box" begins right now. ♪ ♪ good morning, everybody, and welcome to "squawk box" right here on cnbc. we've already from the ncaa market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. and yeah, it's not just every three months we get earnings -- >> every quarter. >> every quarter, every month we get cpi. that may be the more important read that we're going to get today. >> they're all important. every earning report, every -- >> the cpi really is important yesterday. >> cpi. >> we expected producer prices. >> cooler. >> cooler than expected, and that really helped markets until marketsed, we've got to do this again tomorrow. you have green arrows. u.s. equity futures at this hour

show the dow is indicated up by triple digits, a gain of about 110. s&p futures indicated up by about 12. the nasdaq by about 55. yesterday we did see markets pop meet following those cooler than anticipated producer price numbers. but you did see the gains kind of give back over the course of the day all right s&p ended up, only by about 11 points. the nasdaq actually ended lower on the day. the dow was up by just over 200 points. we'll continue to see how things go as we get closer to that number at 8:30 this morning. the treasury market has been acting in kind. you're looking at 477 for the 10 year. that's about where we were yesterday at this time. the two-year sitting at 435. we keep watching the 30 year because it's so close to 5%, 4.956%. news just out. blackrock out with quarterly results, overseeing 11.6 trillion under management. the earnings a blowout, i think is fair to say. earnings coming in at $11.93.

beat the streets at $11.19. topping the estimates of $5.49 building in the fourth. black rock generating $281 billion of net inflows for the entire year generated record inflows of $641 billion, more than double the prior year. i had an opportunity to sit down with blackrock chairman, exclusive interview about the results, and we're going to show you a lot of that throughout the broadcast. take a listen to this. >> never had a year like last year in the united states. we did three remarkable mergers. we had a record amount of inflows from clients. >> we're going to bring you pieces of that conversation ahead of 6:30 a.m. and then throughout the broadcast. but it's fascinating just to think about the doubling of the inflows throughout the year.

and just the market share kicking from just about every other asset manager that's happening. and the fact that it's happening and we'll talk about it, you'll see it, a large majority of it in the united states. and that's interesting, i think, and we get into i think in the 8:00 hour, because there has been this perception that maybe, you know, this world's become politicized and wokeness and unwokeness and this and that, red states were trying to hold back, all of that not happening. i mean, so i think -- >> although blackrock has pulled back. >> that's an understatement. the inflows are big, but the assets under management obviously are helped from 22-plus years in the stock market. >> gains in the market yeah. >> of course. but the inflows too. >> but the inflows as well. the s.e.c. filed a lawsuit against elon musk yesterday accusing the billionaire of committing securities fraud back in 2022 by failing to disclose he had amassed an active stake

in twitter. the s.e.c. says musk was ten days late in reporting that he had built a position greater than 5% and that the delay in reporting allowed him to underpay by at least $150 million for shares he later purchased. he got such a deal on those twitter shares. only lost how much money. an attorney for musk called the case a sham, and a ticky-tack complaint. not a tikky-tok complaint. said the s.e.c.'s action was an admission that they cannot bring an actual case. an s.e.c. spokesperson said the litigation of release is, in their words, literally an actual case brought by the s.e.c. they declined to comment further. a post on x, musk called the six a totally broken organization. it's unclear how the s.e.c. will proceed with the case under the trump administration. i have a pretty good idea, but it's unclear at this point. >> you wonder if this was a parting shot? >> exactly, there's a lot of the

parting shots that we're seeing. how many more days? what's it, five more days? five, six more days. >> to me, though, i imagine, and we've got to look into the details of how it all happened. if there's a rule that says you need to disclose -- >> didn't do it, it's an accounting rule. >> and you don't do it, then you pay. and i hate to say it's like a fine. in this case, it would be a fee. but hat's -- i think that's the rule. >> i remember at the time, it was a big deal. because i think it was not only that he didn't disclose, i think he was saying he was not looking to be an active manager, an active -- >> right. >> -- manager or to try and change and sway the company, that he was going to be a passive investor. i think that was marked incorrectly at the time, too. maybe he was changing his mind over that period of time, but that was -- trying to go back and remember details -- >> i think trying to get the depgs and the testimony was the idea of trying to understand what actually was going on. >> right. >> not just in people's minds but the phone conversations, the

emails about what, in fact, was really happening in this particular moment. and as for being a bad deal, i would actually argue to you it is probably, even economically, the best deal he's ever made. >> oh, yeah. but it just -- in terms of how much market cap twitter has lost since then. >> oh, no what i was going to say is, it's the best deal he's ever made. >> because he -- >> not just -- >> ai's different. >> that's what i was going to say. all of a sudden he has bought this form of data -- i've always said this. i was not always in the category of, he's going to lose his shirt. i was in the category of, he's going to turn this thing and actually make money out of this. >> someday. but the grousing -- >> someday, i think actually we're probably on that day. >> the grousing is how much the banks lost and the loans that were made and it was a bad deal. i mean, there were certain parts of media that just loved the valuation of twitter and how much money -- what did he pay for it, what's it worth now? at the low?

and the banks got killed and everything else. so maybe there was always a method to the madness, but i don't think he got a good deal when he bought it. i don't think he was able to buy it on the cheap. i think he way overpaid for it. >> he wanted out of it. >> no, at the time i'm not disagreeing. but in the totally of life when we look back on this, he will turn out to be both the actual -- both the actual twitter, because of what he's been able to do with grok, and what it ultimately has done to his influence, therefore the valuation -- >> and the savior of the free world and the first anticipate, yes. it's very good for humanity. and for all of us. we should all be celebrating, and i agree with you. >> okay, on that, let me move on. speaking of elon musk, he will be in attendance at president-elect trump's inauguration on monday, along with billionaires jeff bezos and mark zuckerberg, according to an official involved in the planning of the event who said that they would have a prominent

spot at the ceremony, all three of them. by the way, musk, bezos, and zuckerberg are currently the three richest people in the world, according to the bloomberg billionaires index, in that order. musk, bezos, zuckerberg. monday is a market holiday, but cnbc will bring you special coverage of the inauguration live from washington. that coverage starts at 9:00 a.m. eastern time. we'll be talking to a lot of special guests, including stanley druckermiller, gassing to to be talking about what he's concerned about with government spending, how to get control on that. a lot of big guests from that coverage. it starts at 9:00 a.m. on monday morning. coming up, a big bank set to report. we're expecting results from jpmorgan, wells fargo, goldman sachs, and citigroup in the next hour. up next, the latest on the trump transition and confirmation hearings for key posts in the incoming administration. "squk x"omg ghbaawbo cinrit ck. . (1,2,3,4 . . ) hina: ichi, ni, san, shi... (1,2,3,4 . . )

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less than a week away now from president-elect trump taking office. joining us to discuss what's ahead for washington policy in the trump administration is tobin marcus, head of policy and politics for wolf research. what do you think -- before we get to that, what about the -- some of the cabinet hearings? hegseth looks like they circled the wagons. he may not -- i don't know how many he loses, but he looks like he's going to be secretary of defense.

>> yeah, i think hegseth will get through. it's possible he loses some republican votes from outside the panel, but you know, on the armed services committee, he had what appeared to be quite uniform support. and jody ernest, who's been kind of the key vote for him, someone initially skeptical, has been very vocal on sexual assault in the military as an issue, had some concerns, she's turn around and made it explicit she'll be supporting him, so i expect he'll get confirmed. >> pretty eventful, that hearing. hasn't always been like this, has it, tobin? is it different? it seems worse, to me, the -- some of the, i don't know what you'd call it, grand standing? >> yeah, i think partisan acrimony has gotten more intense across issues, including confirmation hearings. he as very nontraditional nominee. when he was chosen by president trump last year, he was somebody who immediately leaped off the page who was going to be controversial, who democrats

would tee off on, who would elicit some concerns from republicans. he's managed to allay those concerns with help from pressure from the trump camp. it's not surprising this is someone who would get some scrutiny. it's not that long ago we have gotten a lot of uniform bipartisan support for nominees. i think we'll see some of that in this case also. scott bassen has his hearing tomorrow. >> who's not going to make it? rfk? i hear his prospects are going up, rfk jr.'s. is tulsi gabbard going to make it? >> i think she's the most realistic person at this point who might go down. there have been some concerns about her specific policy stances on some surveillance issues, and she i gather has not been terribly impressive in meetings in terms of putting those to bed. i still would guess she gets through, but she might go down. kash patel is the other one that's been controversial, but people haven't been as vocal in terms of raising concerns. hegseth i think is a bellwether. the fact that he's been able to put the concerns within the

republican senate caucus to bed is indicative i think a lot of these people are going to get through. rfk certainly i think will. >> let's talk the big bill and taxes, then we can talk some tariffs. just like one of your quotes here, a lot of conjecture swirling around, but in the end, trump is ultimately the decider. and we found out the president is the decider. because george bush, "w" told us, do you remember that? >> i do. >> on so you are confirming that the president of the united states, he's the decider for all the strategerie? >> right, and i think there's a lot of strategerie being reported on issues like -- you know, i think -- i believe these reports in terms of what the staff-level conversations look like. we've had, you know, "the washington post" reporting that they're looking at targeting universal tariffs. we've had "bloomberg" reporting they're looking at phasing them in gradually. i don't think any of that is a done deal. again, trump will ultimately make the decision.

but you know, we've gotten a lot of questions from investors about what the day one executive orders are going to look like. i think the fact that there are different swirling ideas that apparently have not been presented yet to president-elect trump suggest to me they're not going to be ready to do some big bang tariff action on day one. we do think ultimately big moves in terms of where tariffs end up. certainly if there's need for external revenue services, he declared yesterday that would indicate we're looking at durable tariffs that would raise real revenue. we think it takes longer to get there than some market watchers have been expecting. >> reality sometimes, the best-laid plans of men, we have a cpi report due today. tariffs, taxes, the reconciliation, whatever goes into that. it could all change. just like the fed. fed, you know, they got those great dot plots. oh, yeah, we're really sure we're doing this. could be totally pie in the sky or fictional.

all of this could change if inflation, which we don't know, maybe it is coming down as expected. maybe not, though. >> yeah, no, it's going to be a really interesting early part of the year. i think the pattern of the last few years clearly has been hot seasonality in terms of economic data are. would not be remotely surprising if we saw a similar pattern earlier this year in terms of these prints. obviously right now we're looking at the december print. we could be looking at a multi-month period where inflation looks like it's running pretty hot. rates already have been concerning. to markets no guarantee of relief there. so yeah, i think that the conservatives who are pushing for big spending cuts as part of this fiscal package will be empowered to the extent that we see more signs of market concern about deficits with rates being high. and i have always thought that conservatives have, you know, pretty good amount of leverage to push for fairly real spending cuts in this package. i think that's going to be a

less stimulative bill and a risk to certain sectors in terms of potential ira changes, potential medicaid reforms. it's not going to be kind of pure positive sum like happy news for everybody in this bill. i think there will be some real tough choices involved. >> tobin, trump's not else on able to run for re-election. we've heard what he says about entitlements and medicare and social security and everything else. but then you put doge or whatever, however you want to pronounce it, doge in there. is there any way that, if it looks like, you know, we're headed for 40 trillion, you know, maybe interest rates go up, maybe inflation is hotter than thought, is there any way that comes on the table? or that just be -- he's been too definitive that that would never happen? >> yeah, i mean, never say never. but certainly this -- i mean, the idea of before 2026, republicans on a party line basis moving big entitlement --

outside of medicaid -- is not going to happen. the lame duck question. between '26 and '28 when trump's term limited, when you presumably have a democratic house after the midterms, we get the typical pattern of thermostatic praection, could you get some grand bipartisan then? i personally would not peg trump as somebody who wants to kind of have his final act be what will be, you know, very unpopular, i think. but necessary deal on entitlements and tax increases. but you know, we're going to need it sooner than later, the numbers are alarming. >> right. even when you talk about doing something in 2060, you know, people still squawk. with age and retirement or whatever. tobin marcus, i'm not going to say anything about wolfe. you're tired of that, wolf of wall street, all of those things. i'm not going to say anything but i just said it. tobin, thank you. not the wolf of wall street. >> it's a tactic. >> he's definitely not the wolf.

or whitney wolf or whatever. is that bum where? >> yes. bumble, not bumbler. >> who's the wolf in "pulp fiction"? >> obviously the fixer guy? >> yeah, what's his first name? we'll get it. i can look it up quickly. pretty cool character. >> he is. when we come back, a big morning ahead for the markets. >> winston. >> winston, yes, yes, yes. the country's largest banks begin reporting a little later this hour. ahead of that, you see ll of those major banks indicated higher. wells fargo the biggest gainer right now up 1.4%. at 8:30 this morning, a key read on inflation. that is the december consumer price index. that's a big number. we'll have a lot to see with that. the fed's going to be watching it cse, lolytoo. "squawk box" will be right back. . wanna see? (♪♪)

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in a blog post yesterday, microsoft jumped into the debate over quantum computing. the company said 2025 is the year for its business customers to become quantum ready by preparing their organizations for the actual leap in technology. shares of quantum computing stocks jumped in yesterday's session, including a gain of about 50% for ra getty computing. all of those stocks have declined sharply in january on skepticism about the timeline of quantum advances from ceos, including nvidia's jensen wong, who when he raised issues about it, that was a real knock for all those stocks. they are still huge gain percent you look back since the december

announcement from google that it had made an important advance in quantum hardware. separately, microsoft planning to pause hiring in part of its u.s. consulting businesses as part of a cost-cutting plan according to an internal memo that's instructing employees not to expense travel for internal meetings. executives are going to have to authorize trips to ensure spending is being used on the right customers. >> such a weird thing to think about when you think about how much they're spending overall on ai right now and getting other things out. guess you got to look at all those. >> got to look at everything. meta platforms cutting about 5% of its workforce, focusing on the company's lowest-performing staffers on an internal forum. ceo mark zuckerberg informed employees that the company would be moving out low performers faster. he told workers that 2025 will

be an intense year. for the lower performers. not in a good way. >> this is what ryan chesky called founder mode. the idea of like, stop listening to everybody else around you. do what your gut says. even when unpopular. and this is what -- this is what mark zuckerberg is now doing. and you can see it across the entire enterprise. >> organization, yeah. >> it started with the hair. used to be really short, remember? i like it longer too but he's like -- it's ot the same mark zuckerberg. >> i think it actually started with the mixed martial arts training. >> and the surfing, looking cool with the flag and stuff. >> yeah, fourth of july. coming up -- >> i like him a lot more, andrew. >> i know you do. exclusive interview with blackrock ceo larry fink. we'll show you his comments about the record inflows in the fourth quarter and his reaction to the l.a. fires, as somebody who grew up in los angeles, as we head to break a look at yesterday's s&p 500 winners and

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good morning, everybody, and welcome back to "squawk box." we are live from the nasdaq market site in times square. i'm becky quick along with joe kernen and andrew ross sorkin. >> show us -- you say -- they're going to have to take your word for it. >> we're here. >> hey, hey. >> just happens to be the case. >> there we go, gang's all here. >> what's the problem, you guys don't want to -- >> i did it out of the blue. >> you did? >> yeah, i made that up. >> director's supposed to follow along? >> our director does. he's pretty amazing. he saves us from ourselves a lot of times. >> a big, fat finger, i think. >> you should be nicer. >> now, now. >> wait until you're picking your nose, that's when you're going to wind up back on there. >> that means you don't pick

your nose, but you can't see what else i'm picking. >> never mind. why did i take us down this road? let's take a look at where the futures stand this morning. dow is indicated up by about 112. s&p futures up by 11. the nasdaq up by 63. blackrock out with fourth quarter and full year results this morning. the stock right now on the back of that news. let's show you where things stand because the world's largest asset manager now overseeing 11.6 trillion under management, beat the top and bottom lines. the stock up about a little over 2% right now. in the fourth quarter, block rock generating $281 billion in net inflows. i ended up speaking to blackrock chairman and clr and asked him about the factors that appear to be driving the performance. >> we announced three mergers in 2024. we spent $27 billion in acquiring these three firms. generally, when you're doing

mergers, clients pause. they want to see what the firm looks like. they want to understand, what does it mean for them? our job is to try to tell them what everything means to them. so in the context when we did three remarkable mergers, we had a record amount of inflows from clients. so $641 billion of net inflows, $241 billion in the last quarter. over $3 billion just rom the u.s. alone over the course of the year. across every segment in the world, whether it's passive, active, index, alternatives, we've just -- we had a really great inflow. what it translates into, clients are believing blackrock can help them and provide more for them. >> what do you think you're doing? meaning, this money is coming at a time where it's not being evenly disbursed. >> no. >> to all the asset managers in the world. >> no, i think what's going on in the asset management industry is true in most industries. clients are doing business with

fewer organizations. you see that in retailing. so let's look at, you know, walmart versus so many of their competitors. their market share really improved over the course of the year. i think what's going on is you could provide more. if you have the scale of providing that with your clients, your clients will reward you with that. i do believe our penetration with clients worldwide, from cash management to long-duration assets across the board, fixed equities and alternatives, really just gives us that differentiating model. now, you know, we are the number one firm in etfs. the number one firm in investment technology through aladdin where we had 12% organic growth in that, on top of that. we had 7% net new fee growth. so every metric that you suggested was a record moment for us. >> we're going to get into a lot of other issues, including the issues of woke and unwokism and climate.

we don't get too deep on the bitcoin topic. but we get into a whole conversation, well, get into a conversation of the market which we're going to have to see in a little bit. we do get in a conversation about insurance. one of their big clients are insurance companies, as it happens. >> insurance companies and reinsurance companies. >> insurance companies and reinsurance companies, exactly. fink, we should mention, is a native of los angeles. i asked him about what he thinks of these devastating winds and not just the personal but also economic cost. >> as a loss angelino, it is horrible to watch. i used to hike the santa monica mountains all the time. i used to -- i mean, it was one of my pleasures of growing up. actually looking for snakes and reptiles as a kid, walking through the chaparral. and i was there during the great bel air fires. so, you know, we've always had fires in los angeles. but we've never seen the destruction like this. maybe we're going to have to redefine, you know, event risk

throughout so many parts of the country. and it's going to be a big issue in america, you know. the role of homeowners insurance. and homeowners insurance is becoming a larger and larger component for home ownership. and i think this is going to be an issue for government going forward. and, you know, i think this is going to be one of the bigger issues that we're going to have to be tackling over the next four years. but, you know, when you have whole neighborhoods destroyed and you have infrastructure and schools and supermarkets destroyed -- this is not a one-year fix. this is going to be five, six, seven, maybe ten years of fixing. >> big issue raising about just the idea of what homeowners insurance looks like in america over time. the other thing is, they now have a massive investment in infrastructure. that's what they are trying to do. and so we're going to spend a little bit more time later in

the conversation talking about what that infrastructure play looks like, not just in l.a. but around the world. >> i hadn't really thought about this idea that home insurance is going to play a much larger role or much larger part of home ownership, a much bigger part of the cost. you think about that in coastal areas. >> right. >> you think about that maybe in the wildfire areas that this had been in the past. if that spreads out and becomes a bigger issue, as he was saying in other parts too, in the midwest they've had more issues with some of the tornados and damage that's been done. same thing in texas. if that plays a larger role across the country -- >> makes home ownership a lot harder. >> another issue that is making it tougher for young people to buy homes these days. >> i think insurance companies have a -- we've asked warren about it. he hasn't seen much difference in the actual claims. i mean -- >> we haven't asked him recently. i've talked to him a little more recently about it. >> the last couple of years? >> in the past couple of years,

i think it has made a bigger difference. >> just where you're building. >> it's where you're building, how much you're spending on these things, too. it has been a bigger issue in the insurance costs and the risks they're associating with it. >> building right next to the water, you're going to have to raise rates. >> we're going to bring you a lot more of that exclusive interview with larry fink in the next hour. >> it's also about whether states will allow you to charge what you need. >> right. >> for those rates, too. >> right. >> as inflation has gone up and you haven't gotten those rate increases, i mean, in california, they're talking about it being 200%, 300% to build back what was already there, there's not an insurance policy that covers that. >> california, 170-mile-an-hour gusts in 2011. they have let things go -- i can't use a four-letter word. in terms of forest management and everything else, delta smelt -- >> i'm not going to disagree but it's still going to have an impact -- >> that's what i mean. you need to fix government. you need to fix --

>> that's exactly, but there's also the winds. >> the home ownership component -- >> the winds have always been there. >> the home ownership components -- >> as i said, 160 miles an hour in 2011. winds aren't any different than they were 100 years ago. >> it's a big part of inflation what we've seen the last four or five years, what it costs to build these things back. >> we're going to talk a lot more with larry fink. bibes going to talk about hi g t on infrastructure. "squawk box" right back after this.

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our next guest is a crisis pr veteran. we're going to get his response to the california wildfires plus share his unique insights on the white house's unusual alliances throughout u.s. history. joining us right now is eric dessenhall, the chairman of dessenhall resources. he stepped away from day-to-day duties at his company. his new book "wise guys and the white house: gangsters,

presidents, and the deals they made." and we'll tease it for now just to say that you go back through lots of administrations, and this is not just a history book. you're looking at current administrations too. we're going to talk about that in just a second. why don't we start with what's happening with the california wildfires. already we are seeing the blame game taking place. what happened, what went wrong? how was this allowed to get so bad? was the state and the city, were they prepared for hat's happened here? >> i remember years ago there was an l.a. earthquake, and i was watching the news coverage. and somebody, a reporter went up to a town manager and said, what went wrong here? and i thought, well, the earth moved. and so, what's happening now is the only thing that matters in this news cycle is blame. that is the only thing people are going to want to talk about. nobody wants to talk about solutions. it's all about blame. the mayor really cannot recover from something like this. >> she was out of the country. >> she's out of the country in ghana. >> slashed the fire department's

budget. >> well, right. and i think that when you are a mayor, when you're somebody in this situation, the whole idea in politics is, it's all about accepting credit for things you didn't accomplish, and taking the blame for things you didn't cause. she is going to take all the blame. there's nothing that can be done about it. the one that's more interesting to me, because it's more survivable, is gavin newsom. because he wants to -- he wants to have a future. and what is going to be imperative for him is what the public, if he wants to run for office, is going to need to look at is, how well he takes your beating. one of the things voters are very interested in, they want to see how well you take it. and whether you can endure taking it. and second, what he's going to have to worry about is bringing money to the state. that's really the focus. in terms what was the mayor can do, that is beyond anything i can possibly comprehend. >> how -- what are gavin newsom's odds of success at bringing money to the state? already you've had the house speaker, mike johnson, suggest

that there should be conditions to any aid that comes along. and clearly, this incoming administration is not friendly with gavin newsom and vice versa. >> i don't think the odds are great, but at least he has odds. the mayor has no odds. there is no play there for her. for him, if he can get something to the state, it could work. the problem he's going to have is he's going to have tension between wanting to rebuild and environmentalists who are his big constituency who don't want to rebuild. and so it is an absolutely fraught situation. and you have somebody who wants to be president who external circumstances are really going to determine it more than anything he does. >> you think he's going to be looking at the rebuilding process and saying, maybe we don't do it as much because the environmentalists helped put him in the position he's in? >> i is they that's a tension he's going to have to deal with. the problem is how do you tell people who lost their homes, we may not rebuild? i don't see how there's a win there. there's no option for them other than to rebuild. you can't just say, well, just

move somewhere else. that's a little bit glib. and that's going to be a problem he can't dig out of. >> more than a little glib, i think. >> yeah. >> then the questions that come back to why the reservoir was empty, why the fire hydrants were empty. he's called for an investigation. how much patience will there be with that playing out? just given the acrimony that's already built up? >> well, that's right. and no matter how much a client under attack wants to get out of the blame situation, i have seen, no matter what chess move they make, it always comes back to, who takes the fall? and that is going to be the news cycle we are going to be in for a very, very long time. >> how do you think of he contrast between what gavin newsom is doing right now and between what the governor of florida, desantis, had done when hurricanes have devastated his state? because you can look at this and say, okay, there are -- there are natural disasters, acts of god, things we can't control. but there are human responses to these things. >> well, there are. >> and the response has been

pretty different. >> i think there's been greater competence in florida. i think that they're more used to it. i also think that you have a leader there who, while controversial, is very, very camera-ready in the sense that he looks like somebody who is in absolute command. i never really understood why george bush got in so much trouble over katrina. because there was really only so much you can do in a natural situation like that. but unfortunately, what the story becomes is the handling. it is always about the handling. >> vacuum, didn't handle it. a vacuum, they didn't address it. if you let, you know, the chips fall where they fall, that's exactly what happened to poor "w" back then. probably should have never come out and said that brownie's doing a heck of a job. >> there's no question. >> mishandled the whole thing, but you're right. >> but i think it's still a hurricane. and you're still dealing with an act of god. there's a reason why force majeure clauses exist, because

you're dealing with somebody beyond control. that's why i find it humorous when i think of the reporter asking the town official in l.a. in 1994, what went wrong here? the tectonic plates moved. >> right. let's talk about your new book. "wise guys and the white house." when i first got wind of it, i thought it was going to be looking back at a lot of historic administrations that we've kind of known around the edges, whether that's fdr, whether that's jfk, some associations with the mobsters and things they had done along the way. i think what's most interesting about this is you take this right up to the biden and trump administrations, that this is something that's still active today. what's the relationship -- >> oh, absolutely. >> -- between organized crime and power? >> well, you know, one of the cliches we always hear in washington, it's not the crime, it's the cover-up. turns out the cover-up really well. they're cover-ups. one of the things i've seen in the history from roosevelt to biden is covering up organized

crime connections works very well. my favorite biden example, when he was running for senate in 1972, he was behind. he was a kid. he was 29 years old. he had a serious opponent that was supposedly going to beat him. an incumbent. and the teamsters, which were controlled by the bruno family in philadelphia, made sure that the attack ads that were going to hit biden on election eve, the newspapers weren't picked up and delivered. the teamsters made sure of it. so that's my favorite biden anecdote. what's interesting about trump is trump drives people crazy when he says -- when he's accused of something naughty, he says, that just makes me smart. he's actually right are because if you look at how he dealt with organized crime, he did it in a way that was right on the line. nobody can provably show that it was illegal. and to be specific about it, if you picture in manhattan -- >> talking about in buildings? >> in building. you picture a building being built. you picture steel. trump didn't use steel in trump

tower. he used concrete. steel is an international industry. concrete is controlled locally. it was controlled by genovese, columbo family. he gave them a good concrete contract. that took care of labor problems. the detractor would say, if he got something in return, it's illegal. my response is, it's been 45 years. when donald trump says, that makes me smart, as much as people cringe, it's actually kind of true. the other thing that's fascinating about trump of all the presidents i go through, he is the only one who uses organized crime as a branding thing. he openly has said on television, repeatedly, yeah, i had a deal with these people. he said on "letterman," they're very nice people. as only trump can do, if he's asked five minutes later, did you deal with the mob? no, i would never do that. and people go, okay. this is trump. the branding, to use organized crime as a branding, as a

patina, as a whiff of who you are, is unique in presidents. but i go back to roosevelt and the work with lucky luciano and the johnson administration -- >> and the waterfront, protecting the waterfront. >> protecting the waterfront, and lyndon johnson when they had civil rights problems -- were you unable to connect the dots with joe kennedy and -- >> joe kennedy was not a bootlegger. that is a very important thing to understand. >> what about the elections, washington virginia, chicago -- >> yes, but jack action bobby, and joe were different characters. joe worked the mob. jack and robby didn't necessarily know. more interesting, the efforts to kill castro. boobee kennedy and jack kennedy inherited the nixon campaigns -- i mean, the eisenhower administration's efforts to kill castro. bobby kennedy was furious to hear the mob had been contacted. the cia said, bobby, you want him dead, castro, but you want us to use the nicest people? really? is this where we are? >> right.

>> so you'll see in the book what ended up happening. but they did use the mob to try to get castro. didn't work. >> fascinating stuff. eric, thank you. the book is "wise guys and the white house." and we appreciate it. all right, we've got breaking news just out. wells far go reporting its earnings. leslie picker will join us right now with more. >> hey, becky. the market liking what it sees. shares of wells fargo up nearly 3% on these numbers. let's get to the fourth quarter. reporting 1.43 per share gap earnings. you can see up about 2.6%, those shares. on the top line, that was a miss relative to estimates, a small miss, 24.4 billion for the fourth quarter. that was down slightly year over year. but i think what has the market excited about this report is the net interest income guidance. because they are saying, and this is new information, they expect 2025 net interest income to be 1 to 3% higher than 2024

net interest income, which came in 47.47 billion dollars for the year. that's because throughout much of 2024, we were seeing negative growth in net interest income for the firm. for example in the fourth quarter, wells reported $11.8 billion, down 7% year over year. so perhaps an upturn in net interest income here. noninterest income, as has been the case for wells, up 11% year over year. although missing estimates slightly. investment banking fees up 59% year over year. investment advisory and brokerage conditions up about 15% there. there were a couple of special items in the quarter, which is why we are not necessarily comparing eps at this time. there was a 26 cent per share tax benefit which was additive to eps. also a severance expense of 15 cents per share and net losses on debt securities of 10 cents per share. the stock reacting positively,

up more than 3% on these earnings results, guys. >> all right, lie, thank you. jpmorgan just reported earnings, $4.81 a share, above estimates of $4.11. managed revenue coming in at $43.7 billion, better than the $41.73 billion on the street was expecting. you can see the stock right now benefiting from these numbers. the highest quality lender, obviously. it seems like quarter after quarter. you know, we see that with jpmorgan. a lot of metrics that you can look at. and we'll do that as we have a chance to look, to mull over all these numbers in terms of book value, price to book, everything. i guess it closed at about $116 of book value. you can see not too many banks trade, what is that, 2 1/2 times book?

crappy lenders trade below book at times. so, asset and wealth management, $5.78 billion. maybe we need to start thinking about charge-offs and the like and net reserve builds. charge-off, $2.4 billion. net reserve bill, $267 billion. assets under management, talking about blackrock in terms of jpmorgan, up 18%. market was up about 20% year over year. so it all sort of makes sense and probably not a huge surprise. we'll have more on jpmorgan and what to look at in relation to its peers as well. they all sort of -- there's similarities and macro trends that affect all the banks. then you can see some, depending on the specifics of the businesses, some do better in certain areas. the headline here, jpmorgan profit jumps as dealmakers and traders ride the market rebound.

maybe that's a good summary. >> yeah, there had been questions about the consumer business, and i'm still digging into some of those numbers too. it looks like they're strong across the board. >> we're going to talk a lot more about all of this. we've got more of the big banks' reports and reaction from wall street straight ahead. later, former house speaker paul ryan is going to join us to lkbo the trump transition. all that and more as "squawk box" rolls on after this.

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it is just before 7:00 a.m. right here on the east coast. you're watching "squawk box," right here on cnbc. among today's top stories, the s.e.c. filing a new lawsuit now against elon musk over his takeover of twitter. it accuses him of securities

fraud. the agency claiming that musk cheating twitter shareholders out of more than $150 million by waiting too long to disclose his growing stake in the company as he prepared his takeover bid. musk's lawyers calling the lawsuit a sham and a post on x, musk called the s.e.c., quote, totally broken. tiktok reportedly planning to shut off its app for u.s.-based users on sunday. the same day the federal ban is slated to take effect. according to the informational platform, planning to give users the option to download ought their data should the app go character. investors preparing for the next read on the cpi report, the headline figure expected to show a 2.9% jump from a year ago, up slightly from last month's reading. we've been looking at results from jpmorgan and wells fargo. and we're awaiting goldman sachs and citigroup. joining us now, stephanie link, chief investment strategist at hightower advisers and a cnbc

contributor. you've own the some of these names in the past, stephanie. give us the snapshot of at this point in time, from what you know so far from who's reporting. reported. >> yeah, so far so good, right? i think the big theme on the positive side for the quarter for all the big banks is going to be fee growth, and this is exactly what we saw from jpmorgan and warg wells fargo, up 59%, these are huge numbers, and last quarters, very big fees as a surprise to the up side. you're going to continue to see equity capital markets from 40 to 60, 70%. bank of america is going to post a 70% number. investment banking, 30% on average, and equity and trading in the teens. that's the positive. also positives, m&a. remember last year, we did

$3.3 trillion in global m&a. larry fink just talked about it, right, so we are going to see a tail wind this year from the momentum last year. but it should improve under the trump administration. by the way, it's january 15th, joe, and we've already done $100 billion in global m&a. those two will be real positives. long growth is not going to be so great. low single digits for the group on average, and net income income and net income margins will not be great, but we have wells fargo raising the net income guide, and that's the real icing on the cake. we haven't seen net income growth in a very long time, and that has something to do with the yield curve. by the way, bank of new york melon reported net income interest that was better, and net income margins that were much better than expected. stocks are still cheap. wait until we get basill 3, the

end game, not being as restrictive, you're going to see buybacks as well. i think these stocks are still a buy. >> it's kind of weird, stephanie, we understand how some of this stuff works with the stock market, like the banks and the trump trade, so a the lot -- a lot of stocks moved and the inauguration is not until january 20th. we understand how stocks can move in advance of what they think are going to be some tail winds, but why do the number already, the past three months, why do the numbers seem to reflect better operating conditions? >> well, i think a lot of it has to do with, joe, we're growing at about 3% in the economy. so there is a lot of underlying momentum in the economy that the trump administration is inheriting. and i think that people and ceos and the executive benches at a lot of these companies are

starting to feel better, on top of the activity already being strong. and these companies have done an amazing job in terms of expense control. so that's been the story for the last couple of years. it hasn't really been the top line so much as it's been the expense, and kind of keeping things in order and in check until we could see better activity. and so i think that's really at the end of the day, the economy is driving the activity, and we're going to see a continuation of that under the trump administration and his policies. >> maybe not just the continuation, but some of the other stuff, if they've gotten their, you know, the expense line. >> yeah. >> under control and in order, and then you do see m&a pick up and whatever other things you think of with deregulation, whatever you expect to happen, they could be totally leveraged, and this could be the beginning of even better numbers like the next quarter, you could even see better numbers.

>> 100%. that's why i mentioned, net interest income, that's what i'm watching. we asked all the ceos, when are we going to see net interest income increase, and most were cautious and conservative. that's going to be an additional driver in 2025, we haven't seen that in a very long time. to your exact point, if you have good expenses, solid margins, and now you get top line acceleration, that's operating leverage, right? that's the definition, and that's when stocks really take off, and these stocks are pretty cheap. jpmorgan, it's a beast, right, it's priced like that, two times book. they are so good at what they do. however, some of these other banks are trading at 1, 1 1/2 times booked, and i think as rotc goes higher, and fundamentals go higher, you can get maybe into the upper eight times book, which gives you a lot more up side.

by the way, the regionals, like truist, i own in full disclosure, those are trading below book value. citi group, below book value. if they're buying back their stock below book value, that's accretive in addition. >> phanie link, thanks for the quick analysis. more to come, thank you. still to come, the countdown to the big number of the morning, the latest read on inflammation, we'll be getting the december inflation price index. expectations after the break. plus, former house speaker paul ryan will join us to talk about thine coming trump administration, and what he expects to see after the inauguration. we'll be right back. this store doesn't have agentforce, so an ai agent didn't tip off the stylist as to what i might actually wear. - yes. - oh. that's a commitment. [glass knocked] hey bud! whaddaya think?

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we're less than 90 minutes away from the number o.f the morning, the december consumer price index, and economics reporter, steve liesman is here with a look at the preview, and how much inflation progress we have been making. we have been talking off camera. no reason, necessarily, to be complacent because of yesterday. could be good. >> a few things might feed in, might be helpful. a couple things might be unhelpful. the market is looking for another downside in the consumer price index that we got yesterday in the consumer price index, which joe was talking about. the consensus forecast expects the winter inflation stall to continue. here is what we're looking for. zero three's and zero three's, that's not going to do it for the fed. food and energy both the same, but this would raise the year-over-year rate, 2.9% from

2.7, and food and energy, 3.3%. think about this, a half point higher than the pce. it's closer than it appears but still not good enough. by this time two years ago, we had made considerable progress bringing inflation down. check out this chart. the high was 9% in june of 2022. brought this down to 6.4, big jump in december. another big jump by this time last year. what we're leaps lower in inflation have now become baby steps. if the consensus is right, if it proves just 0.4 percentage points on the year, 2/10 forecast in the beginning of the year of the cnbc fed survey. inflation progress has disappointed. there was somewhat more progress on core inflation. it remains well above 3%. beyond december, the bullish inflation case is this, that the old inflation numbers that we got from that pop earlier this year, they drop out, help the numbers in the first part of the career, and we don't get unexpected price hikes like we

got in january last year. the housing price inflation declines and helps the effort. the tariffs, whatever they may be do not spike price hikes or continued inflation. it's more than just a single rise in the price. the fed is going to be on hold until the potential impacts of these policies are clear, and it's confident inflation is once again on a clear, downward path. it is not now, unless we get a surprise, the consensus numbers expected are not going to cut it for the majority of the committee. this is likely a report that's going to enforce a hold in cuts and maybe an extended hold. >> can i just ask, the increase in health care costs because of maybe higher costs that are going to be paid to medicare advantage that are going to be signalled, when would that show up, when would that affect not this number, i don't anticipate? >> i don't think it's this number, no. and you might also have offsetting, we're hoping for january, february, looks better than a year ago because of the price hikes we got. motor vehicle insurance may come

off. we don't know what the effects are going to be of the terrible wildfires out there. the hurricanes in the fall boosted up used car prices. that was something that worked its way through the system. so there's going to be a lot of stuff to look through, and then of course, we don't know what to do with the tariffs. you know, if it's a one-time price hike, but then if there's retaliation on top of that, it becomes more difficult to really figure out. it was the line in the minutes this week that said, we don't know if stuff is going to be temporary or permanent. that's what it said until the minutes. they don't know, i don't think you know. >> they are probably reluctant to call things transitory. >> right. right. but that may be the right call on tariffs. it may not be the right call on tariffs. we've heard the europeans are preparing counter measures so we don't know. there could be downward pressure on some prices and upward pressure on others. it's a lot of fun to be an economics reporter.

>> keep things interesting. >> when we come back, a lot more on "squawk box" this morning. exclusive interview with black rock ceo fink. plus former house speaker paul ans joining us to talk about his expectations for the incoming trump administration. you're watching "squawk box" and this is cnbc.

♪ president-elect trump is ready to take office in five days, and a big agenda item for him this year will be reauthorizing those tax cuts and job act, then getting the economy back on track. joining us right now to talk about this and more is former house speaker, paul ryan, he is the chair of teneo and a partner

at solamir capital. thank you for being here. >> good to be back. happy new year. >> i want to talk about a lot of things and what your expectations are. i know you have your focus on the tax cuts bill and whether that will be reauthorized coming up this year. something you fought for, your white whale. >> it was one y biggest goals. we made the corporate side permanent. this is the individual side, but it affects a lot of businesses and when you have these kinds of tight margins like you do in the house, and you're doing reconciliation, this is going to be a tough needle to thread. that's why to me, republicans need to stay unified. look, i want to see trump succeed. i wish him well. if he succeeds, we all succeed as a country, and there's all of this optimism that's coming to the country. we surveyed 700 global ceos and investors representing $10 trillion in market cap. it's a 32 point swing in optimism. >> from when, a year ago? >> from a year ago. so that kind of optimism will

manifest itself if congress delivers on these policies. that means this reconciliation bill has to pass. it's going to be hard to write. it's all about having not having republican factions erupt. especially with these narrow margins. to me it's really really important that republicans stay unified, get this done. and i think they're going to do it. it will take a while. it's a sequence of bills. you have to build your baseline, pass your budget, then do reconciliation, the fastest they could probably do it is probably july. >> there has been this idea for one big beautiful plan that mike johnson and i think the ways and means committee were kind of favoring one big plan to put all of this together instead of using reconciliation twice, had which you have the opportunity to do this year. kim strassel says flushing this gift down the toilet. >> i spent my whole year in

congress working on the reconciliation law. >> should it be one or two? >> i'm for whatever mike johnson and john thune think it needs to be to get it passed. >> i think it's different. >> john thune has a nice cushion relative to the house. 53 seat senate. mike johnson won't be at full strength until the special elections in the spring. you can't pass anything until then. i would defer to johnson and jason smith at ways and means. i would defer to those guys as to what they think is necessary to pass it, and i think they're probably rating. one big beautiful bill with immigration reform, border control, and tax cuts is probably the way to go. >> you know i love you, and i like the needle -- >> but, but. >> you know i love you. >> comma, comma, comma. >> so you you're calling for unity. >> i am calling for unity. >> it would have been nice. would have been nice before the

election. when you said hey, look, i want trump to succeed, you know who that sounds like? it sounds like a democrat. it sounds like a democrat. >> i hope the democrats sound like that. of course you want trump to succeed, you're a republican. >> i'm a conservative republican. i'm a free market limited government constitutional -- >> that's who i hear -- >> my brand of conservative doesn't overlap with trump optimism. >> you know we argued about that. >> binary, all along. it was always binary, and a vote not for trump was a vote for kamala harris. >> here's the point, a lot of this agenda, my kind of conservative, trump populism overlaps. we disagree on trade and things like that. i'm not a big fan of all the tariffs on our allies, but the point is, all of this other stuff, the tax policy, the border policy, the deregulatory policy, very good for america, very good for the economy. >> don't sacrifice the good for the perfect. >> and i think it's important that republicans stay unified. >> do you think they will stay

unified. >> i do. but it's going to be a challenge. i have watched congress erupt into factions more often than not and when mike johnson is dealing with a razor thin majority, you have no margin. that's why joe is riding me here because i think it's really important -- >> i wasn't riding. i think it's funny when you come on and say, look, i want trump to succeed. that sound like what democrats would say. >> won the biggest comeback in political history. i'm not familiar with the grover cleveland race. >> he doesn't need any help, andrew. go ahead. >> you know what i thought before, now that we have an opportunity to pass a very good agenda, it's extremely important -- >> and he doesn't have to be reelected at this point. he seems a little bit different. he must be more palatable to you this time around. >> my hope is by the end of the administration, he makes a good dent on entitlement reform. >> that's what i was talking

about, what are the chances of not having to run for reelection, what are the chances that doge actually finally looks at entitlements. >> congress needs to look at entitlements, doge can do a lot. >> led by the leader of the party. >> in an ideal world, a reconciliation bill, you make the tax cut permanent, you put big savings in that bill that in the out years pays for the second decade. that's how we measure it, and you have really good entitlement. that's the ideal reconciliation package. >> even though the extension package is as is, or there's a complete rethink of it. a lot of folks are looking at for example, the wharton school, you know about it. effectively, brings the top individual rate actually down to 27% interestingly -- >> the broader base. >> and then gets rid of basically all deductions and

then also moves the capital gains rate up to 27%. it's very interesting. i don't know if you think that republicans, democrats get behind that or the only reason i'm asking is the sort of format that we're living with today, will that be voted on or do you think people will bring these other things? >> i spent my entire adult life in tax reform. everybody has a plan until they get punched in the face. getting this stuff is very very hard. i tried to get rid of salt, a $10,000 salt deduction, that now because of california members has to be raised. when you pass in the house, you're relying on blue state votes. it's a totally different dynamic, quick answer to your question is i think they're going to stick with the plan as it is. i don't think they have the vote margin to go comprehensive different tax reform. stick with the plan as it is, make some modifications, get it passed. to his point, the doge guys,

first of all, those guys could do a lot to help digitize government, to bring modern technology because there's technologists to making government payment rails and all of those things much better. i think there's a case for optimism there. to my point is the way reconciliation works, if you want to make the tax code permanent, and certainty is a big deal for the economy, you combine with real savings and nice debt reduction on top of it. >> a practical tax related question as it relatings to es tech of it all, you're talking about the rails and everything else. there's been an argument for a very long time, that taxes, meaning individual taxes should be able to be sent in an easy way. we talked about putting it on a card, having an easy-to-use web site where everyone can do it. there's always been pushback both from the tax accountants who want the business. >> and the systems. >> but also, frankly, republicans for a very long time

who said we don't want to make it so easy. that has been a big pushback. do we have changes under this? >> i think it changes. i think this is something the doge guys can do a lot of good on on digitizing government. i wanted the eic to be baked into a person's paycheck, so they could see work pain. >> and not wait for a lump sum at the end o.f the year. treasury department doesn't have the ability to do that. >> they don't have the technical ability to do that. their rails are so screwed up, the echnology is so bad. >> do you think people would be okay with the idea of making it a lot easier to pay your taxes? >> i do. we're going into the 21st century. we have to modernize these systems. the way we pay for our structure, file our taxes, transmit money through the system. i'm working on a program at the american enterprise institute to digitize the entire safety net. we have digital safety nets so

we have programmable benefits so you have real work requirements. you have, you know, food goes for food. you can digitize all of these things. >> right. >> i think there's a big -- a lot of conservators are for that. >> why do you think that donald trump would necessarily look at the reform of the entitlement programs, even though he doesn't run for reelection, he's a populist because he's popular want. and everybody hates that. >> we have to. it's going to happen no matter what. >> it's what joe said, interest rates, we have to. >> revisiting the unity thing in a serious, i was serious but in a different way, are you surprised at mike johnson, how he survived with such a narrow margin? it's really amazing, and then my second thing is do you think republicans could ever be like democrats? do you remember how many times

hakeem got -- he never lost. i call him the board collective. >> that's it right there. you have to remember -- >> they can never do that. >> the mind of a republican is as an individualist. a lot of the medals in washington are individuals, collectivism. democrats are more collectivist. they're happy to operate in a collective mode. republicans are historically -- >> i think democrats see it different. i think democrats think republicans are more aligned with each other. it's an interesting faction. >> reagan conservatives say i want to see trump populism succeed because eight times out of ten we agree on things, and we're going to stick with the eight and not focus on the two. >> are you an eight before, before you leave i'm going to give you a hug. come home, i left the lights on for you. come home. >> to the mike johnson question. eight out of ten. >> okay. seven out of ten. >> round it up. >> the reason mike johnson won is because he's a very honest man, and everyone knows that when he talks to them, he keeps

his word, even if he doesn't tell them what they want to hear, they know it's truthful. that's why mike johnson has remained speaker of the house. he represents a certain type of conservative. there are others in the party that aren't his type, but they know he's a straight shooter. >> paul, what's your sense of, you add vise a lot of ceos now corporations across the country, and a lot of them are putting their support quite publicly, they might have been privately supportive, and now they have switched somewhat potentially like you, what do you think of that? >> i think they see a top tier economic team coming into the government. first round pick, lutnick, ken keys, he's literally the most qualified person in the country to be the assistant secretary of treasury for tax. you see russ vote, one of the young budget guys we had in the house, one of the smartest in the country. you see, you know, kevin hassett, very accomplished economist with a bunch of

experience. i'm not a big protectionist, jamison greer, a very credible guy. really knows what he's doing. so i think these ceos see an a team put in place on the economy, and they're ready to go. that's what our survey tells us. we invest in founder businesses, these founders and these middle market bids, they're ready to go. they think m&a is going to be on lock this year. they see this regulation suffocation being lifted off the economy, and they see tax policy being more predictable and favorable. >> and teneo, you see ceos putting deals in place, not just talking about it. >> that's why i say republicans have to deliver. the optimism has to be translated into the policy people are optimistic about taking place, and when you have these narrow margins, we can't factionalize. we've got to stay together to get this stuff done. that's why i think mike johnson is the perfect type of person to deliver this. whatever mike thinks is the best

way to go, that's what we have to do. >> trump called a couple of those guys and said, kwoun, they were -- you know, they were going to hold out, and he called them that day, you do not want to get on the wrong side of this, i think. >> yeah, we have about 18 months, maybe even less. >> you're saying we. >> it's amazing. >> as a country. congress has -- >> i know, i know. >> we have a year and a half to get stuff done, and then in the -- >> you're back, baby. you're back, i like it. i'm happy. eight out of ten. >> former speaker paul ryan, thank you very much for being here. >> happy new year. meantime as we were just speaking, put the news across the ticker here, goldman sachs just out with its results, leslie picker has been going through the numbers. she's going to bring them right now. >> those shares higher on these results as well. a very big beat on the bottom line, beating by about $3.73 per share coming in at 11.95 per

share in the quarter. that's about 45% higher than estimates. on the revenue side, that was also a beat, coming in at 13.87 billion, which was about 23% higher ear over year. return on equity, annualized for 4q, 14.6% for goldman sachs. in terms of the individual drivers for the top line there, the top line growth, you've got to pin it on what we're seeing with sales and trading. fiq and equities each higher by more than 32% in the quarter. driving a 2.74 billion. and equities at 3.45 billion for the quarter. investment banking up 24%. those fees up 24% over $2 billion in revenue generated from those. advisory had a slight miss in the quarter, coming in at

$960 billion, but everything else was a beat equity. in terms of asset and wealth management, $4.72 billion. that was 8% higher, due to average assets under supervision that were higher in the quarter. book value per share coming in at $336.77, which was also higher year over year. guys, important to note the second highest annual eps in the firm's history after that block buster buster year of 2021. shares coming up a little bit up 1.5.in pretrading. >> thank you, lessee, we'll be speaking more with you in a bit as bank earnings roll in. we have more of our exclusive interview with blackrock ceo, the $11 trillion man, larry fink. "squawk box" is coming back right after this. time now for today's aflac trivia question. what year did the donkey first

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weekly. welcome back to "squawk box," blackrock, now overseeing $11.6 trillion. that's with a t. under management. beating on the top and bottom lines. i spoke to blackrock chairman and ceo larry fink in an exclusive interview and asked him about the alternatives business, which is a big new priority for the firm. >> it is my belief for democratic economies to continue to grow and western economies to continue to grow, we're going to have to rely more on the private sector, and the brilliance of the united states economy is based on the capital markets. that's a role to talk about the role in the capital markets. we have the broadest, deepest capital markets in the world. a start up company, a medium company, large company has access to capital like nowhere else in the world, and we underestimate the power of our global capital markets. it is my belief that capital markets are going to become a

larger and larger economic engine in the united states and all throughout the world. i said in the editorial we can't rely on deficits. we don't talk enough about our deficits right now, and i do believe we're going to have to rely more on the private capital, private sector. that's what president trump is talking about in some of the new policies. we'll see how that rolls out. if i had a crystal ball, i would tell you right now that the sectors that are going to grow the most in the capital markets and the private space will be infrastructure. >> one year ago, just this week, we should mention, blackrock announced the acquisition of gip, that deal closed in october, they have since announced more deals. i asked fink, what is next on his wish list. >> i mean, i would tell you -- >> are there other things, you say to yourself we would like to be >> actually, in 2023, we called

it our 2030 strategy, we said we need to get much larger in private market data. we said we need to get much larger infrastructure. we had a growing infrastructure team. we were doing well in it. we're not growing as fast as the perceived market. we had one target. that was gip, and we said in the strategy session in 2023, we need to get much larger in private credit, and we had only one target, hbs, and the beauty of last year is we only had three targets and acquired all three new targets. i don't have any new targets. we may do some minority investments, but we're not going to be -- i don't believe you'll see blackrock in the market buying whole companies. >> also this morning, black rock announcing one of its top executives, mark wheaton who spent more than two decades at the firm departing. he is the head of global client business and was considered a

potential successor to fink. i asked him what the announcement means for succession plans at the firm. >> mark is a dear friend. he will remain a dear friend. he is a really true dear friend of mine. mark came to me six months ago talking about what ifs and all that stuff. he's been at the firm 20 years, and he said, you know what, i'm looking for a new chapter. and over time -- he wasn't decisive back then, but as we talked and talked and talked, it was very clear that he was going to go down a new path. i don't believe we have ever had a deeper, broader bench at this firm ever, and so i'm actually smiling about the ease in which a serious leader of blackrock chooses a new direction in his life that i had many options. and, you know, we worked with the board, with the management team, and this has been a -- it's really a moment of joy not

that mark is leaving, but he's leaving with a hug and he's leaving with a lot of grace. there's a beautiful memo that's going to be out this morning about mark and all that, and what he meant to me. and what he will mean to me in the future. it means nothing. none of this was about succession. >> we're going to have a lot more of our exclusive interview with larry fink in the next hour, including views in the economy, what's happening in the stock market right now, the firm's decision to exit the net zero asset manager's initiative, and the debate in this country over wokism, anti-wokism and the role of blackrock in the middle of all of that. when we come back, we've got some stocks to watch outside the world of banks. "squawk box" will be right back.

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welcome back to "squawk box," i'm dominic chu with a check on your morning movers for this wednesday. we're going to start with a comeback story. quantum computing stocks higher across the board, bouncing back after plunging earlier this past couple of weeks. two big tech ceos fueled that selloff, meta ceo, mark

zuckerberg, and right now, stocks after that drop, you see rigetti, ionq, quantum computing, d-wave, up 16, 17% to the up side. keep an eye on those. media companies getting a boost. meta, reddit and spotify higher app deutsche bank analysts named the companies as top picks and raised the target prices. the firm highlighted meta and spotify particularly saying companies with pricing power will be best positioned to pass through inflationary step up pressures there. analysts noted that ai is going to remain a theme this year. markets will eward companies that display near term returns like meta and reddit as well. turning away from technology, devin energy sup, 1%, after bernstein upgraded from out perform to a market perform, and raised the target price from 45 bucks to 43. they said they are orecasting a

u.s. gas super cycle with significant power demand growth through 2030. for more on that and other key calls of the day, head to cnbc.com/pro. subscribers get full access to the detail and analysis behind the calls. keep it right here. "squawk box" continues after this break.

all right. still to come this morning. we have the latest on the fire conditions in los angeles, and what's expected today with the

weather? also, a programming note for you, the markets are closed on monday, but cnbc will be bringing you special coverage of the inauguration of donald j. trump. we have a big lineup of special guests who will be joining us, including investing legend, stanley dominican republicemiler, albert, and walter isaacson. we'll also be joined by david rubenstein, the founder of the ca carlyle group. make sure you join us. "squawk box" will be right back. or open your eyes and get out here. there's only one vehicle lineup that embraces everything the cold has to offer. the official vehicles of winter. jeep, there's only one. right now, during the jeep start something new sales event, get 20% below msrp for an average of $13,000 under msrp on 2024 jeep gladiator rubicon and mojave models.

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welcome back to "squawk," southern california again facing extremely critical fire conditions today crassacross paf los angeles, and ventura county. contessa brewer joins us from pasadena. >> reporter: smaller fires breaking out elsewhere in southern california because

those santa ana winds are making every brush fire even a potential life-and-death situation, although firefighters got control of those. i'm at a massive command center at the rose bowl. this is the staging area for fire crews from all over the western states. and communications are improving dramatically for these first responders. the mobile cell towers that typically depend on satellites are rather limited for speed and capacity, and verizon told me an engineer figured out a way to tap into the underground fiber lines and says this will revolutionize communications disaster response across the industry in the future, and they really credit outside the box thinking there. that is needed at many levels now in addressing the response to this fire. bipartisan legislation introduced by nevada and montana senators, they tried to get the western wildfires support act passed in 2021, hoping the scope of these fires will prompt more support from their colleagues. governor newsom issued a new order to protect fire victims from lowball offers to buy the

property. he said we will not allow greedy developers to rip off these working class communities. they may not want to get in these developers. we got a warning from new fronts, head of real estate, and he was saying, look, it's already that multiunit property developers were hit hard. it was hard for them to get insurance in california. he warns that they're facing high deductibles, soaring premiums for coverage that likely won't cover full replacement value. and so there is some question about whether developers see this as profitable potential in recovery, andrew. >> contessa, it's obviously a tragic story. i think one of the things i have been thinking a little bit about in terms of the real estate peace of this and the development piece is just what's happening to the rental market out there, given all the people who are displaced. does that become, you know, outrageously expensive? do all of those people stay, do

they go? and obviously they would be ostensibly, if they were staying in rental properties for some duration of time, maybe even a long time until a new house was built. it's how you think that whole sort of system works, and then actually the value of properties that have actually been saved, how the value of those properties may be higher in the short term but may be lower in the long term sitting next to homes that may get built. what's the sort of calculus that you're hearing out there? >> reporter: i mean, i wish i could just boil it down to something simple. you just laid out very well how complicated the various factors are going into this. and there are lots of homes that are really in the middle of a destroyed neighborhood. like the home on one side, the home on the other side. they're gone, and here's one house that's standing. and you think, do i want to be the person living there? not only that, okay, so pasadena borders altadena, which is where

the eaton fire happened, and some of the homeowners were texting me yesterday, look, we were on a zoom meeting for school, and there's no good alternatives for where to put the school that has burned down. so now what do we do with our daughter? we live in altadena, we have our house but our daughter doesn't have a school. now what? and so those factors are going to come into play when people are trying to figure out do they return, and is this a long-term plan? you know, can you figure it out for a year. do you have to figure it out fur five years because of the demand for construction labor and materials, and by the way, a lot of those national crews that are used to going in and respond to go disaster, they're already hired to respond to helene and milton damage in florida and the carolinas. >> contessa, it is, i mean, there's so many questions, and as i said, continues to be a tragedy for everybody who has been involved and engaged in it,

and what the next five years in l.a. looks like, i think is a big open question. we appreciate it, contessa, thank you. >> sure. coming up, citigroup results, plus, we're going to talk tech with doug clinton of deep water asset management. still waters run deep. "squawk box" will be right back.

it's 8:00 a.m. on the east coast, and you are watching "squawk box" right here on cnbc. i'm becky quick, along with joe kernen, and andrew ross sorkin. and the futures as we await that december cpi inflation data are indicated up even more. at this point you're talking about the dow up 200 points above fair value. s&p futures up 20, and the nasdaq by 80. let's take a look at treasury yields and see where they stand. 477 earlier this morning for the ten-year, the two-year is at 4.35. you've got energy prices, which had been picking up a little bit of steam, continuing that climb this morning. 77.88 for wti, and then cryptocurrencies, which also were trading higher yesterday, bitcoin at the head of the pack,

up $96,866. in a blog post yesterday, microsoft jumped into the debate over quantum computing, the company said 2025 is going to be the year for its business customers to become quantum ready, by preparing their organizations for the eventual leap in technologies. shares of quantum computing organizations for the eventual leap in technology. shares of quantum computing stocks rising yesterday, and again this morning. joining us now to look at markets and the tech sector, doug, founder and ceo of intelligence, alpha. we use words and they are supposed to be accurate descriptions of something. a quantum leap is supposed to be something in physics, it is not gradual, it just happens. if this was quantum, why are we even talking about a quantum computing for 20 years, and now we are finally saying, it is a quantum leap? >> i think you can ay the same thing about a.i., joe. there have been a i winters

ahead of the moment between the a.i. we are having now. the whole debate between a high and quantum, it is kind of funny because a.i. is actually here and quantum, as we look at some of the applications, some of the things, for example, google's project last year, willow, i think really broke open the excitement about quantum. most of these, i think i remember meta from a couple of days ago, quantum is still several years away. should we be quantum ready? i think that makes sense. >> i hate to interrupt you, but we have citigroup earnings, i guess? >> leslie baker has those numbers. that is right. it is a beat on the top and bottom lines per quarter for city. the note on the street is probability targets, which are seen as a profitability by

which to measure the term's efforts. the last two years, citi had been traveling between 11 and 12% on common equity in today, they are reducing that range from 10 to 11% by 2026. that is still higher than the street expectation, the street average, and he fourth quarter rotce range allows them to make additional investments in business transformation and the local level is of level, not destination. we intend to well above that level and deliver potential for our shareholders. the board is also authorizing a new $20 billion multiyear share repurchase program, and as for key drivers in the city services business, revenue was up is more than 34% with that unit generating $4.6 billion in revenue. the group, which largely comprises cash management for corporate clients, more than five billion dollars, up 15%

from last year. a record year, frazier said in the release, full-year revenue across the firm, surpassed the audience that citi had initially shared in expenses were in line. though shares up about 2.7% in market, guys. >> very good, leslie, thanks for that. let's get back to, founder and ceo of intelligence of alpha. i guess it begs the question, how do we add in the promise of quantum computing, and layer it on to a.i. , and what does it mean for the tech group, and even the tech leaders, the mag6, if we don't use tesla? although, that is a tech stock too. >> the way we are applying it, at least, it will refocus a lot of a.i. on a.i. companies, i think it is the

moment. for the next two to four years, all of these companies will be driven by what they do in the a.i. space and how they actually generate revenue from a.i. quantum, i think, is fun optimality, but we will not see anything tangible in the next two to four years. it is a good story, but i think we need to rely on a.i. products or revenues if you are making investments in the tech space right now. >> to summarize maybe how you are feeling, or encapsulate how you are feeling some of the tech trade, while some think it is dead, if you assume multiples holdup at 28, these are still fast-growing companies. you theoretically could just add the earnings growth and layer that on to the stock price, and that would be probably what, 18 to 20% growth this year in the mag 7.

>> that is right. a conversation we have been having more, a saying that markets are meant to frustrate the most participants possible by doing what no one expects. exactly. and i think the consensus coming into 2025 was me this is the year of broadening come of the year where big tech slows down, and we are sort of asking, what if it is not? you go back to '23 expectations were for recessions, '24, expectations were for small caps to win. what if in 25 we get steady earnings for mag 6, and you do have stocks growing high teens , probably, that is a pretty high stock for the markets to keep up with. >> and there will be some fomo, i can feel it already. think of larger numbers, it is hard to imagine stocks that are two, three, four market caps. a lot of times stocks hitting new lows hit new lows, stocks hitting more highs hit more highs, i have seen that.

>> they do. i think the fundamentals in the cases of these mag 6 companies are so strong. they do support large enterprise values. at 28 times multiple, sort of in the range in the last 10 years, it is roughly in the middle. it is not a crazy multiple, but healthy. big numbers, large numbers, a lot of concentration, but they provide a lot of the earnings as well. we talk about 30 plus percent for concentration and we have to look at how much of the earnings they provide in the index, which the last time i checked was in the last mid-20s. they deserve to be a very big part because they are a big part of the earnings story. >> okay, doug, very good. appreciate it. nobody knows, but that is an interesting idea that maybe the same leaders are around in 2025, would not be a big surprise, thanks. >> tom, we will switch gears now, the sec filing a lawsuit against elon musk.

this at all to do with musk's cumulation of twitter stock before he purchased the company back in 2022 and changed its name on the east coast. good morning. >> the sec filed a suit against elon musk, alleging he violated the securities law by failing to disclose he acquired a stake in twitter, secrecy that allowed him to buy shares at what sec says, are artificially low prices. before buying twitter for $44 billion in 2022, changing its name to x the following year, must amassed much of its stock, which does acquired disclosure. the sec saying that musk was more than 10 days late in reporting that material information, allowing them to underpay by at least $150 million. musk posted on x last month, the sec, after investigating twitter fraud around twitter

disclosures in 2022, issued a settlement demand, pressuring him to agree to a deal, including a fine within 48 hours. his attorney responding in a statement that the sec quote, cannot bring an actual case and that musk has quote, done nothing wrong. the big question is what will happen to these charges wendy trump administration takes over the sec, which is next week? andrew. >> is there any particular back and forth about that back channeling? does this put the sec in a very difficult position in terms of walking away from this case, in terms of what that would-- what kind of message you would send? >> we will have to see what is going to happen. the timing, andrew, obviously is so notable, given that we are at the very end of the and administration of the inauguration is on monday. as to whether there has been back channeling, i can't say, but i am sure there has been interest in back channeling

just looking at the proximity of musk and the incoming president. you would have to assume this would be a topic of conversation. >> julia boorstin, thanks, talk to you soon. coming from ceo larry the inflation data coming up at 8:30 eastern time, former fed vice chair roger ferguson will join us with reaction. stay tuned, you are watching "squawk box on cs nbc.

welcome back to "squawk box ." blackrock beat estimates on the top and bottom line, decisively. in an exclusive interview, i asked the ceo where he thinks we are in the market right now. >> i think i said last quarter, i see the scenario where the bottom will be 9%. i can actually see a scenario where the tenure is at five and at present, i can also see where it is going back to 4%. and so, we have an incoming

president, who was making broad changes to the economy, broad decisions, and we will see how this all plays out, and it all comes down to inflation. there are some economists who are calling for the fed continuing to ease three or four times, and some people say, they will stop. i heard from one or two economists, they will have to start raising it again. i don't know truly where we are, but i could say the range of outcomes is broader than he range of options we just saw four months ago, and i think that is what is going on in the markets. >> asked what is going on in the markets in terms of that range? >> 5 1/2% with the harmful for growth equity. that is what you are starting to see. that being said, we will see a lot of reports this morning related to earnings. we will have earnings the next few weeks. my bet, earnings will be stronger overall.

that being said, we cannot discount, and this is something people are not focusing on, the strength of the u.s. dollar. let dissect in my earnings announcement, i will talk about blackrock. we had to a $81 billion in net influx also, because of the dollar appreciation, we had a $200 billion evaluation, because of our appreciation. that will play a big role in earnings in the fourth quarter, and we will see how these multinational companies will be playing it. beyond the reevaluation of the dollar that you can't control, i do think earnings will be stronger than what people think, because they believe the resiliency of the u.s. economy. and i think the economy is in very good shape. that being said, is it in too good of a shape? are we going to start seeing elevated inflationary measures? we will know that probably by march. the range is broader. >> i also spoke with larry fink about wokism the politics of

the moment, especially as they relate to investing. they left a climate group called the asset managers initiative and blackrock is somewhat of a symbol for principles and a target for those that see the initiatives of having gone too far. it didn't seem like investors were punishing the company for any of those negative perceptions that may be out there, given the amount of inflows that are coming, specifically in the united states, frankly from red states to blackrock. >> actually, we are getting more checks. there is no question, we were a topic of debate from the far left and far right. i think what is resonating, our job is we are a fiduciary for every one client. if a client awarded us $1000,

if a client ordered us $10 billion, our job is to do what is right for them. a lot of members of the far left, a lot of members of the far right would like to tell me how to manage their money. what we are telling everybody is, our job is to manage your money your way. it is not our money. all $11.6 trilliant we are responsible for, are our money. what it shows is, we are doing a very good job of helping each and every one of our clients to do asset management the way they want s to do it. yes, there are-- could we want more business, if we were not a part of a topical debate, yes, we probably would have won more. that being said, we never had a year like last year in the united states. >> you think this is that debate? >> no, by no means. we are responsible for a lot of people's money. we are a large shareholder listed on behalf of a lot of companies. no. scale and size in every industry , you become a target. that is

just a part of life in a world that is heavily oriented toward populism. our job is to be persistent in working with each and every client. our job is not to be working for the left- wing organization or right-wing organization, or the spokesperson from the far right or left. our job is to work for each and every client and that is resonating with our clients. >> real quick on that issue, will you speak to the idea of taking yourself out of the net zero absorption? >> was i a part of the conversation internally, or what? well, so many things have become politicized. we are responsible now in decarbonization, and the whole investing in new technologies for energy, we are the largest manager in the world in that. we are getting more business than ever before in terms of decarbonization technology. we have over $1 trillion we are

responsible for. those clients who are interested in the tech technologies, new issues, new things, they are coming to us. at the same time, we are the largest hydrocarbon investor in the world, we always were. it has been contorted by many people. today, it is i think $181 billion we manage from carbon companies. in the last three years, we won almost every major energy company in the united states their pension plan. >> it is fascinating dynamic, given all the sort of crosscurrents that have been growing in politics at the moment. larry fink will be in switzerland, we will catch up with him or there. when we come back, we do have some breaking inflation data and the instant market reaction. economists see, the consumer price index having risen 2.9% year-over-year in december. we will see, just 11 1/2

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welcome back to "squawk box" everybody. futures have been in the green all morning long. in fact, looking at the doll, it is indicated above 15 points by peer value, s&p up by 22, the nasdaq up by 82. let's take a look at the shares by the big banks that have reported this morning. all of them in the green. citigroup is a 3%, wells fargo

up by 2%, and ldman sachs 10%, all of those with pretty strong earnings too. tiktok is planning to set up its app in the united states on sunday, unless the supreme court intervenes to block an upcoming ban. this is according to what is called, the information that says, if the court doesn't act, and tiktok goes ahead with the plan, users would see a message in the app, directing them to a website that has more details. president-elect trump has asked the supreme court to delay the ban. more other chinese apps have seen a surge in popularity in the u.s. one of them, a photo sharing service called lemon 8, comes from as well as tiktok's parent company, bytedance. the operator of the main moving pipeline of gasoline moving gasoline from the east coast to the west coast says, it is shutting its transit route

from a potential spill in atlanta. telling cnbc yesterday, crews were on the scene in pullman county, georgia, for donating response efforts. colonial's line 1, about 1.5 billion barrels each day from houston texas to north carolina, where it pumps to northeastern markets, including, we should mention, right here in new york. the federal trade commission has prepared a lawsuit against tractor giant deer alleging that its repair practices violated competition law, according to a bloomberg report that says, the agency could file the case as soon as this week. the report says that the suit will accuse the tractor maker of withholding key information and diagnostic tools from farmers and independent repair shops. that means that owners are often required to to dealerships for diagnoses and repairs that require deere's proprietary software. the agency has been looking into deere's practices since

2021. part two here, i don't know what part i would say for south korea. that corruption investigation, office arresting now the country's leader. it sounds like, it did not work the first time. this was the second time authorities had tried to detain president yoon, following his brief acclamation ofmartial law back in december. you may recall, the first attempt to place him under arrest failed when the security service blocked investigators from answering yoon's residence. now, you may recall that yoon was impeached for the short martial law investigation. according to reports, yoon said, he would appear before the corrupt investigation office to, his words, prevent , an unpleasant bloodshed. stay tuned to that. up next, the number of the morning, december cpi. "squawk box" is coming back. but also the people who welcome you home.

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we are a little more than a minute away from the december cpi data. we are looking for a number of 2.9% year-over-year, that is the estimated increase and consumer inflation. market ahead of that has been

pretty calm, cool, and collected. in fact, now looking at the dow futures up by 225 points, s&p about 22, nasdaq up by 88. a lot of what you are seeing is confidence after better-than- expected earnings coming from the big banks. we will be watching that very closely as well. also watching what has been happening with the treasury market. take a look at where things stand right now. looks like the 10 year is yielding 4.75, tenure at 4.32, the five year at 4.95, just below 5%. yesterday, we got cooler than anticipated numbers for producing inflation. that had the market really taking off for the moment. it was a short-lived rally through much of the course of the day. the nasdaq ended lower, and you have the s&p by up by 11 points at the end of the session. today, we will see where we stand. producer pricing does not necessarily indicate what we are seeing with consumer prices, but a lot riding on

this number and the fed's expectations of what it will do as a result. rick santelli is standing by in chicago, and rick, we have got about 20 seconds before we get these numbers, but a lot riding on this. >> yes, a lot riding on it. yesterday, we made some hay with the short term is over pbi, but year-over-year was still sticky, well over 12%. same may be true today. we want to pay very close attention to year-over-year on retail inflation. and here we go, consumer price index for december comes out 4/10 of the headline, exactly as expected! to find a higher number than 4/10, you are going all the way back to august of 2023, when it was up half of 1%. strip out the all-important food and energy, up to tens, one sent cooler than we expected. one intent cooler than the rearview mirror. up to tens, how does that come?

we equal july of 24, to find a lower number, you go back to june of '24. here we go, on the headline year-over-year, up 2.9, as expected. how much more as expected? the fact that it is 2/10 higher than our last look, which was 2.7 peer to have a number higher, you are going june of last year. finally, on the year-over-year core, it is 3.2%, 1/10 lighter than the rearview mirror, lighter than expectations. but, 3.2 is a little bit of progress, it equals where we were in august. that equals august to find a lower number, you are going in the way back machine. you have to find a 3% number, that is all the way back in april of '21. many don't look at the indices, i look at the indices. this really says it all. if you look at the cpi index, started 10 1913, it is now 315.6.05, that is the second

highest number ever, the highest , the record was october '24. if you look at this, and much every month we make new, all- time highs. it is nice we pull back just a smidge. if we look at the year-over-year, excuse me, core going all the way back to 1957, 323.8, that is an new all-time high and what does that tell me? we can look at these numbers based on expectations, like we do, but the reality is, even yesterday, if you look at some of the smaller month over month numbers, it means the inflation rate is growing more slowly it is not growing in reverse, that is what these indices tell us that virtually anybody watching that is an economist, they feel the pressure of rising prices, and it is a pressure that very much never seems to ease off.

we don't normally see a lot of negative numbers. speaking of negative numbers, there is one i haven't pointed out yet, empire is also out. january number kind of real- time, minus 12.6, minus 12.6, for the week going back to minus 15 in change of may last year. we still see manufacturing is a bit curtailed. interest rates, moving significantly lower here. significantly lower. maybe it was the month over month core. maybe it was the fact we came in as or a little light on expectations of what the market prepared for. like yesterday, we want to watch the secondary and tertiary responses as we get closer to the opening of equities. it may be a very short-lived rally pushing yields down. i want to point out we have traded slightly on a basis above 480 and a 10. we touched 5% yesterday briefly and 830. a

dollar index, on monday, it was at a 26 month high close. becky, back to you. rick, stay right there. a lot of analysis that we need more from you, but we also want to bring in the rest of our panel our income fixed portfolio at j.p. morgan asset management. our very own reporter steve levison, and peter bill barr, chief investment officer, also cnbc contributor. steve , why don't you walk us through what you are seeing as you did get into these numbers. >> it is a good number. actually, rick was using a different consensus, 0.4, we had 0.3 from the dow consensus on the headline. the important thing, we both agreed the core was lower than expected at 0.2. it looks okay. i said earlier in the last hour, the ppi, downside surprise, took some of the edge off,

upside surprise today, i think that came to pass. the big number, the number both of our guests asked me for right away, the owners equivalent rent number, that was up 0.3. we were doing 0.5, 0.6, more there. you did have apparel was well contained. new vehicles up 0.5, used cars up 1.5%. take a look at commodities. let's do services, less energy, that was a 0.3%. you need to do 0.2 to get to 2%. becky, we will take it. it is a good number. you can see how concerned the number has been with a possibility inflation was going to get out of control. this says, all right, the fed can be on hold. we don't have to talk about this thing joe likes to talk about, the idea of hiking rates. >> we are looking at the 10 year falling below. >> and while you talk to your other guests, i will update the

probability and how that has changed. >> i would say, the dow is indicated to open up 600 points, that is going tick by tick with the treasury, you focus on the treasury market on fixed income. what do you think of what we just heard? is this the right reaction, based on these numbers? >> absolutely. i think we are in the danger zone. as the tenure got closer to 75, i think it is a danger zone for the economy, because there are intersecting sectors in the housing market, look at other intersected models. cost of capital that high you will get more disclosure, have more impact on multiples. i think this is a good number, a sigh of relief for the bond market as well as the equity market. risk factors in general. we have priced out a lot of the fed cuts in the last few months, and now inflation is moving up, and you get the big questions still remain, what

are you going to get from the administration? i would argue, there is a market constraint and a political constraint. i don't think you will get that much, but i also think that is behind in the markets' mind. the long end of the treasury market has been selling off, i think that is still an open question. we get this, beautiful bill, i don't think that is happening, that will still be in the markets' mind. i think the reaction where inflation is slowly, but surely getting close to that 2%, it is just taking longer. i look to shelter because shelter is a high component of cpi, it is frustrating in terms of how quickly it is coming down. it did shorten as primary. i think good reaction, but we still have lots of action on what we will get from the policy front. >> peter, i would ask you, how much confidence do you have this number is indicative of a trend of lower inflation? can you bet on it? >> on the good side, we have already seen this inflation on

what we want to see. around zero year-over-year was really the pre-covid trend. the service side is what was keeping overall inflation elevated. i do expect that to further decelerate as lower rates work its way through the number. i think the key question though, there is one thing to have a spike in inflation, the deceleration, another thing to keep inflation down. it is the sustainability of keeping inflation lower that still remains to be seen. yes, we have got a good inflation number, still kind of sideways around his three-ish level, still quite different from the 1% to 2% trend we saw during covid. that has loan through having interest rates higher for longer. it is not just a u.s. thing, it is a global thing. one of the setups is a less than expected uk cpi number that took some of the heat off the guilt market, a good set up for rallying treasures today. >> you both asked steve about

the owners rent number, what is the second number you looked at as after housing costs? >> i would say super core, or ex housing service inflation, to your point, that is high. i will highlight, inflation is difficult to forecast. there is often one component out of a couple of components that can be high. a noisy, bumpy series. we should not react necessarily to one number. i think it is good news, but we want to see it is heading lower. >> they came down if you did real earnings, obviously because the 0.4 comes off the top of the game. really quickly, becky, i want to tell you that the june probability, we will probably show 66%, or 65%, it is moving 68% now. they updated it, what does it say now?

68 now, that is up, 10 points possibility of a june cut. look, the markets still can't get its arm or brain around the idea of a second cut. that is where the market has been. i don't think there is any region present to actually change that. the physical policy and uncertainty, although what peter was saying, i will take what peter is saying, put it into monetary policy speak, they need to have the confidence that inflation is heading back to the target. this is like a wrestling match, where it is like one, two, and the guy got up again. we have got to start counting again to have that confidence inflation-- >> can we really get to two? >> that reminds me of one thing. you guys can't do this on the fly, can you? type in what is made for the cpe? later, in about an hour or so, i will get the guys to plug in their model. one of the things that happens there, becky,

housing is not as big of a part of it. there are some other components that are an even bigger part. >> cpe made higher? >> no, it should be made a little lower, i'm not sure. airlines being medical, housing is less, it is a funky thing. >> will they move the goalpost 2 1/2? >> i don't think they will move the goalpost 2 1/2, what they might do, in the process of their review in their longer- term strategy, they might eventually go for a range, but i don't think that range would be higher than 2 1/2. >> would it put 2 1/2 in the range? >> i think that is the way they want to talk about it. >> larry said it had something to do with-- what did he say? he said two was arbitrary. is it based on gold stock? where do you get two? >> two, you mentioned new zealand they were the first ones to officially go to percent. it is to the benefit of central

bank, inflation is a 2, we can have the fed funds rate at one to two basis points of the call three to four, therefore, in recession, we have rates to cut . the 2% is not what is modeled to be good for the economy, it is modeled to be good for what the central bank wants it to be. >> and three is bad. >> three is really bad. the reason it is two, joe, zero is a problem, and one is too close to zero. it is that simple. a little bit of science behind it, we don't want to be in inflation. they are too worried or nervous being at one, because it is too close to zero. i don't think three will be a part of the discussion. >> if you think 2 1/2 is okay? >> i think that when you are trying to steer an oil tanker, you can't get it through a very tiny gap. exactly.

i think what we need to say, we were aiming for one and a half to 2 1/2% range. >> rick what were you saying? you don't agree with moving the goalpost? >> no, mohammed and i are very good friends. his interpretation that moving the goalpost is not a good thing, you can move it to 2 1/2, it is all arbitrary. many people ask me constantly, what would be the trigger, the catalyst to set this tender box of debt on fire? that would be it in my opinion. i think the market would penalize the federal reserve for moving the goalpost in a very, very large way, in my opinion. i think inflation is sticky. i don't think we will ever see the 2% in the next year or two, if at all. if we base all of this on expectations, the market got a little fearful that maybe we are going to see even worse numbers. ultimately, look for more steepening, still about 40 basis points, and all the happy talk on inflation or you can

keep talk to me and i don't see it in the reality of the markets, where the numbers. >> explained that. you are now looking at 470 on the 10 year, we have come down significantly. where do you look next? >> i would say, the yield curve is probably your best bet in terms of trying to gauge where long rates are heading to me and will there be any relief for the near future. i think based on the steady steepening of the curb the answer to that would be, no. >> and pira, you are agreeing, it looks like you are shaking your head? >> i do agree it is much longer for the economy. some of his inflation, some of this fact here, but it is really physical. to your point, it is a global move. globally, we have a supply of duration and the price sensitive buyers, either reserve managers, or central banks, they are stepping away. we have to create a level where people buy duration and see

value in buying treasuries. >> it is not traditional buyers. >> right, but price-sensitive buyers look at market to market every day. we need some clarity now of how much more supply there will be. what i am not watching for, we hear from scott tomorrow, are we talking about the 3% deficit target? is he serious, is doge going to be serious, in terms of being able to fund ? we extend the tax cuts, where is the offset there? i don't think that a stimulus, necessarily, it is keeping things status quo. >> peter, i will give you the last word, what does that mean from the equity in markets perspective? >> one of the things that benefited stocks last year, the fed was going to cut interest rates, yields are going to fall across the curb. the end of last year, we sort of got mugged my reality that the fed does not have control over the entire yield curve.

the long run, speaking for itself. the fed is much less relevant in its ability to alter where interest rates will go, therefore, if we are ever going to see a multiple compression after the multiple expansion we saw, it would be parking interest rates that stay elevated. >> we want to thank our panel this morning, all of you. coming up, investors, back on fed watch following the latest round of inflation data. we will speak with vice chair roger ferguson, and how the central bank is likely to view today's latest numbers. it is risk on it, but also for cut immediately spike, you can see it on the chart, it looked like all the other markets. >> tech stocks. >> i don't know what that is. >> you are watching "squawk box" on cnbc . keep us going. the places we cheer. trust.

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welcome back to "squawk box." core december cpi coming in cooler than expectations. futures, right now, as you can see, up e-mists-- immediately. i think the number that came up was 4.50. it came up immediately, and the carts moved, bitcoin moved, everything moved. treasury might not see as far as a big move, 4.68 now on the 10 year, and i think it closed 98.5, something like that. 98 on 9, that is after a big day yesterday. >> more on how the fed is likely to view this years inflation, former vice chairman, as well as cnbc contributor . let's do it this way, let's say, you happen to

get a phone call from j. powell right now and he says, did you see the cpi numbers, what do you think i should do about that? >> look, a funny way to ask the question. look, i think the fed is looking for trends. the market is excited to move one way or the other. the truth of the matter is, underneath all of this, the economy is strong, the labor market remains strong, and inflation, if it moves to the 2%, it is moving glacially. i think the answer is, you stand at the next meeting, wait for more information to get a clearer view, and obviously, fiscal policy will come into play as well. my view is, this is not change anything, stay where you wear with no expectation of moving at the next meeting, and we will see what happens after that. >> are you surprised at the market's reaction thus far? and i think it is fair to say, the market is rallying on this news pretty much across the board, and you have this

interesting sort of risk on, or i don't know what we are deciding with this bitcoin situation, as a symbol of barometer or something moving materially higher as we are speaking. the dow up 670 points, roger. >> look, i think the market is getting very sort of data point dependent, and every time it is slightly good news they take that as an excuse to rally. as we saw yesterday, the initial reaction is strong, and that sort of faith the reality of the trend sets in. i am not totally surprised we are seeing initial, strong reaction but we will watch the rest of the day, but i think the market overall is missing the big trend, which is, the fed is in no hurry to cut. don't think they are ready to raise, either. inflation is moving sideways. and i think fed policy for a period of time will be moving sort of sideways with the fed funds rate. >> why is the market missing that? you have been saying it, others

have been saying it. >> i don't the market now goes up when it thinks it is going to get a rate cut. i don't think that has changed. i think the market was just worried about inflation going back up. if it can sort of stay where it is, i think that is very bullish for the market, even if we don't get any cuts, as long as we don't get any hikes this year. >> i think that is a fair point. this may be to some degree a bit of a relief rally. there may have been an expectation, despite ppi, things, assuming that proves not to be the case, a little wiping the brow, continuing to move forward. the other thing we should recognize, the market is right, the economy is doing pretty well, very well. we saw a bunch of bank reports this morning, all of which i think were indications of a strong, underlying economy. there is something else going on here in addition to a little relief rally around inflation, there is a sense that the economy is actually healthy, and maybe people holding their

singers, or crossing their fingers the fiscal policy, the incoming administration will not mess things up too much and we could have a pretty good year. >> roger, i don't know if you are listening to the earlier conversation we were having with steve liesman, and decided that maybe at some point, you think the fed actually shifts from 2%, or talks about it in a more range way then to present on the big goal i should say, the target? >> i understand your question. i think the economic logic would be, let's think about this as a range. i was never in favor of an explicit, 2% target, because it is very hard to hit, such an estimate that is so imperfectly hard to measure and hard to manage. economically, the range would be smart. i think the issue is credibility. moving from, we believe in 2%, we believe in 2%, to suddenly

now, we have opened up the range, people will scratch their heads and say, if the range was 1 1/2 to 2 1/2, why is the range 3? i think they are in a bind, where logically, theoretically, they should go for a range i think it kind of makes it very hard to move away from this pinpoint estimate. >> roger, real quick, do you think this is aj. powell issue, meaning, down the line, if he ultimately was replaced-- i say down the line, but when somebody else comes into that seat, they can establish a range if they want without the credibility issues you are describing? >> i think it is an institutional issue. the 2% got built-in, it has been there with janet, now with j. powell. i don't the kind of person would come in and say, open up the range. are you an inflation art, an inflation dove? if that is your first move, i think it undercuts individual

and institutional credibility, right away. >> always the smart analysis. thank you, sir. we will see you soon. "squawk box" will be back after this. to last week and buy a winning lottery ticket. -can i come? -only room for one. how am i getting home? sittin' on my lap like last time, ronald. fine, but i'm bringing this. [ whirring ] alright. or...you could try one of these savings options. the right money moves aren't as far-fetched as you think. there it is. see? told you it was going to all work out. thanks, future me.

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the results from some of the biggest banks this morning,

leslie picker joins us now for that. >> wells fargo missed slightly on revenue. we receded some updated guidance from j.p. morgan and wells for 2025. jp expecting to be lower, wells to be higher. a big topic of conversation on the calls this morning, executives thing on the media call it is prudent to hold capital based on the broader environment. the ceo saying they are actively looking for uses of that capital and don't want it to build up more than they already have. the firm is trading well over two times --

after cpi or on the court number, lots to still cover. "squawk on the street" will pick up with that tomorrow and -- right now and we will see you back here tomorrow. good wednesday morning. welcome to "squawk on the street." jim cramer is in san francisco. a wave of relief washing over the market as cpi tends to cool. yields are lower across the curve. the banks look clean across the board. small caps nearly 3% this morning. economic