bed for good although we do see the tenure is at lower yields than we saw before those inflationary numbers that came out and also, a pretty firm bid after the cooler inflation numbers meeting the fed the fed more dovish. got four seconds. make sure you join us tomorrow. "squawk on the street" is next. ♪ good thursday morning. welcome to "squawk on the street." stocks look to add to wednesday's gains, the best day since just after the election, even with some weakness on the dow thanks to unh. steady bond yields in the wake of steady economic data. morgan stanley and bank of america both with some quarterly

beats. shares of unitedhealth group are lower. it is the company's first quarterly report since the ceo was murdered. plus, the trump transition, scott besson goes to capitol hill for his confirmation hearing. we will bring it to you live. let's get to bank results following that massive rally yesterday. 46% yesterday at jpm, but today 44 at b of a. >> not bad at b of a, although you're seeing more of a muted response, though obviously we haven't started trading yesterday. yesterday, as you guys well know, was a very strong day, given strong numbers from many of the banks and obviously a tamer than expected sort of

report on inflation there that helped the market overall. you can see they did top estimates. listen, there's a lot of optimism in terms of m & a, ipos, capital markets overall. it will be interesting to see whether it is met certainly when it comes to m & a which i tend to remain fairly close to. there's an awful lot of chatter and expectation and does seem to be a lot of potential deal making to come or at least announcements to come. again, sometimes it can be more difficult to get to the finish line regardless of if there is a more forgiving anti-trust environment, which is one of the key reasons people do believe there will be more because of that. >> also revenue growth more broadly in some of the banks, a lot of the banks feeding on revee n all lines.

loans not as strong, but overall i think what the banks are painting a picture of is a pretty friendly operating environment. yes, it's for investment banking, as david said, but also people are paying back their loans. the credit quality has been good overall. some of these profit numbers are very high because they don't have the fdic fee they had to pay. remember, they had that sort of assessment in the last one. but overall, just pretty good fee growth. even bank of america showed net income growth, which not all of them have shown as the changing environment plays out. rates remain elevated, but they're clearly dealing with that very strongly. every source of revenue increased according to brian moynahan. we saw interest rate growth in

deposits and lanes. >> interesting, though, you mentioned loan growth and credit card loan growth, only up one at b of a. whether it's about caution ahead of would-be tariffs, deep private liquidity, economic uncertainty, caution. that's going to be one to watch. >> we've seen a spurt of optimism from small businesses, and consumer loan growth has been a little bit better than commercial loan growth, but it sounds like the bankers think it's coming just given the fact that the overall outlook has been improving. the pnc guide doesn't capture any loan growth, zero loan growth, because it's been hard to forecast right now. that's part of it. also, these banks are trading at higher multiples than they have been because there's been a lot of excitement over the incoming

administration on regulation and the economy. >> david solomon's comments about going public in general and what he argues is less urgency on the part of startups to do that. >> not news to us. obviously we've been talking about this trend for years now, the ability of private companies to continue to finance themselves well into becoming more mature. data bricks is a perfect example having raised -- it's just staggering, $10 billion in new equity at the latest round. i think around 62 billion was where they put the company. a perfect example of a company that many are waiting for. perhaps it will show up at some point here at the new york stock exchange on a big day but there's no need to when you can raise that kind of sums in the so-called private market in

equity and debt. >> philly fed massive gain. >> what's going on in philly? >> new orders go to the highest since november of 2021. we'll get to inventories later on. even retail sales still very strong on the control group. >> healthy, but as you say, mixed, especially because we have high hopes on retail sales, because this holiday spending season has been good. those numbers up 4 or 5% in december. smallest gain that we've seen month over month since august when retail sales actually fell. if you take out autos .4. that ultimately should bode well for gdp. furniture sales with a nice jump.

that's been a sleepy category. that was a 2.3% gain on the month. clothing was up. that was good to see in the holiday season. the really big winner was the miscellaneous category spiking by 3.4% on the month. hard to know what's going on there, but online continues to be strong. electronic sales were kind of muted. overall it's decent, it's healthy, but perhaps not as robust as we thought on the consumer. >> right. coupling it with the beige book yesterday, interesting line, the number of districts and manufacturers were stockpiling inventories in anticipation of higher tariffs. the question will be whether that is really happening at scale and whether it's happening regarding enterprise and the consumer or both. >> the word of the beige book was moderate and modest. that came up so many times. growth was moderate, modest.

consumer spending was moderate and modest. prizing were rising moderately or modestly. that was the theme of the beige book. i think the fed can look at it and say, okay, we're good to pause, but maybe still an inclination to cut. if you look at that beige book, you didn't see anything super strong as far as the commentary. again, it's very anecdotal around different businesses and what they're hearing, but the beige book has been upbeat. >> perhaps mega cap tech this morning are the results from tsmc, which did not disappoint. obviously this is the company that manufactures so many of the high-end chips for the companies that design them, namely nvidia. when you look at the breakdown of their fourth quarter revenue by plarm, high performance compute now 53%. more and more of that is being done at thefree nanometer

level. the revenue growth rate came in in line, maybe a bit ahead. obviously this is all about a.i. and that is why this is being seen as a positive in terms of a reflection of continued spend and the continued need for what tsmc has, namely the most for high performance compute. obviously smart phones, automotive, internet of things, those were all still important parts of their business as well, but high-performance compute is the key. again, this 2025 guidance as well, they are pointing to higher cap x, but revenue is up mid 20% in line with the 25% that's been modeled by many of the analysts who follow the

company. >> gross margin up six points. nice commentary about their fabs in the u.s. finally getting some traction going online. huge story. if jim were here, he'd be all over it, i'm sure. >> the margin profile is not quite as strong. and there is risk. there's just that geopolitical overarching risk as to what conceivably would happen -- >> you saw those comments yesterday. >> no, actually i didn't. >> unless something dramatic changes, we'd be looking at a scenario in which china invades by the end of the decade, is how rubio put it. >> also watching unitedhealthcare, first earnings report since the murder of one of its top executives. the call is under way right now.

the ceo did comment on the tragedy. >> i'd like to start by expressing a sincere thank you from my colleagues and from me from the overwhelming expressions of condolence and support following the murder of our friend brian thompson. many of you knew brian personally. you knew how much ant to all of us and how much he devoted his time to make the health system better for all the people we are privileged to serve. he would dive in to find solutions whether for an individual consumer, an employer or a public health agency. >> this company is in a tough position from a public relations standpoint in a way, because i guess it's good that they missed earnings, because it would have looked very bad if they beat earnings and looked very profitable with the public backlash that has followed somewhat surprisingly after the murder of one of its main ceos,

and now questions both of capitol hill and in society at large about whether they are indeed fulfilling their mission to make health care more accessible. >> yeah. there was no legislation. there was an expectation perhaps as the year ended maybe you'd start to see something. we'll see what happens. the pbms continue to be under political pressure. in the incoming administration, i don't think that will potentially change, but we'll have to see. when it comes to unh overall, the focus has been on this medical loss ratio. you've had seniors accessing the health care system again after a pause for covid perhaps. it seems like it would have been a long time. in doing so, well, you know, when you don't get health care for a year or two, things tend to get worse, so there has been a higher level of cost associated with that and many of the insurers have been dealing with that certainly in their medicare advantage programs. you had 87.6%, i think, was the

medical loss ratio. 86 and a quarter is where the am lists were br estimating. the tone and tenor of the call itself would be important to where the stock trades this morning. >> they maintained guidance ratios, but missed on the top line on the insurance and managed care business, miss on the optimum business. not substantially. they're still growing. they're also coming off a very strong year in terms of profitability and results. as far as what they could be facing, you know, on capitol hill, look, it's hard to know what the health care plan looks like under president-elect trump, but potentially cuts, right, to things like medicaid? >> yes. >> medicare. that's always in play here. the stock was at a record high on november 11th after the u.s. election on optimism around a

trump win, that actually it would be good and beneficial for private insurers, but it has dropped and was down about 10% going into today since the murder of brian thompson. >> the insurance model in general, whether health or property in this country is under so much duress, so much mistrust in the wake of the fires. a lot of that relates to drug prices, which is another topic witty got to. listen. >> there are participates in the system who benefit from these high prices. lower cost equivalent quality site of service, for example, can be good for consumers and patients, but threaten revenue streams for organizations that depend on charging more for care. another example is a persistently high cost of drugs in the u.s., leaving american consumers, employers and public agencies to pay disproportionately more than people in other countries.

just look at glp1 prices. one drug which costs $900 in the u.s., costs about a tenth of that in europe. pharmacy benefit managers play a vital role in holding those prices down, which is why drug companies and their allies have spent the past several years attacking them. >> one can envision long-standing standoff between the pharma industry and the insurance industry. >> they're going to start to articulate that pbms do save money. they're trying to make that part of the conversation. you've been hearing a very different side of it for a long time. >> this is the middlemen that have been criticized. there is some hints that trump

administration politicians on both sides want to go after them. >> right. that gets back to the idea of what, if any, legislation there will be. we'll see. nothing came out of the last congress, obviously, as the end of the year was not a good one for stocks and there was a lot of discussion about it. >> i don't believe they've announced a replacement for brian thompson at this point. they have ceos of all these units, so i think they're thought of to have a good bench. >> take a look at futures as we go to break. we'll talk some tiktok. we have a sale on southwest and the fourth downgrade of amd in just a couple of weeks, when we come back. -what've you got there, larry? -time machine. you gonna go back and see how the pyramids were built or something? nope. ellen and i want to go on vacation, so i'm going to go back to last week and buy a winning lottery ticket. -can i come? -only room for one. how am i getting home?

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tens of thousands are still under evacuation orders due to the california wildfires, but many residents are eager to return. our contessa brewer is in pacific palisades with the latest. >> reporter: good morning. these residents are not being allowed to return to the charred neighborhoods just yet. a cal fire spokesman told me he doesn't know when that's going to happen, though it is a top prierd. priority. in some neighborhoods mandatory evacuation orders are now lifted. southern california edison says that about 68,000 people still don't have power. meanwhile, in the eaton fire, the investigation is looking at edison's transmission lines and whether potentially they sparked the fire. steven powell told the "l.a. times" the company was monitoring the wind last week,

but it wasn't high enough to trigger a shutdown or in his word deenergization. if cal fire determines that's the cause, the next step then is determining whether the utility negligent. ubs has downgraded shares to $69. insurers could recoup some of their claim payouts. the state's largest insurer has received 7400 claims as of yesterday afternoon at state farm. it issued thousands of initial checks to cover the cost of living expenses. they said that's just the start. for people desperate to find a place to live, a new crackdown on price gouging. owners who hike the rents beyond the permitted 10% in an emergency will face criminal prosecution and public shaming. zillow tells me it has removed

2% of listings that exceed the threshold. some of these rents before the fire they were listed and then after the fire they jumped 200%. >> we've heard about it. just awful. i'm glad they're crashing down. contessa, thank you very much. from los angeles, contessa brewer. "squawk on the street" will be right back with the open.

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futures continue to benefit from some of the earnings we just discussed. then even with the modest uptick in yields today, the ten-year 4.66 still well off the 4.8 earlier in the week. we'll see how much the bull can add to wednesday's gains. follow "squawk on the street" opening bell podcast.

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welcome back to "squawk on the street." look who's back from san francisco. jim cramer, welcome. you never miss a beat. >> no, i don't like that. why don't you retire if you don't want to come? >> i agree. >> are you talking to me? >> no. a little self-reflection. i'm not talking to you. >> let's talk target because

we're going to be watching that into the open. the company out with holiday sales and some signs of life here for target. there were worries about target and whether it was really resonating with customers. 2% comes from the final two months of the year, 3% up traffic growth, 9% digital sales and they raised guidance to 1.5%. they said they saw a meaningful acceleration in discretionary items like clothing and toys. is it enough? >> here's one of the problems i feel with target. now the investors, not ourselves, is it nordstrom? it's not kohl's, but it certainly can't be -- [ indiscernible ] >> is it existential? >> i mean, you've raised that question in the last six to nine months. >> yes, i have. >> i don't know that we know the answer. >> i don't either. >> investors may want want not

wait around to find out. >> they don't have the elivery that amazon has. [ indiscernible ] [ bell ringing ] >> the 2025 college football playoff national championship being held in atlanta on monday at the nasdaq. it's providing supplies to those affected by disasters world wide. jim, i think your point this morning was, if you're not impressed with b of a, i can't help you. >> brian moynahan we know is very even keeled. he's not going to say, look, it's all clear, but the numbers speak for themselves. they really did a tremendous job. when i speak to them, the thing

that's most glaring is for those people who have come on air and said commercial real estate is going to be the death knell of banks, i mean, what the hell happened to that? commercial real estate -- let's buy some office property and turn it into condos, all of us. this was a quarter where i just said, you know what, if the stock hadn't run so much yesterday -- charlie stole the show except for -- citi good too. >> yeah, citi good. wells, i think, showed some promising trends, because there had been concern as well. it's not as though there aren't going to be losses taken. they will be taken, but it certainly is not going to be systemic. there was at least concern back in the spring of 2023 when we had what i refer to as that mini banking crisis involving a handful of institutions. >> there's no doubt that the regime that we thought was

punitive was punitive. it's not so much that -- i was so struck by what you asked me yesterday. look, if we have full employment, if we have the market at high, didn't they do a good job? i ask every one of these bankers, because it in spite of or because? there is so much pushback, it was in spite of. what i'm really struck by was the antipathy that the government had, the current regime had toward all of the actual people who were running these banks. >> yeah. >> i mean, as if they're a different class. did they go to school together? did they ever meet each other? did they ever have any camaraderie? i'm saying no. whoever was a regulator was from a different club. >> now we'll overcorrect and be too infused with business influence. >> that's david's point. i mean, we did have a banking crisis. it wasn't like a bunch of clowns

took advantage of the regime. i come back and i say look at the last few days of this. do you know that nvidia didn't know anything that's happening? do you think kkr knew they were about to really get the book thrown at them? what happened here? was it really just in the last 25 days they just said, you know what -- [ speaking in a global language ] >> high end chip sales conceive conceive conceiveably might impact nvidia. i understand. >> i mean, it has been onerous and it's across the board, i think. what we're learning now now that all these ceos are talking about the new administration is how they had felt about it. with banks it's not just about

regulation. the tone of these ceos and robin vance at bank of york melon yesterday on the call and the ceo confidence levels rising and how that will be better operating environment for banks. loan has been the missing link. potentially they're to follow if we really see follow-through with optimism. >> post election was let's put the money to work. preelection was we're doing pretty good. it's now david's world. every one of the banks are saying the same thing. they always felt they'd be sued if they did a deal. now they feel they'll be praised. >> yeah. well, we've talked about it. the only surprising thing this year is if we don't have an avalanche of m & a. >> beacon was a very good company. i'm surprised someone went hostile against them.

it's like going hostile against the salvation army. >> they are coming. brad jacobs' company could be a new proxy fight. that is a possibility. i think there are more potential hostiles out there. >> yes. >> i'm certainly happy to hear that, because those are fun. we'll see if you get them, though. it's not now. when you're hostile often times it's maybe a competitor, which you wouldn't have seen previously because of anti-trust concerns. it still doesn't mean you're going to be able to navigate the price issues. it's still a big deal to come with a hostile offer. it takes a lot. you have to be ready. you have to pay the highest price, first of all. that's the main thing. >> i was struck by the jp morgan health care conference. these guys are ready to go. they need the pipeline and these small companies and mid-sized companies. maybe it isn't hostile.

i was privy to deals being made. i was shocked. big pharma said we've got the sales force, we just need the drugs. we get the drugs, we become really powerful. everybody is jealous of eli lily. there is an idea that the next administration is not as pro glp1 as the current. >> i was going to ask about the health care space. it hasn't had any kind of post-election jolt like the rest of the sectors in the market. >> no. >> did your mind change about it after the conference? >> it's rfk jr. he's mentioned in every breath. i believe rfk jr.'s diet and exercise and trying to go against the food companies. i think it's not the drug companies as much as the food companies that should be very careful. >> we'll have to wait and see, though. like so many other things when it comes to the administration, will you be correct?

will it be more about processed foods? or will there be a focus on rolling back vaccine mandates and pharma? and the tariffs and the possibility and how deep they will be and the deportations and, again, what that will mean from the labor force. >> he hasn't had his confirmation yesterday. >> nobody thinks he's got a real opposition in any way. he's going to be confirmed. >> this is a wild one. i don't know if you want to go there. i don't know if you want to climb this hill. i think that's what bessent will add to the equation. >> he is expected to talk about the strong dollar and how that's critical to the economy. he has not argued in any way for any kind of depreciation. he is going to push for the extension of these tax cuts, which got some discussion according to some reports yesterday. yellen's speech, for example, is the extension of those cuts

dangerous to our ability to serve as $36 trillion in debt? >> i think when i hear -- i get the distinct feeling that people in business feel like the tax cuts are going to make us even more productive. we've got so much good to make up for the deportations that david made. keep the rates down and let us flourish. >> right. but what is the history of tax cuts producing more revenue? >> well, i think it's okay. i'm not saying necessarily it's a be all and end all. i believe that the a.i. revolution is more important when it comes to productivity than tax cuts. >> even quantum? >> no one even knows what it is. i was talking to some of the people in semiconductors out there. i said, what's quantum? they look at me and say, oh, we thought you knew what quantum was? >> that's quantum. >> it's really cold. >> retail fascination. >> got to do it in space.

>> d wave, i thought they acquitted themselves well. rigetti was at 80 cents. why not take it to ten? >> we were talking about tsmc. >> i was up for the call. i took the call. it's great. >> nvidia up 1%. >> why don't you say, jim, that is impressive? >> you continue to impress me of the ability of a man your age to do what you do. >> you had to throw it in -- >> i had to. it's amazing. we should all aspire. >> i thought we had treasury secretary confirmation, so i came in a little late, and i had a lot of traffic. >> rush hour has gotten a lot faster since congestion pricing. >> it is, except for one bridge. i wanted to come onto talk about

the optimism issue. >> taiwan bank up 7%. >> why talked about a huge increase in cap x. you know why they need more cap x? nvidia. the iceland issue that those are not our friends when it comes to 18 countries that are green lighted to have all the gpus. i had no idea that mexico was part of the cold war that we have. >> you're saying those countries were in the exempted from the new biden order, which doesn't make any sense. >> you think they should be allowed because of -- >> well, okay, so jensen did this world wide tour. we're not going to have american hedgemony on this. i mention iceland because that's

100% renewable. the reason i mention mexico, biggest trading partner. the reason i haven't mentioned germany or france is because, of course, they're our friends. i didn't know who our friend was until saturday night when the list came out. you know, very interesting, because if you went to nvidia, they were asking who's on the list. we all want to know who's on the list. david, what is this? >> jim, you're very focused on it, perhaps rightfully so. aren't we expecting it will be changed immediately conceivably? or will it be a firm by the trump administration because they share the same concerns, even if they're overblown in your opinion. >> because they share a concern -- >> not to let the chinese -- >> i don't think the -- i do not think that the trump administration thinks that israel is a conduit to china. >> no. >> i don't think iceland and china have anything going at all or green land land for that mat >> right. all true, agreed. >> thank you. >> agreed. >> who did this stuff?

>> who what? >> who did it? >> i don't know. just to be clear -- >> commerce. >> you think we're going to put up barriers against canada. we're going to have a confrontational stance against panama and we're going to at the same time open up our export on chips relative to the current -- >> i think the hardliners about china are going to look at mexican steel. they're going to look at dumping of china. i never thought they were going to talk about choking off ten countries in the eu, which we now feel -- are they suspect? >> the whole thick is mysterious. today's high-end chips are tomorrow's lower-end chips. sam altman is saying we'll reach it in the next four years. once we get there, who knows what's going to happen? they'll get to agi, and all bets

are off. artificial general intelligence. >> tiktok has the data on your family. they know what your kids are up to. they know more about the american zeitgeist which they've decided to make a new zeitgeist which is very anti-american. they have all the data. they have every bit of data on your family. >> i know. i'm going to try to keep my kids away from it as long as i possibly can. he's invited the ceo of tiktok to the inauguration. >> this was a standalone ban that passed the house 197-15. >> and the senate and was signed by the president. so it's a law. i think the expectation, however, is that tiktok is not going to be banned, right? >> -- will step in. >> they're waiting for the supreme court, by the way. we have to wait and see.

will they at least give a administrative delay, or will they uphold the law? >> how many positions does the supreme court have? it's what stalin said about the pope. >> right. >> i have some stock lines. >> it's a great line. it's a great line. >> take it where you can get it, carl. >> guys, the market losing a big voice on the short seller community, kind of i thought worth a mention. hindenberg, which we brought up more so with carvana. they have blown the whistle on some things and been followed up by regulatory action. >> i went back and forth with nate last night. i think it's a soulful person. we were talking about how hedge funds can destroy your life, destroy your marriage, destroy your family. he had a lot more self-awareness both in his good-bye letter and

going back and forth with him. i wish i had his self-awareness. >> yeah. he writes -- i'll just share a little bit to your point, jim -- the intensity and focus of doing that job as come at the cost of missing a lot of the rest of the world and the people i care about. i now view hindenburg -- >> how successful? >> i think they did fairly well. sometimes they were right on and other times we sort of questioned some of the findings. you want short sellers in a market. i know they are reviled to a certain extent, but you really do. they do the work that others don't. they sometimes hold a mirror up at least and say, wait a second, does that make any sense? >> nikola, versus the last one he went after which was garcia. and ka carvana -- >> this one could be too difficult. you need a down economy. >> and roadblocks --

>> even though he changed -- >> -- questioning things at the way they were accounting at that company. >> i thought the timing was wrong to go against the cannabis company and that he had to wait. he felt like he missed -- that it was a juggernaut. i loved his work. by the way, his work had a level of rigor that i've never seen on the short side. carvana, i think, again, is a bridge too far. it has so much going for it in the actual economy, that i thought that was a tough one, but never lacking in rigor. >> luxury stocks are having an up day. european luxury is having an up day because we got richmont earnings. this is the owner of cartier ad

van cleave. >> their numbers are fantastic. their stuff is beautiful. i've always felt that the issue was if you wear a watch, that's your only way to show status because you're not really allowed to show property. you can wear a watch and jewelry. the regime has not yet come after people who have nice watches. >> that's why the 8% decline because china's been weak. >> does anyone really think china is doing well other than the people who feel that tiktok has controlled our minds and hearts? >> no. they do have a trillion-dollar surplus with the rest of the world when it comes to trade. that may not be a sign of strength but it's a big number. >> you go to that milan airplane, you think there's still those belt and road ads? they're all down. the only belt i bought was the

one i replaced my tjx belt with. >> made in china? >> actually made in mid italy. i was invited to the factory because -- well, we had a good relationship. >> consumer discretionary worst performing group. >> that's a great call, sarah. >> before we head to break, let's hit the bond report. that big rally yesterday sent yields lower, helped stocks. right now, yields are a little bit firmer 4.66 so well off the highs. an exclusive with fed governor chris waller, how he's excerpting the recent economic data. we'll be right back. business. it's not a nine-to-five proposition.

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what do you want to tell the nation about investing right now? >> look, i think what we're going to see from president trump is wall street can win, main street can win, just like we did in trump 1.0.

everybody can do great. >> that was scott bessent with, of course, jim. that was here at the nyc last month when donald trump visited the big board. the pick for treasury secretary heads to capitol hill. it will be his confirmation hearing. it's set to begin in less than an hour. >> emily wilkins is in d.c. she has more on what we can expect. >> this is the first time we're going to hear from bessent. lawmakers are going to have a chance to ask how exactly he would lead the agency. we know committee republicans want to focus questions on tax cuts and how to make them permanent. many tax cuts put in place in 2017 are set to expire this year. bessent in his opening remarks, he's going to agree on the need to make that happen, to make as many as they can permanent or at least extend them for a while. democrats also want him to answer about ensuring tax cuts

don't end up being a giveaway for the wealthy. we also expect to hear about tariffs, debt and deaf ficitsde. trump decided he was the best combination of someone who could support and carry out his trade agenda but also be a liaison to wall street, wouldn't spook the market. bessent is really expected to be somewhat measured here. he's called for tariffs. a maximalist in terms of negotiationing position. he believes tax cuts is going to boost growth and pay down that debt. he proposed a shadow fed chair to limit jay powell's influence. watch for that, of course. we're going to see if he stays in that lane. one final issue that could become a flash point, democrats on the committee are planning to grill bessent over his taxes. they're claiming he avoided

$950,000 in self-employment taxes based on their view of his recent tax filings. bessent, of course, says he believes he was not liable. democrats say he's in violation of the treasury's own policies. look out for tough questions on that front. at this point, bessent is expected to win confirmation pretty easily at this point. he posed with schumer were a photo op yesterday. >> emily, thanks. important day. we'll be happy to take that hearing live. you think he's net-net bond bullish? >> yes. how different is he from say larry -- look, we can grow our way out of it, let's be positive. let's use the example of fossil fuels. we get fossil fuels at 3% growth, everything will be fine. that's somewhat fanciful to me. i don't know where he gets that. >> you think the oil part is the at least --

>> yeah. >> i don't know, deficit 3% is also -- >> i mean, you've got to have elon on the team. did you mention elon? >> very little mention of elon in today's show. >> and that is because? >> i don't know. i don't know. my apologies to him. >> yeah. they have to cut. they have to cut. no one knows where they have to cut because the deficit -- the interest just went over the fence. >> it's over a trillion dollars now in 2024. we played an interest on the 36-plus trillion in national debt that we have. >> he has to address that. short of doing what bank of america -- where you ri efinanc debt. a lot of these companies had 5% debt and they cut it. >> right. but the hope of refinancing at a lower rate is not there. >> i once asked secretary rubin that. why can't you finance? because it's america. >> a lot of people blame treasury secretary yellen for not doing that.

>> i've seen you interview her. >> you wanted a 50-year. we talked about that many times. >> i had everybody on board. >> he said there wasn't enough command for demand for it, remember? >> i think this is going to be the easy confirmation, because he feels like he's one of us to everybody. >> he's a hedge fund manager that focuses on macro and has traded currency. >> have you ever seen him really interviewed in real life? he had this great interview in europe. >> didn't his career begin when he was short of the pound? >> he's so thoughtful. it's like neil ferguson. >> that's one that he can help ensure and maybe this idea of tariffs over sanctions. >> he's a learning experience. he's a great teacher. shockingly -- look, i don't mean shockingly, but he's so

thoughtful that i don't think anybody can think let's not have this guy as treasury secretary. >> how about tonight? >> this is second day bank. no one's going crazy. i have a company called biohaven left over from europe. i've got to tell you they're tackling diseases that other people think are impossible. cybersecurity, tiktok. can we prevent the chinese from polluting the hearts and minds of our children? or are we all manchurian candidates? are we all angela lansbury. after the break a cnbc exclusive with fed governor waller when we're back in three minutes. .

good thursday morning, welcome to another hour of "squawk on the street." i'm sara eisen with carl quintanilla and david faber live as always from post 9 of the new york stock exchange. s&p is down .2 of 1%. you've got strength in groups like financials that are bank earnings continue today, with bank of america, morgan stanley, pnc. utilities, industrials, energy, real estate, all higher, but technology is weaker, and guess what, nasdaq down .3 of 1%. you have chip makers like broadcom and nvidia, taiwan semiconductor numbers surging. tesla is down. apple is little bit weaker, so is meta, and that's dragging down the overall market. take a look at treasuries, after the rally. a little bit of a reversal today. firmer, 4.67. two-year yield just below 4.3%,

carl. >> a huge hour ahead for the street. the president-elect's pick for the secretary. scott bessent in his confirmation hearing. watching the supreme court this hour as the justices debate whether to step in and block a potential tiktok ban from going into effect on sunday. first, we have some economic data crossing the tape. rick santelli has it for us. good morning, rick. >> good morning, our november read on business inventories. this is a fourth quarter number. we want to pay attention to the widgets to see if it adds or subtracts to gdp. expecting up .1. in the rear view mirror, up .1 last month becomes zero. not much going on to add to gdp. this is the 11 month, and ten out of the 11 months have been positive. you look at last year, nine out of the twelve were negative. we have had a much better

inventory backdrop in 2024 than we did in the previous year. interest rates, well, as we sit, two-year's up 24.67 and the ten is up two. parallel shift on the yield curve. we have more data on housing, home builders housing market, sentiment index is coming out, and for that we head east to diana olick. >> home builder sentiment in january rose one point to 47 on the nahb index. the street was looking for a one point decline. it's an improvement but anything below 50 is still considered negative. the index stood at 44 in january of last year. the builders cited optimism for an improved regulatory environment, and economic growth, and concern over how building material tariffs and costs and a larger government deficit would put upward pressure on inflation and mortgage rates. of the index's three components, current sales conditions rose

three points to 51. buyer traffic, two points to 33, and sales expectations in the next six months fell six points in part due to the elevated interest rate environment. ongoing and slower easing from the federal reserve should help financing for private builders currently squeezed out of local markets, builders report cancellations are climbing as a direct result of mortgage rates rising back up near 7%. regionally, sentiment is higher in the northeast, lower in the northwest. >> hopefully we can get answers to that right now, diana. thank you very much. the latest inflation prints raising questions about what the fed will do next and when it comes to rates. joining us for cnbc exclusive, federal reserve governor, christopher waller. governor, welcome to the show. good to see you. >> hi, sara, good to see you. thanks for having me on. >> it's a good time for you to be here because we're in this middle of raft of economic data. we had really strong jobs last week, more benign inflation

report and cpi yesterday and mixed data today around retail sales and jobless claims. i'm curious how you're interpreting it all and what kind of picture it's painting for you. >> yeah, the inflation data that we got yesterday was very good. it's the sixth month out of the late eight where we think core pce inflation will come in below 0.2, which is getting very close to our 2% inflation target would be in terms of core. so the inflation is good. we had a couple of bumps there in september and october, but it looks like it's getting back to trend. we'll have to wait and see whether this continues. i believe it will be. we'll see some base effects come out, but last year we got a shock with inflation in january and february that kind of put us back in terms of our progress for cutting rates. i'm hoping that doesn't happen again so that if, if we continue getting numbers like this, it's reasonable to think that

possibly rate cuts could happen in the first half of the year. >> rate cuts in the first half of the year. market's not pricing that in. but that's what you're looking for? >> i'm saying, it depends if, and always the big word, if, if the inflation data continues to come in like it has been. if we don't -- if we get a surprise like we did last year, then we're going to have to stay on hold until we get inflation coming back down. i'm optimistic that this disinflationary trend will continue, and we'll get back closer to 2%, a little quicker than maybe others are thinking. >> why? what do you think is keeping it sort of stubbornly high? i mean, seeing shelter prices still up there, food prices are still rising a bit. i'm just curious what you're watching that gives you confidence that you'll get to 2% sooner. >> like i said, six of the last eight months, we're not too far off target, and i think there's no reason to expect that will reverse or change.

so looking at the 12 month year over year numbers, it doesn't look like we made a lot of progress on inflation. like we said, we go over to the last sigs x or eight months, co pce inflation will come down, and i think that will continue. a big shock last year at the beginning of the year. there's some concerns, beginning of the year price shocks. i'm hoping that doesn't happen. so if it doesn't happen, and we continue to get through a couple of good months of data, then the base effects will kick out from last january and february, and we'll see further progress on inflation going into the second quarter of this year. so based on that, if inflation is down, the labor market stays solid, then you could start thinking about, you know, restarting rate cuts later, you know, several months from now. >> you're not talking about january, you're talking, i don't know, march? does that sound reasonable? >> well, january, we need to kind of see what's going to happen. there's, you know, the chair has said we're in really no rush to do things.

we need to see a little more progress on inflation. this mon th was good, but we ned to make sure we get through the turn of the year to see if it continues. we have to wait and see. i don't think march could be completely ruled out depending on the data, but anything that kind of disrupts that is likely to push it back some. as long as the data comes in good on inflation or continues on that path, then i can certainly see rate cuts happening sooner than maybe the markets are pricing in. >> how many are we looking at this year? >> well, again, that's all going to be driven by the data. i mean, if we make a lot of progress, you could do more. it's also going to depend on where people think the neutral rate s you know, there are people who think that we've got a lot closer to neutral, and therefore there's not as many possible cuts coming. others have, if you look at the sep, the median is a neutral of about 3, which would imply, you've got four cuts, three cuts, depend ongoing what the data tells you this year. >> three or four cuts this year,

you think, could be possible? >> it could be. it just hinges on the data. if the data doesn't cooperate, you're going to be back to two and maybe even one if we just get a lot of sticky inflation. >> i mean, the data has been pretty strong. last week's jobs report, unemployment rate surprisingly fell, much more jobs created than expected and the thinking there was, well, how restrictive is the fed, really, and does it need to be cutting if things are looking so good? >> yeah, i think the jobs report last week, i think there was a little loss of memory that some of that is a makeup from the very near zero number we got in october. we knew there was going to be a rebound in the november and december reports. and that's basically what we see, so if you average through the last three months of the year, you're right at about 170,000, which is not much different than the previous quarters. in terms of looking at the market, yeah, the jobs number was good. a little tip down in the unemployment rate.

that's been moving kind of sideways all year. when you look at things like hiring rates, quit rates, wage growth, you're not seeing a labor market that's starting to overheat or accelerate, and that's why i think things are still restrictive. we're also seeing it in in any interest rate sensitive sectors, manufacturing, housing. we're seeing it in surveys of consumers that, you know, interest rates are affecting their decisions to buy kind of expensive durable goods. monetary policy is restricted in exactly the way, and in the areas we think it would be. >> so you're not as excited about the better data, in other words, the data that would suggest that the fed doesn't need to cut? you see weakness, more weakness, perhaps than the market perceives? >> yeah, i think the labor market is not -- look, i'm happy jobs are up. i love it when people have work. but when you look at all of the indicators in the labor market, it's solid. it's not booming. it's not falling.

it's just a good solid labor market, and we'll see if the jobs numbers continue. we're going to get bls revisions next month that could take, you know, i've seen anywhere from 50 to 60,000 off kind of headline numbers as they correct for methodology and estimateing job. that's something we'll have to take into the effect. >> what about the incoming administration, clearly you guys are discussing it and potential inflationary policies like tariffs. we'll see what we get and how we get it. hard to know right now. tighter immigration policy, does that factor into your view of where inflation is going to go and what policies should look like? >> we know with kind of certainty we're going to get. we're going to get more tariffs. we're going to get immigration controls, and we're going to get more of a deregulatory environment. all of those things are fairly

certain. what's hard to do is map that into forecasted numbers like inflation, unemployment, gdp growth. we know qualitatively what they might do. until we see what the administration does, it's going to be hard to put a number on anything going forward. you know, i mentioned last week, based on what i have heard and expected, i don't think tariffs are going to have a significant impact or, you know, persistent effect on inflation. we'll have to wait and see what actually happens. >> why don't you think that they would have an impact on inflation? if american importers have to pay more, if importers have to pay more, doesn't that get transferred on the consumer? >> well, some of it potentially can, and then on the other hand, the firm's also don't necessarily mark up prices for fear of market share, losing customers and whatnot. we saw that with a lot of the tariffs in the first administration. there wasn't a lot of the pass through, except for a few items

like washing machines and a few others. we did see evidence this was not fully passed through, and i think that's why most of the street estimates. i was up in new york on monday asking questions about this, and most of the street estimates are it's going to have some marginal effect and short lived effect on prices because if it happens, it's typically a level effect. it's not persistent inflation, and that's where i think most forecast it. they don't see it being a huge inflationary impact. >> this is a very dovish view of governor waller. i feel like you came into the fed, and you were a little more hawkish, and people really pay attention to you as sort of a thought leader in the committee. i'm curious if the rest of your colleagues feel as you do, and are as itchy for cutting rates as you sound to be? >> well, i make all of my policy decisions based on the data and where i think the data is coming in. right now, i think inflation is going to continue to come in towards our target, the year-over-year stickiness that

we saw in 2024, i think will start to dissipate, based on like i said, we have seen in the last six to eight months, with base effects coming out, so i may be a little more optimistic about inflation coming down than the rest of my colleagues, and that's what's driving my outlook for the path for policy. but i don't speak for the committee. i don't speak for the chair. these are just my own views. >> quickly, do you expect any broader economic effect, gdp effect from the california wildfires and the devastation at such a large scale? >> yeah, it's always very disheartening to see this kind of damage and destruction to human beings and property. and it's going to have a big effect locally. but in the aggregate, it's just not going to have a huge impact on the aggregate economy, much like the hurricanes have temporary disruptive effects, but you have to, again, these are things we typically look through because we know they're not long lasting. >> governor waller, thank you

very much for the time today. really appreciate it. >> thank you, sara, thanks for having me on, i appreciate it. >> good to see you. chris waller, governor, guys. we are seeing yields cut their gains after waller talks about first half cuts, something the market is not processing right now after he talks about three to four potential cuts. he had a big if, right, if we continue to see inflation move lower, but then also said he does expect inflation to move lower, disinflation to continue, and expects us to get to 2% faster than the market, and even faster than some of his fed colleagues, reminder, he gets a vote at every meeting, and markets do pay very close attention to his thinking. especially on inflation and where rates are headed. this is a fed that sounds like is more willing to cut than maybe the market thinks. >> yeah, he did hold up his finger a number of times. if, if. but that said, you can take a look. we have backed off obviously in the yield over the last few sessions. >> stocks recovering too. >> yeah.

all right, as we head to a break here. let's give you a road map for the rest of the hour. unitedhealth shares are under pressure this morning, this on the back of the latest earnings. it is weighing on some of the other health insurers as well. tough words on tariffs from our neighbors up north, canada's minister of international trade joins us with her response to potential trump tariffs. and the street watching the man who may become the next treasury secretary. we're going to go to scott bessent's senate confirmation hearing when it begins. don't go away.

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it's bank earnings time, financials continue to be a focus as the bank etfs come off their best day since november and more earnings this morning, morgan stanley beating equities, thanks to strength in equities, and fixed income trading. similar story for bank of america, a top and bottom line beat on better than expected investment banking and interest income. do not miss brian moynahan on cnbc later this afternoon, joining "power lunch" at 2:00 p.m. eastern. one of these good operating environments where a lot of these banks like bank of america is beating across revenue lines. unh is a drag on the dow. bertha coombs has been watching that action since the print early this morning. hey, bertha. >> yeah, the print was disappointing, but unitedhealth ceo andrew witty kicked off the earnings call addressing brian

thompson's assassination last month, and the public discussion that ensued after the killing. >> many of you knew brian personally. you knew how much he meant to all of us and how he devoted his time to helping make the health system work better for all of the people we're privileged to serve. he would dive in with passion and caring to find solutions to improve experiences, whether for an individual consumer, an employer or a public health agency. the task in front of us, all of us, health care providers, payers, employers, drug companies, and policy makers, is to continue improving quality and health outcomes for individuals and their families. while lowering costs for everyone. >> shares are lower this morning after mixed fourth quarter results. earnings of $6.81 a share beat by nearly $0.10, but on the top line, $108 billion came up a billion dollars short. united health care insurance unit was one of the areas where

revenues were light after medicaid membership fell on post pandemic redeterminations, taking people off the rolls, medical costs coming in higher with the fourth quarter medical cost ratio at 87.6%. that's a full point above expectations on continued high utilization. the company sees that stabilizing agent 86.5% for 2025. still, that doesn't bode well for the other medicare advantage players either, and they are giving up some of the gains that they saw earlier this week on those early 2025 medicare rate increase notices. on the pharmacy benefit front, andrew witty announcing that the company is moving toward a 100% pass through of all rebates for all customers by 2028. rebates and the fees that pbm's collect are certainly at the heart of the ftc lawsuit against unitedhealth's op tum, cigna's

express scripts cvs care mark. >> we played sound this morning of witty's comments about drug prices and i wonder if you saw any kind of evolution in that rhetoric, and whether or not this standoff between pharma and the pbms may intensify. >> what's ironic is that andrew witty was the former ceo of a pharma company. here he is saying that the issue is that pharma companies are pricing drugs too high in this country. not the rebates that get negotiated and that those actually bring the costs down. nonetheless, clearly all three of the big pbms under so much pressure have moved more towards this transparent pricing model as regulators have really upped their, you know, rhetoric about trying to move them in that direction. >> okay. bertha, thank you. united health down 4%, hurting the dow right now. we are just moments away from the start of scott bessent's

confirmation hearing for treasury secretary. president trump's pick. he's on the hill before the senate finance committee this hour. we will take you there live before he speaks. stay tuned. ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ ♪♪ at state street, we know everyone's trying to get somewhere. ♪♪ take the next step toward your future, by investing in the s&p 500 with spy. getting there starts here.

watching the senate finance committee this morning as we await scott bessent's hearing for confirmation of treasury secretary. we're going to take his opening statement, i believe, and we'll return to it once q&a begins. important hearing for the street. we're days away from the trump inauguration, the global economy bracing for some changes. canada readying some retaliatory tariffs on over $100 billion worth of u.s. goods if the president-elect proceeds with a 25% tariff against canadian goods. our seema mody is here with a very special guest on that front. hey, see ma. >> i'm delighted to say we have canada's minister of international trade. >> i'm looking forward to this conversation with you and americans. >> three days until president-elect trump is sworn into office in the u.s.

big question is around trade. what can you tell us about what canada is preparing if he does follow through on his tariff threat? >> well, i think what i want to say to americans is that canada is the biggest customer to 36 states. every day 36 states wake up and say canada is our biggest customer, and i think that matters, and the reason that matters is that if you're going to put tariffs on canada, what it actually will do is make things more expensive for americans. it will make things more expensive for american families, for american farmers, for american businesses and if you look at how much trade we do, that's going to really matter, and it's going to matter a lot for americans. >> the cost of business goes up if canada retaliates, are you expecting dollar-to-dollar retaliation, and what's on your list? >> everything is on the table. what we have been working on is to make the point to americans that as your biggest customer, and when we sell 70% of our goods to the usa, you can pretty

much be sure that if you're buying something in the super market, any of that good, think about a candy bar, there's probably some canadian in there. if you're paying $4 today, you might be paying $5 tomorrow. it's about the cost to americans, what it means to american businesses, what it means to american families. you don't want it to be more expensive. i would say to the americans, and i would also say to the president, these don't make good sense for americans, why do them. >> is canada ready to use energy as leverage in this trade negotiation, a thought of an export tax on the canadian oil and gas that comes to the u.s., which would be costly to americans. >> you make a good point about energy, and there's a lot that has been said about a trade deficit with canada. you know what, we sell a lot to america. that is true. we sell energy to america. if you take away the energy that we sell to america, there's actually a trade surplus, so, in fact, americans do better in their trade with canada, and if

you take energy out, it is a trade surplus. i don't actually think americans want us to not be selling electricity, oil and gas to america, because you know, i'm here in new york, the lights on broadway, lots of it is canadian electricity. >> one way to get around the tariffs is you could merge with the u.s. and become the 51st state as the president-elect has suggested. what do you make of that? >> let me put it this way, that isn't going to happen, and i'm more interested in talking to americans, to the 50 states here, and to say that, look, tariffs are going to be really really hurtful to american businesses, to american families, to american farmers, and i want americans to think about those tariffs and just how not good they are for the american economy. >> speaking on a day where the u.s. chamber of commerce has a speech out, and i'll read a

piece, market tariffs, blanket tariffs would worsen the cost of living crisis, retaliation by our trading partners will hit our farmers. the bottom line is this, tariffs are a tax paid by americans. are you coordinating with the u.s. chamber? >> i'm glad the u.s. chamber has come out to say that. that is actually the fact. when you put tariffs on, they actually impact directly americans. so i'm glad that the american chamber is also saying that, but i would also say this, i think we have a very unique opportunity. right now. for canada and the united states to build an even stronger economy, a stronger north american economy by working together. i think we've got a once in a lifetime opportunity to do that today, and that's where we should be going. let's not talk about these tariffs. let's not do these tariffs. they hurt american families. they hurt american communities. let's do something together, which is let's build together. >> as we see scott bessent arriving there for his confirmation hearing, which

we'll be taking live. speaking of the incoming administration, though, there are many who believe that president-elect trump simply says these as a negotiating tactic. what do you think the incoming administration and led in part by scott bessent at treasury if he gets confirmed, really wants from you guys? >> i think that what we know to be true is that canada is the biggest customer. the united states does really well trading with canada. i think in the time that we low temperature done this interview to give you an order of magnitude, we will have done $20 million in trade, in the few short minutes that i have been sitting here between canada and the united states, and what we should be talking about is how we build a really strong economy. >> if there's a desire for a negotiation on the part of this incoming administration, do you have a sense as to what their ask might be or what you might be willing to meet them on if there's an area of agreement and/or contention? >> well, one of the areas that the president talked to prime minister about and to our administration about is, you

know, working together collaboratively on the border, and we are doing that. we're doing that together. we've now got a strike force going on between canada and the united states. a secure border is a good and a safe border, is good for america. it's good for canada. we're really looking forward to working with the united states on that. and i think that what we're also trying to do is to build more together to innovative more together, and the competition is not canada. what we need to do is we need to do business together to be strong and competitive globally. if you think about it, 70% of what we send down here to the united states is from canada. so you're making the made in america includes canada, and when you make it, you have finished goods, and you don't want to be less competitive. you want to be more competitive. if you're going to put a tax on that 70% of inputs that come in from canada, it's not good for canadian, well, it's going to hurt canada, but it certainly is going to hurt americans. >> it's a balancing act, isn't

it, depending on how aggressive canada is, it could also be economically damaging to your country, which, if you look at the elatest economic data. gdp is slowing. i'm sure that's being factored in. >> as the canadian trade minister, i must also look at canada's economy, and what's good for the canadian people, but this relationship is the envy of the world. this economic trade relationship, i mean, people always say, what is the million dollar question here between canada and the u.s. it's not the million dollar question. it's the trillion dollar question. that's what we do together. and americans benefit when we keep doing this together. but as i said, tariffs hurt american families. they hurt american communities and i think that that should be the focus. >> let me ask you this, are you already in talks with other countries, learning to figure out how you can diversify your trade partners, if this does, in fact, end into a trade -- if we

enter into some type of trade conflict between the united states and canada. >> i have always had the mandate as canada's trade ministry to diversify. we have through our own trade agreements, access to 74% of the world's economy. i've got trade agreements in the asia pacific, through the cptpp, countries like japan, singapore, australian, new zealand, i've negotiated an agreement with indonesia. i've got a trade agreement with the europeans. so canada does trade everywhere around the world. i do trade missions and i bring hundreds and hundreds of canadian businesses to the united states markets but also to those other markets. i would say canada has the skills and the talent in people. we've got the resources. it's really great for us to be doing work with america, but absolutely, we also need to be pursuing opportunities around the world, and we are. >> we should remind viewers, this is not the first go around we have had on this front.

2018 was an experience for both countries. what would you say canada learned from that round of negotiations or back and forth regarding tariffs with trump? >> what i think we learned and take away is that we can do this. >> do what? >> well, it is president trump's agreement in the u.s. mca, doing this together. finding a common ground. and i think that's where we should be focusing our energy. finding a common ground to build a strong north american economy, something that is already the envy of the world and can be more. the learning is we can indeed do it. if we're committed to doing it, we will do it, and i think for american interests, as well as canadian interests, that's where our focus should be. >> if we see a change in government, trudeau is still there but announced his resignation, if we see a change in government, do you expect a different approach in dealing with trump and tariffs? >> canada has a consensus, and

that is that team canada really is that. we must do that across the country. we do it at government, at all levels of government, but also with the business community, also with labor groups and other stake holders. so i think team canada will continue to be united because it is about the canadian relationship with our closest trading partner, the biggest customer to the united states, and, you know, just a point on the biggest customer, you know, we buy more from the americans than japan, than china, than the united kingdom by far, combined. so we, in fact, out size in that customer relationship. that's how strong this relationship is. and i would say let's keep doing this. >> 70% of canada's military is procured from the u.s. but your ambassador has said that is an area where you guys could buy more. what exactly is on the list there, fighter jets, drones? >> i think everything is on the table. >> okay.

that's clear. yes. minister, we appreciate your time. minister mary ng, international trade minister for canada. interesting conversation here. >> thank you so much, have me back. >> thank you, we will. >> waiting for scott bessent here to read his opening statement, and he'll take questions from the senate finance committee as part of the confirmation hearing. look, we're expecting tariffs to come up. we don't know exactly how he's going to feel about tariffs. traditionally investors, hedge fund managers, economists that we speak to are not really pro tariffs, right, because the thought is they're going to hurt economic growth, raise inflation, but when you're part of the trump team, you're for tariffs because he clearly views this as a necessary tool in terms of realigning trade, potentially national security. i'm curious how he's going to frame the tariffs, guys, and whether he'll -- bessent will talk about them as a negotiating tool or a potentially necessary economic tool. just apropos of our conversation

here with the canadian minister. tariffs, and also sanctions. there has been some sanctions fatigue. treasury oversees sanctions as well, and it gets to the whole question of the u.s. dollar as reserve currency. countries sick of sanctions are trying to move away from the dollar, and i wonder if this president trump views tariffs as a more effective way than sanctions, for instance, as he has threatened that for countries countries trying to vie way from the u.s. dollar. >> sanctions are getting a fresh look not only as a way to move the ukraine deal along but to squeeze iran, squeeze venezuela, we'll listen for questions about treasury, fed leadership, dollar strength, bitcoin. megan is in d.c., and can probably give us color on how you thinks tone is going to go today, megan. >> that's exactly right. you can see on the screen, we're

getting started here. it's a packed room, and the opening statements from the top republican and top democrat getting started. i think the points you hit are exactly what we're watching for down here. bessent has sort of been presenting himself as something as a moderate, a more measured stance on tariffs. a maximalist negotiating position. that's different from what trump himself and other advisers have been talking about that. i'm interested today to see how he tries to sort of strike that balance between supporting the trump trade agenda, and not going so far to say tariffs are something we need to keep in effect. you mentioned sanctions, and i think it's interesting, we have excerpts from his opening remarks which should start in a couple of moments here. he's set to say, we must secure supply chains that are vulnerable, and we must carefully deploy sanctions as parts of a whole of government approach. the use of the word carefully there. i hope there's follow up questions on what that means on how broad they should be. lots of other questions, and i

want to flag the flash point that you were talking about last hour. democrats on the panel say they believe bessent has avoided the $50,000 worth of self-employment taxes over the past few years. bessent, a spokesperson is now out with a statement responding to that. he says these are meritless, and that scott bessent has paid his taxes. that's via a transition spokesperson and this erson also says that after providing thousands of pages of records through an exhaustive process, near senator wyden or his staff is able to provide evidence that scott violated the code. we know he's denying the claims that he avoided taxes. >> i have a feeling tat democrats will go there. thank you, megan, as we wait to hear from scott bessent. i've asked many times, janet yellen who has been treasury secretary and fed treasury, which one she prefers and what the difference is. the biggest difference is

treasury secretary, there's so much more you're in charge of and you have to know. sanctions policy, tax policy, there's the irs. the debt management and issuance and deficit, not to mention the economy and staying in touch with business and market participants, much bigger as a mandate than say the fed chair, which is in charge of maximum employment and inflation and monetary policy. the questions can be quite varied here, and investors care about all of them. >> street is getting ready. we'll squeeze in a quick break and get you back in time for the opening statement. don't go away. (auctioneer) let's start the bidding at 5 million dollars.

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as we wait for scott bessent, comments on capitol hill for his senate confirmation hearing as treasury secretary . take a look at the market. s&p down .1 of 1%, the nasdaq down .3 of 1%. there's weakness in tech spots, apple, tesla, meta and alphabet. strengthen the chip makers,

taiwan semiovernight helping the chips. the financials having another strong day, not as strong as yesterday, which was a big rally. strong begun, morgan stanley at the top of the list, up 2.4% on earnings. bank of america, strong results. utilities, real estate, industrials, all higher today, and as far as treasuries, it's a little bit of a selloff, though we paired some of those declines off the back of comments from fed governor waller on this show at the top of the hour, talking about more rate cuts than the market is expecting. he's looking to the first half for cutting rates. that's not something baked in the market. could see as much as three or four rate cuts this year. market expects one to two. if we continue to see the kind of progress that we saw yesterday in the inflation reports. he also played down some o. strong data lately like jobs, and said a lot of it was payback, for instance, on construction, and rebuilding, and he thinks that policy is still very restrictive. guys, we are about to hear from scott bessent, and one of the

questions will be probably, we hope, around central bank independence. because we know treasury secretary and fed chair have a close relationship, and bessent before has talked about this idea of a shadow fed chair, where you have someone a little more political on a different track waiting in the wings to become the next fed chair, potentially weighing in on things like interest rates. not sure how the market would take that. >> which was sort of taken as a sleuth move to defang the fed chair, well in advance of his term ending, right? >> yes. and since then, we have heard from president trump who kind of said we're going to leave fed chair powell alone. like last time around, didn't sound like he was going to use powell as a punching bag, at least at this point, but let's see how long rates stay high. >> we'll see how long that lasts, things change, so could his approach, right? >> absolutely. but, you know, look, this is a president who campaigned on

lower inflation, and economic growth. and right now, we have a little bit lower inflation, and we have economic growth. he wants to super charge that. i'll be looking on comments for tax policy. we are expecting bessent according to the prepared marcs on the extension of tax cuts, and how that will help americans and american business. the argument is if they don't that, you would get a big tax increase. >> that comes 24 hours after yellen's speech in which she says the extension would hurt the u.s. ability to service our debt, pretty strident words yesterday. >> deficit. i will be interested to hear his answers on that as well. i assume he'll be asked can you be a deficit hawk at the same time. his plans, 3, 3, 3, 3% reduction in the debt, 3% gdp growth and

then the 3% that jim was questioning and others have as well. not 3%, 3 million barrels a day of oil output. we're already at a record, by the way, i'll point out. >> and how he plans to manage just the treasury issuance, it's a little bit technical but been in focus for the markets, and it has been market moving. there's just, they're going to have to issue a lot of debt because our debt and deficits have been rising a lot, and what he thinks about that, and where that happens along the curve. there's been some criticism at the last administration of treasury secretary yellen for issuing short-term bills to try to keep long-term yields under control, and now that's not great set up for bessent who has to refinance all of that debt at higher interest rates, which raises the interest costs on the debt. yellen would say definitely not trying to manipulate. it was not political at all, and i do think there's a very strong case for that. nonetheless, it is a tougher setup here when it comes to the incoming treasury secretary.

>> yeah, would you argue that was one of his biggest differences with yellen, this idea that she was operating the financing of our government at the short end too much? sfl >> that's been the republican talking point, at least from some economists, it's technical and hard to make that case that she was doing that for the election. she has strongly denied that. not sure that that's what they're thinking, but overall, it yielded good results in terms of treasury yields not shooting up. remember, we had some scares in 2023 where yields were higher because of all the issuances and because we were starting to get jittery around bond vigilantes. >> you covered this with yellen a few days ago, what's a realistic expectation out of doge, now that we have seen yellen say the math doesn't really work, and even some expectations being brought in by musk himself. >> she was skeptical. >> let's get to the hearing. >> and today, we are honored to have our good friend and

colleague and now the new budget committee chairman, senator lindsey graham to help introduce the nominee. welcome, senator graham. from the great state of south carolina. i want to thank you for joining us today, and i'll turn it over to you to introduce mr. bessent. >> well, thank you, mr. chairman, and ranking member, and all of my colleagues, we know each other pretty well. this is my first appearance in the finance committee, probably last. y'all work on complicated stuff, and i'm glad you like this stuff. seems kind of boring to me. it's important what you do, and i respect the intellect of the people on the committee because our economy needs the best minds that we can find on the finance committee. and we need a secretary of treasury that knows what he's doing has the trust of the president, and loves this country. your ship came in with this guy,

so scott, from south carolina, he's academically gifted and real world tested. he went to yale, so nobody's perfect. when he told me that, i said, hmm, i don't know about that, but anyway, he's really really smart, and this is a complicated area. now why am i here? because trump won. i wouldn't be here if trump hadn't won. trump won because more people voted for him. and he had to pick people to form his cabinet. and when he talked about secretary of treasury, i'm not the normal person you would go to ask about because this is not so much my portfolio, but when he mentioned scott, i said, oh, my god, home run, from my point of view. i mean, you talk about somebody who's academically gifted, understands the world, scott, like any republican president

would pick scott. i mean, he really understands the president and what the president wants to do, and the reason i vote for almost everybody for every president is i believe, colleagues, that every president deserves a cabinet that they know and trust and can rely upon. if i had to vote for people based on agreeing with them, i wouldn't vote for anybody y'all picked. that's not the standard for me. i vote for people who i disagree. >> unclear as to whether or not graham's remarks were on the schedule or not. but we obviously took the hearing a little early. we're going to wait until bessent actually begins his opening remarks. >> doesn't sound like he's a regular cnbc viewer. >> he thinks global finance is boring, what the heck. >> judging on his comments about global finance. >> complicated and boring. a wind up on the trump election win and the fact that scott bessent is picked, and what he

said so far is it's good to have someone that knows what they're doing, and we'll get to hear a little bit more about that. we know bessent's history, he's a hedge fund manager, worked for soros, and some of the big successful trades like ting the british pound, and had his own firm. >> and a lot of real estate buying and selling through the years. >> his own real estate? >> yeah, yeah. most recently, i think, another sale. as a lot of the members of the incoming cabinet, very wealthy man. >> i think as far as the market is concerned, you know, first of all, i'm just watching these bond yields. they have been moving around a lot. and, you know, deficit is a big question, especially as term premiums started to rise, we have been talking about that a little bit, that's basically the extra risk that investors demand from the government to take on the risk of holding long-term debt. it's where you get in concerns about fiscal. with that heightened focus and attention lately specifically on bonds, bigger move up in the

long-term bonds, that's why this testimony is so important, why we're taking it today to hear about that fiscal picture and how he thinks he can help fight what has been, i mean, outside of a war or a crisis or a pandemic, record high def sits, right, and that's what he's inheriting. >> meantime, he has been very outspoken on the issue of tariffs. as you recall, some of the op-eds he wrote during the campaign, advising the trump campaign about his view, megan cassella, that tariffs are not inflationary, as long as the money supply does not increase, the amount of money that a consumer theoretically would have spent additionally on one good will get subtracted from something else. >> tariffs and the way that he's tried to sort of adopt president trump's view on tariffs without spooking markets, while using his wall street pedigree. i think all of that is interesting and ready to hear more from him on how we could impose tariffs, even

temporarily, without seeing inflation rise. on the debt question, that's been really big for him, too. he says he got into politics in the first place because he was worried about the size of the debt, the size of our growing deficits, and he has said in the past that he thinks tax cuts are the way to get there, that we can grow our way out of debt, and that we're running out of time to do so. he put out this memo, i think it was early last year, saying that tax cuts were going to unleash an economic lollapalooza, and i would expect democrats to sort of get at that and say how can you be cutting taxes significantly, and trying to get out of debt at the same time. the yields, it'll be interest to go see how they respond when he starts talking about that today. >> graduate of yale. went and taught at yale, taught classes on economic booms and busts, which is interesting, because part of the framing here is it's an good example of an academic shift based administration a market

player administration, who have done this for a living, not just write and study about it. >> i think one of the questions that has come up in all the confirmation hearings, especially pam bondi yesterday, hegseth for defense and might as well here for treasury is just the trump loyalty question, right, putting the country ahead of the president's wishes, that sort of thing. i mean, a lot of the democrats have been sort of harping on those issues, especially relating to the ag jock, megan, but i wonder, the treasury relationship is interesting. treasury is located right next to the white house, closest proximity of all the cabinet buildings, and there's a reason for that. >> that's absolutely true, and the reality is, sara, you're not going to get any of these nominations unless you're pledging your loyalty to trump. he wants to ensure all of these people are on his team, especially after his first term and how it ended. there's a lot of distrust of government, bureaucracy, and a lot of people close to him at the time betraying him at the

end there. he wants to make sure they're on his team. what's interesting with something like treasury, when you're overseeing such a powerful agency, and he has such deep knowledge of the markets if we start to see a real backlash within the markets of something like a tariff agenda or of tax cuts that might go too far, then you just don't know where, how close they're going to stay. so carl, it's something to watch. i'll toss it back to you. >> let's get back to the hearing at senate finance. >> i'll turn it over to you for your opening statement. i have four questions that we ask all nominees who come before this committee. the first is there anything that you are aware of in your background that might present a conflict of interest with the duties of the office to which you have been no, minated? >> no, sir. >> second, do you know of any reason, personal or otherwise, that would in any way prevent you from fully and honorably discharging the responsibilities of the office to which you have been no, minated?

>> no, sir. >> third, do you agree without reservation to respond to any reasonable summons to appear and testify before any dually constituted committee of the congress if you are confirmed. >> yes, sir. >> finally, do you commit to providing a prompt response in writing to any question addressed to you by any senator on this committee? >> yes, sir. >> thank you very much. again, welcome to the committee mr. bessent, and you may make your opening statement. >> good. thank you. chairman crepo, ranking member wyden, members of the finance committee, it's an honor and a privilege to be considered by this committee as the president's nominee for the secretary of the treasury. i want to thank all of you who took the time to meet with me over the past few weeks. i want to thank my spouse, john freeman, who is here today and my wonderful children, cole and caroline who are sitting behind me -- >> mr. bessent, could you pull the microphone a little closer to you.

>> who are sitting behind me for the ultimate civics lesson. i want to acknowledge three people who couldn't be here today. my 98-year-old mother-in-law, selene freeman, a world war ii french war bride of an american soldier who lives with us in charleston, south carolina. making for a three generation household. my sister, page mcleod bessent wo doesn't like crowds and prefers the mountains of south carolina to large cities, and my recently deceased sister, wynn bessent, who worked tirelessly as a public defender in one of south carolina's poorest counties. i also want to thank president donald trump for having placed his trust and confidence in me for such an important role in his administration. while i met with many of you, most americans watching at home will be unfamiliar with my background. i have been blessed now for a fulfilling and successful career but my presence here today was

far from predetermined. i was born and raised in the south carolina low country, when i was 9 years old, i started working two summer jobs, and i haven't stopped working since. i eventually made my way to yale yale. i accepted my internship in finance. because the job came with a pullout sofa in the office to sleep on. which allowed me to work in new york city rent-free. i have been involved in the markets ever since. i have been able to work with some of the greatest investors in a career that has taken me to almost 60 countries over 40 years. my life has been the only in america story that i am determined to prepare for future generations. today, i believe that resident trump has a