it is 5:00 a.m., welcome to worldwide exchange, here is your five at 5:00. quantum wreck, jenson wong, sinking stocks as his own stocks see the worst days in months. rising prices putting wall street on edge, sending treasury yields surging. u.s. stocks fall. however, futures are higher. metaceo reveals a content policy 180 as he preps for the trump administration. and palantir is off to a

rough start after a blockbuster 2024. and later, avian flu hits the bottom line of the egg producer, it's wednesday, january 8, 2025, you're watching worldwide exchange right here on cnbc. and good morning, thanks so much for being here with us, i'm frank holland. we begin as always with a check of u.s. stock futures after a big selloff on wall street with nasdaq falling 2%. take a look at futures. in the green across the board. all three indexes up a quarter of a percent. the dow will open up more than 100 points higher. also a look at the s & p 500 premarket gainers. you see moderna here quite a few times followed by globe life, charles river, discover financial, and tapestry. up almost 2.5%. we want to talk about

treasuries, bond yields that continue to be big. indications companies are preparing for tariffs. you see the read on the benchmark, 4.67, highest point since we have seen in april. the 30 year hitting a more than one-year high, taking a look at the broader spectrum. the 30 year coming up at 4.9. hitting a one-year high as well. the two-year, hitting about 4.28 right now. at the same time, we saw a steepening of the yield curve, where guests said would be a positive sign for the market. we see it at 38 basis points. hit almost 40 basis points. financials were the key area that would benefit from this yield curve that you see right here. however, financials, after having trading positive for most of the day, closed lower yesterday. want to switch gears here, look at bitcoin. that fell on yield pressure. bitcoin falling back below the

100,000 mark, down just about 1%. week to date, down 3%. we want to turn back to equities and sectors. tech, that was the big thing yesterday. fell more than 2%. had the worst day since december, nvidia was a big reason for the weakness. you can see it is rebounding a bit. but you see week to date down over 1%. huge drop yesterday. fell more than 6% yesterday and as we just mentioned, negative for the week. some big downside moves when it came to nvidia along with the other index. also, we want to talk about one sector, red hot sector. we talk about quite a bit here on the show. that is quantum computing. we have seen some huge upside moves for these stocks. up 360%, rigetti up 18%. these are not mistakes. these are the real numbers. quantum stocks having a big

surge. new comments from jenson wong, for the cutting edge tech, has investors certainly reacting. take a look. you can see just declines across the board. double digit declines on top of that. rigetti down 17%. d-wave down almost 16%. you get the drift. comments from nvidia ceo, jenson wong. take a look at what he has to say. >> you said 15 years for very useful quantum computers, that would be on the early side. if you said 30 is probably on the late side, but if you picked 20, i think a whole bunch of us would believe it. what we're interested in, we want to help the industry get there as fast as possible. >> and his comments obviously had an impact on the market. quantum computing stocks falling double digits. okay, that is your setup, now

we want to switch gears and see how europe and asia are doing after that selloff. sylvia, good morning. >> very good morning, frank. today, i have two different market stories to tell you about. let me start with the performance over in asia. and indeed, very interesting how you were highlighting there, the pressure that we saw on u.s. stocks yesterday. that translated also into some of the moves over in asia. we had the nikkei down a quarter of a percent. if i show europe, the market narrative is different. investors in europe basically putting aside those concerns that we witnessed state side in terms of perhaps seeing higher inflation going forward, perhaps not seeing the fed, cutting twice this year. over here in europe, we are tracking higher. we have the main market in germany up almost, well, about

.3. the italian market up .6. so, yo u can clearly see, frank, that actually here thus far, the movement, the mood is positive. let's see how european stocks will continue to move throughout the rest of the day, but this far, it is a positive session overall. >> silvia, thank you very much. live in our london newsroom. we'll bring in greg, founder and managing director. an investment consulting firm. greg, good morning, always great to see you. >> good morning. >> i want to start things off with a sound bite last night and see if you agree or disagree. >> we know the fed can't raise rates. that would make them look like total idiots. after we get a report and interest rates go higher, plenty of people say stocks got ahead of themselves. there are others who know only one thing, if rates are going higher, then we're headed for a

burst of inflation that will send stocks lower. >> so, greg, kramer's thesis, higher bond yields. it followed that read, agree with that. with yields the benchmark. will that continue to put pressure on equities? >> i agray with that notion. i disagree with the notion that it is epistotic. when we look at the inflation read, frank, you will know, many of us have been concerned about what is just happening organically. we saw core go from 0 basis points in june, 10 in july, 20 in august, followed by three 30 point reads and possibly a 40 point december. both things oppose a head wind for equities. the organic rise of rates fueled by deficit spending, fueled by less of an appetite

in china, japan, potentially others. also, the reinsurgence, given some of the administration policy objectives and what that may force the fed to do. >> all right, part of that thesis is investors are counting on rate cuts going forward. i want to talk to you about the fed. this is an interesting idea that you have here. the feds on pace for a moment, explain that. your idea here is running contrary to what kramer just said. what is this moment that you think is coming up? >> yeah, so, it harkins back to 1979 and '81. they declared a premature victory against inflation, and had to come back in 1981 and raise rates almost to 20%, far higher than he had to do the first time. so while i don't want to necessarily be alarmist and ring the bell on something of that nature, i do believe the

evidence is being put in that we probably or most of us, some of us did not. most of us probably declared a premature end to inflation, and that battle was over. the data, likely the jobs data, the core cpi data over the last five months, points to a resurgence in inflation. that is without the inflationary platter of policy that the administration proposed. >> first and foremost, thank you. made a little mistake on my end. that's a great reference, greg. i want to get to the point of your thesis. you think the fed would raise rates? it might have been something you said before that, but he said the fed would lose their credibility if they raise rates. do you see that as a real possibility going forward? >> i do see it as plausible. this is not about a choice. if any of us had a choice, we

would prefer for rates to stay lower and we would prefer for the cutting program to continue. i think if it is to become a reality, the fed simply won't have a choice. we start to get into mass deportation, trade wars and tariffs, deficits, cuts on taxes. i think you're going to see a very acute inflation and the fed won't have a choice. you have seen two governors come out and say that they decent from even last month's cut. so, you know, i think at the very least, we're going to see a pause. i'm going to refrain from saying it's likely that we see a raise, because by the time that becomes evident, it become accepted that the feds have no choice. >> i want to ask you about a red hot sector on the markets over the last couple of months. i know you're not a tech analyst. big upside moves when it comes to stocks. yesterday, comments from jen

son won, leading the whole basket to decline double digits. when we see a hype cycle, what does that do to market sentiment? what does that do to the market action in your mind? most people would afree, we're around ai, quantum cop pouting was supposed to be the next big thing. >> right. i don't know if we're in a height cycle, right? because in terms of ai, we have seen the companies putting up the earnings growth. we have seen the 50% earnings growth. while some look at the multiples and say they are stretched. if you're going to give me 30% earnings growth over the next three years consistently, then that's worth multiple. so i think jenson's comments had a natural impact in many thought we would see the same type of earnings s-curve within the next five or six years and that was worth waiting around for. is that worth waiting around for if it's 20 years away? probably not. better places to deploy

capital. so, even in long-term investor, depending on how much weight you put in those words, it's better to come back another day. >> looking at quantum computing, double digits lower. always great to see you. have a great day. >> thank you for having me. moving on, time for our big money movers. we'll start off with shares of samsung. closing higher in asia, after the profit more than doubled in the fourth quarter. still fell short of estimates. results were hit by rising costs and the rampup to manufacture more advanced chips and slowing demand for pc and mobile phone business, shares of samsung are up 3.5%. flooder are under some pressure this morning. the company warning profits and revenue for most recent quarter will likely come in short of estimates after the u.s. customers, we had a hot streak in the u.s. betting on sporting events. this past nfl season has been the quote, uncoat, most

customer friendly since the launch of online sports betting. favorite winning in nearly 20 years. shares of flooder. shares are moving higher. the top u.s. egg producer says demand was robust and market prices have quote, continued to rise as supply levels of shell eggs have been restricted due to a recent outbreak ofavian flu. also, the company announcing it just bought back more than 3.9 million hong kong shares. the most since 2006. u.s. defense officials also listed tencent as a company, putting pressure on the stock. taking a look at the one week move on tencent, down more than 11%. we have a lot more to come, including why my next guest is the new love affair with one sector not named tech. first, what's ahead for industrials after the fed rate cuts failed to spark a widely expected rally and much, much

more on the quantum stock drop and this means the end of wild wind streaks. later on, we'll break down mark zuckerberg's play book. he insts.ans for veor weava very busy hour just ahead, when worldwide exchange returns. don't go anywhere. t-mobile connects 100,000 delta airlines employees, powers tractor supply's stores nationwide with reliable 5g business internet, and partners with pga of america on game changing innovation. this is how business goes further with t-mobile for business.

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we're constantly engineering new ways to get the entertainment you love to you faster and easier than ever. that's what i do. is that love island? welcome back. industrials have lagged the market since the 50 basis cut in september. that was expected to spark

investor interest. as the rate cutting path has become less clear and the post election enthusiasm declined a bit, there's been a divergence with out performing. according to ubs, 2025 is a more challenging setup with several head winds, including inflation and rates remaining higher for longer. earnings must meet or exceed earnings. joining me now with top picks and a look at industrials in 2025 is managing director and head of large cap diversified industrials. look at that title. welcome to the studio. you and i used to talk transports. now you moved on to industrials. >> happy new year. >> why don't we start with your top pick. parker, shares up 39% over the last year. why is this company your top pick? >> a high quality company. 50% revenues are exposed to short cycle industrial exposure. 30% of the business is

aerospace. they have a balance sheet that is prime to make further acquisitions, about $12 billion of capitol. so, it gives us the balance of secular growth via the aerospace, and creative acquisition, as well as exposure to a short cycle inflection, which we expect at ubs over the next five, six months. we have to be patient about that. companiesstart reporting results in january, we're not going to be pointing to a massive acceleration in short cycle. the leading indicators are pointing in that direction, whether it's small business optimism. so we're optimistic here that if you had me back on in march or april, we're talking about a different tune. >> all right, you just mentioned manufacturing. that has been lagging, we'll say, i think there was one month that was an outlier, tipped over to expack. mostly in contraction. when do you see that turning around and how important is that to names?

are there other tail wednesdays or manufacturing a key metric to watch? >> you're absolutely right. the industrial economy has been in resession, if you can believe it or not, for the last two plus years. it's the longest stretch of contraction. you would expect that to improve at some point. interest rates matter. there's an inverse relationship. the election is positive and the psychology as you can see in small business optimism. so, it's a short cycle, low visibility. we'll see. again, manufacturing is close to 50. it's been below 50 for two years. small business optimism saw a surge from november to december, and so we're quite optimistic that over the next couple months, the industrial economy, as measured by the manufacturing, will go from contraction to growth. the question is, what's the magnitude of that improvement? we'll see that over the course of the next six months. government policy has a lot to do with that. we are optimistic.

the other tail wednesday is ai and data centers. a lot of that infrastructure that needs to be put up is exposed to electric components. that's another huge tail wind for the industry. >> we were talking about quantum computing. is there a tie-in with quantum computing and industrials right now? >> there's a tie-in between ai and industrials. you can see with train technologies. there is an exposure, more directly, i would call that honey well, it's a 54% stake in a private quantum computing company. we'll see what the evaluation of that, the last evaluation round was $2 billion. there's about $4 per share of value baked into honey well's iyty equity value. it needs massive amount of

infrastructure. this is data centers and all the electrical hvac cooling that goes into data centers is an industrial play. >> we'll continue to talk to you about this connection. i didn't see that coming. it wasn't on my bingo card. >> thanks a lot. still on deck, an emotional appeal from u.s. steel. however, it is doing little to sway sentiment in dc. we have your top stories coming up after this break. stay with us.

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the biden administration is committed to helping. you're looking at a live shot and the fire. meanwhile, open ai ceo is denying sexual abuse allegations made by his sister, altman claims her brother

abused her regularly between 1997 and 2006. she has previously made public accusations and o post on x says the claims are quote, utterly untrue. and u.s. steel ceo is calling on president-elect trump to reverse president biden's decision to block the sale of his company to japan's nippon. >> what we want is for due process to work. and obviously, we have a new president that will take a fresh look at this. we understand what his current views are. he's a smart guy. he has the opportunity to take -- have fresh eyes and do what's right. i believe strongly he will. >> and president-elect trump has previously expressed opposition to that deal. and delta airlines striking a new deal with uber, allowing its sky miles members to earn miles for the ride sharing app.

and that move ends delta's eight-year partnership with lyft. the new partnership is set to begin in the spring, frank. >> it's interesting. you fly somewhere and a lot of times you need the uber. that makes sense for the ride share. you can't use uber office. it's like a kleenex. >> you have to check your options. >> thank you very much. all right, coming up here on worldwide exchange, the quantum stock rally hits a speed bump. the comments from jenson leading into premarket action. we'll be back after this.

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we get back to our roots and focus on simplifying our policies and restoring free expression on our platforms. more specifically, here's what we're going to do. first, we're going to get rid of fact checkers and replace them with community notes, similar to x, starting in the u.s. >> that was meta ceo mark zuckerberg, bringing back political fact checking. the move seen as the latest effort to solidify ties with the incoming trump administration. welcome back to worldwide exchange. i'm frank holland. the push to better align itself with the president-elect. we'll have wharton professor join us. we'll kick off with a check of

u.s. stock futures with a big selloff, with s & p 500 closing lower. take a look at futures in the green across the board. all three indexes up a quarter of a percent, give or take. we'll get a check on the biggest gainers. take a look. micron, shares up about 2%. nvidia up almost 2%. we'll talk more about this stock in the comments, autodesk, rounding out the top five. >> rising after yesterday's hotter than expected services read, and indications that companies are preparing for tariffs. you see the tail end of this chart. right now, the benchmark sitting at .67. highest level since back in april. also, the 30 year, the long bond hitting a high that we haven't seen in just about one year. at the same time, a steepening of the yield curve. would be a positive for the

market overall, in particular, financials. a positive for the market overall. right now at 38, 39 basis points. yesterday, we did see financials trade higher for most of the day, but they did close lower. we also want to look at bitcoin. that fell on yield pressure. yesterday, hit the 100,000 mark. right now, trading at 95,000, just under 800. falling back over a half a percent. week to date, bitcoin down more than 2.5%. we want to turn our attention back to the sectors and to equities. tech, fell more than 2%. the worst day since mid december. nvidia, big reason for all that weakness. right now, we're going to take a look at shares. they were moving higher in the premarket a moment ago. they had a huge drop off yesterday, falling more than 6%. we're going to show you the chart. nvidia negative for the week, along with the rest of the index. this is the big drop we were just talking about. nvidia shares down. seeing a rebound, up almost 2%.

all right, that's your setup right now, i want to turn to a red hot sector, that's quantum computing. red arrows across the board. it's been hot going into 2025. as you can see, there's been a bit of a reversal of that momentum. joins me from london with more on this. argen, the comments from the nvidia ceo, a big reason for that drop. do you think this might be the end to this red hot trade? >> not right now, frank, there's a little bit of pause. certainly, the nvidia ceo, it seems when he speaks, the market certainly listens. his latest comments were focused on this quantum computing sector. just important to note, quantum computing is seen as the next generation of computing that will be able to solve problems that current computers can't. there's been a lot of excitement around this, particularly from some of the big tech and the idea that this

might become a reality soon, that's under pinned. a lot of the big rally we have seen in those quantum names. useful quantum computing may be a little while off. let's listen to his comments. >> if you kind of said, 15 years for very useful quantum computers, that would probably be on the early side. if you said 30 is probably on the late side, but if you picked 20, i think a whole bunch of us would believe it. what we're interested in, we want to help the industry get there as fast as possible. >> and wong is not alone in expecting this longer time line. i want to draw your attention to a story from december, in which google unveiled willow, that it claimed marked a major breakthrough in the field of quantum computing. in terms of reduction of errors. at the time, i spoke to a number of experts who praised the development from google, that said despite that, there

are no real world use cases for quantum. so putting his own time line on that leading to a drop in those quantum computing names. as you question there, frank, is this the end? it's a pause to take stock really where we're at. yes, there have been some big leaps in quantum computing in terms of technology development. what he is eluding to is yes, while we have seen big leaps, the usefulness of these quantum computers isn't there yet. >> i mean, i'm sure you can see it as well. rigetti up. i want to circle back to another area of your coverage, which is startups, private equity. have you seen a lot of money pouring in to quantum computing startups? >> yeah, there certainly has been, frank. i've been speaking to a lot of vcs who are excited about this area of quantum computing. i have spoken to a number of

quantum companies, even here in the uk, and they are all very excited. of course, as you'd expect. proponents say quantum computing codo things, solve medical problems that current computers cannot. impact finance to cyber security, to the medical space. as i said, so you are seeing a lot of money pouring into that. and of course, it's not just the startups. it's the big tech giants, like the googles of this world, pouring money into this problem. so this is an area that has been very red hot in vc. it is also an area that requires a lot of patience. you hear jensen talking about a time line of 20 years before we get useful quantum computing. when you think about vc at this point, they are often investing over a ten-year horizon. it's an area that requires

patience. there's very specific vcs that are willing to invest in this area right now, frank. >> live from london, argen, always great to see you, thank you very much. coming up, 2024 best performing stocks, off to a stumble in the new year. we'll get whether the stock's run could be winding down. take a look at shares down more than 13% or vethe last week. stay with us. i see you. i feel you. and...i know you. gold bond. get in touch with irresistibly touchable skin.

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welcome back to worldwide exchange. the stock was the worst performing in the s & p 500 yesterday, dropping nearly 8%. the biggest decline since may. major change in sentiment and momentum. palantir, best performing last year, soaring 340% on hopes companies will spend massive amounts on ai software. but despite the surge, the street is not sold with more than 80% of analysts covering the stock, maintaining a hold or sell rating, making this a good battleground stock. joining me, equity analyst who has a hold rating on the stock. and owns palantir, gentleman, good morning, great to have you both here. maalik, i'm going to start off with you. one of the issues you have, is the evaluation of palantir, at 150 times. is there any other big issue with this company, other than this really elevated evaluation? >> to be very honest with you, first of all, good morning.

to be honest, we think about palantir's business, it is one of the only ai places out there. the company business is great, the u.s. commercial side of the business is actually doing really well, and firing on all cylinders. our issue with palantir, as a stock has been the evaluation. that's what we highlighted over the last few quarters, the evaluation is getting out of hand. especially if you think about trying to take into the stock price, those are some very optimistic assumptions. >> derek, i want to come over to you. palantir was a black box, it wasn't clear what they did. now they expanded out to commercial work. we're talking about this evaluation, and just the potential they could have with u.s. and global companies looking to upgrade themselves

with ai. do you believe the evaluation is over stretched as well? >> oh, well thank you for having me. we at krane shares, while the current are optimistic. palantir could become the gold operating system for ai, we're talking about potential trillion dollar market. now palantir is the key holding in kraneshares. infrastructure, and ai coin to applications. what is really exciting is how the deployment is really taking off in the enterprise world. seeing real benefits. better efficiency, and business creating ai adoption, palantir stands out in this space. their ai platform, their system

is a game changer. it brings together data, logic, and action, in a way both humans and ai can actually work together. but the ai platform is topnotch. security features, which is crucial for companies to adopt ai safely. also palantir's business, the trump administration is really prioritizing efficiency and digital transformation. this could be a startup trend, potentially bringing palantir in the future. >> maalik, back over to you. evaluation, you're expecting revenue growth and other things to kind of meet that evaluation. do you agree with derek had to say, this company has more upside than we have seen last year? 340% gain. because derek seems to be saying they have proprietary software that other people can't quite match. >> first of all, i think i agree with derek's point about

them having competitive advantage. when we look at our method, we do, now as it relates to, as you said, evaluations are forward-looking, i would again sort of put that question back, what do you need to believe about the top or the margin profile for this business over a five, ten-year time period for you to get $70 or $80, as it was illustrating a few days ago, dollar per share evaluation. i tried to conduct a reverse dcf, where you bake in what assumptions would get you to the stock price. and the numbers i got would have put palantir ahead of all the software company asks out there. you have a ten-year around 30%. you would have margin profile

gap, operating north f 55%. if that is the assumption you have over a ten-year period, you could buy the stock at $80. but when we're looking at our own assumption, again, they are very optimistic. they factor in a lot of the stuff derek has talked about, but we don't get there. we don't get to $70. >> maalik and derek, thank you very much for talking palantir with us. both of you, have a great day. coming up on worldwide exchange, we have the one word every investor has to hear and the stock pick every investor needs to know. and mark zuckerberg and meta, the graces othf e trump administration. when we come back after this break. stay with us.

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a hundred thousand delta employees so they can make every customer feel like they've arrived before they've left the ground. this is how business goes further with t-mobile for business. welcome back. some meta employees aren't happy about the decision to end third party fact checking. reviewed by cnbc, employees voiced concerns with one saying meta is quote, sending a bigger, stronger message to people that facts no longer matter. meta added trump ally, dana white, to its board and a former bush staffer. president-elect weighing in yesterday. >> i think they've come a long way, meta, facebook, they have come a long way. the man was impressive. actually, i watched it on fox. i'm not allowed to say that. >> do you think reis responding to the threats you made to him

in the past? >> probably. >> all right, so for much more on this, let's bring in the university of pennsylvania's wharton school of business. he's also a cnbc contributor. thank you for joining us on the show today. >> happy to be here. >> i want to get your initial reaction to what we heard from mark zuckerberg. he mentioned that the steps they will be taking will be similar to x. what was your take on what he had to say? >> similar kind of take, frank. i think what we're seeing here is not super surprising, we're looking at a tech company who is basically saying listen, we have to make sure that we are not in regulatory harms way here and so it's been very clear that the president-elect has stated very clearly that listen, you are with us or you're not. so there is this retaliatory, sort of flavor out there that i think many of the tech companies responding to. it's not surprising, because i think it is pretty normal for most companies to say, you

know, when a new presidential administration comes in, we want to make sure we are aligned for sure. what is critical here, frank, is the idea that this is really the critical question that facebook and meta has been facing for a long time, which is to say listen, are we a news platform or are we a vehicle where information flows through? i think we're about to get our answer on that. >> all right, so we're spending a lot of time looking what the possible motivations are, whether trying to line itself with the incoming administration or be more like x. i want to ask you, someone who is a marketing expert, is there a business reason to do this? there's been a public relations impact. is there a business reason to do all this? >> there absolutely is a business reason to do this, frank. let my lay this out quickly. i think a couple of things. it costs a lot of money to police free speech, free speech in the social media platforms. you have to pay monitors, you have to set up automated algorithms to check across a wide area of high scaled users,

millions, billions of users and things of that nature. so that's a cost. that's a real expense that you can scale back if you're doing this. so from that perspective, economically, that also makes sense. i think it also makes sense from the perspective of the idea that at least for half the population, as you know, there is too much of this free speech, you know, there isn't enough of this free speech advocacy and too much wokism. those consumers will say, you know what? i may be more -- i may look at the platform now more favorablely because now i see it as aligned with my own views on the ability to say whatever it is you want to say out there. so i think there's two reasons. there's a consumer reason that says those advocates of free speech will be more attracted to the platform. those operational costs that could be reduced, frank, are significant in terms of what meta is facing.

>> thinking about 95% of the revenues from ads. how do you see it impacting that part of the business? not fact checking is cost cutting, but what about the revenues coming in? do you see the fact they are shifting more towards x and i want your take on how x is operating now. if they are shifting toward x, what does that mean for future revenue growth? >> it's a great question, frank. there are two forces here that are going on. the first will be, there will be a group of enterprise organizations that will say, we can't be on that platform. we saw that with x, ibm and other companies that said hey, we can't allow our messages to be coinciding with other things that might be seen as hate speech or might be detrimental to our brand. there is that, sort of, that reaction that is going to say, you know, we'll pull back. some companies will pull back and say, we don't want to be on the platform advertising. however, there will be additional counteraffect of that, which will be companies that say, we do want to be there because they may brand

themselves or see themselves, frank, as kind of this antiwoke kind of brand. parallel economy kinds of brands. those brands are probably going to be more attractive. we'll see some companies dropping off because of the effects to their brands and their ideological points of view. but we'll also see some brands coming on board more so as advertising opportunities because of the fact they see alignment with meta's new policies in terms of scaling back these different approaches. >> you know, interesting intersection between commerce and culture when it comes to this decision from meta. i have one last question for you. you work down there in philadelphia. where is your favorite cheesesteak place? >> pats. no doubt. >> we'll talk later. >> am i coming back? >> it's been a great pleasure. appreciate you. coming up here on worldwide exchange, the sector our next guest says is a favorite in

2025, set to dominate the headline 'lreal our mystery chart coming up right after this break.

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welcome back to worldwide exchange. looking for a rebound on wall street following by yesterday's selloff. take a look at futures.

the dow would open up 130 points higher. let's bring in megan chu. megan, good to see you. >> good morning, frank, thanks for having me. >> megan, how do you see today, this week shaping up? what's your word of the day? >> yeah, so i think my word of the day is quality. i think that really describes the environment that we are dealing with in at least the first quarter, probably the first half of this year. the way i think about it, and redefine quality is companying generating really strong, sustainable earnings while also carrying low levels of leverage. so, the two most likely scenarios are inflation continues to come down. the economy softens a little bit, and the fed cuts much more than what we are expecting. in that environment, where you get a softer growth outlook, you really want those companies that are generating sustainable, strong earnings. but if we're wrong and the market is more right and rates stay elevated for longer and

the fed is not cutting very much, if at all next year, then i think you really need to be focusing on companies that do not rely on interest rate sensitive debt or their borrowing needs and higher quality companies tend to carry much higher levels of overall cash. i think it's a win/win. that's why higher quality is a theme we're focused on. >> i want to go back to your base case. i think people now are thinking it's two cuts, maybe just one cut. inflation appears to be stickier than we thought it was. on your base case at least, where do you get confidence that inflation is going down, especially after the read yesterday, we saw companies are preparing for tariffs and prices are going up. >> well, in all honesty, and full disclosure, yesterday's data did not work toward our base case, where we not only had pryer prices paid in the services, but we got an uptick in the jolt survey, and what we're working on the inflation front is really the underlying

price pressures. if you look at categories of housing and then everything housing. housing continues to come down. it's stickier than we would like. if you look at the categories outside of housing, that has been at or below the fed's target for a number of months now, and we just do not see the conditions that would really be necessary, the inflations stay here or even reaccelerate, which is the fed's concern. labor market -- >> meghan, i want to make time to talk about this. your pick for today. what is your pick and why? >> my pick is banks. this is another sort of, i think win/win for the year ahead. banks were a key part of the broadening story we saw in the second half of last year. we expect rates to stay elevated. we think short rates will come down. you'll get really a nice rate

environment and a steeper curve for banks. the thing to watch will really be credit quality. business bankruptcies are very low. consumer credit quality is rocky on the lower end. >> to your point, the highest level in two years, two and a half years. meghan, good to see you. that will do it for us here. squawk box starts right now. have a great day. good morning. before the opening bell, we're going to show you what is moving, could be some comments from nvidia ceo, sinking stocks of quantum computing companies. wild fires in the los angeles area have forced thousands of people to evacuate. strong santa ana winds, we'll bring you the latest on the blaze. it's wednesday, january 8, 2025, and squawk box begins right now.

good morning, everybody, and welcome to squawk box right here on we're live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. let's see how things are shaping up. you're getting green arrows this morning. dow futures up 133 points, nasdaq up about 90. that comes after stocks fell in yesterday's session. the dow was down by 178 points, the s&p was down by 1.1%, the nasdaq down by 179%. that was driven by a 6% drop in nvidia shares and a nearly 8% drop for palantir. we will have more on those stocks in just a moment, but take a look at what's been happening with the treasury markets and the yields there. yield for the 10