tv Squawk Box CNBC December 13, 2021 6:00am-9:00am EST
good morning, everybody. welcome to "squawk box" right here on cnbc i'm becky quick along with joe kernen and andrew ross sorkin. we're going to start this morning with the markets after the s&p logged its best week since february, up by 3.8% last week and closed at a new record. looking at it it was the dow that was the better performer, up 4% for the week nasdaq up by 3.6%. the dow and nasdaq aren't at new records but aren't far from it the dow is 1.6% from an all-time high, nasdaq 3.5%. if you look at things this morning looking at green arrows again. dow indicated up by 90 points. s&p up by 15 nasdaq up by just over 60 points and the treasury market right now, the yields have been under pressure for a while the 10 year still below 1.5%, at
1.473% and then you have oil prices crude oil skyrocketed last week up by 8% after being put under pressure with concerns from the covid variant but it snapped a six week losing streak let's talk about this terrible situation over the weekend. an update now on the severe tornados that ripped across several states on friday the death toll in kentucky still unclear as rescuers are combing through the wreckage the governor estimated between 70 and 100 fatalities but said yesterday he's hopeful there may be fewer than feared at least 12 others kiltd by the storms in arkansas, illinois and tennessee. in illinois six people were killed when part of an amazon warehouse collapsed. winds knocking down walls 11 inches thick and 40 feet tall this believed to be an image of
the tornado that travelled 227 miles from arkansas to kentucky over just a three-hour period. >> that is in contrast to some positive news that we're seeing out of israel regarding omicron. the fight against covid, new research found a three course shot of the pfizer vaccine provides significant protection against the strain the data supports the findings presented by pfizer last week. it all indicates hopefully some positive things. the israel study is the first using actual samples of the omicron variant. other studies have used a pseudovirus, constructed to mimic the strain's mutations and then there is this, the big buzz over the weekend. seems like everyone saw it, coming with a spoiler alert for
those in advance for those who have not seen the premier of hbo's sectx and the city revival titled "and just like that". it's hard to avoid this news, in the show a character suffered a major heart attack shortly after taking a class on a stationary bike since that premiered last thursday, peloton closed at a 52-week low on friday. a member of the health council had a statement that the character's lifestyle, including cocktails, cigars and big steaks was to blame for the heart attack but actor ryan reynolds wrote an ad to help the company take a look. >> shall we take another ride?
life's too short not to. >> and just like that, the world was reminded that regular cycling stimulates and improves your heart, lungs and circulation, it strengthens your heart muscles, he's alive. >> he is alive he is alive. ryan reynolds jumped into a peloton pr crisis two years after an internet user made fun of a peloton ad for portraying a wife who looked terrified. he cast that same actress for his gin brand. so he's now done it twice. i don't know what the count is at this point on twitter and instagram and the different social media sites they released that ad to i imagine it's worth it. >> why ryan reynolds does he own it -- >> he's a big business guy. >> is he a creative genius
>> he's become an entrepreneur beyond his acting business and he has lots of things to do, making ads, he has a mobile phone business he's a creative guy. >> i was reading last week about how peloton said, okay, you can -- for product placement with the hbo series and said you can use it for "sex and the city," even provided their fitness instructor but they didn't know the outcome, how it was going to be used or he was going to die, so you can imagine them being like yeah we got this great product placement and then finding out, it killed somebody off. >> you did -- that was the spoiler, we know who it was now, mr. big. i didn't think you were going to go into that. >> none of it makes sense if you don't know that. >> you have to look at who the actor is -- >> it's in every newspaper >> i don't watch the series but i read it all. >> the other question i have,
though, is, is hbo upset with the actor, who's now obviously taking advantage of this i'm sure -- >> so what, they killed him off, you lose all rights once you kill somebody off. >> this is the question. >> i forgot all about that -- that commercial which was very highly produced and slick, and i forgot about that. that shows you how short the half life of that thing was. that came out, people said this is just -- they had no idea. madison avenue can screw up once in a while it was a gift i think the husband was saying get on this thing, bab. >> fatty. >> yeah. you need it. get on this you're letting yourself go. she's like, am i going to be able to satisfy his image of what i should be like? it was totally tone deaf, i forgot about that. that's been two years now, has it really, wow. >> a lot has happened in the last two years
i understand not remembering it. >> and we forgot about it quickly. obviously with everybody doing the in-home training i don't want to digress, but i'm doing much better. my body fat is down like 4%, i'm running. that immediately takes off -- >> peloton >> no. a walkway. >> a woodway >> my knees are a little -- you know what, i don't want to digress because i don't want to hear about it. i'm tell ming you i'm doing brault better. >> looking good. >> weight wise the covid thing that everybody experienced, i don't want to -- >> the covid-19. >> mine was about 12, i think. 12, 13 but the body fat was bad, over 30 over 30. sorkin what are you like 16 or something? do you know? >> your metabolism >> no. body fat percentage. >> i have no idea. >> i thought you meant the
metabolism. >> depends on how many donuts and then the water weights. >> you're obese. at one point over 30 you're close. getting close to 35, do you know is 35 obese? i'm plummeting, just to let everybody know >> well done. >> we're rooting for you, mr. big. >> unfortunately, it's like taking out, you know how you get fillers for wrinkles to make you look younger when you lose weight, you take the fillers out so you start sagging. i don't want to talk about this. now i feel like i ruined the a-block. >> no. well done. and it played into the peloton and mr. big. it all works. >> it's morning. >> the peloton treadmill is as good if not better than the woodway. >> it is >> it is >> i got rid of the bike. >> that was our pandemic purchase absolutely >> when we come back, inflation
is going to be a hot topic of conversation again this week as the fed prepares to kick off a key meeting. we have the squawk planner for you next. futures picking up steam, dow up by 108 points s&p up by 16, nasdaq up by 66. and "squawk box" will be right back feel stuck with your finances? move your money to sofi and feel what it's like to get your money right. ♪♪ ♪♪ move your money to sofi. download the app and get your money right.
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right now it's time for the squawk planner the fed is going to be front and center with the central bank beginning a two-day policy meeting starting tomorrow and concluding wednesday with a news conference by chair powell they're expected to speed up the end of the bond buying program and signal that it expects to start hiking interest rates in 2022 also on this week's agenda we'll get the latest read on producer prices tomorrow. and then we'll be getting retail sales and import/export prices on wednesday, followed by jobless claims and housing starts on thursday on the earnings front we'll hear from lennar and then darden and others for more on this right now let's
bring in barry knapp, managing partner and director of research at iron side's macro economics we had so many things happening last week, maybe the cpi information is something to really pay attention to. where do you come down on inflation and what the fed might do in reaction >> well, i think as we get into next year, we're for sure going to see goods related inflation coming off, it's running at 9:00 p.m. -- running at 9%. it's been a theme we're not going to get prices like we had in the '90s, 2000s and '10s any longer so that was going to push the trend up it's unlikely to remain at 9 what we will find in 2022 as goods flags inflation come down, goods clear, we're going to be left with higher sectors.
we're getting transitory disinflation in health care and education, those are likely to pick up. the fed has themselves in a bit of a pickle here, even if they're right to an extent that this is transitory, meaning the goods and supply chain issues that all the policy response is going to drive those service sector numbers higher. so i think what the fed really needs to do is, rather than go directly to rate hikes as they're indicating they're likely to do, they need to go directly to balance sheet contraction. you recall last time they taper the asset purchases, waited, went to rate hikes and then went to balance sheet contraction that contributed to a flattening of the yield curve they instead went to letting the balance sheet run off as early as march, that would steepen the
curve, help cool off the housing market a bit and be a better approach to try to tighten policy so far policy is more accommodating even more than the november meeting >> that's an excellent point i'm not sure why that isn't pointed to more frequently is it we look at rate hikes as a signaling to say we're taking it seriously? we'll be doing the same thing maybe more targeted getting rid of the mortgaged pack securities >> i think the signaling piece is key, becky. the fed has convinced themselves that their communication strategy signaling is more powerful than their actions. in fact, they -- you know, these are all new tools and they actually do have a much bigger impact, that stock of mortgage
backed securities in particular. they really do need to get out of the treasury market and mortgaged back security market more importantly sooner rather than later yeah, rate hikes send a stronger signal to market participants but in terms of getting the rates to move higher, they really do need to go directly to that runoff. >> let's talk about the services sector part of this, i think that's really important. oil prices have come down, even though they bounced back last week, commodities, precious metals all of those things aren't as hot, that's going to take care of itself. but the key is services sector and have that work into wages because that's where things can spiral and get away from you especially when you consider that we are a services economy, not a hard goods economy what happens, what worries you about that, and how do we take care of that
>> so i've been describing housing, education, and health care as our dead weight sectors for years, and the great gallop survey or economic report, white paper going back to '16 that looked at those sectors they've been using an increased amount of gdp, running above aggregates for decades. these sectors have been the biggest drag on u.s. productivity, that transitory dis-inflation as i said during the pandemic if you think about the government involvement in all three of the sectors, it's likely to push inflationrates on those sectors even higher pep so those were -- if you look at core services prices, throughout the 2010s and the 2000s, it ran above 3% it was above the fed's target all along.
it was only because we had this disinflationary shock from china we stayed below 2% if you think of the sectors running at least at 3, likely bumped to 4 as a consequence for a year or two, the fed is going to find themselves with trend inflation way above their target and there's no easy solution for those sectors. what they need is technology, innovation, adoption and delivery of services starting to see it in health care a little bit. but the health care sector is a great one. it's the biggest contributor to s&p 500 revenues but not near that in earning. prices have been falling for 30 years. >> we have to run but we'll have you back soon because i want to take the next leg of that, if this is your concern on these, what do you do as an investor? we'll have you back to do just that soon. >> thanks, becky. news just out, pfizer is going to acquire arena
pharmaceuticals for $6.7 billion coming up cyber threat, tech giants are scrambling after experts warn of a major vulnerability in some widely used software. watching shares of apple today, j.p. morgan just raised the price target to a street high of $210 the company's market cap would be well above $3 trillion even if it hits 182.86. that's the number. we'll be right back. as an independent financial advisor, i stand by these promises: i promise to be a careful steward of the things that matter to you most. i promise to bring you advice that fits your values. i promise our relationship will be one of trust and transparency. as a fiduciary, i promise to put your interests first, always. charles schwab is proud to support the independent financial advisors who are passionately dedicated to helping people achieve their financial goals.
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security is urging government and private sector organizations to address what's being called a critical flaw in widely used software the vulnerability is in a java base software known as log 4j, the organization used it to conf configure applications that can give access to networks. they started e plexploits the fa on friday, to those running microsoft's mine craft game. all said they're carrying out investigations into the depths of the issues, and they're all deploying patches. are you a mine craft guy what's mine craft? >> we're mine craft people we're mine craft people and some roadblocks, a little bit both.
>> we do a little mine craft, not roadblock so much. >> what's going to happen? you're both compromised then. >> i don't think it's an active thing in our house at all. >> no? >> it's all right. >> we might be, we'll have to do some work. meantime, alibaba in trouble over its response to a claim of sexual assault the company fired the female employee who made the accusation against the supervisor, accusing her of spreading false information and damaging the company. the woman went public over the summer with her allegations because she said alibaba failed to take action her story was shared over a weekend, that was seen as beijing's endorsement of the outrage over alibaba a criminal case was dropped. we have more on "squawk box" this morning a big story in the red hot electric vehicle business.
good morning, everybody. take a look at the futures this morning. you see right now the dow indicated up by about 103 points s&p futures up by 16 the nasdaq up by 68. this is after a strong week for the markets last week with the s&p closing on friday at a new high andrew thanks, becky. meantime, motor trends truck of the year honor going to an can electric vehicle for the first time, phil lebeau joins us with more because the brand doesn't start with a t >> no, it does not andrew. it's rivian. the r1t from rivian named the motor trend truck of the year.
if you think this has just barely been out, it's the first vehicle from rivian. you are correct. this is the second time in two months that motor trend has named a first time vehicle as the car of the year. it was lucid with the car last month and now rivian with the truck. we asked the editor are you saying that the rivian r1t is going to be a runaway hit? he said, hold on, we like the truck. we're not making a comment on the company yet. >> truck of the year, it's not business case of the year. we don't know what's going to come we are hopeful they'll have a smooth ramp into full-scale production and get a lot of e vehicle out there and everybody super happy. >> still a nice feather in the cap for rivian we have the gmc hummer ev, the
delivery starting later this month. f 150 lightning. the sooib truck the cyber truck and then, of course, the rivian r1t. the hummer deliveries begin next month. as they ramp up those deliveries in the next year, general motors is counting on big success from the hummer leading into the silverado. as you look at rivian, going back to the i.p.o., the company reports the q 3 final results later this week. they gave us preliminary results when the i.p.o. happened i don't expect a big difference in the numbers but it 'll be interesting to see what they have to say in the conference call in terms of the reservations and ramp up in production >> i'm assuming this is going to
k create a new set of reservations if you will and the question is how quickly can they produce them and deliver them? >> look, i think they are getting a lot of interest from people who are interested in an electric vehicle and interested in a pickup truck. that is the first mover advantage that rivian is enjoying right now that said, rj and his team have been very clear that they want to be cautious in terms of ramping up production. they're not just going to start spitting them out. they want to make sure they have everything exactly as they want it as they start the deliveries of these vehicles. from everything i heard from people who have received the vehicle, they have been judicious in terms of making sure that they do the right things right off the bat and they're going to slowly increase their production and deliveries. >> okay. phil lebeau, thank you, sir. >> you bet. coming up the inflation
debate rolls on. big piece by our friend, kevin walsh in "the wall street journal" today we'll talk about the potential impact of the build back better bill next. as a reminder you can watc listen to us live any time on the cnbc app we'll be right back. yeah, that's right. wait — so if geico's 85, that makes you — are you asking if i'm 85 years old? i mean sea turtles live to 150, so...nn — i — i was not. do i look 85? what! no! you, you look young, fff...you...you, you look young for...however old you are. geico. saving people money for 85 years. jerry is here! j! mate, how are ya!? it's so good to see you. good to see all of you, yeah! why is jerry so... popular? it's been like this ever since we started using workday. what do you mean? it makes it easier to develop great relationships with our suppliers. now everyone, everywhere loves jerry.
president biden's build back better bill and the potential impact on inflation and the economy. joining us to discuss, former congresswoman donna edwards also an msnbc news political analyst and mick mulvaney. congresswoman, great to see you, i love that backdrop, that shot, merry christmas, beautiful tree. you too, mick. congresswoman in the journal today, and it's not specific to the journal, but that the cbo estimate that some republicans requesting showing what the actual cost would be if the programs were extended like they are in all likelihood that is going to happen. the penn warharton model at 4.6 trillion do you have any regrets that maybe the democrats in congress didn't just sell it exactly for what it is it seems like they're trying to
hide the actual cost >> i don't think that's true at all. we're making a big presumption that future congresses are going to extend all of these programs, and we don't know that to be true what we do know is that the ones that are factored into build back better, some of them have shorter time frames and it brings the cost to where it is and so, i'm not worried about that i'm more concerned that democrats just need to pass the doggone bill and get out and sell the components that the american people care about to the american people. and so that's my major concern, it's not over time whether some programs will or will not be extended i was in congress and i know you cannot project from one congress to the next what's going to happen >> that's true i know that senator schumer and speaker pelosi both said they would offset that still so they would say that it's not costing
anything because there would be tax increases. but now you're talking about definitely future tax increases every year if the programs are extended, and i can't see how they wouldn't be mick, i'm going to start with you with this kevin warsh piece saying it's the fed's fault we have the inflation but the reason the fed is in a box is because jay powell is going to be really unable to raise rates because we keep adding to our growing debt and he's going to be in a box, the debt service would be so high at that point that you're definitely going to see it impact the gdp. it all seems like a witch's brew of not great things if we keep spending at this rate. >> it's an ambitious cycle at $20 trillion debt in the country we had a $400 billion tax bill you go to 30 trillion and to say the fed wants to raise interest rates to 6%, that's
$1.8 trillion worth of interest only so yeah, the fed really is in a box. but they're mostly in a box, let's be honest because congress put them there if the national debt were zero it would be more flexibility towards the fed. don't discount, i don't think kevin mepgntioned this, the fact that the fed is politicized with both sides watching if jay powell gets renominated. you have folks like aoc saying she thinks biden should work on things like racial justice but we're in the box because of the size of the debt and the bill adds to it. say the pre-k thing lasts for six years and another congress wants to extend it that manes they have to raise taxes without giving anybody anything that's new. that never happens something goes in for six years and it gets extended and it's added to the debt. the only reason that many of these programs are so short in
build back better is that originally they were longer and cost more, so they needed to shorten them to satisfy joe manchin so it's not like the democrats are going to do a short term project they want them to be permanent they just can't pay for them. >> that's what i thought of when you said i don't have a problem with it, they need to pass it. and manchin is the stumbling block when we see a print like last week, inflation the highest in 30-some years the difference between virginia and west virginia, they're different places and he has constituents there that notice things more than states that are bluer. you need him you can't just pass the thing if joe manchin is not on -- he's drawn certain lines in the sand that are in the bill that have to come out and it has to go back to the house. it just seems like a hard thing to imagine before the end of
this year. >> look, i do think that there are things that west virginians do care about. they care about universal pre-k. if you look at west virginia in terms of where it stands on education, universal pre-k would help tremendously. they care about child tax care credit and the child care provisions these are things that actually help working people. medicaid expansion, lowering prescription drug costs of prices these are things that west virginians and that americans care about and i do think there is a way to accommodate joe manchin's concerns, those are things that he's expressed an interest in and to move a package forward that's going to make a difference not just today but in the future. >> what do you -- mick, what's the time line for you and probability for you on how this -- what is it the 13th, i
was shocked it was already the 13th -- >> that's right. don't forget this is how the timeline works it's passed the house. if the senate passes it exactly like it is, it can go to the president's desk whenever. that's not going to happen it's going to change at some point in the senate so we have to then go back to the house you think joe manchin and others, there's plenty of folks looking at this saying my folks back home might care about pre-k but really care about the cost of gas and cost of ham and turkey for thanksgiving. they don't care about money for news networks, which is in the bill republicans do it when they try to pass a piece of legislation, democrats are doing it now, pass it quick so no one knows what's in it. what can we do over christmas so no one has a chance to digest it at the end of the day, something will pass and voters will
decide, do they care about pre-k the earned income tax credit, or the price of gas i don't think it matters whether the republicans take control of the house and probably the senate next year >> congresswoman, i -- you can either respond or i can just -- i don't know there are a lot of things that if you did one -- i certainly could see what do we have, k through 12, i can see n through 13, whatever you call the child care before k. i can see that but just piling it all on. this is like 40 years of democratic wish lists in a 50/50 senate and in a house where democrats lost seats in -- you know, with poll numbers that don't look great for 2022. just seems like a bridge too far to be trying all this right now. i don't think the american people necessarily are on board. sure they love free things if you ask someone a question,
would you like this free stuff they say yes but they also say that maybe government is getting too big and they're overreaching and they don't want to do that like a europe, an entitlement state. >> it's not about free things. it's about passing legislation that's going to make a difference in people's lives when they go to work, send their children to school there are significant climate change provisions in build back better and as we -- you know, you've done the reporting on the horrible tornados in kentucky and these changes in the climate are really contributing to tornados in the middle of december so i do think the american people care about those things that are impacting the economy that is not to say they don't care about the cost of food and clothing and all of their consumer goods we know the pressures of inflation. but i also believe those pressures are being created because we haven't quite moved
beyond covid so getting people vaccinated getting people back into the economy, there's strong job growth there's every indicator that the american people will do just fine, contribute by working and paying taxes and we need to make sure they have the tools they need to participate in this economy. >> mick, november is a long way off -- actually, it's not. seems like it. no, it's not but in political terms it is in terms of our country and how quickly we can -- i mean, it's only -- when was inauguration? that was like -- it's not even a year and look where we are. >> it goes quick what we could talk about here. >> what do you think the prospects for 2022 are in terms of the house and senate? >> i think they're good. the wisdom is thaw should be good anyway. any president in his first term
usually loses seats in the house. but i think everybody pretty much knows or assumes, you never know anything, assumes that republicans are going to take the house. that's why you see so many retirements from so many high ranking democrats. there's nothing worse in the house from going from being a chairman to a ranking member, especially after you've been there 20, 30 years, they have huge staffs ranking members, which is the highest number in the minority party, it's a deemotion. we saw the same thing in 2018, by the way it's the ordinary cycle of things your point is good should we really be having this type of massive progressive programs debated in a senate that's 50/50 you can't stop it from happening, but when the republicans have a narrow majority coming up in 2022, what will they be coming up with? both parties are moving further out to the fringes republicans to the right,
democrats to the left. it's more and more difficult to strike any compromise in washington d.c you don't see that changing in november 2022, even though i think the republicans take the house and senate >> okay. want the last word, congresswoman? >> well, look i think it's going to be a tough year coming up in '22, and everybody acknowledges that the best thing that democrats can do is continue to govern, continue to make sure they're doing things for the american people and communicate that to them and mitigate whatever harm might be projected to happen in '22. we'll go through our holiday season and then it's going to be full on campaign season from january forward. happy holidays, merry christmas, i know i'm celebrating so i hope the american people will too and we'll get started in '22 >> thanks, donna merry christmas to you as well good to see you again. >> someone surprise you with new
art? do you know what's in that package on the wall? >> i wrap my art in wrapping paper because it makes me feel more festive. >> that is festive as heck i got to say this. it looks like one when i get it done, whenever i buy something i get it done at the department store lake i wait for an hour because i don't know how to do it that looks better than the ones i get at blooms or something like that. >> you still go to department stores >> thank you. >> how old are you going to department stores still? >> i'm not a big online shopper. how do you get the credit card in the -- i don't know how -- do you put it where the disk drive is i don't know how that is thank you both, appreciate it. >> merry christmas. >> happy holidays. >> merry christmas and mick mulvaney is doing my job for me, joe it's really quite extraordinary. coming up when we return, steven
joining us with more matt, it is great to see you i've been reading your news letter a lot of people starting news letters in the past 12 months. yours has become a singular must read for me. congratulations. >> thank you that's nice. >> it is beyond. like every time i open it. let's talk about what happened in box offices this weekend. it raised question should it have come out on a streamer >> it couldn't this is a film disney inherited from fox they have to go to hbo first a number of these fox movies that disney has been quasi-stuck
with they've put in theaters another aspect that steven spielberg probably would have thrown a fit if they put this movie on a streaming service without the release he's accustomed to. they are saying it cost $100 million. i've heard it was more a weird date before the holidays. not in the holiday corridor and it just didn't work. >> what's the larger view you have now in theater films. >> it does matter. it does seem to matter in these territories. the one that does not work is adult oriented dramas and
musicals things that require an older audience to attend we saw a quarter of the audience for westside story was over 55 if your movie is targeted towards those type of audiences, you are not going to get them to theaters in any kind of mass the ones that are working are the comic book, shorter, punchier but not necessarily family family movies have struggled because children until recently have not been vaccinated movies like venom ii or spiderman. they are drawing those back. >> take us inside of disney and office spaces.
>> they are very frustrated with this they know westside story could have been a big event film they didn't have that option they could have done a master deal and chose not to. it would have been a hamilton exile event on disney plus it went to theaters and disappointed globally. not good internationally >> is that a forever situation do you think this is pandemic specific still >> i think pandemic specific still. there is a question whether there are some moviegoers it
now. >> good morning. welcome back let's show you the u.s. equity futures. still two and a half hours before we are set to open. dow up 62, s&p 500 up about 11 and dow up about 48. >> apple up again, nearly 20% in the last month alone based on the shares out. price of $182.86 would give apple a $3 trillion market cap we are so close. >> very close. next time we check it, it could be there >> pfizer is buying arena pharm for $6.7 billion
100% premium to arena's closing price. looking at the build back better bill. >> reporter: democrats are trying to wrap up work on the social spending package. president biden planning to speak with senator joe manchin in the next few days inflation likely to be on the agenda as well as the projection that the build back better would be if they made it permanent focusing on the ways the plan would lower costs for child care, elder by and health care and trying to lower the cap on state and local tax deductions it literally says place holder for compromise on that part of the bill
some snartz trying to revive those irs bank reporting rules those slated to meet to argue whether the package complies with the rules getting all of this done, democrats do seem determined to even try >> there are some complications. if this isn't passed, there is no way checks will get passed out to families it kind of comes down to joe manchin. if he's not in a hurry those higher numbers are making him feel like he doesn't need to move forward on this.
we'll see if that is successful. clearly joe manchin is under a lot of pressure and does not feel the urgency to move at this moment >> the big market story this week is the fed. once again the central bank meeting to expect a faster taken. is that all investors should expect raising those rates earlier but
itself might appear more aggressive those rates attract inflation at minus 6.8% the lowest on record the fed has a lot to do from neutral the question is if that is prices in. >> did you get to see what we were talking about in the journal where he blames the fed. he's been blaming the fed for quite some time on this. is he right? >> i think the fed played an important role in the inflation out there. i think it is an interesting request to ask given when it should have hiked.
president trump did a spending bill, president biden did a spending bill. which one should they have leaned on in the policy? i've made this argument going back to the alan greenspan hike. if the fed makes a rate cut, they ought to be able to take it back the fed didn't do that powell went all in on qe it was a lot yeah, you add the fiscal side, monetary side and things that were not predict b8 and you have a recipe for higher inflation. >> he writes achieving the economy at this stage is difficult. financial stability with sharp
relief in the new year which is going to win and how quickly? >> i know you've got to go very difficult the fed will always side with financial stability. somebody wrote this weekend that the fed main job it does well is to back up the stability i think that will ultimately win. trying to maintain control of prices here. i think kevin has framed it well in that regard >> thank you for the analysis. appreciate it. when we come back, we'll talk about the stocks we should be watching. first, check out some of the biggest pre-markets and laggards stay tuned with cnbc
to our guest a cnbc contributor the fed seems like it is bringing in the timetable. and we've got a variant swirling around do you have a market mood ring does it have a reading for now you feel about how bullish or bearish you are? >> what i'm looking at are really specific companies. last week, you had oracle and cvs report no one cared about those six months ago the stock really reflected the
earnings they had a really bad quarter in terms of cost and getting people to work and wages. looking and saying specifically, what are some of these reporting and how is that going to be a see through to the rest of the economy. >> so you have no opinion to the averages are we extended to the markets? how will 2022 be do you have an opinion >> i do. i think the s&p is up 5 to 7%. that will be driven mainly by sectors that have not performed as well.
so much of that valuation issue is your pe expanding where you'll get the biggest bang for your buck is how the stay-at-home stocks. peloton and cloud stocks that have carried the index at this point, there is nowhere to go investors aren't looking for bonds. you aren't ghoing to get hurt but i think there is more opportunity in other parts of the market >> it looks like rates will go down they are not selling bonds >> not selling bonds but also seeing that people are not
really clamoring in for them it is more of hey, where are we going to be down the road? at this point, you are not going to get much bang for your buck hiding in a 10-year? >> what do you think about is a little increase of rates the economy is that fine >> i think it would be a good thing. we want to move up a flat to yield curve. we do need that to go up that will be the future of the pricing growth of the economy. 2%
2.5% the market could handle it that would be a good indicator because things look healthy on the indicator. >> behind the curve. the highest inflation in 39 years. that takes away any wage gain from people who buy food moving forward, those will be hard to come down. >> supply chain will be hard the longer we have covid around, those will be more permanent so, yes. we do need to ratz rates or at
least get the tapering done. i don't think it will be up huge it will be individual sectors and stocks it will be dependent on value growth >> happy holidays. thank you for being with us. some breaking news from harley davidson the details now. were you a sons of anarchy fan could you see those guys on a motorcycle going -- with no sound? can we pipe in the sound of a hog on these things? who wants this >> that's been the debate. the fact that you don't get the
vroom vroom vroom sound. i think going back to seeing the first prototype. being toured around the country to see if consumers would be interested given the fact that it wouldn't have that vroom. this electric brand will merge with a spak to become the first publicly traded electric motorcycle company in the u.s. giving live wire value of about $1.8 million post value $2 bot 8 million. the ceo will serve as acting ceo for live wire up to two years. expected to raise $545 million including a pipe of $100 million
of harley and taiwan base kim co this is a business 10 years in the making it will benefit from at scale manufacturing. currently has a presence in north america and europe plans to expand into asia and other markets. with a ramp to ev and motorcycle the motorcycle icon is in the midst of this multiyear turn around strategy. this would enable more investment and core business in the ev and tech expected to filter back to that core portfolio over the longer term deals expected to close. joining me exclusively in the 10:00 a.m. eastern hour. you will see shares of the spaak
and harley the for the ev motorcycle very much an urban market or consumer to start. >> the acceleration a normal motorcycle could have like it could almost come out from under you. same deal here >> very similar. they have a number on the market and in the works that will enable an even bigger, fuller product line is the carbon foot print of hogs something we'll see. gas prices are high, right sos that a piece of it in l.a. they are around $5 a
gallon. >> even with what i make, i can afford to fill a motorcycle. >> it goes to the future coming across different types of vehicles towards an electric future i will ask all about this later. >> not getting on a boeing electric plane okay put some jet fuel in my jet, thank you. that's just me see you later. >> how about one run on cubing oil. how did that work for you. british prime minister boris johnson says at least one patient has died with the omicron variant in the uk. he is warning of what he clsal an omicron tidal wave. up next, dr. scott gottlieb.
with about 44 points s&p indicated up by 11 you'll see at least for now under pressure and sitting at 1.4% we are watching shares of apple. the stock price you can monitor on your screen right now close to that $3 trillion market value. coming up, all-cash deals are the life blood of the auto industry we'll have more when we come
estate more than half of sales are done in cash without a mortgage or a loan in places like aspen and jackson hole, that is even higher now the treasury department is going to crack down. the financial crimes unite proposing new rules that could require more information about all cash deals consequently the possibility of elicit actors to launder finances through real estate saying it could stifle the market about 20% of nationwide sales
are cash over $400 billion. even higher in luxury markets. in new york, nearly half the deals are cash in miami and parts of l.a., over 60%. on tap of companies that shell real estate. over 50 prosecutions or charges over the past five years including the vice president of venezuela buying $7 million in miami condos and a russian gang landering over $200 million in new york real estate they are talking residential as well as commercial this could be more for residential and more in that
phase. >> i understand the way they are doing it are the prices high? i have a feeling they are nowhere near the peak of where we could go like the roaring 20s. >> the reason the u.s. is so attractive to loaundering. it is such a stable industry the u.s. is the only country in g 7 where real estate brokers are not subject to money laundering rules that's what they are hoping to fix through thisrule
one of the ways they look at this, if they don't raise taxes on the wealthy, they can do it through rules. this would be a nationwide look at all cash transactions we don't know if it is just deals over $1 million or all transactions this could be a rule that takes the place or in addition to the renews irs scrutiny hoping to get through funding and more agents >> robert, thanks for that report when we come back, dr. scott gottlieb on the morning's top covid headlines including a study on boosters and only kron. hospital case counts, mask mandates and one university using vending machines to give students free covid tests. biggest movers
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box. futures have been drifting from some of its best levels. nasdaq still doing well. s&p and treasury yields closing in on that 1.5, 1.47 right between 1.45 and 1.5 we'll see what next year brings. it is time 12 days to christmas >> santa clause rally? >> that's usually the week after christmas, doesn't it? >> we should talk the tax moves for all these gains. >> i mean the royal we, not us
omicron variant. joining us now is dr. scott gottlieb serves on the boards of pfizer and alumina. what does this mean, especially from what we've seen out of south africa at this point if they are seeing significant threats of only kron, we need to take notice of that. in the hardest hit region of south africa, ifs that true. we'll reassess some things or whether or not there is some sub kpcomponent of the populati.
the most obvious is some who have the delta immunity but no other. people who had delta but prapsz hadn't been vaccinated those with with the old south african variant. be it off a very small base and they are looking at their own data and are very concerned that this is going to sweep across the nation that could cause pause for other countries. >> just here in the united states, you are looking at really big uptick of cases rhode island up. gains of 132% in west virginia
and illinois is this what we were anticipating because of the holidays >> no. this is the delta wave sweeping across the country the regions that hadn't had their wave yet now starting to peak and new england, the tri-state region we thought maybe it would be imperious in the tri-state area. it is not. most of the country that has not yet had that wave are now having that wave. the south, southwest, delta plains have already. numbers are ticking up because of the holidays and cold weather. even in florida, you you are see ago a pick up. what is considering for the uk for the u.s. there was some
feeling we would be more imperious because of our higher rates of vaccinations. it is very similar of the p uk if the uk has a bad experience with omicron, it is a good indication we'll be at risk as we well >> that's what i was wondering i don't know what the effectiveness numbers are. i saw something about 23 for pfizer say you are double vaxed maybe you got the booster or you didn't there is still a lot of only kron spread in europe. if the cases are mild to moderate, you really see a big spraed and we are back to hearing it is doubling every
second those numbers that are concerning if it is mild to moderate, what does europe do i guess then down the road, we'd have to figure that out too. it would be a full fledged wave? >> it would be a wave without the extreme death and disease. the two mrna doses look to be about 40% effective. three doses are 7 a%, which is quite high other data points that suggest the protection at 70, 75%. >> do we quarantine? say you are in europe. i'm asking for a friend. you go to europe
you get onmicron, do you quarantine for 10 to 12 days >> it is affecting a largely immune exposed community you have protection. what worries us is if it sweeps across the population, it is going to find its way to the biggest pocket in the u.s. they don't have any immunity are children under the age of 18 25% have been vaccinated most are teenagers most of them are teenagers we've done a good job preserving toddlers and young kids to keep them from being infected you have to worry about those
immune naive populations vulnerable people remain vulnerable regardless. if you infect enough people, law of averages. it is the outcome. they are seeing larger number of cases in the uk. >> doctor, to the extent children have the opportunity to get the vaccine. most are only taking the two shots. you look at the data coming out of israel that seemed positive for pfizer, it really did choir the third shot to have a real meaningful push. what do you do about that? would you be moving up the time line to get people a booster >> they moved up the time line they are not seeing that
immunity protection. with kids, they get a pretty robust immune response that data at six months was 100% they seem to be getting a more robust immune response we see the waning overnight as transmissible to kids. it is the same thing it doesn't appear to be nearly as sharp as what you are seeing in adults. >> if you spend time in the northeast or frankly most parts of the country right now restaurants in doors are full. they are packed. people are behaving in large parts as if there is no virus. do you change that behavior? the question is, can you change
that i think the answer is no public health officials and leaders will have to work within the confines of what the public is willing to do now in the third year, people worried have probably been vaccinated three times a lot of people were never worried. most have had covid and think they are protected we'll have to look for less intrusive ways to get public access i think you could still get the public to wear a mask in confined places. closing businesses and schools, that's not going to happen >> are you changing your own behavior at all? are you going to a packed restaurant today >> i never went to a packed restaurant i haven't changed my behavior for omicron.
i feel a little more confident now than i did six months ago because my children are vaccinated now my big children was bringing the infek back into my home. my behavior hasn't changed for omicron. it might if this starts to spread and we'll be more cautious in terms of going into packed restaurants, i haven't done that in a long time >> a lot of us are thinking of going to europe or have plans to do it next month i think the concern becomes not just for us but for anybody planning business travel, i feel more comfortable too my kids are finally vaccinated and i feel great about that. the question comes, if you go overseas, are you going to be trapped there for 12 days
quarantining >> it is one thing to go to the planned business trip and another thing to add a couple of weeks on it. >> that's the one concern, people ask if i'm traveling overseas the answer is no not that i think the risk is bigger i don't want to get stuck in a policy change or policy change heaven forbid you get covid in another country and they put you in side and throw away the key i think people can serially test with these antigen tests if i think i've been exposed there are ways to come back with
your family. the concern is a policy change or quarantine change being subject to a country's pcr machine, you can always get a false positive on those as well. >> a boost of confidence thank you for taking any and all questions from us. when we come back, veteran internet analyst on the companies more likely to positive the meta verse.
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welcome back to "squawk box. the internet has grown by leaps and bounds since its inception, and some are calling the new version web 3.0. it's call the metaverse. joining us is mark mahaney, head of internet research at evercorp mark zuckerberg suggests, microsoft, too, suggests that the metaverse is the future. still may be 5, 10 years off i don't know what your timeline is, but let's talk about how investors start to think about how to invest in it. >> you can watch the facebook connect conference of about a month ago when he talked about the different applications they see rising, but zuckerberg has done at least two things correct so far it's 5 to 10 years out, and
they've been -- about the price tag for the metaverse this years that's likely to go up there's a series of potential winners here i'm skeptical it will be as big as the emergence of the mobile internet, but if it does emerge, and not just virtual reality but a broad use, you could see at the applications left, just like when the desk top rolled out and then the mobile internet rolled owl. there's a lot of other plays in here >> mark, can you do something definitionally for the audience. there's web 3.0 on one end, and metaverse. now, metaverse may be part of web 3.0, but i don't think they're the same things. >> i have found these conception confusing too, andrew. i think when people talk about the metaverse, in many ways, it
could better more than this, but let's get down to the apps, that's what's going to drive this the question is whether we will use virtual reality type of devices. social collaboration, if it's a virtual social network for things like training and there are examples already in the marketplace, what i caught meta-shoots, so roblox has 50 mill won people on a daily basis, the question is whether all of them become interoperable or not there's headsets that walmart is using for a million of their associates for training in customer service and managing crowds facebook as hod 10 million of this oculus quest 2 devices. one may be if it developed a virtual reality and rolls it out next year.
they're pretty good at devices, and really need someone no unlock mass appellate. >> you're wearing a pair of glasses there. are you expecting apple to do it and to do it in a way that works for the, quote met 'verse. i think there's a lot of speculation around this being more of an a.r. -- augmented reality stye headset, something you can see through, but maybe adds graphics into the glasses, and you is key the world, as opposed to a v.r. experience, where you're effectively closed off from the world and living in this metaverse. >> i don't know that they have ton mutually incompatible. in the space i look at, snap, and make a strong argued, there are limits to how much people really want to be in the presence virtually
zuckerberg is much more on the aggressive vr side he thinking the people will want to see that. he's going to try to create a lot of these to help people do that so, i don't know, the device is going to be warm-up keefe unlocks. if it's not the clunky headset, it's as simp as taking on and putting on a bunch of cases, but that has to be the universal 5, those five, seven years down the road the apps on the quest 2 i think are stunning, but there's only 10 million of us that like that, you knee 100 million, and you have to make sure the systems are interoperable. >> mark, i want to thank you, as always, for living in the
squawk-verse [ laughter ] >> thanks. thanks, andrew davos in the metaverse, that's a possibility, becky, what do you think about that >> it sounds enticing, right >> i would be glad to send my avatar, my quadruple-boosted avatar over there. i think he would be all right. >> honestly, i'm not as concerned about getting it at this point i feel like i would be oak, protected, most of the people around me would be it's a question of getting locked down. >> you know what i just fired off to the people who know what's going on. i asked the hotel if they have netflix. if they don't have netflix, i'm not getting stuck there for 12 days. >> they have wi-fi
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inflation and plenty of it after friday we're going to talk about whether it still makes sense for congress to pass the build back better plan. apple closing in on a $3 trillion market cap milestone. we're going to speak with a top analyst how the tech giant gold here the final hour of "squawk box" begins right now. good morning what is it the 15-week -- we are live from the nasdaq marketsite. >> less than 10% in. >> -- in times square.
equity futures at this hour -- is that right? >> more than 10%. >> not just eight points of up-yard movement here premarket on the dow the nasdaq has backed off a little, up 50-plus, now up 58 in the s&p 500 eight and change treasuries, the ten-year, that's what you like to follow. 1.46 last time we checked 1.463, the latest reading >> we made it through monday >> i'm telling you, you're right. >> let's get you caught up on some other stories. check out shares of pfizer and biontech a new israeli study shows that a booster provided strong protection and pfizer is buying arena pharmaceuticals. that equals about $6.7 billion
overall. pfizer up by about 1.3%. arena, shares up more than 90% and look at harley-davidson. the company announced it's merging the lifewire with a special acquisition. livewire will have an enterprise trails and trade under the ticker lvw peloton rebounding a bit a spoiler alert. it released an ad features actor chris na after his care died in the "sex and the city" reboot as he was riding a peloton. that was a big shock last week peloton knew it was going to have product placement there, didn't they got saved by ryan reynolds that stock up about 3% now
>> it's an amazing ad. ryan reynolds is just a genius, and peloton was smart to lean in on it. $3 trillion could be something. >> when tim cook became co the market cap was about $350 billion. now, fast forward and apple's approaching a remarkable milestone, about to reach $3 trillion in market value apple has become the world's most valuable business and morgan stanley's katie huber respect who recent his raised
her price target reminds us it's not just the iphone. wearables and accessories now a $38 billion business now nearly $ 0 billion annual revenue, business doubling over the last four years. there's, of course, a lot of hot talk about what could be coming next gene muenster with a mixed-reality headset is on the way, allowing users to immerse themselves while also interacting, muenster bets that new product is unveiled next summer, and launching in 2023. by the way, muenster just raising his price target to $250 andrew, back to you. so, what do you think? how many years to get to $4 trillion >> you know, i'm not sure, andrew our a yes, sir are
thinking about how to get to $4 trillion i think it's going to stick to at least an intermediate term. i saw the promo with toni sacconaghi, so i'm interested to get his hit on this. but there are some who stake their ground, maybe sit on the sidelines, say, listen, the iphone 12 was strong, but that pulled forward demand. the i foam 13 just isn't going to have that kind of momentum. i know others thing the demand will be there. they're simply counting on the fact there's millions of people all around the world still on the older iphone devices, meaning three-plus years, and maybe we'll have a sense the next time apple reports earnings. >> thank you thanks, andrew, the latest read showing a 6.8% gale
on a year-over-year basis. our next guest joins us now, republican senator rick scott of florida. constitution walk those hallowed has, senator, so you must pass senator manchin from time to time do you feel you have some insight into howing this goods to play out this week and between now and the end of the year the house version will not pass muster on a couple things, we know, for senator manchin. so some things will come out in the senate plan. what do you think that will be and then what goes back to the house, and will that be palatable to the more leave-leaning members of the house? what's going to happen >> i'm hopeful when each senator talks to the citizens of their state, like i do, and talk to
families who can't afford gas or can't afford the food or see all sorts of prices go up, empty shelves, they're going to say we have to stop what we're doing. what the democrats are doing is not working. inflation is up it seems like every manufacturer is seeing double-digit increases, so i hope that every senator says, ahead, you know, we can't do this it hurts or poor families, and then you look at what. cbo put out on friday, and it increases the debt by $3 trillion that's not insignificant so i hope joe manchin and others say to themselves, we have to put this on hold, we have to get control of inflation we have to quit hurting poor families that's exactly what this is doing. >> senator manchin will not switch parties you see that bandied about once in a while he says that's not true. he's going to come around in
some pass. i wonder what you think that looks like we had senator mark warner on last week. i asked him about the actual cost and programs, and he was fully willing to say i'm looking at the cbo i will said -- that gives him cover. i'll look at what the cbo says even they numbers -- the other side will be the numbers you gave them. but that didn't matter to him. there's only one or two people standing on that side that are throwing a wrench into the works. warner is not going to, and manchin better have some broad shoulders. he's not going to be able to withstand the pressure. >> i hope so it's not good for families given $600 billion of tax cuts to rich people in california, new york, other states like that, cudding medicaid for poor families in florida, that's
exactly what that bill is doing it it's cutting medicaid for charity hospitals and giving tax cuts to the rich you can't be doing this stuff. my biggest concern is this unbelievable inflation and unbelievable debt. there's a day of reckoning with all of this ebt. >> so you think, like kevin morris -- you don't think it's a transitory supply chain issues resulting from some of the ports, some of the supply chain issues in southeast asia and elsewhere, respect the ports in los angeles, that's adding to all of this? that has nothing to do with congress or the fed? >> paying people not to work that's what you're government has done we're telling people you don't have to look for work, and you can be dependent on your
if this was solvable, why didn't the secretary of transportation get on a plane, go out to the port of long beach and solve it. they don't worry about inflation or supply chains, what are you working on? we know that eastern vaccinated people can give covid to somebody else >> so you get to someone whose
unvaccinated and is can have a -- why does personal freedom take precedence other geren that person into a place where he won't be in a hobble -- or heart attack or whatever why not make it -- induce it to a greater extent >> i believe government's role is to give us education, not to lead our lives. >> what i does with sizika, i me every pregnant woman in florida had a right to a free test for zika, and that's how i dealt with it. i had hurricanes i didn't mandate people to evacuate americans are smart.
give them information, they'll may a good, informed decision. >> at this point you're taunchly against president biden's plan to force private companies or to get private companies to enforce mandates >> if a private company wants to do it, that's their choice government should not be mandating -- biff, i did a democrats blocked -- biden can't require you to get a it's okay for businesses give people good information you think that inflation is out of the bag, and that was the thrust of the kevin morris people, that the fed is in a position where it's difficult to strict itself
keep printing and that will which hurts the people the most. so now the people that are --, you know, get hurt will be the people who will -- any wage gains will evaporate. the democrats' req his spending is by buying up the treasuries, by running up the money supply, those two things have caused inflation, are they changing the democrats haven't blinked. by the way, i don't know how in the world anyone feels comfortable buying a long-term treasury right now, when -- who's vote to go raise their
taxes to pay off this debt when the democrats' plan will take you to $45 trillion? it makes no sense. live within our means. that's what we have to do today. not in a moment. we have to do it right now government should be doing it. i'm reading up on hurricane irma it appears you were ordering people to evacuation you issued evacuation orders >> no, what we did -- what i went around the state and said here's what we know today. we made sure we never ran out of fuel
>> i didn't support the evacuation order there's many evacuation orders that took place during that pertain. the state was telling people they had to leave. >> what we did is we gave people information. i don't believe in evacuation orders i believe you'll make a good decision over 6 million people evacuated homes. we opened relief stations all over and irma hit the west coast, just south of naples we never ran out of gas, food or water. we worked hard every day that's what we should be doing at the federal level but what i watched the biden administration is sitting on their hands on d.c., and going on cnn that's it. >> senator scott, thank you. there's room for all of these
beautiful backdrops. good to see you. thanks >> whether we come back, cry wall phet immediate this week. mohammeed el-erian will join us and an exclusive interview with james goanrm you're watching "squawk box," and this is cnbc thinkorswim® by td ameritrade is more than a trading platform. it's an entire trading experience. with innovation that lets you customize interfaces, charts and orders to your style of trading. personalized education to expand your perspective. and a dedicated trade desk of expert-level support. that will push you to be even better. and just might change how you trade—forever.
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insurers are scrambling to identify the customers who need the most urgent care >> in kentucky, farmers is t the -- we don't have a solid grip on the numbers, but an established presence on the site to pick up the pieces one policyholder at a time allstate told me it's moving its teams to customers as quickly as possible to help with recovery, but the big hurdles are economy.
labor shortages, inflation will be big challenges from this incredible tornado outbreak. inflationary pressure and supply change imbalances are escalating by the day, resulting in rising prices for consumer goods and services, and increasing claims costs. a recent analysis following hurricane ida indicated overall rate construction costs rose 30% over the last we're. we could break u.s. records for natural disaster costs this year you've got the texas deep freeze, the damage from hurricane ida and its remnants, that combined for nearly $50 million. then the western wildfires, now tornadoes. the ceos of both chubb and aig are wringing alarm bells over the risks of increasing severity and frequency of these
climbed-related disasters. >> the real question is how are insurers going to think about premiums in the future for things like this >> well, what we have seen is premiums are skyrocketing in places where there is risk they have redrawn the lines. in california, for instance, where state regulator versus kept the insurers from hiking up rates too rapidly over wildfire koomplg, the insurers have just wiped their hands of it and left the state. so now you have sort of this public amalgamation of wildfire coverage and peer are pays through the -- but they continue to rebuilt this they wildfire-prone areas we have seen it with cyber, for instance, but they're going to start demanding that homeowners and businesses mitigate the risks, that you have co-insurance kicking in,
deductibles will be far higher and the cap for coverage will you lower than previously, so they make sure they have the pool to go in and cover all these claims. >> contessa brewer, thank you. >> sure. coming up, more of this morning's top corporate stories. a feather in the cap for a new players in the ev industry also an eye on apple's market cap closer and closer to $3 trillion more about this later this hour. stay tuned you're watching "squawk box" on cnbc
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equipment back to "squawk box. "time's" person of the year is -- drum-day-old roll, please -- is elon musk that news out minutes ago. writing of his twitter habit, "time" says, request a flick of his finger the stock market soars or swoons. that stock is up nearly 45% since january 1st. the market cap stands north of a trillion a big recognition for another electric vehicle company. phil lebeau joins us with more on that. phil, good morning >> good morning, becky
we're talking about truck of the year award, announced earlier this morning rivian is the winner for the r-1-t, this is make two companieses in two months, where the it's delivered truck of the year. >> it allows the r 1 t to do amazing things it's also warm-up most official -- it gets 314 miles of all-electric range. >> as i mentioned. we'll get an update in terms of
where things stand with deliver yes, sir as well as reservations thursday afternoon that's when rivian reports the complete third quarter results the numbers will not change dramatically, but it will be interesting to see what the ceo has to say during the conference call after the numbers wonderful out t also look at shares of lucid, going back to when the company had the lucid air sedan named the vehicle of the year. there was a huge pock in the stock. it has come back dramatically since then what you have seen in the last month is, yes, there maw by a pop, but things may change a month later. finally, take a look at shares of general motors. we're showing you this, because the hummer ev s.u.t., first delivery happening this month.
for rivian, this is a nice fet ner their cap, also one in a will generate even greater interest people do pay attention to things like car of the year and truck leader. coming up, we'll have much more on this week's key federal reserve meeting. could the central bank go further if inflation stays hot we'll talk about that with mohamed el-erian stay tuned you're wchating "squawk box," and this is cnbc
welcome back to "squawk box. equity markets have started to price in a more hawkish fed. the question is, are investors still behind the curve steve liesman joins us with more steve? >> good morning, andrew. there's promises of more to come it does raise the question whether the fed may have to do much more to get control of rising prices, not just taper faster or even raise rates earlier, but actually move to slow the economy here's a preview of tomorrow's
fed survey 45% of respondents say yes, 48% say no, so it's an issue that's out there. rapid changes in the fed's policy means that most forecasters, only now catching up to where the markets priced they have brought forward the estimate into the spring or early summer, but is that enough given the current inflation outlook. jpmorgan writing over the week jeb -- it's not anticipatining cumulative adjust that's ahead fed futures market is priced in a may rate of just about a second hike in 17th, a third one in december. that had put the fund rate about -- investors will watch 9 fed's own new projections that
will come out on wednesday to see how aggressively the fed has forecasted that for the real fed funds rate take out inflation mine his 6.8%, the lowest on record, lower than it was with the voelker. the question says whether the markets priced in that level of tightening. >> steve, stay exactly where you are. i want you to be parts of this conversation, joins us is mohamed el-erian good morning to you. if you could answer the question that steve just raised, chess effectively, do investor versus it right or not at the moment? >> i think the fixed-income part of the investment university has it right, has it right nom in terms of pricing rates increases, but also recognizing there's a limit to how far the fed could go this economy cannot support higher rates quickly
the equity market is playing the liquid paradigm. they are right to do so, even until steve's scenario and under the market scenario, we have another 150 to $200 billion of equity injections in the next few months we don't need to relitigate whether it's all the fed's fault, but if you look forward in terms of how you think the fed will think about it, not only how they will think but it, but how they should think about it, with the stability of the financial s and the monetary system, how do you think they should do it >> so i way they should do it is recognize they have been caught
massively off, that they are late, that the inflation read was awful and they have had a credibility issue. the -- they were functioning as if the -- and it turns out that the problem is not on the demand side, but the -- so if i were them, i would want to say very open and honest as to why they got the inflation call wrong two, i would go even further that is doubling the rate of taper, and three, i would open it up to the possibility that rate hikes may come faster than what the market has.
>> he basically said they were wrong. remember, the fed maid a decision, he came back the end up november, saying we're doing 30 why did he say that among other things maybe we need to get around to hiking rates sooner so, yeah, they got that wrong. they also got wrong the extent to which supply constraints were an sure that, as mohammed said, a supply-side issue rather than a demand side issue. another thing that he said that
was interesting, is -- you can correct me if i put words in his mouth the wrong way, but there's two aspects. first, the fed is going to continue to buy for quite a while. that's what they call the flow argument there's another called the stock argument that the fed's balance sheet has cranked up from 4 to $9 trillion. over the course of the next year, at least, the fed's balance sheet will remain $9 trillion we asked a question about whether the fed eventually will get to balance sheet reduction, but that's down the road, so at least for some foreseeable future, we have inflows into the stock, and a huge stock of $9 trillion all of that i think sets up a pretty decent environment for stock, until or if they get spooked by the idea that the fed may have to clamp down on the economy in order to get control
of inflation >> mohamed, do you agree with that >> certainly on the flow side. there's nothing more reassuring to an investor than knowing you have the fed buying, because the fed is a noncommercial buyer if the fed is priced insensitive, it makes everybody else price insensitive so i completely agree with steve on the flow argument the stock argument, i don't know we haven't been there before, i don't know what has, he's slight will you right but he's certainly right on the flow side. we have apple up on the screen it's about to hit a milestone i think.
>>er we are at record leaves, and i'm not surprised, you know, i've been -- telling you don't underestimate not now, but. >> lop off inflation, i mean, it's unbelievably low. in fact the fed has gotten easier since inflation has gotten higher. does that put more of premium on stocks you not only can't get in the fixed-income, but you lose more money than you were losing before >> yeah. you don't want to be in cash when inflation is at 6.8%.
in the relative paradigm we're in, equities shine the question is, we start at minus 6.8 as you point out, historically negative left the fed is way behind. it's not easing its foot off the accelerator. is it goods to have to slam off brakes the thing the marketened afford, you know what happens then, the risk of recession goes off that's the risk, they may have to hit the breaks. that's not some the -- >> weld -- he brought up a good point. the rather than tapering
>> i think this fed is somehow caught in a trap, whereby it stayed in transitory too long. it kept on repeating it, even though the data suggested otherwise. now it's caught into the sequence that was defined a lots tinal for conditions that don't exist today i agree, but i don't think the fed will go anywhere with it. first they'll stop buying, then they'll do rates down the road they'll think about reducing the balance sheet. >> thank you both, breaking it
all down for us. i appreciate it. coming up, jim cramer's first take on the week. and then apple's mar this on $3 trillion market cap bernstein's tony i sacconaghi wl join us soon stay tuned, you're watching "squawk box," and this is cnbc bill, mary? hey... it's our former broker carl. carl, say hi to nina, our schwab financial consultant. hm... i know how difficult these calls can be. not with schwab. nina made it easier to set up our financial plan. we can check in on it anytime. it changes when our goals change. planning can't be that easy. actually, it can be, carl. look forward to planning with schwab. schwab! ♪♪
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jim cramer joins us now. from what i can glean from some of we're musings this morning, you're wonders about the early strength continues in some of the averaging. we have taiwan with a beautiful tech place, just waiting for someone do you think he was dis wadded from whatever his plans are? >> no. i think he's just a mischief maker that wants to assert what russia was like in another era.
when the dr. gottlieb came up, it was a little chilling >> just for way to plan -- you know we all think of our personal situations, but it's a big decision to head over. if i was going to go on have a vacation, if you're going to do it, would you leave the country, jim? >> no, not with this i've been thinking a lot about it when you hear the leader of a country just say basically stay away, what happens if you go to another part of europe i mean, our country is the best play to go i feel like that's a major
change from what i would have said six months ago. i listened to dr. ottlieb, and it just worries me, i really felt better about he spoke. >> that's my question. i'm tripled. >> me too. >> i don't, you know -- i left the technology of mrna, and a lot of people don't understand it it's an elegant way to do it, so maybe an immune response to spike proteins there's an immune response to covid spike proteins, too. >> nobody talks about t-cells, that's the win here. >> so i feel good, but -- >> i feel like the message has been told wrong. >> i don't want to see a moderate case, and it -- i don't feel like getting it, i don't
feel like quarantining, i don't feel like gives it to someone who is immune compromised, so we're back to thinking about that. >> that's exactly how i feel if you were going oversees for my vacation, after lens, it could be a problem getting back, i would cancel >> i it's not going to matter -- i mean it does matter, but it's still not something to say, hey, it's mild to moderate, bring it op. >> >> the people i've known had breakthrough, it's pretty tough. >> yeah, that therapeutic, the pfizer pill will be the
game-changer next year, maybe i always liked when i was on the cover -- you were on the cover. >> and when you were on the cover of "sports illustrated," it was a curse i can't believe it, it's a miracle. hey, thanks. and we want to remind you about the new investing club point your phone at the code right there on the screen. it will take you there "squawk box" will be right back. . you have to deal with higher expectations and you have to lower wait times. with ibm, you can do both. your business can unify apps and data across your clouds. so you can address supply chain issues in real time,
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this is just one of those round numbers we've been paying to apple was up 80% the year before, so it's been a phenomenal rise. with those sorts of gains, how do you come down on this, and room is left to run? >> sure. good morning, becky. it has a terrific run for apple. credit to them, they have executed really well, driven the services business, and investors are increasingly recognizing apple as an extraordinary consumer brand that said, as we look forward, we have seen the stock go up 25% since october 1st. the stock is trading at 33 times forward earnings, which is about as high as apple has traded on a multiple and this would be the third year
with a strong end of year run. we haven't seen that pers particularly ending 2020, going boo 2021 we had a similar phenomenon, about 32 times earnings. it underperformed somewhat in the first half so i don't think there's anything, quote, wrong with the apple franchise, but the stock's had a tremendous run, particularly in the last three months i'm not so sure that necessarily persists in the first three or six months of 2022. >> one of the things you've been thinking about for the longer term, though the is the stock buyback. a human amount of shares you actually think they could continue this for a very long time to come i mean, 15 years >> yeah, it's really incredible. apple is a cash-generating machine. you know, it pays a modest dividend it generates a lot of cash that
they continue to use to buy back shares, and then ultimately it also has a big cash balance right now. so the combination of those two things, precash flow generation that doesn't have a claim on it, plus a healthy cash balance today, means that, you know, apple can buy back -- continue to buy back shares aggressively for five years if it chose to take on a modest amount of debt, which the balance sheet could do, could probably buy back about 2% to 3% of its shares for 15 more years. so the buyback alone on a sustained basis could add 2% oar 3% to eps growth. >> there are contends about the supply chain for apple, and its tight relationship with china. how do you try to do a risk/reward scenario for
international relations at this point, which obviously matter? >> i think that's a great question apple's exposure to china is almost 20% of the revenues, but obviously much more so in terms of its supply chain and its products being almost entirely assembled in china so there's really significant geopolitical risk, but it's very difficult to handicap that i think tim cook deserves a lot of credit for the diplomacy that he has exhibited in china. fort naturally, apple, like a lot of other companies, because it's such a large employer in china, that somewhat works to its advantage. it's not only benefiting from china, but it is beneficial to china. so from that perspective, you know, it may have a little more risk -- a little less risk, excuse me, than other that's
right that are arguably only participating and taking from china. i would just say that apple is arguably in a more advantaged position than other companies given its employment base there. >> i know apple has pretty talented managers, and with a lot of different unput we used to talk about steve jobs as the key man and no one would be willing to take the role, but i would say the job that tim cook has done is the key man there. it's kind -- how do you factor for that >> yeah, look, i think tim's done a tremendous job. part of it has been china, which we just spoke about, but i think the other was transforming apple into a services company that, you know, tim's belief that
apple has a franchise and a trust with consumers, and that it could leverage its install base to sell services that they would enjoy and enhance their experience, that's probably been the coup of what tim cook has done i think, to some degree, given tim's personality, the leadership is more distributed than it was when steve was ceo i think that's a good thing. i think that tim is a -- is good about inculcating a culture and skills perhaps more broadly than steve was. i would argue that tim is a more well-rounded manager in that sense. kudos to him i think apple has a great bench of executives. it's not clear who the heir
apparent is, so there's still time for it to play out. >> toni, thanks for your time. it's great to see you. >> thanks for having me. that does it monday officially off the books for us joe, that's officially 20% down in the books. >> it will be the 14th tomorrow. >> yeah, christmas is coming far too fast we'll see you tomorrow "squawk on the street" starts now. >> good morning, welcome to "squawk on the street. we are looking for a higher open, i think it's fair to say our road map doe
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