Skip to main content

tv   Squawk Box  CNBC  December 30, 2021 6:00am-9:00am EST

6:00 am
revenue plunged after the chinese government cracked down on the company it is thursday, december the 30th, 2021, and "squawk box" begins right now good morning, everybody. welcome to "squawk box" here on cnbc i'm becky quick along with wilfred frost. joe and andrew are both off today. it's good to have you here, though, will >> thank you for being here. >> i saw you past 6:45 the last couple of nights, too, so you're the every man all over the place. we appreciate it. >> it's one of those busy weeks isn't it, it's all in. great to get the extra air time, frankly. >> and it's good to see you in
6:01 am
person we start with markets this morning, the s&p 500 rose by 6 points yesterday that was enough for it to log its 70th record close of 2021. we are getting a little spoiled by these records, this is the most records we've ever seen, second most back to 1995 with 77 records. so we have closed with a record level 28% of the time in 2021. it wasn't just the s&p, the dow was also up, it added 90 points and closed at a record for the first time since november. the dow has been up for six days in a row now nasdaq was an opposite story, down by 15 points yesterday. if you look at the futures this morning you'll see green arrows across the board dow futures indicated up by 15 points s&p up by 4. the nasdaq indicated up by about 34 and then treasury yields, yesterday we finally saw the ten-year above 1.5%.
6:02 am
look at the treasury this morning, you see it's yielding 1.531% that's a level we've been waiting for. it's been a surprise we haven't seen it sooner. >> it's not just the records that keep coming in, we had no 10% pullbacks all year and in the short term, month to date, s&p up 5%, all sectors comforted blue higher and week-to-date up 1.5%, s&p, and all sectors higher it's a resoundingly positive end to what's been a positive year. >> unless you were waiting to buy on a dip, in which case you missed it. >> a dip is 5% max covid cases continue to surge in the u.s yesterday's count hit 488,000 bringing the seven day afternoon to 301,000 according to "the new york times." that's a new record, and the first time daily cases broke the 300,000 mark
6:03 am
u.s. cases have increased more than 150% in the last two weeks. hospitalizations are up about 14% over that time but remain below prior peaks in january and december last year dr. anthony fauci predicting omicron will peak by the end of january. here's what he said yesterday. >> tough to say, it peaked quickly in south africa, went up vertically and turned out quickly. i would imagine given the size of our country and the diversity of vaccination versus not vaccination, that it likely will be more than a couple of weeks probably by the end of january, i would think. >> dr. fauci also defended the cdc's decision to reduce restrictions for people who test positive from ten days to five days of isolation. >> we need to keep society running in the sense of there are many other effects health wise effects if society is
6:04 am
crippled in the sense of being functioning to keeping critical things going so in order to address that, they looked for a balance between what is safe and scientifically based and what could get us to keep society running. >> dr. fauci also said the supply of tests in america will get much better in the first several weeks of january and becky, that second clip was in response to a question based around the fact that the cdc director had said the new isolation rules were based, in part, on what people would tolerate and i think that got quite a few headlines as to whether that meant we're totally stepping away from being led by the science. i think he gave a balanced and understandable response it's about practicality at this point, particularly if this variant isn't as severe as
6:05 am
earlier variants and spikes in cases. >> i think it's the acknowledgement we're moving more towards the endemic phase of things more than the pandemic but you had the surgeon general in the trump administration, saying you can use these guidelines but i wouldn't for my family you can test yourself at the end of five days to make sure you're still not picking up a positive test but part of the other test is if you test yourself with a pcr, you can test positive for 12 weeks and there's no way people can be locked away from society for that long, whether you're an essential worker or not, that's too much of a burden to bear >> i imagine we probably do have more to come over the rest of the show but we did go back and forth with him as well on this kind of uncomfortable fact that we're now in a point in the pandemic where a lot of people have been
6:06 am
vaccinated, possibly boosted as well, and whether they're still getting it and whether there had been an error initially as the vaccines were rolled out as the way they were framed as being something that could stop you getting the disease as opposed to something that would reduce the severity if you get it so we went back and forth on that, i know it's up on cnbc pro, but we do appreciate the way he comes on like that, because he takes the tough questions and responds pretty directly to them >> i didn't see the interview live but i did read about it on twitter, that you and sarah were kind of giving him some tough questions and he answered every one of them. that's good to see, too in the back and forth because i think more than anything there's a lot of confusion at this point. >> one of them i think he interpreted that i was an anti-vaxxer myself, but i'm not. anyway there we go. sign of good back and forth, at least. >> it is it is. in the meantime, jetblue said
6:07 am
it's going to be trimming its schedule through mid january as it faces crew shortages from infections the carrier plans to cancelled 1,082 flights the next two weeks saying it gives passengers time to reschedule their plans. this move by jetblue comes as travelers faced a fifth day of more than 1,000 cancellations from carriers in the united states because of covid depleted crews and snow in the pacific northwest and midwest. as the cancellations rack up so do the equity losses the nyse ara is one of two indexes lower this week. if you can only imagine the frustration from people you are trying to fly, i know over the christmas weekend it was like 1.3 million travelers who had plans disrupted by the cancellations. if you're somebody trying to get
6:08 am
somewhere, planning to go somewhere and the flights are happening like this. normally we are better than 99% in terms of getting the flights and getting things through right now we're more at 94% and that can only add to the air rage that had been out there the last year and a half or so. >> i agree but i'm going to put a different take on that i think there was probably a lot of rage and legitimate rage before christmas when people were trying to get to start their vacations and get home or whatever it might have been. on the way back, i think the rage might have been a bit lower simply because not many people have to get back to a physical office this week because it wasn't as much the end of the world if you had your -- >> you clearly don't have children yet i'm saying seriously too try traveling with kids when you're told that, when you show up at the airport. like that is the nightmare like oh my gosh you're kidding me, i have to unpack this stuff
6:09 am
and find a place to stay. >> if you get to the airport but i think the cancellations were coming through earlier. i had to get a flight on sunday, managed to get one after two cancellations. the one i got onto was still very empty, weirdly. so it shows it wasn't everyone scrambling to get the next one and thinkingi can stay a littl bit longer i have to be back in the office. >> we appreciate you are i don't know who would have been doing all the stuff if you didn't make it back. >> that was why i made sure. i owed it to dear lacy, i had to get back for scheduling. yes, they pulled back a bit this week, the airlines but relative to those previous peaks of a serious new variant, airline stocks have not done too much. they bounced significantly i wonder for the broader markets the stats we mentioned for the month of december as a whole, i don't know that there's any bad news from omicron really priced
6:10 am
into stock markets as a whole at this stage we bounce pretty quickly and the blip in the first case was smaller than prior variants. >> although i would probably say that's because people are looking at this in the same way dr. fauci is, thinking this is going to peak sooner rather than later. looking at a peak in january, we can push off our expectations for a return to the economy and a return to things getting back closer to normal, if you're just talking about a three-month push down the road, that's different than what we've seen with the past variants before, when we didn't have tools we'd hope would fight it as well and looking at higher hospitalization rates, too crossing our fingers we don't know everything. we could be looking at higher hospitalization levels if next several weeks but crossing our fingers this hopefully is a more mild variant. >> yeah. and shortening the isolation period as well helps market sentiment a bit too. still to come this morning here on "squawk box," futures at the moment pointing to slight
6:11 am
gains at the open, record closes as we said yesterday for the s&p 500. we'll talk strategy for your portfolios ahead as we head to break, check out shares of american eagle, the stock jumped 6% yesterday after they completed the acquisition of quiet logistics the stock is up more than 27% year-to-date new projects means new project managers. you need to hire. i need indeed. indeed you do. when you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. visit indeed.com/hire and get started today.
6:12 am
6:13 am
6:14 am
when you have xfinity, you have entertainment built in. whose resumes on indeed match your job criteria. which is kind of nice. ah, what is happening. binge-watching is in the bag, when you find all your apps, all in one place. find live sports faster just by using your voice... sports on now. touchdown irish! [cheering] that was awesome. and, the hits won't quit, with peacock premium included at no additional cost. all that entertainment built in. xfinity. a way better way to watch.
6:15 am
with just two trading days left in the year, let's talk about what to expect for tech and the broader markets in the new year joining us is una paturkey and dan ives good morning to you both uma, i'll start with you and the broader markets, if that's okay. are you worried, we were talking about this moments ago, becky and i, that we are 5% in this month of december for the s&p 500 after what has already been such a strong year, does that set the bar very high in january for further gains? >> good morning, great to be here as you guys were talking about earlier, what has happened this year has really been a story of fantastic recovery, fantastic
6:16 am
growth, a lot of liquidity so in that context what the market has done this year makes a lot of sense. as we look into next year, the building blocks that we're looking at in the broader economy as it relates to the consumer, strength of the consumer, the fact that we're kind of getting covid under control, by that i mean we're getting used to living with it as we move forward into what the new world is going to be like that's what the market is looking at at this point and looking forward into 2022. >> in terms of the biggest risks out there, do you think the valuation multiples are more likely to be pressured over the course of next year than to grow >> absolutely. as we've gotten through the year, a lot of that easy money has kind of been made. as we look to next year, the question is really about earnings growth and the quality of that earnings growth. we're going to have some choppy waters as it relates to the fact that we've seen that yield curve
6:17 am
really flatten which kind of brings in the conversation about what growth really looks like in the broader market so you're looking for the strong earnings growth type of stories as we think through what next year could be and i'm expecting choppy waters as we look to the next year. so our job here is really looking for those winners in that sort of an environment. >> dan, with that in mind, discussing this a bit yesterday with mike santoli, what multiple do you have microsoft on at the moment and of the mega cap names do you think it's vulnerable to compression next year? >> i think overall in tech you're going to see compression, say movicrosoft is a good exampe in some parts as to what the cloud business is worth, we think the cloud business is worth over a trillion dollars
6:18 am
when you view microsoft, that's the way you have to view it we think, when we view apple and the things on the hardware business i think you'll see some multiple compression but i believe we're in a fourth industrial revolution you'll continue to see numbers significantly go higher. i think the street is underestimating growth by the 12 to 15% which is why we think a year from now we're sitting here at nasdaq 19,000. >> nasdaq 19,000 and how many companies this time next year will be worth $3 trillion? >> i think there's two apple, of course, we can hit this week. and then i think that company in redmond is going follow them in terms of microsoft i can tell you, cios i've talked to this week, the level of spending on the digital transmission is massive because of more and more movement to the cloud. some are going to fall by the
6:19 am
wayside. but when we look at cloud, cyber security, 5g, those are the names to play. >> uma there's a bullish take there. what about the new year, and just the risk of a general broad change in sentiment after a strong year. will people pivot to profit taking >> the question really as we look into the final days of trading this year, i think is looking at what the short-term reactions are from the omicron wave we're seeing right now. and a lot of that has to do with policies, right. so as we think about what's happening fundamentally on the ground as it relates to consumer spending, sentiment, all things looking positive, the question is whether policy really responds in a way that changes that consumer sentiment. as of now, the next couple of days, that doesn't seem keyed up to what's happened
6:20 am
we're looking into next year, the things we're excited for, what's going to create the demand patterns and trend that is we've learned to develop the last two years and those are the types of things we're looking at. mentioned inflation is something we still think is going to continue into next year, slightly at lower levels but still a pressure point there we're looking at real estate as a great way for investors to hedge for inflation within those portfolios for example we're seeing residential real estate showing rental rate growth across the united states anywhere between 10 to 15, 20%, some markets growing at 25%, rental rate growth so that provides a great inflation hedge for investors looking at ways to make sure that their portfolios are protected from that standpoint going into next year >> quick final question, dan, do you see any high profile leadership changes over the course of the next year? >> i think the leadership
6:21 am
continues to be over the course of next year -- >> i'm sorry i worded that badly, i meant in the ceo positions, anybody handing over the reins? >> we had some of that with dorsey but when i look at the core, the bigger names, i don't see it for two to three years. they know they need to navigate through what's still going to be a bumpy year in terms of supply chain and other issues that's why i would not expect that this year in terms of any sort of tech leadership changes. >> dan and uma thank you both for joining us, much appreciated. >> thank you when we come back, we've got an i.p.o. report card. we'll look at high profile public debuts from 2021 and where they're trading now at the end of the year. also on today's planner, we'll get the latest read on jobless claims at 8:30 a.m. eastern time don't go away, "squawk box" will be right back.
6:22 am
6:23 am
6:24 am
6:25 am
time now for a checkup on some of the notable i.p.o.s of 2021 two-thirds of the companies that went public this year are now trading below i.p.o. surprises thanks in part to an end of the year selloff in high growth stocks a look at a few of the names bumble soared 63% on the first day of trading but hasn't fared well since, the stock is down 24% since its debut on february 11th robinhood fell on its first day of trading in p late july but surged in august thanks to interest from retail traders however the stock has been declining since then and is now
6:26 am
down 54% from the i.p.o. and then rent the runway, they fell 8% on the first day of trading on october 27th and have been declining since that stock is down 60% from the i.p.o. gaming company row blocks jumped 64% on the first day of trading and took a jump higher in november after a positive earnings report. also buzz about the 3d virtual platform that's considered a metaverse play that stock is up since march, $97.38 the last trade. still come here on "squawk box," a tough year for cannabis stocks we'll look at the challenges and opportunities for the company in 2022 a look at yesterday's s&p 500 winners and losers as we head to break.
6:27 am
hey lily, i need a new wireless plan for my business, but all my employees need something different. oh, we can help with that. okay, imagine this. your mover, rob, he's on the scene and needs a plan with a mobile hotspot. we cut to downtown, your sales rep lisa has to send some files, like asap! so basically i can pick the right plan for each employee. yeah i should've just led with that. with at&t business. you can pick the best plan for each employee and get the best deals on every smart phone.
6:28 am
6:29 am
6:30 am
good morning, everybody. welcome back to "squawk box" right here on cnbc watching the futures this morning, and even after record closes for both the dow and the s&p 5:00 yesterday, you are looking at some green arrows again this morning, the dow is indicated up 33 points, s&p up close to 5 points and the nasdaq up by about 26 points in the premarket right now. overnight samsung denying a report it's in talks to buy biogen shares of biogen jumped more than 9% on the initial report from a korean newspaper that said a deal could value biogen at $42 billion that's about a 20% premium from its current price or the price it was before you saw the big jump the company makes treatments for neurological conditions, obviously it's been in the news a lot this year for alzheimer's, the drug that was kind of controversial that's been approved for use at this point when i first saw this, i
6:31 am
scratched my head, what would samsung be doing with this, but samsung buy lodgics is the unit reportedly going through with the deal samsung talked about how it has a lot of money to invest, something north of $200 billion over the next three years in areas like artificial intelligence and bio technology. >> when it first crossed you were thinking samsung galaxy biogen >> exactly. >> i was thinking the health care unit was more medical devices which it is slightly bigger by revenue but they're a goliath and have been loosely linked in this area before, specifically to biogen but pouring cold water over it over night. cannabis stocks had a rough go of it this year and still
6:32 am
many challenges headed into the next year, despite a potential year of rises for that sector. frank holland joins us with the playbook for 2022? >> reporter: good morning. the legal u.s. cannabis market is forecast to grow to $31 billion in 2022, sales are expected to grou 28% questions about the federal legalization timeline. a bill passed by the house has yet to go to the senate. analysts say the difficulties in the build back better bill are equal to cannabis. a major trend to watch, thc beverages. cannabis beverages they make up about 1% of the u.s. market, less than 2% in canada but a much higher margin. it's estimated a dime worth of cannabis goes into a beverage but they can retail for 3 to $5. there's already investments or partnerships with canadian
6:33 am
investment companies a lot of questions about how supply chain will impact canada u.s. prices falling 15%, canadian prices more, while warehousing, grow facility and trucking rates remain at highs but the wild card is the new york city market fully opening, estimated to be over $4 billion, what companies plan to do to compete with the illegal market with a very broad selection that will all be watched and modelled, not only around the country but possibly around the world. back to you. >> frank, i was going to ask, we focus so often on the progress of legalization here in the u.s. are there any hopes for big steps in other key markets around the world over the next 12 months? >> reporter: there other key markets. germany, the biggest economy in europe, you may be aware of this, they're in the process of potentially legalizinge
6:34 am
recreational marijuana israel is another area but in general, the u.s. is the holy grail of cannabis, the market that every company, whether in america or in canada, that's where they want to be because there's produceability here at the state level and potentially the federal level but people are willing to spend the dollars on the cannabis experience >> frank holland thanks very much. >> trying to figure out what frank thought your area of expertise was, understanding germany because being from the uk you understand europe or your expertise in another market. >> i decided not to say it there, but i was going to say, frank is right to say this is going to be a bigger market. we grew up desperate to have a beer before you're legally allowed. we're more focused on alcohol where here it's a bit of a mixture between the two. it's about the fake ids getting you into a pub a little sooner
6:35 am
than you meant to. if you were tall, it was helpful. >> this is a conversation for later. but yes. thanks we when we come back we'll talk about the big changes in the job market as a result of the pandemic and what we could see in the new year. that's next. later we'll talk to dr. kavita patel for the latest on the spread of omicron and the reaction to the cdc's updated guidance a reminder for you, you can watch or listen to us live any time on the cnbc app
6:36 am
your shipping manager left to “find themself.” leaving you lost. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire
6:37 am
6:38 am
job openings continue to exceed the number of people actually looking for jobs. and employee wages keep rising. up 2.8% in the last five months according to the bls the fastest increase since 1981. joining us is allen gorino, vice chairman at corn ferry i think the resignation number is the highest we've ever seen, so this is definitely a take this job and shove it market what does that mean for employees and employers as we head into the new year >> becky, i mean, it's actually a great time to be an employee let's face it.
6:39 am
it's a seller's market for talent and if you are a competent and a good employee that works hard, makes a great contribution to your company you're going to be in high demand ideally to your own company and also at other companies that would love to have you come in and help them >> are there certain areas, certain industries, where that's really the case more than others >> actually, one of the unique things about this particular recovery, becky, is that it's literally across the board durable goods, for example, had significant job losses during the pandemic that's everything from, you know, washing machines to automobiles. and the data says that that sector has actually recovered and actually is looking to add more jobs than they had pre-pandemic so basically across the board, phenomenal demand for talent and it's been brewing for 20 years and it's finally come to a head. >> we were just talking about
6:40 am
how wages overall were up 2.8% in the last five months alone. when you're talking about the high end of the talent scale, what kind of increases are you seeing in the contracts that you're writing up right now? >> becky we're seeing what i would consider to be unprecedented jumps in compensation this is an outlier example but i was at lunch with a ceoabout a week before the holidays we finished the lunch and he said i have to go back and spend a million dollars on somebody i said what are you talking about? he said i have to move somebody from 1.5 million to $2.5 million a year to keep that person on my team because they got an offer from another company that's an outlier but it's gives you an idea of the froth and frenzy that's occurring. >> don't reveal my personal information, aaron >> sorry >> that was all i was weighing
6:41 am
in with. actually, i will follow that up, because i mean, in the financial space we always talk about huge, huge bonuses at the end of the year and even though this has been a bumpy year and last year was too, there's been on the surface an idea that well, there's been the pandemic going on and you can't be seen to pay too much. so has there actually been enough under the surface people pay bonuses to be satisfied or, in fact, there's dissatisfaction even if they've been given bonuses? >> so, actually, compensation is a hiking factor, the reality is people leave company's cultures and their manager. the real question is, is the compensation adequate and quite frankly, so competitive one would tolerate an environment that's not ideal, that's not uncommon so the real focus today that
6:42 am
companies should be investing in, something we do at korn ferry, and that is making leaders better, managers better, making people come to an office or work remotely in an environment where they really feel valued and then compensation becomes a little less important >> allen, is there any sort of case where you can see someone saying, okay, i hear about everybody is getting pay raises and i'm going to hold out and get it are there situations where people push their luck too far, even in this market? >> that's been going on for a long time. i will tell you that holding a company for ransom is not a good strategy that said, there are people that do find themselves getting a pay raise by, as you said, holding out or potentially threatening to leave what i find there is that it kind of breaks down the relationship between the organization and that individual companies don't have short
6:43 am
memories so perhaps later on, a year down the line, that person's bonus may then be cut a little bit or they may not get that promotion. so dealing fairly, the way you would want your company to deal with you is always the best way and i think that holding companies for ransom piece is a short-term gain. >> i mean, i look at that and think that's not enough punishment, maybe down the road you don't get the promotion or a bigger end of the year but if you held them up from 1.5 million to 2.5 million and still making 2.5 million next year, you came out okay. where do people get their comeuppance. >> the 1.5 to 2.5 million, that person could have been told, love you here but we can't do it that's an outcome that could have happened for sure, and probably happens more often than getting the million dollar
6:44 am
raise. when people are career minded, not getting promoted is an expensive price to pay if you're not seen by your company as someone they see as loyal. your career being, let's say, dislocated isn't that great. >> then you're the stinky kid and nobody likes you >> in terms of what ceos say about this, are they willing to kind of admit this is the case for the foreseeable future or do they think the tide is going to turn sometime next year? >> no, i mean, as we're talking to, they realize this is a secular shift. what's happened over the years, we could talk about this for hours we don't have the time the playing field for talent, for business, has gotten more difficult. 15 years ago you could look good if you were a division ii caliber executive. now to look good you have to look like a pro. and to look great you have to look like a super bowl athlete
6:45 am
as a result ceos don't have the luxury of saying talent is fungible if suze leaves we'll replace her, if larry leaves we'll replace him. say the top 5 to 10% of all employees, priceless absolutely priceless >> allen, thank you. good talking to you today. happy new year. >> pleasure, take care still to come, didi's woes continue shares plunging overnight after china's tech crackdown took a toll on their third quarr vee. 'lta to a company that advises doing business in china. that's next on "squawk box." i feel like they might have a better finance system than we do. workday. how do they make better decisions faster? workday. it's got to be something workday. i think i got something. work... hey, rob, you're on mute. hello! hey, rob, there he is. workday.
6:46 am
the finance, hr and planning system for a changing world.
6:47 am
6:48 am
6:49 am
an update now on the global chip shortage, two major manufacturers are warning a lockdown in china could affect production in the area china has cracked down on travel into and out of the city to curb a covid outbreak it could lead to delays of d-ram memory chips samsung said it would temporarily adjust operations at its facilities in the region that manufacture flash memory chips. sm so look out. >> yeah. it's been a hard year for investors in chinese tech firms. the companies -- internet companies have lost an estimated $1 trillion in market cap over the past 14 months the crane shares china internet etf down 59% in 2021 overnight, didi said third quarter revenue dropped 11.5%
6:50 am
from the prior quarter as the domestic business took a hit from the regulatory rackdown joining us now, james mcgregor james great to see you thanks so much for joining us. main starting starting question is, are we at the start of the end of this china crackdown on these big successful companies and will it ultimately hurt china's interests globally and kind of suppress innovation over the long term, or lit help them? >> well, that's a long question. well, look, the crackdown is about control. the chinese government wants these people to be up to date their control and actually direction you can understand they were abusing people's data, they were running monopolies they're not compliant with a lot of regulations when china went after them, of course, they overdid things. but it's all about control in
6:51 am
china these ays, xi jinping is going for an unprecedented third term, next year, in october and november he wants nothing to get into his way. he wants to remind the billionaires who's your daddy? the business has to be good for the country and follow what the party wants. as far as form and investors are concerned, they don't care that much i remember when they were doing their first overseas listing, they convinced him to do it. he said you could get money from foreigners, they wouldn't have control. they still have that idea. investors are losing a lot of money. they know they'll be back when they see an opportunity. it's a very, you know, tough calculation by the party >> so i think what you are saying, james, is it makes sense domestically for the government and for china the way they run things to sort of restate some
6:52 am
of those key factors him but does it hurt innovation in the long term? if you do clamp down after people have made money, it must lower incentives to take those risc in the first place? >> yes and no i think a lot of these people that have made a lot of money and have been a part of the crackdown are quite unhappy and they're kind of checking out however, there is a lot of other people in china that will see an opportunity and they're used to working around what the government throws at them. they're used to it so i think it will hurt some innovation but i wouldn't count china out they've got how many -- they got 1.4 billion people, a couple hundred million get it right, they will move ared pretty well. >> what about u.s. companies and european companies doing business in china in a way over the prior couple decades, it seems pretty clear many of them, their business came at a cost of lokz some of their i.p., things
6:53 am
like that. is it sensible taking subsidiaries is that a sensible thing to regret it like a lot of companies did in the '90s? >> you have to go into chosen with both eyes o. you can't think you have a resident's permit you have a visitor's permit. you can be there as long as china vantages from you. with this policy now, they want to reduce their diplomacy on the outside world, meaning export earnings they want earnings, supply chains on shore f. you are a foreign company with opportunities they need, will you have a good opportunity. there are two companies, ones that need china and ones that chiner china needs those that need china know they will be pushing back on their governments on anti-policies,
6:54 am
that's already happening, opening the financial services, giving them slivers of the china market which is a very big amount of money, still, they want them back at the white house or in brussels relevants saying, you got to lighten up on china, which is what happened for decades. >> james, once you are more broader on the chinese economy, the crackdown intention am from the chinese government they also have to get more involved in the property sector, which has been a necessity as opposed to intention, are there problems beneath the service that can rear their head in the next 12 months >> they have a lot of cleaning up to do with debt on real estate it was really irresponsible lending, out of control. they're clamping down on that when they clamp down and it slows down the economy, then they lighten up again.
6:55 am
so there is balance back and forth all the time consumption is not doing well in china. manufacture secretary off the charts because we in the west are buying everything china can send our way so, i don't think it's going to be a green year, but i think they're going to have a better year than most of us >> finally, what likelihood do you put on the making of significant move on taiwan after the olympics >> i don't think so. i don't think they will invade taiwan they'll erode taiwan they will mess with their stockmarket. they're already sending these sorties in to wear out their military, they'll go after their tycoons, china will be very good at eroding taiwan and making life difficult over a period of time >> james, thanks for joining are us much appreciated >> okay. >> when we come back, we still have two big hours ahead first up, we will talk about
6:56 am
buying opportunities in big tech as we head into the new year. then the united states reporting a record number of covid cases yesterday. but dr. fauci says there is light in sight are there still value in shipping stockss a top analyst joins us to break down the sector. you are watching "squawk box" and this is cnbc and this is cnbc want more from your vitamins? at nature's bounty, we give you more. more immune support.
6:57 am
with the only vitamin c that lasts 24 hours. more restful sleep. with the first-ever triple action sleep supplement. we put more of our brains into helping your heart. we give you more wellness solutions backed by rigorous science than we ever have before. nature's bounty gives you more, so you can live bountifully.
6:58 am
6:59 am
. two days to go in 2021 the s&p coming off its 70th record close the dow is on the longest running winning streak since all the back to march. johnson&johnson out with encouraging results about a booster shot we will bring you those details. and a brigg group of flight attendants isn't happy about the guidance from the cdc. they're worried about big employee interest over safety. the second hour of "squawk box" begins right now
7:00 am
>> good morning, welcome back to "squawk box" here on cnbc. joe and andrew are off today u.s. equity futures at this hour are pointing to slight gains, as you can see, a fraction are in the free market. of course, we had record closes yesterday for the s&p and the dow, enjoying 35% against month for the day for s&p. 6% for the dow all 11 sectors are higher month to date and week to date johnson&johnson says their booster has 85% effectiveness in a study in south africa at the time omicron was the dominant strain there a booster showed it generated a 41-fold increase in neutralizing anti-bodies. shares of j&j not really moving.
7:01 am
the guidance here has been saying you should get booster if you had j&j as your first shot within two months even, that that one can fade quicker. >> it doesn't surprise me, a booster shot for j&j is a second shot it gets you back to fully vaccinated if you look at the mrna ones there. >> i was going to say, they're encouraging it's so specific against the latest variant, where some of the others have seen slightly less effectiveness than earlier trials with this variant. good news either way chip micron memory components will be hit by an ongoing lockdown in the chinese city of xi'an. those chips are used in data centers across the world it comes hours after samsung issued a similar statement
7:02 am
it's 5dz justing production in x'an micron is down a little bit in the premarket. samsung denying it's in talks to buy biogen shares of biogen jumped 9% from a career newspaper who said a deal could value $42 billion the pharma company makes treatments for alzheimer's and dementia giving up 6.5% this morning. big tech stocks were investor favorites in most of 2021 josh lipton joins us right now with three names to watch as we head into the new year the big question is, is this going to continue in 2022, this tech love? >> so %, becky, that's the question we're asking, what is the smart bet for tech investors as we now roll into 2022 let's start with apple
7:03 am
we pulled that stock, it's up about 35% this year. right here, the all time highs, skeptics are not excited valuation is not attractive they say and growth, so they bet it will be slower next year on the other hand, katy huberty says apple's strong loyal customer base and the pipeline upcoming launch, she thinks a rerate in next year, meaning investors will be willing to place a higher valuation on apple's earnings switching gears, microsoft investors, check out that stock, it has surged more than 50% this year and rba argues it's a top pick for next year saying the migration to cloud he says is benefiting azure the direct transformation of business, benefiting office 365
7:04 am
and hybrid work models benefitted teams they are trying to execute on a lot of growth drive between swings and misses. that opposite opportunities to rivals like amazon and alphabet. finally, nvidia, a monster run, that stock surging 130%. ubs says nvidia is still one of their favorites for next year, too, as it builds more revenue sources is around ygpu in software motes webbush maintains a newt trauma setting. they say metals here are excellent, but he argues a lot of good news is then priced in becky, back to you. >> we will have those who are fans of the stock and those who are kind of thinking that stocks will go down from here but if you were to look at those names, the big tech names and figure out if more of the street was in favor of it or there was
7:05 am
going to be more of a bear case, how do the chips fall? >> listen, there is a lot of bullish analysts on all these names. i think nvidia is a really interesting one, if you look at that there is certainly a lot of confidence on the street about this name. some i mentioned are getting nervous about valuation, not surprised. i checked in yesterday, valuation set is scary, but a lot of these tech names is not a reason to buy or sell in and of itself stacy still has a buy on inindividualia i asked him why, he said, listen, bottom line it crushes the earnings report. demand is strong new products are on the way. it's drawing this storied narrative around metaverse and our own jim cramer a big dleever in nvidia. becky. >> thanks, so much joining us now for his take
7:06 am
on investors favorite talks, the key market strategist and sj.j. my first question is whether you've seen any of the investor climb interest in the tech sector cool off as the year has progressed >> no they have been incredibly strong all year long apple remains for the third year the number one holding at t.d. ameritrade our clients continue to like it. it's interesting as we head into the last two weeks of the year, and you look at the stocks climbed for buying, inindividualia apple, microsoft are three of the top five so as we head into 2022, it was almost like people took a little of a break from them. not nvidia, but apple and microsoft not as strong. perhaps the last couple of months but a lot of interest as we head into 2022. you know, josh talked about a
7:07 am
lot of these reasons, apple, 42% of the revenue is coming from the phone. 25% from their services, 27% actually from their services, you are looking at that saying is there any reason to believe these two revenue streams slow down i think that the answer for most people is still going to be no i know that you know valuations for all three of them as josh mentioned is something to look at we're coming off our 70th record close for the s&p 500. i think there has took note of caution overall, going into the year that's going to be difficult to duplicate these last three years >> are you clients showing any caution, j.j.? are cash levels relevant to history? >> yeah. if i look at where our clients are in terms of their exposure to the mark overall, will, they're not as high as they have been earlier this year they're just above average i
7:08 am
would say. and you know that's paid for them to have that sort of pattern as we've headed into the year and apple and microsoft i think are a little bit different than nvidia as we head into 2022. the reason being is because apple and microsoft get an incredible benefit in my opinion and that is on the upside, they're viewed as growth stocks. you see that a little bit as i talked about apple revenues. microsoft revenues, now the cloud is their number one source of revenue that's incredible the way they've tiltd towards that but what happens with microsoft and apple i don't think happens with other stocks is when we have a sell-off, the trusted blue chip name so people go to those two names in times of trouble. in fact, when you hear about buy the dip, that's where buy the dip usually starts with our client is those two stocks so when you see those two stocks in
7:09 am
any kind of down move, people coming for those two stocks, that's usually where the rest of the it will go so they are the trusted names in any times of trouble because people feel they can continue to go a little bit lower. it's interesting we often double up on those two. let's face it, over the last ten years, that philosophy has certainly paid off. >> step away from tech which is the other sector people are most rotating into at the moment >> it's really been interesting for the last few weeks, will and that is the ev space overall. rivian, ford, tesla, when tesla got down to you the know it got down to 900 when it started back right around 950, we started to see people start to buy. it was very interesting. i think they needed to see a little bit of the you know back in like december 18th/20th that type of area, they needed to see a rally first in my opinion
7:10 am
before they jumped on. then they jumped 950 and 1025 we started to see our clients come in to buy tesla more to me, tesla is really interesting. i don't know there is a stock that reflects consumer confidence more. when the market starts to upswing, that is a stock that people have intended to jump into pretty quickly when they start to get confidence on what's going on in the overall market >> thank you for joining us. good to see you as always. >> thanks. happy new year, pam. >> and to you. when we come back, the head of a powerful flight attendant union will join us with this week's guidance from the government the big issue is how to keep the government running while protecting at-risk employees we got that interknew next "squawk box" will be right back.
7:11 am
7:12 am
switching wireless carriers is easy with xfinity. just lean on our helpful switch squad to help you save with xfinity mobile. they can help break up with your current carrier for you and transfer your info to your new phone. giving you a fast and easy experience that can save you hundreds a year on your wireless bill. visit your nearest xfinity store and see how the switch squad can help you switch and save. get $200 off a new eligible 5g phone when you switch to xfinity mobile. talk with our helpful switch squad at your local xfinity store today.
7:13 am
welcome back wednesday's new average daily case counts in the u.s. hitting a record, topping 300,000. u.s. cases have increased roughly 60% and hospitalizations are up about 14% over the past two weeks but remain below prior weeks. dr. fauci spoke about the omicron variant yesterday on "closing bell. >> [ inaudible
7:14 am
>> he's so good, we can just watch him outwithout listening o him. perhaps we will get it halfway through our next interview with dr. kavita patel, also an msnbc medical contributor. thank you so much for joining me this morning i guess the first question we didn't get to hear from dr. fauci there was going to be on whether you support the cdc alteration in guidance isolating five days rather than ten days after you report positive? >> i want to support this for vaccinated and boosted individuals on negative rant antigen tests would be good enough that can tell us how infection someone is so make no notice between
7:15 am
vaccinated and unvaccinated individuals and leave it up to individual to determine if their quote symptoms are relieving or improving and how to best determine they will wear a mask properly remember it's not five days when you are done, they recommend the next five days you wear a proper fitting mask at all spaces i have yet to see the american population grasp all those concepts it takes a lot of trust. i think with how many case we have it's short-sided. >> i guess one of the justifications for it was, what is practical now, what people will accept. we are at a very late stage hopefully of this pandemic and people are getting frustrated with restrictions. is it fair to say if you push them too hard people think probably accurately is less severe that you will do more harm than good and if you do get another spike of a more deadly variant, you
7:16 am
need to save some ammunition back in terms of people's willingness to follow the rules? >> yeah, i think policy is intended to deal with averages and situations to your point than the public on average, probably unanimously is frustrated, i think it's very clear. but i also think for two years we have been accumulating science and distinction between people who are unvaccinated and people who are vaccinated. we've made it very clear many of our recommendation to date are really to protect people who are unvaccinated or can't have a proper immune response, to have relief from some of the restrictions, which i agree with, apply to all individuals, with any distinction with the science we know matter does again feel like we are punishing people for doing the right thing. if you look at the guidance on the surface, it appears there is no distinction between people booster, vaccinateder in terms
7:17 am
of isolation we're seeing people who are vaccinated positive, have a mild illness or no illness compared to what we are seeing in hospitals and people we're nervous about who are unvaccinated or have not completed their initial series. >> what have we learned, democrat pat el based on omicron or in general of the pandemic about the effectiveness of full blown lockdowns relative to the damage they inflict >> yeah, i think there is no question than what we've learned and science supports that the l lockdowns have not had anywhere near the original policies had thought they might now i understand that some countries have done their version of lockdowns, much smallerpopulations when we look, for example, back on what happened in the united states, we did not see and certainly not a dramatic improvement in subsequent surges
7:18 am
because after the lockdown as you point out, i think people were frustrated and pent up and less likely to listen to some of the guidance so lockdowns do not work travel restrictions do not work. what does work is to try to get people boosted to do the kind of basics we've talked about. we have resurfaced high quality masks, because of omicron retransmissibility we have resurfaced that advice around masking that involves throwing away the fiber masks and investing no matter who you are in a higher quality mask i think that speaks to how prevalent and infectious omicron is >> dr. patel, we will be speaking to the head of the flight attendant unions a bit. some of them were pushing for the more relaxed guidelines. the flight attendant is not in favor of it. they're worried about immunocompromised workers and workers at risk.
7:19 am
i can understand both sides of this argument. where would you had advise on this >> yeah, i can, too, 40% of my clinical staff are out for being positive themselves or out for quarantine so i completely understand kind of the stressors in a workplace for an essential worker, which is what pilots and flight attendants are as well i hear the guidance could have been tailored for essential workers and provided for testing to be an option for returning to work early just returning to work early without any of those measures creates an environment of pressure and will create for people immunocompromised a comprising situation i think that's exactly appropriate. i hope that we can all come together and agree that testing out of isolation and quarantine continues to be a smart strategy but i'm not sure the cdc will follow that. >> i wanted to ask you about a topic that i went back and forth on with dr. fauci yesterday.
7:20 am
which is whether or not there was a communication failure by government officials on vaccine when they originally came out. that is to suggest they were primarily to stop people getting the virus as opposed to reducing the severity if and when they did? because we're now in this wonderful position where people who have not just been vaccinated but also boosted are still getting the virus and it's sort of feeds the anti-vaxer argue to have that kind of ammunition >> yeah. it is a failure. i'm take responsibility. so much of what we're trained in public health, epidemiology and medicine, when we talked about in november of 2019, 2020, rather, when we talked about the miraculous efficacy. most people didn't know what efficacy was we were referring to hospitalizations and death
7:21 am
everything i just said is utterly confusing. we did not translate to to say by the way, america, this means that people will get infection it was intended to prevent hospitalizations and deaths. i think we were so overwhelmed with how strong mrna vaccines, for example, were that we translated the science because that's what we do. but we did not translate it in a way that people could understand eventually, yeah, you, too, will likely get koichltd it will just be mild. it's a success of the vaccine not a failure. >> that's really frank and honest of you. do you think lasting damage will be done from this in case hopefully many decades that something comes around like this, people won't get vax named or net-net, do you think most of us were, in fact, wowed by how brilliant the vaccinations have been and lowering when we caught
7:22 am
it >> yes, i told you, i have been a creature of science, what we sue is the anti-vaxer sentiment, they experienced nit spanish flu. i think net-net over time, people come to see vaccines as a part of their routine part of health and preventive care just like we do with other vaccines how long that will take i think is kind of incumbent on our communication ability and showing success, which is again another reason, i would like to see these shornted quarantine and isolation guidelines apply to those who were vaccinated that's true, that reenforces the face of these vaccines as well >> dr. patel, how everybody will get this at some point, if that's the case, is this the string you want? it seems to be way more mild if you are vaccinated
7:23 am
if you know you will get it at some point, you think, okay, now a good time for it or do you wait under future strains, are they going to be as mild as this one? >> becky, good question i'm old enough for my mom, one of us got chicken pox together so >> i remember. >> so i completely relate to that sentiment hey, listen, if we're going to do this, here's why i want people to hold off and not do it with omicron we're seek because people have chronic conditions, they're not aware of how vulnerable they are. i got 32-year-old women with high blood pressure who are also experiencing break through cases but because of their chronic conditions, they at higher risk. i want to get another two-to-three months, becky, so i can have the oral pfizer drug. the oral merck drug. imagine how much more confident we can be if we have a strain that we know has a mild effect because we're vaccinated but just in case, because of
7:24 am
your profile, i can have a five-day oral treatment highly effective with a very good side effect profile to take just in case i need about two-to-three months for that production manufacturing to ramp up so that's what i am hoping for >> dr. patel, thank you very much really appreciate it. >> that is a good argument all right. when we come back, the growing trend of retailers telling customers who want to return items to just keep it stechltd we'll have that story next don't be shy, now. i like that prime cut. -aflac! -i love my gold jacket, but that aflac blue feels so right. when you feel right, you coach right. i know that's right! prime never believed in double coverage, but health insurance and aflac...is money. ♪ must be the money ♪ and i know how coach prime feels about money.
7:25 am
-aflaaaac. -♪ aaahhhh ♪ now that is what this jacket needs. ♪ must be the money ♪ get help with the expenses health insurance doesn't cover. at aaflac.com
7:26 am
7:27 am
>> wow, 25 miles per hour. only two nights away, becky, until we pop the champagne if you shake it up to get it
7:28 am
going 25 miles per hour, you waste a lot of it. anyway, 'tis the season for returns. usually a big hassle more consumers are being told to not even bother. courtney reagan joins us with more >> hi. bottom lines, typically they have three-to-five times the return rate of items bought in typical stores v-stock estimates about $114 billion will be returned following a holiday and nearly 40% will be online returns once they initiate a concern, algorithms weigh a variety of factors to determine what they do next n. some cases, they lower the cost some say keep it returnless refunds will total $4.4 billion this year wal-mart says it considers item values, supply chain cost, efficient circumstance sustainability, post-importantly
7:29 am
what's going to lead to the best possible customer experience for some the just keep it phenomenon can be key to keeping commerce loyal. >> we recommend consumers keep it if they can lure that customer, they can generate a high return rate from the same customer. >> reporter: but ceo tobin moore worries these types of returns only add to the waste issue. >> this year there will be probably over 6 billion pounds of waste generated by consumer returns that end up in land fills. >> here's an example, a different return decision. so a shopper paid $40 for 40 pound dog food bag $700 for a dining table ordered online. 20% profit margin for dog food $8 and $200 respectively when the shopper wants to return both the retailer soft ware shows the processing, restocking or resale
7:30 am
leads to a loss for the dog food, sells positive margins for the table. they are told to keep the dog food but return the table. back to you. >> the thing i was thinking about this was whether or not retailers let's say five years ago as ecommerce was starting to take off, we have to offer the option of free returns because it's the done thing. but they never really expected that high a percentage of people to take up that option and the pandemic is slightly elevated that, because everyone is just shopping online. you kind of know that you can return them and, in fact, all of the coupons, all of the labels you need are included in the box. we've now got to a point it's a really good cost for retailers that offer free ecommerce returns. >> absolutely, i think that is exactly a part of that equation. it doesn't make sense for a retailer to offer you free
7:31 am
shipping and also free returns with what the item costs, how much it weighs, can it be restocked? can it be resold if so, in a primary channel or just as a liquidation item, in which case it may get pennies on the dollar or just say keep it, they write it off, maybe they made that easier for you, you are more willing to shop again, which in the end retailers think it's more valuable to retain you. many of vous.net when are you not quite sure about the quality, the size, the fit you order more than one item and at moist ever intend to keep one. >> thank you so much much appreciated >> thanks. so, will, i heard you talking about champagne before >> i was making a nice, funny little comment. >> you can't see that i'm not here at least i can see where you are at all times are you having to do this by
7:32 am
completely flying blind? >> i'm in a normal studio, well equipped, but, no, i cannot see. >> i can see you, look >> i didn't see that you had already gone off to get your own champagne, in fact just to lighten up the morning so my joke about champagne >> i did hear, i was listening by the way, last week i opened a bottle of champagne on air it exploded. the control room caught it it went all over the room here >> you probably go 25 miles an hour as much funs to shake it up and shoot the cork. >> you lose half your champagne. >> the cheap is buy a cheap belmont of prosecco, shake it up you take it very, very carefully the kid enjoy, the adults enjoy. we go happy new year that's my trick at home. >> just one more thing, you know where i was, just to make you jealous? >> no.
7:33 am
>> making coffee >> oh, making coffee i did manage to get one. we do have a very muddy machine here at the stock exchange which i was able, at least i got caffeine it wasn't delicious. but i got some anyway, still to come, why some airline industry workers aren't pleased with theew n covid guidance, sarah nelson from the association of flight attendants will join us >> . don't thank them too soon. kick pain in the aspercreme. make fitness routine with pure protein. high protein, low sugar, tastes great. high protein, low sugar, so good. high protein, low sugar, mmm birthday cake. pure protein. find our coupons in sunday's paper.
7:34 am
7:35 am
7:36 am
delta air lines reportedly revising its coronavirus guidelines following new recommendations from the cdc they report they will be giving workers five days of paid leave if they test positive. the airlines recommends a covid test before returning to work. the new rules are dangerous. sarah nelson is the international president of the association of flight attendants, tweeting, dear, ceos, your business needs are not worth the life of a single worker cutting isolation time to five days will mean more workers will die. don't do it. we knew this was the direction things were heading. the airlines asked last week for the cdc to relax those
7:37 am
guidelines, it was almost a sure line that airlines would follow suit what is your response from delta? >> delta is the only one that's put out a policy changing their support of workers with sick leave and changing this to the five-day quarantine. so they were on it right away. other airlines have not done that we are interfacing with them i should point out the airlines were asking for a five-day quarantine for break through cases, not vaccinated and unvaccinated people. they were asking for a testing protocol before returning so this went beyond what the airlines were asking for our concern is delta met those new standard and not communicated that part of the cdc guidance is someone should be asymptomatic when they're returning. so that's support for workers who are still sick
7:38 am
it's not fair. the thrust is around pushing people to come to work in the middle of this busy holiday travel season where delta has not properly planned on staffing issues and we've seen these cancellations. i want to recognize, this is about weather. but the thrust of delta's request with the cdc was about staffing issues, not public health guidance. so cdc has been clear that approximately 90% of cases will not be infectious after five dayss. that means, we are admitting there will be some of putting people into a position of back to work before they're better and spreading the virus more and putting more people in jeopardy. >> delta does not allow for any additional days off, if are you still symptomatic as a worker? >> that's what their policy seems to suggest and it is a strong army workers to come back to work before they are ready. this is also, there is a hint of
7:39 am
a threat of discipline behind that as well we're not seeing that from the other airlines i just want to remind you, too, we don't have the backing of a union contract for the flight attendants and many other workers at delta like we do at the other airlines united airlines, american airlines and others are interfacing with us and have not abated that policy yet they're going to work with the unions through this and try to put something in place that makes sense, you and i have been talking about this pandemic for almost two years they have been on the front lines dealing with conflict and dealing with the stresses of the pandemic they have gotten sick themselves many have died and they are now feeling this is not a supportive policy about them this is about trying to write them into work when they're worn out, stressed out and feeling really beat up. >> you know, i can understand
7:40 am
both of the employer's side of things and the union's position on this. i will say that at a time when we are look and airlines have cancelled so many airlines, can i understand why they would like those relaxed guidance for terms of people who are asymptomatic it would be nice to know they had a negative test before they came back in, too. i think not only for the health of the workers, but also the flyers who will be flying with these people why do you think delta has pushed things so far and what has the response been from the company when the union has locked these issues out? >> delta has not responded directly to the company, but you bring up a really important point. it is so important we have policies in place the public can see and they can have confidence in air travel demand return when the vaccine became readily accessible people felt confidence in buying those tickets and in air travel because of all the communicating we have done around the
7:41 am
controlled environment on the plane with filtration and wearing the masks, the deep cleaning and the reduced surface procedures so all of that is important for air travel return and you are right. they can be putting a policy in place here that makes a lot more sense and engenders confidence owed from the employees and from the traveling public, with testing, with reducing us down to just breakthrough cases, i think we can be a lot more human about this and be a lot more effective and not have long-term pain from having a policy that's going to extend the pandemic rather than doing what we ca aviations senending it. >> you say delta is the only one doing this, the other airlines if they are speaking with the union right now what do you think a reasonable policy is >> well, we have a letter out to the airlines and we believe that the ten days should stay in
7:42 am
place but we also want to talk with them about what they were suggesting, that this applied only to breakthrough cases, they deal with none case-by-case basis. they have a protocol, not just a strong recommendation from the company to get that done so there is a lot of things that we can do to make this policy a lot more effective and supportive for the workers, making sure they're not forced to come back to work if they're still sick, facing additional conflict in the workplace f. you can imagine anyone coming back to work who is sneezing, coughing, not looking well, that raises anxiety at work among fellow members and passenger so it's important for to us dialogue through this and understand how we can be more compacting about a policy that supports people coming back to work if they are better and we can confirm they are no longer
7:43 am
infectious that's great we should give people the freedom to be able to do that. we want to support those cases where that's not true and where we do need to give people a little more time to feel better and then communicate to the public that we're doing all this, so everyone can continue to have confidence in buying those tickets. >> but you would not be opposed to the idea of somebody who has been vaccinated, has a breakthrough cases and wants to come back, they should be able to do that, right? >> i think that that is perfectly reasonable and these are the kind of issues we can talk to and walk through with a policy that makes sense. >> can i just ask in terms of mask wearing i think that's where a part of the confusion comes down on this, all of us who live in the real world have been in worst place situations, know what it's like when there is a mandatory mask policy, most people don't wear it very well. most don't abide the entire time if they wear one, they are
7:44 am
wearing a cheap cloth mask what is it like on the airline, do people follow the masking rules fully in terms of the employees, i mean? >> in terms of the employees we see that employees are following that most airlines have been very clear about what people have to do and have had a zero tolerance policy around mask issues for the employees. so our experience is that the employees are consistently wearing those masks and modeling how to wear those masks or passengers and other travelers through to our airports. >> i want to thank you for your time it's always good for being with you. i hope you keep us updated on where things stand at this point. >> thank you, becky. appreciate it. happy holidays, happy new year >> happy holidays still to come, why the country may be in for more bankrupts that story is next
7:45 am
you are watching "squawk box."
7:46 am
7:47 am
commercial and consumer bankruptcies plummeted in 2021 will that trend continue into the new year leslie picker, good morning. >> good morning, becky
7:48 am
yeah, the number of consumer and bankruptcy filings is on pies to be the lowest annual amount going back to 1985 and may even record fewer than that year. for the first 11 months of the year, there were just over 373,000 total bankruptcies the low figure can get attributed to a lot of macrofactors, covid stimulus and lower interest looking ahead to next year, there will likely be no more pandemic relief and there will be economic head winds for consumers and businesses says american bankruptcy institute director but the markets don't appear to be pricing into potential for more distress quite yet. according to reuters, the proportion of u.s. loans 80% of face value, an indicator likely to fault over 1% in november according to an index smiled by s&p's commentary bonds looking to recoup some of
7:49 am
the losses they had in november, guys >> so we got that going for us it didn't blow up last year. along out for next year. >> i feel we have been saying that a few years, but who knows? >> cross our fingers, once again, thank you up next, christmas has come aiy gone, how does the suppl chn hold up? we will talk with an expert when "squawk box" returns
7:50 am
this is elodia. she's a recording artist. 1 of 10 million people that comcast has connected to affordable internet in the last 10 years. and this is emmanuel, a future recording artist,
7:51 am
and one of the millions of students we're connecting throughout the next 10. through projectup, comcast is committing $1 billion so millions more students, past... and present, can continue to get the tools they need to build a future of unlimited possibilities. . 2021 makes the year of
7:52 am
supply chain chaos, toilet paperer shortages, ships getting stuck in the suez canal and delayed shipments. looking ahead to 2022, though, we want to know if we're past the worst of this or there are more things to come. joining us is the ceo of thompson research group. this is the big question, have we seen the worst of it to this point? >> the short answer is maybe things are going to be meaningful better in 2022, there are a lot of steps to take in this situation and when you and i first talked about this was back in march of 2021. it was the tip of the iceberg. at that time we hath had congestions, delays were becoming the norm. costs were starting to skyrocket and then you were starting to seeable, too, which further exacerbated this situation so i guess the real question is,
7:53 am
where are we today what's changed and what's not changed? i guess when that stays, covid is still here. and i think what we have learned from this, it's just going to take time. along with that, you still have supply chain issues, whether it's cream cheese in midtown manhattan or microchips for auto plants in tennessee, we're still dealing with that. finally, the other bottleneck is drivers. they're getting products to the ports, you are seeing a shortage of drivers there are some estimates you nieto meet demand, it's 80,000 additional drivers just to meet demand >> katherine a part of the problem with this is there has been such incredible consumer demand like we've never seen in any downturn or pandemic before you expect that to continue in 2022 >> the jury is still out
7:54 am
in your previous segment, you were talking about mutual headwinds. one way to solve the supply chain issue is have a drop in math overall consumer balance sheets are strong you are dealing with the hidwinds of inflation. that will continue into '22. and you know i guess the other thing to think about, too, is as people have been dealing with government stimulus, that's also going away so we expect to see still a pretty good consumer going into '22. programs not as strong as you saw in '21 overall in the grand school of thing, i think we're okay. things will get incrementally better that realistically it will be the end of '22 we will not see meaningle of change. >> katherine, until you can't have as big a factor again as
7:55 am
the pandemic, that said, how much of a swing factor would be an elevation again in china and u.s. tensions if that materializes and also the energy crisis in europe, particularly the way it's taking up shipping capacity between the u.s. and europe sending various ships of lng over there >> yeah, well, you kind of hit the nail on two factors that would put the consumer in the backseat for us in the near term, we see covid and that's something that is workable and doable this is just a part of the progression, unfortunately, of the global pandemic. the real wild card as you said is on the political side we have issues both in russia and we also have issues in asia. both of those could create tension, particularly as a flow of goods moves from china to the
7:56 am
u.s. >> what's the best way for investors to play all of this, katherine? are there any kind of sub-sectors or companies that are overlooked by people that actually benefit from some of these issues >> there is a couple different ways to look at it one is from the cultural fomc, particularly so they do mobile units at courts, construction sites, all across the u.s., it is incredibly high cash flows, a very sticky pricing for those units, insofar as we have supply chain issues, insofar as we continue to have populations in southeast and southwest, demand for those products will do well. the other thing, this is worth a structural change and in the world in a post-pandemic world you can say that, is the value of inventory
7:57 am
just in time is that and you will structure in the suggesting case so the value of inventory has gone up exponentially, so you are seeing more and more companies carrying distribution companies carry inventory for countries. some of those names that own a variety of market capsize can be ferguson, a company that just went public last year. both of those play into both on the residential nonetheless and also the infrastructure side, you can go for a little more of a housing-type name, builders first source, beacon bcn and gms. >> hey, katherine, thanks for joining us today i guess if the solution of the supply chain is recession, maybe
7:58 am
we can look at the problems we have at the moment thanks for your time we'll see you later. >> thank you still to come, president biden gets ready to put his stash on the federal reserve with key personnel decisions on the way. we will ask richard fish hear what he sees from the central bank next year we'll be right back.
7:59 am
8:00 am
8:01 am
good morning, covid cases in the united states surging to a record high. yesterday's came in at nearly half a million new infections. details straight ahead stock futures pointing to modest gains this hour, we will get claims. facebook's spin strategy we'll talk to an author of a new report in the company's playbook when it comes to bad press the final hour of "squawk box" begins right now >> good morning, everybody welcome to "squawk box" here on cnbc i'm becky quick along with
8:02 am
wilfred frost. we got another hour. we can keep it up. >> looking forward to it let's check out it is equity futures at this hour there are some green arrows. remember, yesterday, the s&p set another new record this was the 70th record close of the year a. full 28% the stockmarket has been opened. the s&p set a new record the dow set a new record this morning, green arrows across the board the dow is indicated up 55 points, s&p up close to 7. the nasdaq up 35 points. the treasury has been something to watch, too. this morning it's trading at 1.529%. >> news out this morning johnson & johnson's booster shots demonstrated 85% effectiveness against the omicron variant in a study in south africa at the time omicron was the dominant strain there.
8:03 am
the company said separate masses showed a booster generates a 41-fold in neutralizing anti-bodies. meantime, covid case continues to set record highs, yesterday's case count bringing the seven-day average to 301,000 according to "new york times" data updated early this morning. it's the first time daily average cases broke the 300,000 mark u.s. cases are up more than 150% in the last two weeks. becky. >> meantime, jet blue said it will storm system u trim its schedule it plans to cancel 1,280 flights over the next two weeks this move comes as travellers face another day of mass cancellations. according to flight aware, more than 1,000 flights have been canceled today bear in mind, it's only 8:00 a.m. on the east coast
8:04 am
>> another rally moves on. the s&p logging its 70th record close of 2021. mike santoli joins us. a very good morning to you. >> morning, will yes, pretty much holding to form here, upside drip, lower volumes, really got sold out in this market tore a large degree with the latest 5% pullback, which actually did not conform november was weak because we did get that omicron scare also worth keeping in mind, september was another weak month. that was another thing the almanac would have told you, the seasonal tendencies did hold in that sense i think right now you are seeing a bit of tension release based on the worst fears out of omicron, still a little bit of a defensive leaning of investors right now into this latest phase of the uptrend just take a look at the consumer staples group. utility, healthcare have been big outperformers in september
8:05 am
it's hard to separate out the message of this, seeming like people are maybe handicapping the slight patch in economy or returning an economic cycle, separating that theme from the idea that laggard groups in december might have catch-up to do they have certainly been under performing those groups are up half as much as the s&p this year one other theme that's really familiar, washington, is, of course, the massive out performance of u.s. stocks versus the rest of the world that has widened out a tremendous amount. obviously, we can explain it with a hand. of factors, the huge domination of uniquely american megacap platforms that has boosted the s&p 3500 maybe there was more of an aggressive fiscal and monetary response here relative to other parts of the world the way the pandemic has rolled through other regions has also been maybe a little more damaging, because of a restriction. so big question for us allocated out there, is it still safe to
8:06 am
basically overweight the u.s. right now? there will be different opinions on that. the forces of catch-up and international diversification are still trying to make the case that that gap is actually closed. >> all i would say, though, mike, if it's asia that's really under performed, europe didn't do too badly the stock 600 was slightly better than the dow. up 22% not as good as the s&p whereas compared to asia or past years, where the u.s. has continued to outperform, it wasn't too bad asia down. the thing i was going to ask very quickly is what we expect of the final two trading days of the year it's a holiday period. high volume, low volume, what do we expect? >> you know, i think there should but a little bit of decent volume waiting for us at the very close that's more mechanical stuff
8:07 am
they said in recent years, the final two trading days of the calendar years has been on a net basis, slightly weak it hasn't added to further upside i wouldn't expect an extended flurry, i think the balancing of the portfolios probably have been done right now. as we were talking earlier, monday's rally at least gave a bit of a cushion for this seven trading day santa claus rally that a lot of people consider to be a beacon of what happens in january. >> mike, thanks so much. see you later. >> all right talk to you later. for more on the markets, let's bring in barry knapp, the managing partner at economics, let's jump off on mike's question, is this a year the u.s. should be overweighted, once again >> i actually took this question on, on the second of my three outlook reports the one that really i try and look forward to the whole business cycle and i
8:08 am
still think there is a very strong case for being overweight the u.s. in particular relative to what i call the export-dependent commission, will noted the u.s. has done much better than asia and in a lot of ways, he set the interview with me up really nicely with having an interview with katherine thompson earlier, who i have a great deal of respect for. she talked about just in case inventory management as opposed to just in time inventory management this is a theme i have been on since the mid-2010s, this idea we exploited cheap labor in asia all of that stuff had gone way too far. we were going to need to restructure global supply chains if you think of the outlook as a consequence of that we will be rebuilding the capital stock in the u.s., means stronger capital investment the mix of growth, moving away from consumption towards
8:09 am
investment is really good news for corporate profits, margins, productivity, and so i think this scheme will be pervasive. so to will's point to some extent i expect the first mover of the big export dependent commission likely to be germany in particular, getting murkel out of there would set them up for starting to restructure their economy like they did in the early 2000s to take advantage of the globalization boom now i think we'll move back the other way. asia is showing no signs of moving away from this merckantilist model. i think they lagged bely the u.s. is in a much better position i think the u.s. is in a position outperforming down. >> have with learned our lesson about this just in time for inventory? we push things to extremes, found out it didn't work all
8:10 am
that well, but i think a lot of companies have been tap dancing their way through this do you think we have learned our lesson and from now on we will change our ways? >> there was a pretty good economic case to -- that the economics had largely been mitigated just through economic forces all the way back in 2012. in 2011, there were two big supply chain shocks, the kwa great earthquake and tsunami and floods in thailand that shut down electronics and semi conductors we had the truck trade war and then the pandemic the longer the pandemic goes on and more that asia focuses on these zero covid policy and creates more inflation, more supply chain disruption, the strong ter case gets so, i think we've learned our lesson i mean, you've heard it from the former honeywell chairman, can i remember davos, a couple years ago telling you, we've gone to a locally sourced bottle
8:11 am
i think that will be pervasive even in the technology sector where the margins are fat. i think we will start moving away from that that will start to gain momentum in the 2020s, but, you know, that's been my view for some time and this pandemic was just such a shock, i can't see how companies would still continue to rely on china for, you know, for their manufacturing needs. >> you have a very good memory, whipping out quotes from interviews on "squawk box" two years ago. barry, let's talk a bit about what happens with the markets. we have now seen three years in a row of very good gains for the major averages dare we think we will get another one next year in an environment where we know the fed has been tightening? >> i was listening to scott yesterday trying to pin down his crew at halfway whether it's over or under ten. i'm sort of at ten i think earnings growth will be strong because of the capex people how i think that will play out,
8:12 am
something like 15% earnings growth we should be at some multiple contraction, in particular, in the first half of the year so when i look at monetary policy, liquidity tightening, from my perspective, monetary policy got to the point it was counterproductionive all the balance sheets acting as a drag on profitably and housing. we saw first time home buyers go from 33% of buyers to 26 financial buyers were crowding them out so the first point of monetary tightening will be economically positive and good for earnings, but it will be tough on marks at times. so i was thinking, okay, markets would rally around earnings season but then sell off around fed meetings that pushed over the first half of the year. the point of holdback returns somewhat i think in the back half of the year as earnings growth powers ahead and that mix of growth
8:13 am
shifts toward investment from consumption that will ultimately drive the market sort of decently, certainly nothing like the last two >> yeah nine or 10%, i would sign on line for that right now. you can't get paid, you can't get greedy, if you talk about 10% returns on top of what we've seen, that's a pretty decent return >> no, i would agree and i do think, kn though, it will be drn by the economic sectors, i have been in those for some time now. i think numbers, energy, materials and industrials should have really performance albeit the concern about the fed, you and i talked a bit about the fed shrinking their balance sheet, changing the sequencing around. that's good news for numbers at points, though, the market may get concerned about that i surely think that would be a
8:14 am
big net positive and so you know again we have this dynamic the fed policy is so easy, it was counterproductive. as they tighten, markets will get concern. the final story looks really strong because of this capital investment surging >> happy new year. i hope you get some time to do some skiing. >> we've had 3 feet of snow in a week two more expected by noon. >> oh. lucky you. okay enjoy. we'll see you soon >> thanks. >> enjoy, barry, happy new year. coming up, an update on two major legal cases in the business world we'll tell awe comes next in the elizabeth holms' trial check out microstrategy, it bought bitcoin for 90 billion in cash they own 124,000 bitcoins.
8:15 am
the bitcoins are stabilizing, rlter falk back below 50k eaier in the week. 47.5k at the moment. you need to hire. i need indeed. indeed you do. indeed instant match instantly delivers quality candidates matching your job description. visit indeed.com/hire
8:16 am
8:17 am
8:18 am
an update on two major legal cases in the business world, first up, the criminal fraud trial against theranos elizabeth holmes deliberations are set to resume monday morning and a bankruptcy judge extended temporary opioid lit giegs for the sinclair family, the owners of purdue pharma earlier, a judge overturned the settlement that provided the family a legal shield. when we come back, we got facebook's spin strategy we will talk with authors of the new "wall street journal" piece that reveals the playbook when it comes to bad press. that's next. former dallas fed richard fisher will talk to us about ate expects from the central bank in the new year "squawk box" will be right back.
8:19 am
8:20 am
8:21 am
new research showing the younger generation is not as interested in the same financial advice from their parents. >> from building debt, they want to have a partner. they're looking for someone who will go through the goals with them >> they are someone who will relate to a financial adviser who has a strong social media presence > . welcome back let's talk about facebook and their pr and media strategy and the "wall street journal" series the facebook files reported on facebook's playbooks when dealing with bad press, quote, stem the leaks, spin the politics and don't say sorry end quote. joining us now is one of the reporters exemily glazer "wall street journal" business reporter thanks so much for joining us on this topic and reading the article and your reporting it,
8:22 am
it suggestss theybook tried to divide lawmakers as much as possible down party lines, if necessary, on a topic that otherwise perhaps could have been something that unified them >> indeed, will. it's good to see you that is exactly what they did the day after facebook went lower, frances hogan testified in early october the facebook washington team started working the phone. they were calling republican lawmakers, advocacy groups and really their goal was to try to divide lawmakers along party lines. they're hoping more legislation won't get passed >> and was it effective? >> time will tell. but i'm going to say no i spoke with senator mike meek's office. he is the leading republican on the anti-trust subcommittee and a member of the consumer protection committee that brought frances haugh gen the
8:23 am
whistleblower to testify the documents speak for shemanski e themselves she has impacted lawmakers and especially their focus on legislation that protects children from social harms on social media, part of our series shows that instagram has impact and harms teen girls especially when it comes to mental health and body issues. that's something lawmakers have latched on to. >> was it that surprising that they would do this is this not fairly common practice from companies of all sectors, not just social media >> i think whenever any company is in the crosshairs, the lobbyist, the policy team will try to spin what they want what's unique here is that facebook is trying to do it from all side they were telling republicans that, you know , that this coul
8:24 am
hurt them. we saw them make allegation run by their policy team who is making some of these calls and then literally a day or two later we saw several allegations pop up in the daily wire, the spectator and facebook was trying medical science and apparently going to democrats and saying that you know this could impact them as well. companies do try to spin this was on a new level at least what i saw from my more than decade of business finance reporting. >> so it could be a lot of spin going on, emily. what does your reporting tell you about the extent to which the name change to meta was a part of that spin and distraction? >> well, look, they need that name change, they made it after there have been already some congressional hearings
8:25 am
this is something that we've seen in the past google is now as a holding company alphabet so it isn't a brand-new idea it has confusion even when reporting, meta, facebook what do we call it? anything that takes the attention off of the company is something that ultimately can help the company and a key part of our reporting from this story is that ceo co-founder and chairman mark zuckerberg who holds the most power at this company is very focused on the metaverse and bringing the company into the future of the internet, not stay focused on his messy past and not apologize for anything going an and four congressional hearings, bipartisan investigation, investor who's are angry and some users who are frustrated. so i wouldn't say that's not nothing. >> for sure. i still question exactly how much was new in frances haugen's
8:26 am
whistle blowing conference it was something we had known about for a while and added a bit of fuel to that fire rather than starting a new one. pivoting a bit you mentioned zuckerberg and his resolute stance on all this, the leaders, do they disagree with him in the company or are they all on the same page >> well, like i mentioned, zuckerberg is co-founder/ceo and chairman he is roughly 58% of the voting power at facebook and this is a ceo and chair who really does control the company. the numbers prove it as well with those dual class shares and voting rights that he holds. he reported on a recent gathering of board members at mark zuckerberg's 1,300 acre estate in hawaii in early december the board often gathers here it's their annual retreat. they were talking about, you know, the documents that france es haugen put out. i would add it added fuel to the
8:27 am
fire and proof of the harms of what facebook, what some of its platforms have done and show what the company has or has not done they also talk about the regulatory issues, facebook is under a time for information they came out from the facebook files and anti-trust investigation and they talked about how to move forward into the metaverse. they're broadly supportive of mark zuckerberg. i would add, a lot of board members that didn't agree with mark zuckerberg, don't support him. >> emily, good to see you, thank you for joining us >> thanks, will. when we come back, we got breaking economic data we will be giving the latest read on jobless claims, a couple minus teaway we will bring you that data and the instaptd reactions straight ahead. >> (soft music)
8:28 am
8:29 am
hey dad, i'm about to leave. don't forget your hat . good morning. how can i help? i need help connecting with my students. behind every last minute save, ok, that works. and holiday surprise, thank you! a customer service rep is working unseen,
8:30 am
making it happen. and at genesys, we're proud to help them help you everyday. . welcome back to "squawk box. breaking news, rick santelli here live at cme hq. you don't want to miss this. initial jobless claims, it's 10,000 shy it's an awfully good number that remind us we are going back into
8:31 am
the late '60s to see numbers much lower than this here's the big news today, continuing claims drops to 1 million 716,000. why is that a big deal because if you look at the month of february pre-covid, february 2020, the range for that entire month of continuing claims was is million 705,000 to 1 million 730,000. this number is right there so it is a post-covid low and it puts us in the same zip code as pre-covid. that is a rather large accomplishment, unplugging and replugging the economy the politicians think we ought to thank them. but there is an awful lot that just happens when you unplug and replug and we're back into that zone. now, we did see some rather large revisions, actually, i'm being a little facetious, very small revisions. last week the 205,000 initial
8:32 am
claims moves up 1,206. on continuing claims, 1 million 15 turns into 1 million 856. having said all of that, we know holidays present special problems for calculating do you that especially on the claims front, so there may be some distortion due to the holidays we'll take distortion wherever we can get it. back to you. >> joining us to talk more about this, the chief investment officer at the advisory group and cnbc contributor peter, good to see you happy holidays to you. what's your take i guess on this data but how it adds to is overall jobs picture and whether it implies the feds should be moving faster or not in. >> it's reflect labor shortages left and right and claims, companies are holding on tight
8:33 am
to their existing employees and desperately searching for more they are referring as rick pointed out the numbers, the continuing claims component, which is delayed by a week in reporting is back to where it was pre-covid. now we have still more jobs relative to where we were in february 2020. but at least from a case of the pie standpoint, a case of firing standpoint, we're back to where we were pre-covid, showing the tightness in the market, now reflected in much higher wages >> i know, peter, you are a believer in inflation persisting for longer than others, accept maybe not at the peaks we are seeing, nonetheless higher than it should be what percentage or likelihood do you put of stagflation, something of the really also comes alongside derailing the economy? >> i think it's a high risk. we saw doubts of it this year. we have, because of the lack of
8:34 am
supply of orders, we have a recessionary level of -- we had a recession level on auto sales in 2021. we will do about 15 million, sorry, 13 million of auto sales this year relative to the 16-and-a-half 16.7 for covid, fought for a lack of demand, but a lack of supply it is the stagnation-type, different than settings. so, it's a fluid definition their way. i think sticky inflation, moderating growth and interest rate and fed tightening along with bull tightening is the biggest challenge for 2022 >> you have a couple interesting ideas, peter, about how people should play some of the themes next year. one of them is macao casinos >> i do think that, i am hoping after the olympics, china relaxes some of its strict covid
8:35 am
protocols and restriction. and macao is the los vegas with people not just in that in china but obviously in that entire region these stocks have gotten hammered they're incredible properties. this is the los vegas of asia and if someone is looking for value in an area that's beaten up, this is one of them. >> what chance, though, do you put on that being growth problems internationally in general, china, asia and europe and the level to which that could hurt u.s. equity sentiment next year? >> well, in a way, there has been much more restrictive policies in response to covid in europe and asia. so if omicron hopefully is the last leg of this, in terms of influencing and being a force in our lives, there is a lot of recovery potential in asia and in europe relative to the u.s. so, to me the biggest risk for u.s. markets is how they respond
8:36 am
to fed tightening. not just fed tightening. there is monetary tightening going on around this world particularly with the big ev banks, ecb, bank of canada, bank of australia, the last to tighten. >> do you think that the feds will continue to tighten even if the stockmarket does pull back significantly? will they stay focused on purely what their mandate states on economic factors or will they get spooked if we see a 10-to-20ples pull back i think you asked the most relevant question, what will the fed do in in response to tightening, we had more decline as you mentioned and inflation rates are high will they be committed to dealing with liquidation my gut over what we've seen is that financial conditions are their third mandate, they will try to initially extend the s&p 500?
8:37 am
>> and so will your expectation, therefore, are they we don't get a big correction because they've tightened, only a little bit around the margin >> i think the fed is going to tighten until something breaks and that has been history they tighten until something happens. we saw that in 2018 we saw in qe1 stockmarket fell and not soon after, the fed gets spooked and back up. this time around because inflation i believe will remain sticky, it will make their job of backing up much more difficult and possibly that the strike on that employee is further out of the money into the otherwise inflation was lower. peter, thank you so much for joining us. when we come back, former dallas fed president richard fiber will be talking to us about the central bank's
8:38 am
commands to hike interest rates as inflation looms large on the economy. that's next. right now as we head to a break, check out shares of tesla. the national highway safety administration saying the company will recall more than 350,000 prius made between 2017 and 2020 because of the issues with the rear view cameras tesla will recall close to 120,000 s-cars over issues wh e unk.it "squawk box" will be right back.
8:39 am
everything you've seen me do was made possible by what you don't see. cause when you're not looking, i go to work. ♪♪ strength isn't a given. it's grown. it's earned and tested. ♪♪ we all have the strength to see what's possible. it's up to us to unlock it. tonal. be your strongest.
8:40 am
8:41 am
welcome back to "squawk box. the grocery chain board of directors approved a $1 billion buy bang we're up 1.6% in the pre market, becky. >> that's right. in the meantime, the fed has several major challenges ahead in the new year. according to cnbc's quarterly stock report, investors are worried more about inflation than the fesd raising rates than covid. joining us for what's awaiting j. powell in 2022 is richard fisher the former dallas fed president is a senior adviser to bar delays and serves on the boards and is a cnbc board contributor, too wlet talk about this correct me if i'm wrong, this feels like the most important
8:42 am
time we've had in the world of central banks. >> i think we're in for a change of direction which is evidence, it creates some concern and volatility. is i think peter was correct in the sense that the feds got a very tough road to navigate here they have to deal with the inflationary pressures programs a little weakening of the economy. but they also have to be conscious of the fact that financial conditions have to be stable it's going to be a very, very tough, tough decision to make. they're moving in that direction. they've telezoepd it's coming. now it has to be discounted in the way investors behave >> richard, we have been talking all morning about the inflation and supply chain issues. it keeps coming up one cure
8:43 am
would be if consumer demand will be strong. that could happen. how does the fed kind of walk that tight rope and try and do this without pushing us into a deep recession >> first of all, even though we've had a little weakness in december there is a good dynamics i am hear in texasf here in texas in a 30 million base and jobs slow down a little in december so we got a lot of momentum going we will probably have a bit of a pause in the first quarter and should resume our growth in the second quarter, so i don't think that's the risk right now, becky the real risk is not so much
8:44 am
supply chain driven around goods as it is the cost of labor workers have power and how you digest this is without increasing an inflationary spiral f. you go to any corporate release of earnings, everyone is talking about protecting their margins and the actions they will take on price in order to cover the lack of productivity they are seeing by not having workers with skill sets i don't think this goes away in 2022 i am of the view this is going to last for a year it will have to offset there is room to offset it with monetary policy because the underlying economy is strong >> there is room to offset inflation, which is clear, what we're talking about with some of these actions. you know, if you think that this is going to be a problem that persists beyond 2022, we will be
8:45 am
talking about this year. when we talk about what's shaping up for the breaking point for where inflation becomes a serious problem? >> well, it is a serious problem. we've settled in well above the 2% plus. you've seen chairman powell's word transitory and everything is transitory. the question is how long lit last i am under the school, it will last significantly and there will be a residue. again, remember, there is a bias towards labor's power. then you have the administration's policy, very much leaning in that direction pro union. union-type contracts a lot of adding to price pressures in terms of costs of business and the way they operate. i don't see that going away.
8:46 am
as long as this administration is in power. as long as workers have the ability to negotiate for jobs. which is good for them it has to be offset. the way companies offset sit to take price for goods >> sorry i was going to ask how significant do you think the regulatory pendulum for banks is likely to swing back over the next year or two >> well, look at who is being disappointed almost every regulatory agency this is again a change in direction under the trump administration you had to register the federal register. this administration wants to accelerate the rate of growth and regulate more. whether that's good or bad is not the issue. the issue is how do you offset that if are you a business in terms of the costs factor. again it diminishes your margins. how do you make up for that?
8:47 am
>> you do it by price or reducing your head count the point is, this is an inflationary pressure that comes through the regulatory regime. >> there are a lot of stockmarket watchers that say the surest way is for the fed to make a case simple what would it look like in this scenario that we are facing? >> the market says it could be the fact that there were people before every that i don't think they will move off the balance sheet growth i struggled with q326789 i voted against qe3. i know the kind of pressure that they're under, because one of the reasons we did qe2 was to
8:48 am
continue to offset with market weakness and that's a balancing act you are trying to achieve at the table. some people want to swallow that the economy still proceeds with the goals that we're set out to do make sure we have optimal if not max million growth but when you are at the table and the markets start to get volatile, you get nervous. i was going to eat that most members were not. >> the fed, what i mean, in this scenario, what was the major policy in this step be raising rate too quickly or not raising rates sharply enough and soon enough in the face of hotter inflation what's the better move >> i would be in the latter camp, not moving to me would be
8:49 am
a policy error but there are other who's worry that they might move too aggressively and create a market infection as to the economy and slow things down by virtue of a psychological effect this is not the easy job eighth tough one they do the best as they k. it's tough to negotiate this is the kind of debate no doubt going on at the table in the next meetings going forward in 2022. >> the fed is changing a lot new voting members will be filled, too. where do you think the event of this fomc will be, the ones that vote this time around? will they be more in the camp or more in the camp of they want to wait and see >> i think they're going to be cautious here. again, they've declared their direction. it's a change in sign. they're moving toward less accommodation and they're going
8:50 am
to want to make sure they do it properly i don't see that changing with the vote we'll see what new members are brought on board by virtue of decree the senate has to approve these folks. that will take some time i think the existing committee will proceed along those lines they declare i don't see that changing. and i think the market's just down. >> how would you describe yourself just in terms of your own kind of nervousness watching this, as somebody who is a watcher of the fed, a former fed member and somebody who watches the marks, too, as you head into 2022, how are you feeling? >> actually, here's my motto for 2022 i'm going to think positive and test negative, becky that's how i look at it. okay we have a dynamic economy. we are the leading economy of the world, going back to your previous interview with peter, the europeans are stagnant
8:51 am
china is slower. we lead and, therefore, the dollar has stayed fairly strong. i don't see that weakening our fixed income instruments are attractive, negative yields and i think the u.s. is in a pretty good position, as long as theed a might have been straf fiat doesn't destroy the diana michi -- dy dynamism significantly the expression anti-business is not getting their way. that's a good thing if are you pro-business and we'll see what the bi-elections as we lead up to this period in november what happens in the house and the senate and if, indeed, they have changed their power, then that will be a good him for the marketplace. so i'm pretty optimistic, becky.
8:52 am
>> we will think positive and hopefully test negative. richard, thank you. >> happy new year, becky, happy new year, washington, thank you. and to you, too. coming up, moderna shares have lost more than a third of their covid says i c onch dhave surged. biteown 30% or more just this month, we'll be right back. and a follow up. and a “did you see my email?” text. orrrr... you could see her status in slack. and give lisa a break while you find someone online who can help. slack. where the future works.
8:53 am
who can help. ♪ ♪ ♪ digital transformation has failed to take off. because it hasn't removed the endless mundane work we all hate. ♪ ♪ ♪ automation can solve that by taking on repetitive tasks for us. unleash your potential. uipath. reboot work.
8:54 am
8:55 am
[ music playing >> we've got an update right now on the global chip shortage. two major manufactures are warning a lockdown in the city of xi'an could affect their area they are in response to a covid outbreak micron says it could lead to a delay of chips widely used in
8:56 am
data centres samsung said it would temporarily adjust the reason, the manufacturer/memory chips smartphones and other technology gadgets. will, i don't know if you saw the footage over the week or any of the coverage of it. just some of the shaming that they were doing in china of people who had broken covid rules, kind of marching them around in full-on head gear and full body suits to try to shame them into behavior it does leave a lot of questions what will happen when the olympics are out there in less than two months. >> yes what will happen to their economy. one imagines the olympics is why they are taking a heavy-handed approach despite the data everywhere else being fairly encouraging about this variant and okay here in the u.s. halfing the u.s. incubation period whether it's the china internet names, there are pains in the
8:57 am
stockmarket in china and in year-to-date that stock market hardly posted but for year as a whole. covid cases continue to surge here in the u.s. yesterday's case count his 488,000, bringing the seven-day average to 301,000 according to "new york times" updated over the last hour or so. that's a new record, the first time they broke the 300,000 mark u.s. cases morphed 150% in the last two weeks hospitalizations are up 14% over that time but remain, of course, below january in september of this year. the omicron wave they believe will peak in the u.s. by the end of january here's what he had to say on closing bell yesterday >> doctors say it certainly peaked pretty quickly in sack. it went up almost vertically and turned around very quickly i would imagine given the size of our country and the diversity of vaccination versus
8:58 am
non-vaccination, that it likely will be more than a couple of weeks probably by the end of january, i would think >> dr. fauci also defended the cdc's decision to reduce restrictions for people who test positive from ten days to five days of isolation. >> we need to keep society rung in the sense there are many other deleterious effects, health wise effects, if society is crippled in the sense of being functioning to keeping critical things going. so in order to address that, they looked for a balance between what is safe and scientifically based and what could get us to keep society running? >> dr. fauci also said the supply tests in america will get much better in the first few weeks of january, becky, as we discussed earlier, we discussed with him that messaging points on vaccines and how they should
8:59 am
have been framed in the first place to the primary reason for existence was. i thought our conversation with democrat patel was interesting. she was being much more forthright of suggesting it was misdelivered in the start of the crisis >> she made a point of how, look, if you want to be safe about this, you know, fauci said that this is between being safe and following the science and making sure we keep the economy moving, nobody is contagious after five days. you understand the needs for critical workers and this came with the constraint of saying you need to be masked. there are serious questions who will mask properly in that irmt 52 she brought up just the idea that people need to be pretty village lapt about this still and that she would prefer if
9:00 am
there was a test at the end of it even and at-home test to show you are not picking up anything more at that point pretty good advice we get the chance to talk about this tomorrow, will, you will be right back here in >> drnly looking forward to it >> i love the pinstripes see you back here tomorrow right now it's time for "squawk box" on the street [ music [ music playing >> good thursday morning, i am scott walker, carl, jim, david, they all have the morning off. let's look at futures now. we set up for one of the final trading days s&p opposite higher, nearly seven. dow is going for the sempt day in a row to the upside the s&p 500 notching its 70th record close of 2021. it looks like it will add to that the nasdaq is higher nearly 14

106 Views

info Stream Only

Uploaded by TV Archive on