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the headlines and prepare you for the weekend rate i am jack otter the fed is projecting three rate cuts but tourist says the inflation fight is not over yet. he joins me to tell us where he sees economy headed in 2024. then apple had in the store care in 2023 shares hit a record high in the tech giant added 1 trillion a market value. our expert panel will take a look at the growth prospects and what comes next. big-name ceos are facing fresh challenges heading into the new year andrew bary will explain at the end of the show. we begin with three things investors to be thinking about right now the stocks heading into the holiday weekend higher lift in the market to a near record cooling pce inflation data for november is boosting hopes for a soft landing for the economy u.s. steel will no longer be a u.s. company to sell to japan's steel is causing a backlash of lawmakers including president biden say the decision threatens the american steel industry. we'll take a look at the fallout

and how it could affect steel stocks. inflation may be easing at home that there's trouble across the globe that investors need to watch on the barron's rentable my colleagues and your barry, carleton english and jacob sonenshine. the santa claus rally continues. eight straight weeks of gains, what is driving the market. >> investors in the holiday mood this week and the major embassies move higher the s&p 500 gained about a percentage point now up 25% this year a percentage point of the record high and the reason for optimism going into 2024 the fed seems poised to cut interest rates by as much as this percentage point hack yelled inflation coming down to 3% there's a lot of cash on the sidelines with 5 trillion a money market funds. >> the time between christmas and new year's is quiet, you expect the same here. >> there could be fireworks in the final week of the year. jack: i want to ask about a specific thing you been watching the media sector for a long ti

time. in the wind there was a possible discovery of paramount high up sherry redstone wants a lot of money more than the market is valuing what are the odds of that happening. >> it's interesting the paramount control by the redstone family kept saying no to mergers they did not want to sell now with the tank of the stock of fraction a year ago their interest to giving their strategic positioning with some of the issues of their facing and it may be tough to find a merger partner, warner bros. and discovery is rumored to be talking to them but there's not a lot of obvious partners for the company because it does not look like apple or amazon are interested and i'm not sure who else would be. jack: let's go to a merger much more likely to happen u.s. steel being bought by nippon steel of japan the politicians do not like the looks of that. >> this is one area where both sides of the aisle have an agreement on fetterman and vance both opposing deals on the very

issue of the u.s. steel company belonging a japanese hands. there is one thing to keep in mind several things to keep in mind which is the size of the u.s. steel industry. it's tough to say is not what it once was people talking about u.s. steel there invoking andrew carnegie and the original j.p. morgan and i have to be careful and from pennsylvania and i have family members that worked in the steel industry but this is a 15 billion-dollar deal. i when it turned on $15 billion in the scope of the u.s. economy is not that instrumental to the functioning of the economy in japan as an ally and when we think about deals we were worried on the cross-border transaction were not talking about the technology transfer and japanese still has better than the u.s. jack: that has gone nowhere as far back in my chart would go and 1993 it was selling for $33 where was when this deal was announced what about investors do you look at the steel

industry and are other companies in place or do you invest. >> cleveland cliffs which initially was on u.s. steel a few months ago are obviously not buying it so now they have the cash in the ability and the announced a buyback this would be one to take a look at. jack: a lot of very good news on inflation friday but geopolitical hotspots that we need to worry about. >> in the red sea there are iranian militants striking down shipping in the panama canal is experiencing a drought lower water levels and also a threat of venezuelan annexation in guyana. that impacts oil so you have the flow of goods getting slowed down see if companies like ikea and bp oil saying there experiencing the consumer companies experiencing delays of products higher shipping cost

and the going to pass those on to consumers. it is not burdensome for a high enough number of goods to move inflation up but if the issue continues you start to see an issue with inflation. sean: iranian backed militants not iranian so we don't start another one. jack: we don't see inflation move yet but are we seeing any data that suggest the supply chain snags are pushing prices up. >> you saw a five or 6% pop in crude oil and gasoline prices moving up roughly in line below peaks. you want all that to stop but we have had that in cpi inflation looks good but you want to make sure the stops as soon as possible. >> i hope not but that could be the surprise that would make next week not so smooth. investors are optimistic heading into the new year but my next guest says not so fast. economy string

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jack: fresh data from the favorite inflation showed prices cooled more than expected on a monthly basis inflation is down .1% the first decline since april 2020 compared to last year prices are up 2.6% slightly below the estimate my nest guest helps investors make sense of the market with a day of the e-mails help take us a few of those to see where the economy is headed next year apollo chief economist, thank you for coming by. >> inflation down a little bit more than expected. we usually look year over year some people might like jeremy

siegel saying that the above amounts of steel data you should look at the most recent and by those looks better and you said not so fast. >> i think we should look at it the way the federal reserve looks at it. the federal reserve always points out if you look at three months or six months changes in inflation can be volatile and just because it's been coming down in the last three months but does not mean it's a sustained trend and that's why they often talk about it in terms of what is the trend over the last 12 months. >> the fed pivot data points that suggest it could almost spark inflation or keep growth high you have charts to show that earnings expectations. >> the easing of financial conditions that we thought of the law several weeks and in particular since the fed pivoted wednesday last week has been quite substantial we've seen financial conditions ease so much and as you can see in the picture we might run the risk that we begin to see the economy accelerate again in some sense

the pivot could have the unintended consequence of providing a boost to the housing market and to label markets to service inflation with housing makeup 40% of the cpi basket of housing continues to recover it could be a risk to the upside as we enter 2024. jack: on the dampening we talk about the lag effect with said rate hikes. companies of florida practically nothing before the hikes we will see the debt rollover and higher rates in some cases are not profitable companies they cannot afford to pay that stream increasing default rates have started to increase for companies with high leverage and low coverage ratio and earnings divided by interest expenses companies have the cash flow experiencing stress the key risk

the lag effects of the higher cost of capital for companies is weighing on interest expenses in weighing on the outlook for default rates in weighing on the broader economy. if companies that are highly leveraged begin to go into bankruptcy and begins to run the risk and more job losses in particular that firms that have no cash flow that are more vulnerable when interest rates state higher for longer. >> they have been doing incredibly well the patagonian if they lose their jobs. >> the risk meaning the industry if inflation is not only coming down more gradually and if the fed will keep rates higher for longer another come down a bit but they've cut amuck your times and the level will still be biden in terms of the cost of capital being constrained on many companies the most indebted companies with no cash flow and in particular middle-market companies smaller companies are more vulnerable as we look into

next year. >> let's look at the stock market 2024 that magnificent seven dominated. >> the juvenile return, the s&p 493 remaining 493 stocks has been moving sideways that's what investors look at the stock market need to ask themselves of it too much in a run up in the a.i. story. >> the seven stocks equal the combined value of japan, canada and the uk. >> it's incredible the magnificent seven how much they have grown and how important they become in the index overall raises a lot of questions for fresh money going into the stock market what is the narrative and story if you buy the s&p 500 are you buying companies that have been up 75% in 2023 and they have the magnificent seven p/e ratios that are more than 70 on

a trailing basis there expensive and are gone up a lot that does raise question for the outcome. jack: if you don't buy those what do you by. >> the big theme for next year's two things, first of all if the fed is going to keep interest rates elevated it means fixed income spread on top of the fed funds rate in particular credit and the private credit looks attractive because you have higher levels of yield than what you get in the fed funds and bonds you should cut nice coupons and nice returns because the fed keeps rates at elevated level we had issues with trevor under treasury supply and less demand from treasury from china and japan and the risk of a sovereign downgrade that begins to push up long rates and that means the belly in the long end there is more attractive yields you can get the fixed-income

investor in is done on the equity side if you have higher yields and levels of yields from 2008 to may 2022 it does mean the equity market is more risk in particular with the run-up in the high p/e ratios especially in tech and growth stocks at the moment. jack: we have to leave at their mohave back next year end how investors can get into private credit. thank you for having me. a historic year for apple stock the sales we [ applause ] the day you get your clearchoice dental implants changes your struggle with missing teeth forever. it changes how you eat, how you feel, and how you enjoy life. it changes your smile and how others smile at you.

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jack: apple stock had a fantastic year the most world

valuable company jumped 50% to a record high despite four consecutive quarters of declining sales investors are looking for the tech giant to show the growth to justify the strong market performance it is the cover story and alex joins a panel of soaring stock price and falling sales outcomes a recipe for bad investor news. >> we call this the apple paradox in this we experience is not an exaggeration to say apple had the best year ever for any company in the history of corporate america they added $1 trillion in market value no other company has done not an sales fell 4% in the latest fiscal year, what you make of this it is not ideal in investors have good reason to be worried. in the story we went searching for growth. jack: why would have investor bought pushing it up a trillion dollars. >> it's a great question and i think investors believe in the company and believe apple has a 20 year history since steve jobs

returned to continuing to surprise and make comebacks the stock is always recovered but i think it's become the ultimate defensive stock at the new techworld of procter & gamble. >> the evaluation looks high 30 times earning given their dependence on china with 20% of their sales. >> i think china is a concern it's a good point and not that they cell but they make their products is something definitely worth watching tim cook is there and they're worried about them themselves. i would also say all of the techworld needs china and if something goes wrong and sanchez could do that both across-the-board. >> what is the path the growth that massive resources they take so many shots on goal we see it with her services in emerging markets we could see with aim search and there's a lot of opportunities in there been other times apple has seen the sales and they make a big

recovery. >> with all this on tim cook there's not been a lot of innovation with the past ten years or so. >> you don't think apple pencil is enough. i think that's a fair point arguably tim cook's biggest moment as in the air pods maybe the apple watch what the market loves him the stock is up 1700% since he took over in 2011. >> the next big thing is supposed to be the headset a lot of other players have tried with her glasses, headsets why could apple be successful or will they be should i say. >> apple vision pro is due out early next year something early as next month, this is basically apple into virtual reality augmented reality and it is been an area littered with failure most notably and there's a good reason that apple will fail to and it's a company that comes in

and fixes others mistakes, we saw with the ipad and we saw with the iphone. >> we heard a lot about the applecart winter we going to see it. >> for years i don't think will oversee the applecart, margins are not going to do car manufacturing, telsa has done a good job i don't see apple wanting to go into it 30 dominated the cockpit with anyone who has an iphone no longer using their navigation using applecart player and i don't think we'll get applecart. >> let's look at deals the huge cash pile in the media space ted lasso huge show, does apple look at something like an espn, disney, purchaser. >> to have a big cash pile $51 billion in the cash so they could buy and a lot of things that they wanted to. how many times apple rumored weather peloton, go pro and disney at other points, netflix. they don't like to buy other people's brands, they like to grow organically.

i don't see them going shopping i think i'll use the cash to continue their buybacks which have been very good for the stock in investors. >> were just about out of time you mentioned a.i. what is a play for apple. >> apple has been really quiet on a i think of his theory that finally works. >> theory is very frustrating but if she got smarter she would be great. thank you so much. next we have a pair of investment ideas and andrew says three well-known ceos on the hot seat heading into the liberty mutual customized my car insurance and i saved hundreds. with the money i saved, i started a dog walking business. oh. [dog barks] no it's just a bunny! only pay for what you need. ♪liberty. liberty. liberty. liberty.♪ [coughing] copd isn't pretty. i'm out of breath, and often out of the picture. but this is my story. ( ♪ ) and with once-daily trelegy, it can still be beautiful. because with 3 medicines in 1 inhaler,

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jack: most of us are hoppin hopo have a relaxing week but you been compiling a list of ceos who might find themselves at the desk. >> there are a couple of ceos on the hot seat let's start with

mary barra of general motors she led the big push into electric vehicles which one a lot of praise by the biter administration but not going well with weakening demand the cruise robo taxi is creating and losing a lot of money the stock is down from where was when she took over ten years ago. >> earlier we were talking about warner bros. discovery it's a tough road for david zaslow. >> he is well-paid even by the extravagant standards of the media business but shareholders don't have a lot to show for down over 50% sense his merger with warner bros. media a year or so ago. there is pressure to produce in 2024 and cut debt. jack: not everyone in the media business is extravagantly paid, just certain levels. pfizer you been bullish on the company but albert has a tough road ahead. >> we've been wrong on that so far, the stock is in the high

20s and is recently hit a new ten year low it was riding high during covid with their vaccine in the past of the franchise but they've seen a sharp decline in sales in now basically the company has delivered some of their strategic priorities and some of the pipelines have not been great. jack: what do they do do they have to purchase another company or is there hope in the pipeline. >> is not an easy fix for pfizer. >> let's go to actionable ideas, what you have for us. >> bloom and breanne owner of outback steakhouse and a few other restaurants trading around ten times forward price-to-earnings, that's kind of cheap it's grown same-store sales above the industry for more than ten plus years. it's been selling digitally and beating customers and it can continue, a few hundred million dollars in free cash flow not too much debt continue stock buyback, double-digit ets growth the next few years and over three year. it's a double bagger.

jack: who doesn't like a good ribeye, carleton what you have. >> take a look at nike you always want to pay attention to when there's a pullback we got that in friday's training when the company warned weakening sales going into the next year and cost cut of wall street is unsure when they will materialize looking a little expense about 30 times earnings but pay attention. jack: great ideas, to read more check out barron's.com griff: merry christmas. will: it's from mary's mansion designer insta house. ♪ ♪ maria: good sunday morning, everyone. welcome to this special edition of "sunday morning futures." i'm maria bartiromo. merry christmas to all on this christmas eve this morning. coming up, my exclusive visit with cardinal timothy do hand at th