i would rather see what has been passed by the new congress. >> this is something.

i don't want to blame anybody. >> pointing out the interesting thing that rick is talking about, you have had an increase in august cut. probably looking at the 2025 december futures, i will look it up real quickly. talking about this notion. speaking of dances. the market is gaining out what the fed is going to do. versus what the market thinks the fed is going to do. i don't know if that is what to giving it out what the fed is going to do. the take away from his number, is the quarter-point cut. perhaps another quarter down the road. maybe next year, is still on. >> do you think that is good? you think that is all right? >> i think policy is unknown. the next administration is going to have idiosyncratic policy. i think the absolute notion

that tariffs must be inflationary, may be wrong. going back to the first donald trump inflation cell, is because of the slowdown in the economy. we can look at any one variable. this is by definition inflationary. probably january is off the table. in our 2025 outlook. they gave the fed that. if we are growing at 2%, it is sticking around at 2.5 to 2.7. not a real good place where they can cut. i think they keep the cutting bias. they just wait with this applause. >> in reality, we are growing at 100% from this quarter. this is the feds on measure. 3.3%. before, this was q3. actually wanted to take the ministration out of it. even before this election, we

know that whoever ends up in the white house in january, the fiscal backup will be continuing to be unabated. we are going to continue to put pressure on that curve. this is the thing that matters the most. this is control over that. all of these things that we are talking about, potentially tailored for the economy, they are great for the risk assets. i am not sure that they are great for risking credit, or looking at the bond investors. our job similarly, is particularly on my team. this is a return. to generate returns, this is perspective in which way the policy goes. what happens with the policy, et cetera? we are very much for evolving construction. which have had very little evolution, to address the reality that nonstop correlations, are meaningfully positive. there is a benefit across the traditional sectors. .9 correlated. this is .94 or five years ago.

new ways of thinking, like you said. no one has a crystal ball. our job is to generate returns. absolutely looking at the policies unknown. they're predicting where the fed funds will be. >> giving up the fiscal policy effects. >> have you got a few? >> is it your team? >> it is my team. >> have you got a team? you have kind of got a team. i don't have a team. i have a wife and kids. have you got it? >> she has a team. looking into things. >> i have a team. we have 100 junior economics. this is 100. >> you got to come. >> i have nothing out here. >> i didn't have a phone.

>> where would you look? what number? >> i think i would be looking more towards the two and three year maturity from what the fed off to do. getting under 4%, seems to be a lot. ultimately, the market is looking for the fed to do less. >> thank you. >> jpmorgan is incredible. >> i have a pack. that is going to have to do. >> have you ever heard of it? >> they are amazing. >> we have got to go. >> former fed governor, michigan governor. do not go anywhere. we are coming back right after

this.

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the rest of the fed, and you think to yourself, what? >> i think this will be a really interesting discussion. these numbers are coming in, as people expected. they are not great numbers. you see this installing in a pat down to 2%. we have interest rates adjusted for inflation. this is adjusted for the economy. this is a restrictive policy here. this is particularly buoyant. particular to the stock market.

really a situation where the fed may not be restrictive enough. given the numbers. you don't want to surprise people. you are likely going to cut it at this meeting. a lot of discussion will be going on, about whether in fact the numbers are not coming in as good as you would like them to. you don't want to get stalled at 3%. this is a path from the 2% target. the likelihood of them having to pause, is now getting a lot higher. >> i don't know if you are listening to the last conversation we were having. one of the big questions, is whether the federal reserve, on a prospective basis, be making any kind of decisions, ahead of what may actually happen, with the donald trump demonstration, and this congress.

if you start to believe the tariffs are coming, if you believe any of those things are going to happen, the way that you described, are you supposed to get ahead of them? are you going to see how they happen? the reaction to them. are you already behind? >> i think the next administration is affordability. >> says he's going to do everything that happens. flips on a dime. donald trump, is not somebody who operates on these deep principles. is very transacted. it's also the initiative. donald trump has talked about it. this could be a one-shot deal. this is where it comes n. it will affect the price.

not necessarily inflation. no reason not to wait right now. they are saying that their reaction is part of the potential policy. this gets into the whole political debate. about whether they are helping the administration. >> absolutely. >> there's always the industry, looking at how fast and how aggressive we are getting down to 2%. if the economy is not doing that well, the inflation is a little bit high. very hard down to 2% very quickly. the inflation targeting in terms of the research, we have a very different participant. we are seeing some different inflections with inflation

targeting. you should worry about where the economy is. it depends on how quickly you want to get back down to the target. in this context, there's a lot of flexibility built in. what is important, when inflation is higher than you would like, you don't want to be higher to accommodate that. this could reduce some very bad expectation dynamics. we are actually applying work. in the case where that actually hurts your outcomes. very important. this is not in place in a strong way. i'm a sailor. how far out are you going to put your accurate? this is something by judgment. this is exactly what they need to do. >> i want to thank you for joining us this morning. >> you are very welcome. >> coming up, the state of

inflation. food, and how prices are impacting some of the biggest u.s. restaurant chains. don't go anywhere. don't go anywhere. squawk box, will be neright bac. solving today's chal. while creating future opportunities. it takes balance. cla - cpas, consultants, and wealth advisors. we'll get you there. (♪♪) (♪♪) (♪♪) everyone has goals and dreams.

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looking back, you're

talking food inflation in the u.s. general analyst at bernstein. we want to start with starbucks. price of coffee, 47-year-old record just yesterday. where are we really if we look historically at what the cost really is? >> this is from the past few months. this is not something that has happened over the past few months. >> is part of the supply constraints that we are seeing specifically in south america. this is effecting the cost of the coffee beans. is is effecting the boost. this is the typical lower quality beams.

we are seeing the spike in terms of cost. starbucks, since we are talking about it, only offers the beans. coffee, still conspicuous, about a percentage of the food for a starbucks. >> what is happening here? >> at kroger and albertsons, whether they should be allowed to merge. whether they would be inflationary or not. is it about that? have food prices gone through the roof? >> food prices especially for the restaurant sector, this is maybe expected to be part of it. there was an expedition, that consumers were able to essentially absorb some of the price increases. this is from the local restaurants. the charges from the consumers. they will protect the margins, out of the increases.

this is the cost back to the consumers. consumers, are able to essentially use some of these within the covid era. they continue to go to restaurants. we have seen some big pullback, among consumers. this is at the eginning of this year. really, at the bottom, in terms of traffic for restaurants in july. when you saw the big delta between the food and home inflation, versus food and home inflation, with a couple of numbers, this used to be about 5.1% in january, versus the food at home inflation, 1.2. the inflation is at 1.6%. 3.6%. when these dynamics are changing, when you have inflation of grocery

improvement, decreasing rest of the restaurant inflation, that's when it is tough to see people go into the restaurant. >> fair enough. i want to thank you for joining us this morning. i feel it every time we walk into a restaurant. guess, emphasize that we are on the same team, we are on a team -- >> yes, we are on the team. we have our whole "squawk" team. >> it's not my team, it's our team. >> make sure you join us tomorrow. "squawk on the street." there's no me in team. no, there is a me in team. "squawk on the street" is next. good wednesday morning, welcome to "squawk on the street" i'm carl quintanilla with jim cramer and david faber. premarket breathing a bit of a sigh of relief as november's cpi comes in in line across the board, although the fourth consecutive month up 0.3 on core. we will talk about sbermts, two year steady at