Skip to main content

tv   Squawk Box  CNBC  November 17, 2022 6:00am-9:00am EST

6:00 am
collapse of ftx. we have a live interview with the ceo of binance two initials cz it's thursday, november 17th, 2022 and "squawk box" begins right now. good morning welcome to "squawk box" here on cnbc we're live from the nasdaq market site in times square. i'm rebecca quick along with joe kernen and andrew ross sorkin. we see things turning around dow futures off 163 points nasdaq off by 62 s&p down 21 points this comes after the down day yesterday. retail sales numbers yesterday were better than had been expected from the government that has some people questioning whether the fed will be able to pivot or not
6:01 am
we will get additional data from jobless claims look at the treasury market. yields, the 10-year treasury at 3.742% well below the 4% we had seen in recent weeks nbc news projecting the republicans to take majority control of the house the estimate is republicans winning 221 seats to 214 house minority leader kevin mccarthy will get support to become speaker the full house will vote in early january. president biden expressed a willingness to work across the aisle. uk finance minister jeremy hunt will deliver the autumn statement today. expect announcement of slew of cuts and tax hikes economists are expecting a bleak forecast for the uk economy. it comes after the bank of
6:02 am
england projected the uk is at the beginning of the longest recession on record. joe. >> not here. retail sales numbers. now to the latest around the collapse of ftx. the now bankrupt crypto exchange is looking to distance itself from the former ceo sam bankman-fried saying he has no affiliation with the firm and does not speak on its behalf that statement comes after sam bankman-fried has been trying to explain his side of the story. one tweet at a time saying he and ftx became overconfident and careless we will hear from another player in the story binance ceo cz changpeng zhao we call him cz that is at 7:00 a.m. eastern i don't know what he can say. >> he said a lot he was speaking overnight at a conference >> he got a good look at before
6:03 am
everything imploded. he got a good look at the situation. >> some say he caused it >> i think no way. this was -- did you think it was poignant a lot of people worked for ftx and thought they were changing the world. >> i think what was fascinating. >> it happened so fast >> they were changing the world. now he says in the text messages that we'll talk about later that it was all bs. i don't know if you saw his comments about esg and trying to sort of draped himself in the flag of altruistic >> he is a sociopath >> don't you commend him for actually admitting the emperor has no clothes >> he has no clothes >> just in general >> again, you know f, if the dms
6:04 am
are to be believed >> you got to be kidding me. >> he was genuinely not just comingling the funds, but never oddly mingling the funds they never moved people sending money to alameda as if it was intended for ftx and never leaving alameda. >> what about suing celebrities that were part of it does that go anywhere? trying to sue the people like larry david. >> that is going where the money is you will not get your money back through this it will be wrapped up in bankruptcy for a decade. >> it will be hard >> when we talked about mann you say this is not necessarily true everyone was made whole? >> everyone was. >> what is the chances that
6:05 am
happens again? >> zero. >> that's bad. >> the money's gone. >> crypto heaven >> either it didn't exist. a combination of it did not exist. some of it didn't exist and some traded away and lost. >> some employees -- >> it looked like they had it in other places >> they had all of the money in ftx and it is gone some of them thought they were worth hundreds of millions of dollars. >> no question >> now nothing that would be regurgiregurgitatd >> it is surprising so many did not realize anything was wrong when you consider how loosely. >> remember madoff do you think the son >> in this case, i want to say
6:06 am
similar between 4 or 5 or a 12 of people. they were running an exchange. i think they thought they were running the exchange why they thought that exchange was worth that valuation is different. what we are talking about is the valuation of all those people who thought they were worth hundreds of millions based on the idea that ftx was worth $40 billion. that was the conundrum that was the problem. >> it must be easy to believe that when you are there and happy. he seems so charismatic. >> the madoff thing was different. that was a private company you should have known there wasn't enough money to actually literally hand out in this case, they were not handing out money to people. they thought the valuation of the stake in ftx was worth a lot. >> novogratz said he did not
6:07 am
know where he was getting the money. >> questions of where is he meaning sam making all of this money that is supporting the valuation. that is what we are really talking about. >> novogratz was saying he was putting out money to acquire other companies and giving to democratic candidates and beyond where is he getting the money? he thought about it at the time. in hindsight, it is huge. >> the business would not generate that. he is not running a similar business, but he could tell. that reminds me of the old bernie evers days. can they really be that good can they really be turning in these numbers? no, they couldn't. they weren't tesla. change could be afoot at tesla and twitter. james murdock said elon musk has
6:08 am
identified someone as a potential successor as ceo of tesla. meantime, musk said he expects to reduce his time at twitter and eventually find a new ceo to run that company a hard core one, i guess just not right now we are watching shares of nvidia the company came out with earnings of 58 cents a share that missed expectation of 69 cents. revenue beat expectation of $59 billion. the guidance came in below the street, but said it is looking for gross margin to recover. nvidia said it spent $3.75 billion on share repurchasing during the quarter that stock up $ 1.8%. you have shares of cisco revenue up year over year. it beat the guidaguidance
6:09 am
the cfo said it due to the easing supply situation. here is chuck robbins last night on "mad money. >> it was the second highest order in history eclipsed by the quarter a year ago given all of the backlog we have, we are pleased with the demand that we see from customers and our teams and p supply chain have been working their tails off the last two years. we are seeing the benefit. >> that stock is down 27% year to date. it is up 3.1% this morning when we come back, as amazon layoffs continue, the company is offering volunteer buyouts to some workers we have details next. later this morning, starwood capital barry sternlicht will join us. we will see what he thinks after the latest data releases we have
6:10 am
seen you are tcngsqwkwahi "ua box" and this is cnbc >> announcer: this cnbc program is sponsored by baird. visit ♪ ♪ mercedes-benz is turning electric... completely... on its head. bringing legendary design... and state-of-the-art technology... to a fully-electric suv. the all-new, all-electric eqb from mercedes-benz.
6:11 am
(vo) verizon small business days are back. and there's never been a better time to switch! get our best offers of the year on business internet. help your business stay ahead with the reliable connection your business deserves. book your appointment today. and switch to the network america relies on. verizon.
6:12 am
6:13 am
xfinity rewards is a program whose sole purpose is to say thank you with experiences big, small, and once in a lifetime. sometimes it's about cheering hard enough to shake the stadium. let's go! -haha, woo! sometimes it's as simple as movie night right here at home, on us. you mean the world to us. so we're bringing you closer to what you love. kinda like this- welcome to 30 rock! join xfinity rewards for free on the xfinity app today. our thanks. your rewards. update on cost cutting measures at amazon they are offering buyouts for p employees. voluntary offers were sent out
6:14 am
the last two days to employees in human resources and employee services according to the internal documents reviewed by cnbc that said amazon would provide a lump sum severance of three months pay they will be given a weekly st stipend for cobra payments joining us to talk about tech layoffs and potential buying opportunities is mark maheney. mark, a pleasure to see you here in studio. >> good to be back >> let's talk about what you are seeing what does it add up to >> covid winners are covid l losers the covid crisis with advertising and facebook and google and retail names overextrapolated from demand in covid crisis and now going into recession. they have a double whammy. they have to bring down the cost
6:15 am
to match the revenue space you will have it facebook and you will get it with google and amazon is talking about it amazon acknowledged this earlier in the year. you will have low single digit layoffs. the target results from yesterday gave you more evidence of that. >> are they doing this to the right extent from the investor perspective? >> if there is a modest recession? yes. severe recession no there will be more cuts necessary. amazon to their credit is a cos conscious company. i would put facebook at the lowest end of the tier and amazon off the highest end it is rare that you see amazon overhire or overbuild. this is a rare opportunity where it happened. they are having to adjust.
6:16 am
>> advertising has been hit hard you were pointing out it starts on cloud and you know it is a bad situation. >> yes i think that is true what will happen to advising next year? we think in the u.s., we are down mid single digit percent. that is all advertising revenue and spend globally it could be down high single digits that is assuming a modest recession. in that case, digital sizing is flat that is the growth from names like google and facebook surprisingly, of those three big companies, i think it is most of the valuation for meta that is why meta is one of our top three picks. >> what are the others >> netflix the biggest product cycle with the launch of business with ads that came out. the $6.99 offering that came out three weeks ago. we think based on the report we did this morning, we think there
6:17 am
is good traction i like the service i like how they integrated ads and and uber at the beginning of the crisis, they had cost structure slashed. they come out of covid and come into recession, they are lean and mean they don't have the excess costs to cut >> with netflix, the advertising option, are they getting the numbers they were hoping for >> way too early to know they probably will step back. netflix offered 220 million users worldwide. i call them prime users. households that are higher and massive engagement an hour or two a day if you are a brand advertiser, you want reach and frequency netflix gives that to you. it is not like it is social media. what content is my ad showing?
6:18 am
if you don't want to go next to dahmer, you don't have to be it is brand safe massive reach. it is a brand advertiser's dream. >> will they have to give away more netflix will tell you the numbers they want to tell you. you don't know what is happening. as you go to the advertising model, you have to open the komono a little. >> they have never told people the number of basic customers is and the number of premium subscribers. they view the ads business the $6.99 basic with ads is another offering i don't think they will disclose. >> if i'm an advertiser, i want to know more before i pay the rates you are asking >> you may be right. maybe in a year or two those brands and we looked at premium travel brands and luxury brands on there. you want to be the person or company that is sponsoring "emily in paris. they don't have to give that
6:19 am
inform information. in a year or two, they may have to the ad revenue is there, not for granted, but strong opportunity they will get that if disney plus can get $1 billion in the first year, netflix could. >> who would advertise on dahmer no, no >> i'm not going to say. >> everybody watched that. or part of it. >> i didn't. you told me enough i don't need to hear anymore >> i can't un-see certain stuff. >> it was popular. the second most popular show on net netflix. this is a sad commentary not my call. >> there are companies that would not care they would advertise on that don't you think? >> there are plenty of options on netflix >> not really. not for me i'm still -- >> how much is pre-roll and in
6:20 am
the nterface other interesting ways to start to advertise you like to think using this platform. >> they are doing about 4 to 5 minutes of advertising per hour. that is half what you see on lineal tv. most of the ads of the sampling are pre-rolls and cut you off halfway through. it seems like a normal lineal tv experience the ads, i don't find them to be relevant or irrelevant than i typically see. you have reach and frequency nobody else has. it say rare opportunity. you have seen a lot of advertisers sign up. >> online travel airbnb and bookings. they have already dealt with the pain >> they dealt with the cost pain here is the challenge. this is the summer of travel love
6:21 am
the demand that was out there for travel has been pent up. we have not seen slowdown. you talk about the airlines and lodging companies. what investors are saying is yeah i don't want to buy a company that hasn't confessedsoften. at some point in 2023, the shoe will drop. until then, the average they have is if you are a long-term investor, the cost structure was cut at the beginning of covid. >> everybody is down 50% you think there could be more pain to come when this reckoning comes about the slowdown >> i find it is -- think about the 11,000 people who got laidoff at meta. they all canceled vacation plans. that's the first thing that gets cut. i worry about the demand i think what investors will see companies do as we go through 2023, who can defend the bottom line who can defend the lean bottom
6:22 am
line there is a high margin business and notintensive online travel is a good business booking and airbnb and expedia >> thank you, mark coming up. shakeup at cbs we have details on that next. and later this hour, we take you to austria we have the interview with the ceo henrik fisker. "squawk box" returns after this. >> announcer: squawk picks is sponsored by wisdom tree the modern alpha pioneer
6:23 am
6:24 am
6:25 am
6:26 am
welcome back to ""squawk box. the two leaders at cbs leaving paramount global stating two top executives will be leaving at the end of the year. we're starting to see layoffs across the media landscape. more fallout over taylor swift tour ticket fiasco lawmakers and activists renewing calls to split ticketmaster and live nation which merged in 2010 saying the company is a monopoly some are calling for the justice department to get involved the tennessee attorney general is investigating ticketmaster for possible anti-trust violations the problems with the taylor
6:27 am
swift ticket launch could be an indicator that there is not enough competition in the market live nation shares and phenif h phenomenon that is -- i guess you can find a few people in history -- you release something and get the 10 of 10 of the top ten songs. there is a concert coming up, andrew i'm monitoring tickets >> it's in may here at metlife? >> yeah. how do you know? >> i have children >> i do, too my children are young adults >> make the quicks and kernens and sorkins should see taylor. i think that's a plan. can we schedule it is it a weekend or weekday >> weekday >> i don't know how -- i know her father i asked how did you do that. i know him how did you do that?
6:28 am
the song writing ability and the whole package is just sick she's going to be a billionaire. >> totally >> i should say, by the way, although my kids love her, i love her, too. >> so do i it's across the board. >> totally coming up, henrik fisker joins us to talk about the company's new electric suv live from austria i saw a rivian go by and i laughed. i chuckled yesterday they're so happy as cars >> they look good in person. >> they're cute. they're smiling. hi hi, thomas the tank. and barry sternlicht will join us as we head to break, here is the look at the s&p 500 winners and losers >> announcer: executive edge is
6:29 am
sponsored by at&t business at&t 5g is fast, reliable and secure but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.
6:30 am
6:31 am
6:32 am
welcome back to "squawk box" live from the nasdaq market site in times square. checking the futures they were up earlier 172 on the dow down from yesterday. a firmer tone as some indication that there is positive data points with inflation. shares of bath & body works soaring. the company earnings of 40 cents a share doubled estimate revenue beat the full year forecast the guidance was in line with street expectations and the stock has been under a bit of pressure in the last year. up 23% today shares of china gaming giant netease. ended 14-year deal with
6:33 am
activision blizzard to distribute world of war craft. agreement could not be reached netease is behind tencent in china. meantime, the healthcare sector may not be the first place you think of for dividend opportunities, but do you still go hunting for the yield in the sector dom chu has the sectornomics >> dividend yield for that healthcare sector overall. many are the mega cap names we know health care this time around this year has been an out performer versus the broader market look at the healthcare dindustry it is down 5% versus 17 for the broader s&p 500. that gap has gotten wider as the year progressed. there has been more out performance in health care
6:34 am
where you can find the dividend yields, we decided to run a screen for the 64 components overall. 64 stocks on the s&p 500 with a dividend yield of 2.5% if you take 64 stocks and put the screens on there, you get 7 names that pass the screen as for what those seven names are? here are the top ones. i can't put them all on one screen look at abbvie positive year to date returns. gilead 3.5% return. bristol myers and same with merck and amgen. these are the top five that are positive on the year to date basis and dividend yield of 2.5% if you want to look for any dividend yield with the same parameters those 7 stocks go to 14.
6:35 am
if you are curious, andrew, what the 14 stocks are, head to my twitter feed @thedomino. i posted the yields for you to p peruse >> i am perusing i'm going there as we sp speak @thedomino thanks, dom. we go straight to austria with the first fisker suv rolling off the production line. we have the ceo next. and barry sternlicht will talk crypto and more the ceo will be with us at the top of the seven back in a moment >> announcer: currency check is
6:36 am
sponsored by interactive brokers. the professionals gateway to the world's markets.
6:37 am
thanks to avalara we can calculate sales tax on almost anything, anywhere, automatically. avalarahhhhh. what if tax rates change? ahhhhhh. filing sales tax returns? ahhhhhh. managing exemption certificates? ahhhhhh. business license guidance? ahhhhhh. does it connect with accounting? ahhhhhh. item classification? ahhhhhh. cross-border sales? ahhhhhh. what about? ahhhhhh. ahhhhhh. do you have those budget markups? thank you. mmhm. [bubbles]
6:38 am
welcome back u.s. equity futures at this hour have been sinking. dow futures off 215 points dow down 28. nasdaq off 24. let's go to austria where the fisker suv is rolling off
6:39 am
the assembly line. we have phil lebeau with more. >> reporter: a big day in austria here in graz we have the ocean which is behind henrik fisker ceo of fisker. you are starting manufacturing today. a lot of people are skeptical of the asset light approach you believe this is proof it can work >> i believe it is we are standing here with a ton of course off the line we hit start of production as we promised a couple of years ago after going public very exciting day. i think the proof is here. >> reporter: deliveries start in the u.s. and europe next year. you have over 60,000 reservations you can ramp up production as quickly as you want? >> we have 63,000 reservations we are planning for 42,400 cars next year. that is a dramatic thing for a startup. >> reporter: when i talk to
6:40 am
executives, they admit the challenges other automakers face the supply chain it is not strong for the auto industry worldwide does that give you pause >> it is true. supply chain is the difficult part and it could produce more cars if the supply chain could handle it if you look at the ramp up, we start with 300 cars in q1 next year that is not much, but we go to 8,000 because we feel the suppliers are with us. if you give the suppliers the time and spend enough time with them, we can bring them along. >> re >> reporter: the first model is here and the next model is the pear in lordstown, ohio. what you can apply >> the earlier you can plan with suppliers, the better.
6:41 am
the second thing is build to manufacture. we do that here and we will do that with the next car we involved the manufacturing chief and his group into the development of the vehicle from the very beginning that is the most important thing because we want this car to be under $30,000. >> reporter: you know there are more than a few people who look at the stock price and say fisker is an example of the ev start up that will not make it you have $800 million in cash o hand you have delivers to help the cash flow. they look at your company and other ev start ups and say you need more capital or you will not make it. what do you say? >> the difference with us and other ev startups, we pay the same price from the first ocean coming off the line as the ocean coming off the line in december of next year so we don't have to pay for inefficieninefficiencies we make profit from day one.
6:42 am
number two, we have very skilled people here building the brand number three, we don't burn billions of dollars every quarter. we have a cfo who is super tight with the money which sometimes i can't say no to. that means we are not burning that much cash $800 million is a lot. that will take us well into next year >> reporter: this base model starts at $38,000. it doesn't qualify for the new ev tax incentives with the inflation reduction act. how much will that slow down demand >> it hasn't we have seen increased demand. >> reporter: you told people to get incentive in now if you want it how much in the future will it hurt >> we have taken in a lot of people in august since august, demand has increased in the last month. i'm surprised by that. i think there will be changes to the i.r.a. at the end of the day, if you
6:43 am
manufacture a vehicle in the u.s. with u.s. certain battery materials, you will get certain incentives it will start in january of 2023 nobody can build a factory in six months it takes two or two and a half years. we should really have a lean-in period for a couple of years >> reporter: you want that and the koreans want that. they want to change the rules to add more flexibility >> and the europeans >> reporter: is that realistic >> i think so. at the end of the day, the u.s. government wants a quick move into evs and they want u.s. production nobody can make u.s. production in six months. to get everybody to really be incentivized to do u.s. production, you need serious time frame a serious timeframe is two and a half years >> reporter: solar panels on the
6:44 am
roof, how much does that help in. >> you live in california or arizona, it could be more than that at the end of the day, this is free maybe more important, this is the cleanest energy you can get. >> reporter: that's the selling pitch. henrik fisker. congratulations. start of production of the ocean at the plant in graz, austria. >> thanks, phil. nice gig if you can get it austria. that's pretty cool he's doing other things. i'm sure we have sri-kumar joining us next to talk about the squeeze on inflation get the best of "squawk box" in our daily podcast. follow us on your favorite podcast app. it rs ouunabt 12 seconds most days we'll be right back.
6:45 am
6:46 am
6:47 am
6:48 am
a couple of widely watched recession indicators were flashing yesterday in the bond market for more on that, let's bring in sri-kumar. a lot has happened the last time we spoke, sri. i'm talk about the inflation numbers we saw the cpi and the producer price index numbers were cooler than people thought i think last time you were on, i think 4 might have been the top of the 10-year, but arresting spot for a while, i thought. >> i said to you last time that around 4 would be the ceiling for the 10-year. it could go to a 4.25 or 4.30.
6:49 am
around 5% is where we settle i still believe that i said that to you, joe, before the cpi and ppi numbers were published. publication of the two numbers last week and this week's numbers convinced me that is roughly where it will be the reason for that is the significant increase of interest rates the fed has implemented this year is eventually going to lead to recession probably beginning of middle 2023 and once that starts to happen, there will be a destruction of demand as economists call it that will bring inflation rate down two problems one, if inflation comes down, it may not come down anywhere close to the 2% level. my concern is that it will settle at 5% or 5 to 6% on the cpi. the fed cannot call victory at
6:50 am
that stage and they will be going back to an arthur burns type of situation in the 1970s of tightening again. that is one thing. two, you look at the 2/10 year inversion that joe, and that has become negative to the tune of minus 68 basis points yesterday. it is the most inversion we have had since the early 1980s. we didn't have that much of an inversion even during the 2007/2008 crisis that in turn tells me that the recession is coming and it could be quite severe. >> that's what we referenced when we introed you, sri if inflation were to get cool -- and i just heard your forecast that it gets sticky at around 5% or so.
6:51 am
would good inflation numbers allow the fed to feel better about pivoting or does it actually -- does the fed actually need to see a sharp slow down. the reason i'm mentioning that yesterday, retail sales. every cool inflation number we get might be followed by a number that shows the economy is hanging in there does that mean the fed isn't satisfied with what it's done? that it's going to need to do more because it needs to actually slow the economy? or if it has success in inflation, is that going to be enough for the fed are they dead set on causing an inflation. >> those are great questions i don't think they are that set in causing a recession, joe. but they have to be dead set in causing a recession. that's what they're required to do because as you said, even with two cool inflation numbers, we have sales remaining healthy as it came out yesterday that means the consumer is
6:52 am
relatively healthy and he or she is going to continue to spend. as long as they continue to spend after you had a couple of months of good inflation rate, inflation can pick up again, that's the story we have from the 1970s and general powell has said repeatedly, he does not want to follow the path followed by the then chairman burns, but he runs the risk of doing so if he pivots. if he pivots, inflation likely will go back up. that's the risk you run. >> let me ask you this other big-picture question your forecast for a -- a regulation in mid '23 because of what the fed has already done. if you go back to the interest rate environment of the 90s or even the thou2000s, if we wouldv
6:53 am
gotten 10%, we would have thought that was totally not only inflationary but would cause gangbuster economic activity because we were at 7 or 8% or 9% prior to that that seemed like a really stimulative number to invest capital. no one was going to stop investing because of 4 or 5% now you're telling me that that's restrictive enough in today's world to cause a recession. what changed why is 4, 5% restrictive instead of accommodative >> 4, 5% on the federal funds rate, if you're talking about the fed funds rate, being where we are in the neighborhood of 4% is not going to be sufficiently restrictive. that's what i'm saying in other words, they have to keep raising to 5% or higher so i think we are saying the same thing, joe, that in terms of the federal funds rate, you
6:54 am
are not yet restrictive enough this is where you're going to leave it you're going to cause inflation to come back and if you want to kill inflation once and for all, as we did in the early 1980s, you really have to go quite a bit higher that's i think what you're saying and that exactly what i'm saying as well >> kind of saying that i just remember -- you remember that -- when we were at 8, 9% on the 30-year and people ks-- we o down to 6 and it seemed so low given what we were used to and the economy is doing fine. things are a little bit, and it's also the rate of change we went from zero back to this so quickly that i could see how that mattered. but it's still hard to -- i guess the 200-year average of where interest rates are is much lower than we were used to in the 80s and 90s and 2000s.
6:55 am
all right. we'll check back with you. none of that sounds that great but it is what it is see you around thanks uk finance minister jeremy hunt delivering his fiscal plan to parliament. let's go to london this just happened >> reporter: yeah, in fact, it is still happening at this point in time. so we're going to give you a sense of exactly the kind of measures that are being put forward. we have seen an economy that is stagnated when it comes to third quarter growth numbers on the decline. so the start of what could be the longest recession on record was expected by the bank of england. that has now been confirmed as well by the office for budget responsibility which is a key office offering sort of statistical reports then off of the finance minister's speech saying that the uk may indeed be in a recession already
6:56 am
1.3 contraction for the whole of 2023 is also expected. that's according to jeremy hunt, putting that forward in his speech there today, talking about joblessness as well, also going up, unfortunately. but over the next five years, hoping to half all of those measures, all of those parts, rather of the uk economy that are going in the wrong direction with all of these measures, expecting that the recession will be shallower and then hopefully seeing the uk economy spike back up around -- just after 2024 cpi expected to be at around 7.4% as well going into next year still too high and may force the bank of england to consider other measures at present, more interest rate hikes are expected these are some of the measures that have indeed been put forth by jeremy hunt, speaking about personal taxes and how he will plan to reduce the threshold of tax that consumers are then
6:57 am
paying as well in certain instances. a few measures put in place. growth is on the decline and it does seem to be a measure that jeremy hunt is going to stay with for the time being. >> all right, we've got similar situations over here i guess it's a -- global situation. good to see you. i was wondering if he could see the eye. >> the ferris wheel? >> he's right there. i see pictures of it and my legs get shaky. >> afraid of heights what if it gets stuck? what if they had to unload you >> questions when we come back, we're going to talk about the fallout of the collapse of ftx
6:58 am
and later patrick mchenry announcing a hearing to investigate the ftx collapse he's going to join us in the 8:00 hour. in any business, you ride the line between numbers and people. what's right for the business and what's best for everyone who depends on it. solving today's challenges while creating future opportunities. it takes balance. cla - cpas, consultants, and wealth advisors. we'll get you there. if you wake up thinking about the market and want to make the right moves fast... get decision tech. for insights on when to buy and sell. and proactive alerts on market events. that's decision tech. only from fidelity.
6:59 am
7:00 am
♪ good morning bankrupt crypto exchange ftx
7:01 am
looking to distance itself from its former ceo sam bankman-fried. we will hear from another major player in the space about the fallout. the ceo of binance will join us live the markets, the fed and the midterms barry sternlicht joins us for an interview. >> the we'll talk about the monumental auction and the booming art business the second hour of "squawk box" begins right now good morning welcome back to "squawk box" right here on cnbc we're live at the nasdaq market site i'm andrew ross sorkin i'm with becky quick and joe kernen u.s. equity futures looking to
7:02 am
open down 167 points on the dow. nasdaq looking to open lower as well 52 points off. we're looking at the s&p 500 as if it will be off 22 points. treasury yields right now, let's show you the ten-year note looking at 3.723 on the ten year two year up at 4.365 i don't know, you want to be in equities or own the two-year these are the questions. wti right now, we're going to show you oil real quick if we could. you're looking at buying it by the barrel at $84.25 and crypty trading as we've been living through the aftereffects of ftx. bitcoin at $16,500 let's go to dom chu. >> let's start with the retail earnings stuff kohl's crossed on the bottom of your screen. we have macy's out with results. the shares are up a percent or so
7:03 am
up 6.5%. the volume is starting to pick up the department store reported profits that handily topped estimates. sales growth at established store locations fell by less than expected by certain metrics. macy's was helped along by the luxury side of thing, specifically places like bloomingdale's it's up 6 3/4% and then you have alibaba up swinging to a 1% long. often called the amazon of china reported mixed earnings results. revenues missed expectations alibaba faced headwinds because of the restrictions in china also slower consumer spending in that part of the world as well those shares down 1.5% cisco beat on both profits and revenues and gave a more upbeat forecast
7:04 am
those shares up 4% right now nvidia, better than expected but profits fell shy of analysts those shares were up roughly 2% premarket. an analyst call getting some attention this morning out of credit suisse. shares of norwegian cruise line under pressure due in part to a downgraded credit suisse to underperform it was an outperform before. the target goes to 14 bucks. they cited valuation and some other pressures on the costs going forward, perhaps andrew, keep an eye on those shares down 4% i'll send things back over to you. >> now to the latest around the collapse of ftx. the now bankrupt crypto exchange looking to distance itself from sam bankman-fried. he's saying he has no affiliate with the firm and does not speak on its behalf. bankman-fried has been trying to explain his side of the story.
7:05 am
he joining us right now is cz, the ceo of the world's largest crypto exchange, binance and somebody who has seen the books. it's good to see you this morning. we're all trying to understand the aftereffects take us back if you could to when you first got the call from sam and you first had a chance to look at the books i think a lot of people are still trying to understand exactly what happened here how much of this was about comingling, how much of this was about terrible marking of the books? what did you see >> yeah, i think -- i got a call from sam, 24, 48 hours after i made the tweet and then he wanted to talk at the beginning, i thought he just wanted to do a buyout the ftx tokens we had. and then he wanted a buyout of the entire firm, of the entire
7:06 am
ftx platform it was pretty clear, pretty soon that misappropriation of user funds, the user funds are gone and at that point it's clearly that he lied to his users, his investors, his employees at that point, i thought i couldn't -- whatever data we couldn't trust anymore it was hard for us to do that due diligence. we didn't go very far. >> we've all seen his tweets now overnight. do you think he understood what he was doing >> i think he thought he understood i think he probably still thinks he understands what he's doing now which i don't think he's retweeting >> that's for sure but in terms of intent, one of the things that's going to be looked at i'm sure by regulators, potentially by prosecutors is, what he intended to do. he seems to suggest in a lot of
7:07 am
these tweets that he didn't understand or he didn't -- he mismarked things when i say mismarked, mislabeled is the phrase that he's used when you looked under the books, it appears that he was comingling funds using the funds to leverage himself up and the like >> yeah. i think -- look, i didn't do the due diligence myself, but i think you'll be very, very clear that sam knows that he was using the user funds to do trading for alameda and he's probably been doing this for quite awhile. a small number in ftx knew, but most of the employees didn't know i think that's probably the most likely situation. >> one of the things that i think this has demonstrated to the public about crypto is how leveraged the business is. how so many of these coins --
7:08 am
that ftt token and other tokens have been used to leverage other tokens how much leverage is in the binance system, if you will? >> sure, we are consider concerned about anybody using the token they create for leverage as a collateral at binance, we don't use that. it's very simple >> when you think about the health of the, quote/unquote, balance sheet of so many of these firms in the crypto space in the ecosystem, how much of those balance sheets do you think are actual fiat currency that has some stability versus some kind of token or other kind of cryptocurrency that may or may not actually have the value that it portends to have in part because the float of some of these tokens is so low that it
7:09 am
appears the other piece of it is that some people are almost artificially inflating the valuations of these things >> yeah, i think there's a couple things here there's the user assets. every exchange code the user assets as is, as chosen by the users. there's operational funds for the business itself. that should be a combination of cryptocurrencies, stablecoins and maybe even some fiat currencies even today, we are profitable. we're sustainable. so we -- but our rough allocation is about a third in stablecoins and a third in some of the larger coins and also we keep the bnb coin that we hold very separately in our accounting this has been in our financial reports even from early days we call keep the bnb separate.
7:10 am
we believe that many other platforms may include this as their cash reserves which is a -- and when they present to potential investors, et cetera that may be somewhat risky or misleading so we don't do that. we have records of our financial statements from very early days. we have always kept bnb separate. >> i know you guys did release some and the thought of being transparent with some of this last week. the analysis of it, the $75 billion of some of those coins you have, 40% are your own branded stablecoin and native coin, 6.4 billion in the binance coin how much of those were floating? what were the last tranches that were out it sounds to me like ftx was using money and giving it to other people and telling them to turn around and invest in his coins that gave them a
7:11 am
ridiculous markup on those where do you get those valuations how confident are you that those marks are real >> i think you're confusing a couple things which might be a common misconception out there the assets we disclose are 100% user assets. it means users were holding that on our platform. we don't do any conversion it's just -- it's just how it is we don't have any reserve issues we don't have to cover back and forth. and also, busd is not issued by binance. it's issued by paxos it's a regulated entity in new york. >> how much do you hold again? you said it's about 30% you were just saying are coins -- some of these stablecoin that is you're holding. to me, it seems that the marks are off base how much do you hold yourself and where do you get those marks? how confident are you?
7:12 am
>> becky, two separate things here there's the user funds -- >> i know, i'm asking about -- don't worry about the user funds. let's talk about your finances then. >> that $76 billion worth were user funds that's not to be -- >> i'm granting you that you said 30% is what you hold, though, right? >> for our internal operating funds, the money that we have, we have about a third in stablecoins. >> but are you confident with those marks? what would happen if those marks turn out to not be real, what would happen to your bottom line and your stability >> we're still profitable. every month -- we don't dig into our reserves for money every month we're still profitable >> cz, help us with this, there's lots of questions about genesis, there's lots of questions about a lot of folks who have been searching for yields, a lot of yields product, if you will. and whether all of that is about
7:13 am
to become undone how connected that is to the rest of the system with you walk us through what you think may or may not happen here >> yeah, so there are a number of players who provide high yields to attract customers. and they promise high yields, et cetera and they don't really have a -- they just give that money that users give to them to somebody else to try to make those yields those business models are high risk i don't know how many people are exposed to genesis or ftx in those categories but i think there probably will be a few players that are -- so i think that will most -- that's probably the case for at least a few players. but most of them will be part of this model as the cascading effects from ftx goes, each one is going to be more. >> how much damage do you think this collapse has ultimately done not industry? people talked about us being at a crypto winter.
7:14 am
others said this may turn into a crypto ice age how do you think about that? >> to be honest, before this crash, or before the ftx crash ftx had 3 to 5% of the global market share depending on what you count. if you count trading volumes, they had a lower number of users but they seem to have high volumes. so those should be institutional investors. they should have a high appetite for risk so it's somewhere between 3 to 5% of the market so that's where they -- that's where the impact is. it's still a decent number quite a lot of users got hurt. it's not like 50% of the market or anything like that. >> on a personal basis, how you think about sam. the reason i ask, at some point, you were friends, you were his original investor in all of this can you fathom if he lied to you like this? if that's the case >> yeah, i'm very shocked -- i
7:15 am
obviously did not know him until about a week or so ago i'm just shocked i'm shocked that he lied to everybody. >> you didn't know him until a week ago >> i didn't what -- i didn't know he lied to everybody until a week ago >> cz, just getting back to what this means for the future of crypto in general, a lot of people have said there's bitcoin and ethereum and everything else you've probably heard that do you think this was some type of inevitable shakeout that we're seeing and do you still think these 21 million by the year, i don't know when we finally get the last bitcoin mined, but you can still make $50,000, $100,000 a coin forecast do you think those eventually
7:16 am
come true or is this one big house of cards across the board. and i'm sure you don't think it's a house of cards. do we push the time frame out for when it happens? >> first of all, as you said, i don't think it's a house of cards. they're fundamental technologies that are much better than the tool tools we had to transact those are fundamental technologies that are much better than the tools we had before it's not a house of cards. at the same time, i'm not good at projections i don't do those things. i think there are smarter people out there that has a formula to predict it and i don't believe those things anyway i think fundamentally, though, if we look at the industry five years, ten years from now, the industry will be uch, much bigger i don't know what's going to happen to the bitcoin price. i also do not think that bitcoin and ethereum are the only two coins that will benefit. we're far from a one coin take
7:17 am
all. so today one of the largest businesses are not the blockchain businesses, they're exchanges. yeah, i think -- no, we're early in the industry. this incident will set us back a bit, but the industry will better healthier it's actually better in the long run. >> can we talk about regulation for a second by the way, there were comments -- i don't know if you read sam bankman-fried's dms where he says he was going in -- saying he wanted regulation and then says, well, actually, the regulators can't do anything and they can't protect the customers. you've spoken i think saying you never really thought you would ever sort of come on board to sort of a u.s. system. you are based abroad there's a lot of questions right now about whether regulations could have avoided this, protected folks from this.
7:18 am
what do you think? >> first of all, we very much embrace regulations in the u.s binance is an entity set up in the u.s., 44 states licenses of which 10 or 12 of them were granted in the last year so binance u.s., it's embracing the u.s. regular laces and is embracing regulations around the world that's been our philosophy i think regulations could minimize some of the problems. when a person lies, when there's a bad player that wants to do bad things, regulations don't prevent it banning guns doesn't mean that some -- no one will take a gun and shoot somebody that's one person going crazy or lying or just a bad player so i think regulations will help, but you will not eliminate this problem we shouldn't blame this problem on any single person other than sam. but anybody in the industry do share a bit of responsibility.
7:19 am
>> he used the phrase ef regulators, by the way i want to show you if i could, last week on the program we had gary gensler and we talked to him about whether americans have money in coinbase and i said binance as well, you are the two largest exchanges in the u.s., should feel confident that they can get their money out. i want to play you what he said about it >> i'm not going to speak to any one platform, but i would say that you have risk these -- the rules and the laws are clear, but do not assume that these firms are complying with the rules and the laws that the new york stock exchange or the biggest of brokerage apps are complying with. >> you want to react to that >> i think -- look, binance u.s. operates very much according to
7:20 am
the rules. i don't think there's any doubt there. that's it, really. >> what rules? >> look, binance u.s. has 44 state licenses in the u.s. they comply with all the regulations regarding the license. binance u.s., we do not move user funds for our own purposes and that's it. >> here's a regulatory question. i think it's why u.s. regulators have struggled so mightily with this issue on how to regulate the industry some people have complained that banks, for example, are not allowed to custody this stuff technically just yet and one of the reasons for that i think is that you're looking at an industry where the regulators say it's a global business your business, other exchanges live outside of the u.s. you're not going to be able to regulate that part of it if you're regulating a little piece in the u.s. , how much can
7:21 am
the regulation help? what's your reaction to that and what do you tell regulators about all of this? >> yeah, so this is a global industry, but most platforms like do not except u those user we follow those rules very strictly so for us, binance u.s., service u.s. users and follow u.s. rules. i think regulations are effective. we do -- would like to see more regulatory clarity among some different issues so i think previously most of the regulators were more focused on kwmcal. so i think that will come and binance u.s. is fully compliant with 15 different regulators all
7:22 am
around the world so, yeah, i think regulations are effective when they're clear. >> you talk -- sorry, you talked about aml and kyc. there have been reports about investigations about money-laundering through binance related to iran. roubini made that comment and just in the past day i'm curious the state of that investigation and if you can speak to it. >> number one, that report written by reuters is wrong. it was fed to reuters by a website called is -- used to be a russian-owned website. i think ftx bought a part of the equity there we do believe that gave reuters access to a platform that had some wrong
7:23 am
data we use all the economy common platforms for transaction monitoring it's the same tools used by law enforcement. and we are very confident that our practices comply with the industry requirements and the reuters article is misleading. and roubini, i would just say he's -- he tried to become famous by attacking everybody. and i don't think what he says carries much weight. >> cz, sam bankman-fried has said that it was not a good strategic move on his part to get in this battle with you. he says he regrets it because it helped reveal the issues with ftx that led to the collapse of all of this. do you regret that feud? >> we were never in a battle with him he thinks he was in a battle with us. we didn't even notice.
7:24 am
we did hear some concerns about, you know, him bad-mouthing us behind our backs in dc, in other political lobbying circles we said, look, we don't want to be entangled we just want to and it our equity portion we did that a year and a half ago. as part of that transaction, we got some ftt tokens. with the news of them becoming insolvent, we said, well, we want to sell those tokens. that's all we did. we were never against them we don't focus on other smaller exchanges. focusing our energy there doesn't give us the best return. if we take customers away from them, we make 1 or 0.1%. if we go the industry, we can grow we're focused on how to grow the industry more effectively. we never viewed them as a competition or as a fight. he had that in his head. but we were not focused on that. >> so the idea that this was a
7:25 am
move to destroy him or this or that, you don't agree with -- did you have suspicions about this you went public with your decision to sell those tokens. i think you went -- he went public with the decision to sell tokens before you sold them. i would you would sell them first or short them first if you weren't doing that why go public with it and what was the intent around that >> so we just want to be transparent. our team says, look, this coin desk article that ftx may be insolvent, are they insolvent or not, we don't know for sure. and even if it did -- even through the due process, when we look at the books, i don't trust those numbers. i can't trust those numbers. at the time we didn't know but we said, yeah, let's sell it there was a block chain transaction from the address that we received it and deposited it where it alert --
7:26 am
one of the industry monitoring tools reported it on twitter and there was discussions. my team asked me, should we be more public about it i said, yes, we should be transparent. then, they said, well, i should write a tweet. i wrote a tweet. i explained how we got the coins. and then we were selling it now. if you compare two scenarios, we could sell it or as you said short it, which we never do. and then make the news and then buy -- that's i think that's less ethical than saying up front, we're going to sell it. it's transparent you guys -- >> that's why i was making that point. finally do you imagine given that you are the strongest player now, i believe at least in this space, you could argue coinbase is strong too in a different way, buying up any of the assets that may be sold in the form of bankruptcy there's lots of folks who
7:27 am
probably would like to see some somebody take over blockfy so they could get their money out of there if you think there's a way to do that. >> we would be interested in looking at the assets buying the assets, especially some of the better ones. >> which ones are the better ones >> well, look, before we get to that, when we were -- when we announced that we were looking at this deal, we did everything properly there were news in the u.s. about potential alleged u.s. regulatory agency investigations into ftx and given that, we said, well, let's hands off. let the investigators do their jobs and then we probably will be waiting for the liquidation so that we can directly by it from the court that's probably a much cleaner process. we're waiting for that process to happen. >> okay. we want to thank you for joining us this morning.
7:28 am
we appreciate it very, very much especially given all the headlines and we hope to talk to you again -- >> wait, which coins which ones are the good ones of the assets that are left? >> we need to look further we don't -- i almost never comment about coins. it's not so much about coins, it's more about projects they're investing a large number of projects, very high valuations we want to help save some of those projects >> okay. cz, thank you again. appreciate it. talk to you soon. when we come back, barry sternlicht will join us. "squawk box" will be right back. >> announcer: this is cnbc program is sponsored by baird. visit
7:29 am
these days, our households depend on the internet more and more. families grow, houses get smarter, and our demands on the internet increase.
7:30 am
that's why we just boosted speeds for over 20 million xfinity customers, on us. so you get more of the speed you need for day and night streaming. more speed you need when you're work from homeing. and more speed you need as your family keeps growing. check in on your current speed through the xfinity app today. coming up barry sternlicht
7:31 am
joins us in just a couple of minutes. plus jon fortt plays santa claus and the grinch outlook on holiday sales and what it means for investors. "squawk box" will be right back. >> announcer: time now for today's aflac trivia question. in 2021 bitcoin rallied to an all-time high of what price? the answer when cnbc "squawk box" continues what do you... got there? a hospital bill for me? mm-hmm. for $1,200? ga-a-a-ap! did you say "gap"? yeah, he did. he's talking about expenses that health insurance doesn't cover. ga-a-a-ap! uh-uh. aflac! that's why there's aflac. it pays you money to help close that gap. aflac, huh? don't tell me he high stepping. af-lac, af-lac! he stole my move! get help with expenses health insurance doesn't cover at... aflac! com.
7:32 am
what should the future deliver? health insurance doesn(music)r at... progress... (music) ...innovation... (music) ...discovery? or simply stability...
7:33 am you shouldn't have to choose. (music) gold. your strategic advantage. (music) visit lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you round of a-paws at&t 5g is fast, reliable and secure for your business.
7:34 am
>> announcer: now the answer to today's aflac trivia question. in 2021, bitcoin rallied to an all-time high of what price? the answer, 68,649 dollars 05. ea points like hrv and rem sleep, so you know all you need for recovery. and you are? i'm an invesco qqq, a fund that gives me access to... nasdaq 100 innovations like... wearable training optimization tech. uh, how long are you... i'm done. i'm okay.
7:35 am
what if “just an idea” could become a family tradition? this is financial security. and lincoln financial solutions will help you get there. as you plan, protect and retire. ♪
7:36 am
let's get to our big guest on set this morning, barry sternlicht is here
7:37 am
the chairman and ceo of star wick capital you were concerned what the fed was doing, concerned that it had a huge impact on the consumer. yesterday we were from target that things slowed down. this morning, macy's is seeing something similar, that the consumer slowed down in the second half of october and even more in november inventory is building up what have you seen >> i think you misunderstood something i said i thought the economy was slowing on its own >> okay. >> and so i asked the producer to produce a few slides and go through them with. the first is the savings rate of the company. it was 33% and it's down to, like, 3.5% so people spent all their stimulus dollars that means there's less money. we had inflation because we had
7:38 am
too much money chasing too few goods which the supply chain broke. people had money, they wanted to buy watches, they wanted to buy cars, everything went bezerk and now you have an opposite situation. you the second slide would be inventories. >> i'll work on the slides >> there we go that's inventories which are rising to the moon and beyond. the other thing you see are not only savings rates declining, but they've run out of cash. i went out to dinner last night. the restaurants are packed chicago is packed, miami is packed and you're like, who are these people they're actually now on their credit cards it has to end. the spending spree that was
7:39 am
stimulus induced with no savings and on debt, it had to end so the fed is really the icing on the cake. i mean, now they're disrupting and will destroy future growth of the economy, lowering the growth rates because companies won't build plants, we won't build the real estate complex will grind to a halt they will hurt future growth and i think the third most important chart is the cpi they got to bring that up what's actually happening in cpi and why the inflation is going down. that's it. so the orange line is actually what the fed is reporting for rental growth and that line was up, like 0.7 last month -- >> because cpi doesn't accurately -- >> look at the blue line that's actual rents. actual rents have turned down and the government is reporting them going up because of the
7:40 am
lag. and so you will see in four months' time, a third is cpi is rent growth. and it's going to go down. so the cpi is going to fall. look at the other components of cpi. oil. we're going to frack and drill our way to happiness in the united states. we have plenty of oil. you can get great returns in investing in carbon, you're going to get oil prices calm in the united states, gas prices are down to 4 1/2 cubic foot for gas. inflation is coming down hard and it's coming down a lot faster than people thought and i've been surprised at how rents are sort of rolling over and they're growing still, but they're growing at a much slower pace. >> the pandemic was this crazy time savings rate of 3.5% and people taking on consumer loans is not surprising. >> to normalcy, right. so it was this crazy big in the snake, whatever you want to say
7:41 am
for it, however, it's gotten into wages at this point because people have been able to go to their employers to say, we're not making enough to get buy, unions have come back with some pretty tough negotiations and that's where you wonder, okay, it was the supply chain that caused it, all this excess money from the pandemic, but does it -- >> there's not a supply of goods. there was no supply of labor people weren't back in the office they were working, kids were flying around. and even the older people over 55 and younger people less than 24, they haven't re-entered the workforce the way they had prior to pandemic. i assume in a recession they're going to come back you had a labor shortage and that led to wage growth. and now what i say to the government is there's 1.7 million worker visa applications, it's up for a million under trump. if you want to add wage growth, add more workers immigration is down to 200,000 people we used to let in a legal
7:42 am
million immigrants we need to increase the amount of workers and i need them for my hotels. we're still not staffed properly i talked to the ceo of marriott the other day and i was over in europe, nobody has labor increase the supply of labor i tried to hire a woman from norway yesterday i can't get her a visa, i can't get her in the country. >> if oil does what you think it's going to do and rents do what you think they're going to do, where does that leave inflation? >> i think it will be in the threes and i will be delighted threes and fours sort of middle of next year as to that cpi number comes down for rent here's the issue you're right 100% on the unions. the biggest increase i've actually heard, an increase in what you call wages was the social security contract going up 8.7% which was tied directly to inflation but the union contract for
7:43 am
railroads was a 5% increase. >> but it was also some big cash that they were handing out. >> there was big cash. i think if everything goes down and wages go up, we actually should be happy. and we wanted people to get more money and we want the average american to do better. >> it's just how much of that feeds into the inflationary numbers. do we really get to three to 4% if you have a lot of three, four, five-year contracts that are signed right now. >> that's why it will stay at three and four and it won't go to two it will be hard to get it to two and it's not necessary look, i think the fed doesn't appear to understand the ramifications of what they're doing. as joe was talking earlier about, hey, four-year number is not a bad number it's the pace. it's not the level it's the fact that he did the fastest increase in history and destabilizes markets that can't react. people don't know how to value properties right now you're seeing trades close we sold a bunch of apartments at
7:44 am
a 3.8% yield but that's not the going number today. and nobody knows exactly where values are because at the time -- these inflection points, when economies are rolling, there's a pretty wide gap between the two. i had a dinner last night, i was with some bankers and we're talking about, if theyjust sai they were done credit spreads would come in. there's so much fear in the market, everyone is worried that tomorrow is going to be worse than today, that just the calmness -- we will have the slowdown they want if they were concerned, they should have raised rates when dogecoin was worth 85 billion. they sat out the pure crazy speculation and didn't do anything and now the economy is slowing on its own they did three things, they did -- they raised rates and they're selling off the balance sheet which is what they were going to do and they had the ukrainian war and they didn't
7:45 am
switch playbooks they triple dipped. >> fortunately, we have you here for the rest of the show barry sternlicht is with us through 9:00 a.m. retail's wild week the grinch showed up at target yesterday. we'll get a holiday retail outlook next and andy warhol's white saerdist fetching $84 million at an auction yesterday. "squawk box" will be right back. ♪♪ ♪♪ be ready for any market with a liquid etf. get in and out with dia. at ameriprise financial, our advice is personalized. based on your goals, whatever they may be.
7:46 am
all that planning has paid off. looks like you can make this work. we can make this work. and the feeling of confidence that comes from our advice? i can make this work. that seems to be universal. i can make this work. i can make this work. no wonder more than 9 out of 10 clients are likely to recommend us. because advice worth listening to is advice worth talking about. ameriprise financial.
7:47 am
vo: ferrari knows racing. is advice worth talking about. palantir knows data. bonded by engineering excellence. palantir. data driven enterprise accelerator.
7:48 am
welcome back to "squawk. the holiday shopping season begins next week and there are mixed signals on whether consumers will open up their wallets in a slowing economy guess who is here to weigh in on it jon fortt. >> andrew. happy thursday i hate to be the grinch here, but holiday spending is going to be terrible. and that could have cascading effects for inventories and the retrenching of the economy in 2023 look at target earnings yesterday. they said shoppers were doing fine to start october, but then shoppers started to getting addicted to markdowns that target has been using and profit margins thinned out. you're probably thinking, what about walmart? they did better this week.
7:49 am
kind of. walmart sales were up and a lot of it was people flocking to find more affordable groceries higher-end consumers are coming in to stretch their dollars. problem is, higher food prices mean shoppers have less to spend on clothing, electronics, toys, all the things you get for christmas. and inflation is not the only drag in a report this week, the new york fed revealed household debt spiked this summer the fastest in 15 years. fueled by bloated mortgages and credit card debt but they run out of gas just as we're entering the holiday home stretch. >> goodness. >> why don't you stop now. >> we're going to get the other side of it now not all the signals are bad. right? there are people out there, they've got some money and why are they traveling so much if that's true. barry says it's all on credit cards. >> on the other hand, some people are spending less but not
7:50 am
everybody. yes, consumer debt has spikeled b but people are still paying their bills. while lower-income shoppers are stretched, others still have spending power lowe's and home home improvement and then there is the mastercard spending pulse data sayingin store and nine retail stales will be up the return of shopping in physical stores that will grow more than that and next weerks department store sales it tiffany sitting at the mall, getting pictures with mall santa. probably if there is something, it is clear the consumer still craves post covid, it is experiences. that is why aaa predicted transportation will surpass pre-pandemic levels and hold
7:51 am
shopping is an experience one that consumers are still willing to shell out for, guys. >> so where does that l leave u. >> out of time >> we report and you decide. here it is. >> but you could stay and because we're going to talk art and let's do it. the bidding war for an art piece from andy warhol sold at $85 million. and joining us now is charles stewart. i don't know if you know, but do i get a finder's fee if i put you together he's got money to burn so this is a good place for it and it is holding up the high end, we know, a lot of people are not effected or trading down and with the results that we're seeing so far, you're having a great -- this is could be a record week which would match the reports that we will in the more heady times in 2021.
7:52 am
>> yeah, i think that is right, actually it is likely to be the largest week of art sales across the auction houses ever. which is a little bit of a surprise when you look at everything going on. on the other hand there has been incredible material on offer this week including the warhol disaster painting you referenced the high end is very healthy and there is rotation of buyers and i think there is a view that art is a incredible store value. >> when you look at -- you said shit the other day an owe the air. are we allowed to do that? i mean there we ship coins getting so much money and you wonder why real article might hold up and it is not -- we see the excesses in this market from the fed, whatever you want to call what they didder to the past five years, art should hold up and the other thing that i think for you, charles, is that
7:53 am
some of these pieces have never been available before. so, someone bought these pieces like bill paily when they were create and they've never been on the market people will step up for what is unique about the pieces that you have here. >> there are centuries of data on appreciation and store value in the art market. you're absolutely right that there is a good conviction around store value i have a can letto behind me that is a few hundred years old and we're seeing a rotation in buyers and they've been replaced with collector who have been patient on the sidelines these markets are incredibly global and so i think we've seen that reflected over the course of the this week. >> barry might be asking about a specific piece. >> no. charles, how has the demographics the buyers changed.
7:54 am
do you have participation from asia and the middle east and less from the united states and europe there must have been massive shifts in buyer -- >> there has been a lot of rotation, the suspects that you would expect to be less active are less active. they've been replaced with collectors who collect over a long period of time who have been patient maybe on the sidelines over the last few years and looking for best of the best they've jumped in. u.s. is quite healthy and strong asia especially for younger artists. we one sale which is all living artists, half of that sale last night was sold to asian buyers so, you know, in parts of the market, asia is healthy. europe less so because of the fx factor and ultimately this is a market that is priced in dollars. so we have seen some rotation,
7:55 am
but still a lot of demand for master piece works. >> how active is the middle east >> middle east have some of the most ambitious cultural agendas at the sovereign level really of any country in the world. you know, saudi arabia is announcing they're planning to open 28 museums over the next ten years. and incredible ambitions in the uae and qatar as well and we're seeing that reflected in acquisition activity they're professional and deliberate but certainly active. >> we saw the picasso, we saw a mondren and what is left this week that barry might -- he's beating around the bush but what is left? >> well, today's the day we have a -- today is your day, barry and joe, i don't think we have a sotine in there
7:56 am
we have hundreds of works being sold today in our contemporary day sale one the largest ever and so that will round out our week earlier this month we had our luxury sale in geneva and sold $100 million of luxury categories in december we still have coming up a tie ran saurus rex skull and a 3 carat yellow diamond and the last copy of the u.s. constitution in private hands. >> that is pretty cool. >> those are amazing so a yellow 300 carat. what do you do put that in asafe. >> it could make a nice key fob or a door knob come see it. it will be here in december. a lot to see and it is quite something to see and to hold. >> i think would you rather have the tie ran saurus rex. >> it is amazing. >> the money printing stopped.
7:57 am
this is what this is supposed to be about. >> but everyone should rotate out of whatever their invested in a long cash. >> there is a lagged indicator, does this catch up to you at some point. >> there is. but this lag has been happening for longer than the normal lag would you say a three month lag and i think it did -- it is been a good -- a very good result i think we're beyond the lag right now and seeing interest in masterpiece works across categories we sold a formula 1 car for 15 million swiss francs two weeks ago. >> thank you i'll get the contact info for you and barry as soon as we go to break >> thank you very much. >> coming up, congressman patrick mchenry will talk about the fallout for crypto including why he called for a hearing on the collapse. and jobless claims and housing is out at 8:30
7:58 am
and wel ke a'lta look at futures. we're in the red
7:59 am
♪♪ the only thing i regret about my life was hiring local talent. if i knew about upwork. i would have hired actually talented people from all over the world. instead of talentless people from all over my house. the first time your sales reached 100k was also the first time you hit this note... ( screams in joy) save 20% with the lowest transaction fees and keep more of what you make. with a partner that always puts you first. godaddy. tools and support for every small business first.
8:00 am
good morning, futures pointing lower while open lower on wall street we'll be watching jobless claims and housing data on the way. and the ceo of binance said that sam bankman-fried lied to everybody and he's shocked we'll bring you highlights from our big interview. and we'll speak about possible
8:01 am
new crypto regulations and the u.k. government getting a new fiscal plan. doesn't we just get one a couple of months ago. this one focusing on tax cuts and spending hikes and as they say the country is already in recession. details ahead as the final hour of "squawk box" begins right now. good morning and welcome to "squawk box" here on cnbc. live from the nasdaq market site in times square. i'm joe kernan and along with becky quick and andrew ross sorkin and yesterday wasn't great we're kind of running out of steam and we need another number, cool something, inflation number or some data point because we're running out of gas after that big move last
8:02 am
thursday and pretty good move earlier this week on some cooler inflation data haven't really seen a big back-up in interest rates. although i thought what tree camar said about the two and the ten year being higher than it was than back in 2008. that plays into what barry has been saying about whether -- so you think recession next year at this point. >> earlier first quarter. >> shallow recession we could save ourselves if they listen to you, we could make a challenge. >> he's measuring his success by massive increases in unemployment he laz to get through the eight or 8 or 10 million jobs still open if he succeeds in increasing unemployment dramatically, then he's crushing the economy and it will be deep. >> are you surprised the market -- this is a good bear market rally if that is what it is. >> i'm a little surprise
8:03 am
and i think the slowdown is that i was talking about, it was happening again already and it is happening realtime. even software orders are down. and what is happening to amazon and netflix, consumers are out of money they stop buying streaming services, they're on hulu and paramount and disney and now on one or two instead of six. they're being better shoppers and being more conservative and that is the prices in the tech companies. >> on this very point about what the fed is thinking, we do have some breaking news from top fed voices steve liesman joins us with more on that. good morning. >> reporter: good morning. hawk. >> commentary to warn barry sterling, the st. louis president saying policy rate is not restrictive. and then goes through a series of exercises using a series of rules created by john taylor that shows a funds rate of 5% at the top and 7% using a series of
8:04 am
hawkish inputs saying those may be needed to bring down inflation. he does note that declining inflation could lower both of the estimates and they do expect inflation to decline in 2023 but skeptical knowing that the fed has had that wrong over a series of months. and the possible financial success could increase with rate going up but not evident so far according to his metrics here is the chart. and you could see where the funds rate is now in the 3.75 to 4% range and then dovish going up to 5% and the upper showing a funds rate as high as 7% pili piling on, saying it is hard to see inflation coming down, without, quote painful out comes including the likely need for a slowing in the labor market, a possible contraction in the
8:05 am
economy, in order to bring down inflation. i'll get a chance tomorrow from boston at 10:00 to talk to susan collins, the new boston fed president. becky. >> no one used the s-word. >> what is the s-word. >> seven >> s-s-seven >> joe, in the back, put up the two-year note. that is moving on the comments by bullard as well as the fed funds. >> dow futures now down 300 points. >> the peak rate 496 is up a couple of basis points this morning. but you had the two-year rising as well this morning and then it is up further this morning. i have a 4.42 here >> steve, you have heard any of the people recognize the impact of u.s. rates on the global economies and how countries that they can't afford higher rates
8:06 am
have to raise rates and put the uk's in recession and put a deaf set. it is not a volker the biggest pain will be the u.s. government. the u.s. government will have to sell paper from now untille end of tomorrow forcing rates higher because there will be no buyers. this is self-inflicted suicide this is a terrible idea and it is not necessary the economy is slowing on its own. look at sa savings rates and res in the cpi what are they looking at what could they possibly be looking at >> they're looking at inflation rate that is still almost near 8%, barry. >> it is coming down. >> and housing is not seeing it coming down, not seeing the slack in the labor market that they think is going to drive service inflation. >> barry just said that. they're going to keep going until they dry up all of the --
8:07 am
how many jobs are -- >> 9 million. >> they have to get through that. >> and 10.7 million job openings >> that is what you just said. >> but you're not surprised. >> i just think it is impossible to do without destroying the economy. >> i'm not going to argue with you, barry >> we're trying to keep people employed that is the other half of their goal is full employment and now their going to measure their success by three or four or five million empty jobs which will hurt the people it is not -- there are not enough bankers on wall street to fire to effect the employment rate you have to fire people at hotels and stadiums and the service economy and restaurants have to lay people off and that is just tragic that is a terrible idea. it is not necessary. we're running out of money we've spent a lot of money
8:08 am
we can't keep up with inflation. it won't stay this high. it won't. >> again we've been showing the two-year note. take a look at the futures if you were put the two up against each other, it is been tracking with yields that you're seeing, the same old story it is a question of what the fed is going to do once again. and there you see it dow futures versus the two-year note and that is exactly what picture has been all of this related back to the fed speak and what the market is deciding to focus on today. >> a third of cpi is rents and rents are going down >> explain that -- explain again the delay context. >> it is about a four month delay in the fed's report. they're doing a survey of six months of homeowners and people that are renting and they're doing that with a four month delay. >> i thought it was interesting, somebody asked, think chairman powell about that last time around about the delayed aspect of the cpi that they're looking
8:09 am
at and i think he said it is the indicator they're going to follow am i wrong am i making that up. >> you're not wrong. but it is not only rents that is motivating the fed there is a nonhousing service sector that is -- where inflation has been high and not sufficiently coming down that is really something that has motivated the federal reserve. and what they see is the only way to solve that problem is to create some slack in the labor market and that is -- they believe that is a largely wage-driven phenomenon and that is where that is coming from whereas they do see some relief on the good side and we keep getting this phrase sufficiently restrictive barry daily used it with me yesterday. bullard is using it again today and waller keeps talking about it, they need to get to a rate that brings down inflation and the answer to barry's question is they do look at the effects on foreign government and they
8:10 am
think about the government finance but they are of a single minded focus on the other side of the mandate. >> talk it cheap to us, steve. and we've said this before they like to talk. because that does the work for them we haven't had any -- we had the last one we haven't had any of them recently they haven't done any of these things yet they haven't gone to seven yet so the more they talk about it and you see the yields move and the stock market going down. that is exactly what they want to happen. so i guess this is in the playbook that they keep talking and it doesn't work for them. but that doesn't mean they're going where they're going. or am i just pollyanna again. >> i think you're right in a couple of respects first of all. >> i don't know if bullard will fall behind but this is an academic exercise. i don't encourage you to read his paper but it is a series of inputs using dovish and hawkish inputs an that is where you come out with seven on the top.
8:11 am
and the dovish inputs give them a -- you're right. they're trying to front load the problem you get is that according to that calculation, the fed has been running hend where it needs to be for quite a while. which suggests some need perhaps for catch up so, look, the most dovish person on the committee seems to stop at 4.5%. that is your bottom the that nos. not too far off from bullard. and what i haven't seen is those that have to go as far as seven using those inputs to the taylor rule. >> was it bullard that said the housing market could drop 20%. was that him yesterday one of the fed -- i think the dallas guy said that the housing market could drop 20%. >> i think it might have been waller. >> that is $9 trillion of wealth destroyed and for the people in the bottom half of the united states, that is half of their
8:12 am
net worth. so they're not spending money when their home prices now their house is worth $300,000 so it is going down $60,000. is that going to make him spend money and buy stuff. and then the equity markets are down $8 trillion and then crypto is down $2 trillion. i mean, there has been massive destruction of wealth. that is not a buoyant spending economy. those are people who are going to penny pinch and they're at walmart buying grossly, apparently rich people went to walmart to buy groceries you head to the head of walmart, they're not buying hamburger buns, they're buying white toast and saving money on toast. and we're acting -- we're going into a recession they'll destroy the economic system, the banks, i was one with the senior bankers of one of the largest banks in the country yesterday and they said, look, we can't do anything the fed, occ is in our offices every day and running stress tests and told us not to lend
8:13 am
against this as the class. the contagious factor of the credit markets, what they're doing is freezing the capital markets. you can't run a country this way, nevertheless a global economy. >> what do you think hamburger helper without the hamburger. >> i came on so people would listen to me. >> we did a wrap it update after yesterday's retail sales number and the effect was people are now upgrading their fourth quarter growth forecast. the consumer looked pretty good at yesterday's retail sales. we're now talking about a 2% average growth rate for the fourth quarter so you're not seeing much slowing below potential. i think the fed is also looking at that in that most economists say they are considerable pent up savings still from the pandemic that are out there. and that seems to be driving spending right now >> it is all in the data.
8:14 am
>> steve, thank you. >> coming up, new in just the last couple of minutes ftx tradings a new ceo john ray saying in a court filing never in my career have i seen such a complete failure of corporate controls and a complete absence of trustworthy financial information as occurred here he said ftx did not keep appropriate books or records or security controls with respect to the digital assets and slammed a small group of inexperienced unsophisticate and potentially compromised individuals raising that sand bankman-fried is in the bahamas and keeps making erratic and misleading statements. >> this is the guy that said the enron stuff and he's never seen this before. >> you saw sam bankman-fried think that his biggest mistake was in allowing the can't to
8:15 am
file for chapter 11 and if he had been given the opportunity to hold on to the assets for another month, everybody would be made whole and that he's still out there trying to raise $8 billion because he believes he could somehow rescue said firm of course, the firm saying that sam bankman-fried is separated from the firm. so whatever he is saying, whether it makes any sense to begin with, putting it polite lie, and b., what is going to happen here. >> this is the guy, john ray who did the enron stuff. never have i seen such a complete absence of trust worthy financial information as occurred here. >> no cfo, no board of bod directors and an auditor from new jersey that may look like sky waterhouse. >> and there were a lot of people that knew about this and one of things that he's saying which i think is right, think this was like a little company almost to begin with
8:16 am
and there were probably literally half a dozen, a dozen people who understood. i don't think this is hundreds of people who were in on this scam i think this was a couple of folks all living in a penthouse in the bahamas that were somehow managing this -- what seemed to be empire that was not much of an empire after all. >> it is still shocking. >> all right when we come back, we're going to talk much more about the collapse of ftx and possible new regulation with house financial mbrvices committee ranking meer patrick mchenry don't go anywhere. "squawk box" will be right back.
8:17 am
clunky beige, plastic... or... presto... you choose.
8:18 am
better hearing made virtually invisible. that's that eargo difference. well, we fell in love through gaming. but now the internet lags and it throws the whole thing off. when did you first discover this lag? i signed us up for t-mobile home internet. ugh! but, we found other interests. i guess we have. [both] finch! let's go! oh yeah! it's not the same. what could you do to solve the problem? we could get xfinity? that's actually super adult of you to suggest. i can't wait to squad up. i love it when you talk nerdy to me. guy, guys, guys, we're still in session. and i don't know what the heck you're talking about. as a business owner, your bottom line is always top of mind. so start saving by switching to the mobile service designed for small business: comcast business mobile.
8:19 am
flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to $500 a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today. comcast business. powering possibilities. so binance u.s. is defendant embracing the u.s. regulations and is embracing regulations all around the world. so that is has always been our fi philosophy i think regulations could minimize some of the problems but when a person lies, whether there is a bad player that wants to do bad things, regulations don't prevent it. >> that is the ceo of binance speaking with us last hour about the collapse of rival ftx. in the last few minutes we got a
8:20 am
court filing which ftx is trading new ceo john ray aying he quote, never has seen such a complete failure of corporate controls and absence of trustworthy financial information as occurred here ray said that sam bankman fried is in the bahamas and continues to make misleading statements and fallout has once again raised the prospect of tighter cryptocurrency from washington and we'll talk more about that with patrick mchenry he just auns noed a crypto hearing for next month and by the way, the gentleman we were just quoting, congressman, worked on the enron bankruptcy so it puts this into context how bad it may very well be. >> this is the enron moment for this nascent industry. and this is the reason why you have a bipartisan call for hearings and that is the reason
8:21 am
why the outgoing chair of the house financial services committee and incoming chair, maxine waters and i have called for a hearing and we're going to have a hearing in december this is the first bipartisan hearing under the democratic congress in the last four years and our committee, this is noteworthy because it is the entry point for our long-term conversations around how you put up consumer protections and regulatory framework for a really important new set of technology >> so, congressman, here is the real question, though, and straight up could this have been avoided. >> -- yes. >> if this was a massive fraud, a ponzi scheme, a mismarking assets purposely, of potentially stealing assets, of comingling assets and the like, do you believe that regulation and by the way in another country, do
8:22 am
you believe that regulation here could have prevented it? >> for u.s. consumers, yes we've had a complete failure by the regulators we do not have clarity from the ftc or s.e.c we don't have clarity from bank regulators so banks can't even hold these assets as a kcustodian for thei custs and we have a lack of clarity and we have the chair made a decision that custody of digital assets cannot occur, s coin base is just holding those assets on its books. >> congressman, but if the -- >> -- which is a disaster for customers. >> but here is the question. if you have concerns that the underlying assets themselves are part of a massive corruption, and i don't know if they are or they aren't, but the asset
8:23 am
themselves are being manipulate and i think if you look into this example, you could see how they may have been manipulated, there is a question whether you want u.s. firms to be the custodian of assets that unto themselves may be questionable, no >> well, first, there are an enormous number of coins that have legitimate use cases and have serious trading volume and the liquidity behind it and others that do not there is a level gradient here in the digital as pet space. some are securities and masking as others and some are commodities masking as something else some are truly unique sets of technology and others are complete frauds as we found out with this ftx case but the fact that we don't have a framework, both through regulation and law, for digital assets in the united states, if we have an exchange in the united states that is using money transmission licenses because they can't get regulatory clarity, that is not good for consumers so it is the role of our
8:24 am
regulators and since they have failed, now congress to determine what is a digital asset and means of exchange and bring clarity to the space so we could bring legitimate money alongside of this and consumer protection alongsideof this. >> congressman, one of the things that has been speculated about over the past couple of days is we've seen this fallout, as sam bankman fried as a major donor to the democratic party because of those donations he either has been protected or that the industry has been protected from regulations that otherwise would have prevented such a collapse and potentially fraud from occurring do you believe that or not >> well we'll get to the bottom of that. and i'm coming in as the chair of the financial services committee. we do the bank regulation and market regulation. i'll let others pontificate about the nature of what they did here in washington i know law enforcement will look
8:25 am
at that. the fact is you have industry coming to washington and saying our referred regulation and they wanted light touch and insistence on it and that is their goal and that is called in question after this meltdown. >> so the reason i'm asking about the donations -- so one of the reasons i'm asking about the donations is i think there is a question of, a., should the donations be returned, that is one issue. two, you just said it, apparently the industry wanted the cftc and not the s.e.c. to be regulated and at the same time with those the conspiracy theory or just a theory, try to point to the fact that sam bankman-fried was meeting with gary gensler so it is hard to make heads and tails if he didn't want him to regulate things, what that mean means. >> i think that is something legitimate for the house
8:26 am
financial services committee to look into, for the securities and exchange commission to look into and get to the bottom of and i don't have any more clarity than you do. it is an open question but what is the appropriate set of regulations and the appropriate law. i already see the malfeasance and incompetence of the current share of the security and exchange commission. his most significant act to regulate or take action against those in the digital asset space was to find kim kardashian a few months ago and putting out a flashy video that is not about consumer protection that was not about ensuring that consumers were not harmed in the event of a financial calamity. and instead of a cop on the beat, a bystander. >> so i thought the u.s. accounts were okay i thought most of the problem was ftx international. >> that appears to be the case. >> and how does the u.s.
8:27 am
regulators deal with fraud that is off shore and why bother? i mean like you can't regulate stuff that happens in indonesia or -- there is no point, right i mean it seems like the u.s. accounts actually i'm told got their money back. >> congressman, what do you think about that. >> the reason why we don't have -- or the reason why ftx was in the bahamas, you have to ask that question. it was to get the light touch regulation we don't have the regime here in the united states so you could have legitimate changes occur here at global scale we see it in our banks and we export our capital market forces and we don't see that with digital assets and crypto. and you just have the ceo of b binance on >> we want to thank you for
8:28 am
joining us it is a longer conversation and a big hurt hurdle but hopefully we could continue it very soon when we come back, jobless claims and housing data. stay tedyore wchun, u'ating squawk we're live at the nasdaq market site in times square ♪ ♪ connecting to opportunity is just part of the hustle. ♪ ♪ opportunity is using data to create a competitive advantage. ♪ ♪ it's raising capital that helps companies change the world. it's making complicated financial concepts seem simple. opportunity is making the dream of home ownership a reality...
8:29 am
♪ ♪ ...writing new rules and redefining the game... ...and driving the world forward to a greener energy future. (applause) ♪ ♪ opportunity is setting a goal... ...and charting a course to get there. sometimes the only thing standing between you and opportunity... someone who can make the connection. at ice, we connect people to opportunity.
8:30 am
welcome back, everybody. it is time for a lot of breaking economic data. rick santoli standing by r rick, take it away. >> the housing starts, looking for a number somewhat above $1.4 million and that is exactly what we have $1.425 and if we look at termities it is close to expectations 1,526,000. so these numbers aren't surprising, and if i look at the start side, what is interesting here is that 1,526,000, it is still one of the lightest numbers that we've had recently.
8:31 am
one of the higher water marks is 1,566,000 last month which was downgraded philly fed down 6 is much worse at down 19.4 down 19.4. we have to go all the way back to may of 2020 to find a weaker number and once again, just like industrial capacity utilization, it is not painting a good manufacturing type number. initial jobless claims, 222,000 which is down 4,000 from last week's slightly revised 226,000. and on the continuing claims front, 1,507,000 that follows 1,494,000 and both of those numbers are very close to expectations. we all know that inversions gone wild yesterday, twos to tens reaching a level we haven't seen in four decades and three months of tens, the real recession
8:32 am
spread reached a minus 55 that i saw. it is now undermined as 50 hovering as a minus high of 40s. but yesterday's close was the most inverted and in 15 1/2 years and of course we continue to monitor all of that as housing i'm sure diana olick will weigh in on this, on the housing starts and permits front. we continue to see the interest rates are slowing housing. the fed's goal is to slow down housing an the rest of the economy. it doesn't sound like barry thought so becky, back to you. >> rick, thank you. let's get some instant reaction from steve liesman and diana olick. diana, let's start with you. >> these are right along expectations but when you break out the numbers twin single family and multi-family which is the total number, single family really having more trouble and that is what we're focused on with the home builders and mortgage rates and the impact of that and you're seeing the year-over-year comparisons widen. housing starts for single family
8:33 am
were down 22% year-over-year that compares to 17% last month annually and then building permits the same, they're in the 20s versus in the teens so we're seeing that widen, that annual comparison. and when you talk to the builders, they're like well we're going to get morin incentives and they're doing those things to help but obviously when they look into the future, they don't want to put up more homes when they know they can't sell these and we saw in the home building sentiment, the huge jump in the number of builders reporting incentives and that hits bottom line of the earnings, because they were all based on homes that were sold six months ago before mortgage rates were quite this high >> wow steve, weigh in, what do you think? jobless claims and rest? >> i think the story here is as barryhas been talking about th past hour, and diana as well,
8:34 am
the housing market is recession. and firmly so. and the trouble for the fed is that the rest of the economy is not. and you could throw things at me if you like but i'm just saying what they're saying here and what you have is you have somebody like jimbo from the st. louis fed coming on at 8:00 and saying that we're not going there yet and we may not be close to being there yet he put out a range of 5% on the low side remember we're at 3.75 to 4% right now and he said we need to get to 5% in the dovish scenario and maybe as high as 7% on the hawkish scenario and i don't see how we get to where we need to go without pain in the economy and their concern remains inflation. you have some part of the economy doing better despite higher interest rates. for example, the auto seccor, the pent up demand is going
8:35 am
well and we have good retail sales last week that caused people to upgrade forecast for the fourth quarter growth jobless claims, you do have this creep up we need to watch in continuing claims. but the input on the weekly basis, the 222 is not telling you it is a slack in the labor market and feel free to throw things at me again, but this is what the fed wants to see. they want to see an increase in the slack in the jobless market and that means people losing their jobs. >> rick and steve and diana. barry is with us on set and we've been talking about the economy and the markets. barry, you have all of the conflicting signals from the economy. i know we have the lowe's ceo on yesterday and he's not seen any sign of customers slowing down. >> i saw that. >> and the books are long when you talk to his contractors in terms of the projects they have on hand. >> >> well there is a lag effect i joke about in internally and i just came back from the middle east where i was see something
8:36 am
clients when the fed raises rates i don't turn to the guy next to me and say you're fired. that is not how companies work we don't make decisions monthly, based on the 75 bips and they will now cut thur budgets. i've been surprised like the weakness in software i talked to someone who spoke to the ceo of salesforce mark bennyoff and i think you're seeing that ripple effect through all of the companies so they're feeling pressure. lowe's is people are fixing up their house or use a lay away plan, but i was surprised and i own the stock so i was personally shocked actually. not saying i should get out of it but think it is confusing. but think the overall picture in the destruction of wealth that is taking place and the movement of capital from important things that will grow the economy like
8:37 am
new plants and equipment versus money going into the two-year. because i could earn 4.6 on the two-year it cannot do anything other than that and again i was talking to the banker yesterday and i had lunch with a ceo of the one ever banks yesterday, they're really nervous about a nuclear war. there is a lot of geopolitics stuff that could really send this market tumbling and again it is not one thing. it is not just rates he's selling down the balance sheet forcing rates up and who is going to buy our treasuries the chinese are not. they're busy being their own independent country these days and so the treasury may have to buy their own treasuries their going to do their own quantitative easing and otherwise interest rates could have deflation and you'll go over the edge. europe is comatose maybe china opens, but not the way it did before.
8:38 am
it is not a great source of value for american companies and we're scared to death of invest unwilling china right now. so there is no global growth factor and the stimulus is over right. we wrote all of the checks and now the states are writing inflation check which is amusing. and look at the revenue side drop of the market of $7.5 trillion and means they've lost 20% of the tax rate a couple of trillion dollars and it get news a debt negative spiral it is not sustainable. what they want to do is yearly, it is suicide. >> would you be okay with the fed continuing to strengthen the balance sheet. >> now while raising the rates. >> does that seem like the better process >> yeah. >> to get rid of that incredibly big -- >> yeah. why don't we figure out the oil
8:39 am
situation or the increase in -- we'll see how europe gets through the winter but the situation in the ukraine is bad for food prices wheat is up because there is no wheat and people need to get food so, this is not core inflation and interest rates have nothing to do. by the way, the arab, the saudis an the russians say they're kill the global economy and lower demand for oil and cut the supply so what benefit did raising rates have if they cut the supply and you're killing the economy, then oil prices went back up. so it is not -- it is a blunt tool that is going to dkill a lt of things that it shouldn't kill these are people that did solid investing. those weren't stupid this is not ftx or doge coin or scheibeu these with people building apartments and trying to occur the housing shortage the united states they want to have more houses so
8:40 am
prices go up because we have this massive shortage of housing. home builders are dying out there. they're just dying. >> so if we didn't release the spr, maybe the saudis would have the -- >> but the saudis were looking at -- >> but that was counter prozuktive and we're still releasing it they're trying to slow the economy and -- >> and oil is here before china really reopens what happens once they do. >> well, we'll see won't we. >> two questions on things you just mentioned you said he own shares of lowe's and you saw marvin allison on the show yesterday you were thinking about selling it before and changed your mind when you spoke or you heard what he said. >> i think if it is a profit, i think it is up and i was betting that they would close margins with home depot. that they would get -- they were too cheap relative to home depot. >> well run at this point. >> yeah. and well run i was impressed.
8:41 am
you have to be impressed with those numbers. but i think i'll sell it. >> because you have done well. >> and i do think the consumers are going to run out of pressure here. >> and what about this and we talked about this i remember during the program, there was a contractor who sent me a note, a random viewer who said look, the truth is that we have such a backlog of projects that will go through '23, but people have ordered stuff and planning to redo their home and they have a -- >> there aren't, talk about labor shortage, there aren't qualified builders. >> right if that is true. you would think a lowe's or a home depot would be a winner he said if anything gets soft, it is a 24 story. >> but you'll sell the stock in '23 on '24. if you think there is a backlog. i think what you're seeing in the travel world is a backlog.
8:42 am
>> if that could sustain itself. >> it won't sustain itself. >> but you could create a self-fulfilling prophecy on the other side. >> perhaps >> you see >> perhaps look, if people can't buy a new home, and furnish it so the home furnishing will -- you'll just be doing the renovation of the your existing asset. i thought most people did that through the pandemic they thought they were home doing all they wanted to do. >> and there were people who wanted to do and didn't and started to do it -- seeming to try to do it. >> the home renovation is because of the labor issue furniture is a different issue. >> and you couldn't get a guy to move a wall because of the pandemic the average construction workers in the united states is 55 years old. i don't know anybody who went into construction in the last ten years. do you anyone who has gone into construction. >> my contractor's son did.
8:43 am
>> we're plus one. >> it is a crazy market. >> and in technology sales kind of evop or ating marc benioff told you that it was -- >> it was another ceo who said what mark said to him. >> but that is a big question. if all of the sales disappear. that is also big spending during the pandemic. >> and it is interesting because you think in companies with investing in productivity, because they're nervous. everybody is nervous the talk of bullard is self-fulfilling prophecy you have to prepare for armageddon and batten down the hatches. they already increased rates fastest in the history in the united states. the yield curve was 68 basis point and which was 90 before it moved to whatever it is today. that is the steepest curve in the history of the country i was told so this is the like the markets are saying we're going into a recession and the only one who doesn't get the joeke is the fe. >> so the message is we believe
8:44 am
you? >> yeah. seriously, the credit marks which are the smartest markets are telling you that you're in for -- >> the inversion went down to 370. >> the ten-year was 420 wasn't it so it got more inverted. >> yeah. >> barry is with you for the rest of the program. and he'll join the virtual financial advisers summit on december 6th talking about market uncertainty and seeing what happened in the day by day markets and beyond and so you want to get his information and e ce uld register by scanning thqrodon your screen stay tuned we have much more "squawk box" ahead after a quick break.
8:45 am
we're told that success is all about making it on your own. the truth is... need some help? c,mon, get in. nothing great gets done alone. that's why there's shopify. with shopify, you can set up your online store; you can sell on social media; or, you can sell in person, with our point of sale system. it doesn't have to be lonely at the top. join the millions to find success - on their own terms. start your
8:46 am
journey with a free trial today.
8:47 am
coming up in just a moment, jim cramer first take on the trading day ahead and next hour, an exclusive interview with liberty media chairman john malone re. faber will be sitting with he stay tuned much more on "squawk box" ahead.
8:48 am
♪♪ for skin as alive as you are... don't settle for silver. harness the power of 7 moisturizers & 3 vitamins to smooth, heal, and moisturize your dry skin. gold bond. champion your skin. bundle up the entire family this season with jackets, hats, gloves and more from dick's sporting goods. with the latest looks from the best brands like the north face, patagonia, columbia and more. boots that score on comfort and style from sorel and dr. martens. cozy accessories for the whole family. when you're running short on time, shop where one hour pick up is always an option. and with our best price guarantee, if you find a lower price, we'll match it. shop in-store or online. every holiday starts at dick's.
8:49 am
8:50 am
i want to get down to the new york stock exchange and krooim joins us now. jim, we can talk about some of these economic numbers, get your thoughts on what barry's talking about, also get your thoughts on what cz said this morning about the future of crypto where do you want to start >> first, look, i think barry's closer to the situation than a lot of the people who work at the federal reserve, just in part because he's in the business every day, and it's immediate, not looking at last month or the month before, and i think that his projections are
8:51 am
far more spot on as far as your interview with cz on crypto, i find the level of arrogance for people who think that crypto's good shocking. i mean, i have problems with the dollar, the same problems that barry has in terms of the huge amount of debt, but there's clarity, and you know that there's debt, and you can easily switch to gold if you'd like or some other asset, maybe real estate that could be better. but we input up these currencies, and i question, what do we know about solana? what do we know about xrp? the answer is, zero. the reason why we know zero is because the government doesn't feel that it should be regulated. and we put them up -- we could put up lots of -- we could have put up enron that was a very well-traded stock. i question why we put these up i know that that's maybe
8:52 am
seditious, but i question why we're not allowed to question any of these things. >> i think we are allowed to question these things, and i think at least on your broadcast and our broadcast, we've been questioning it repeatedly. >> you guys have been nonstop. you have been nonstop, and it's been great i didn't mean it like that i meant that they don't want you to question. i loved this interview today i want you to be clear what i'm saying, they didn't feel compelled -- none of these people feel compelled -- i've been looking at some of the things you've been asking and it's unbelievable how much money you could have saved people, unbelievable what "squawk" has done you don't have subpoena power. i mean, you have asked everything anyone who listened to your questions would say, i got to get out of this. but their answers were reassuring, and you know, you don't have subpoena power, and you're not a prosecutor, but man, you nailed every one of these things and it is just so aggravating. i'm sure when the book is written, someone will say the
8:53 am
media did nothing. your team did everything but nobody listened in the government i say, congratulations to you, and shame on those who would not answer your questions in any direct way instead just made you feel like, are you kidding me i say, congratulations to you. shame on them. >> well, thank you we did get a lot of "are you kidding me?" >> you guys have been consistent and it's incredible to me how tone deaf the government is. and how these guys -- i mean, the snake oil that comes on. and it's impenetrable, but you did your best, and you should be proud. >> jim, thank you for that appreciate it. we will see you in just a couple of minutes i want to thank starwoods barry sternwood for hanging out with us today do you have any thoughts about the snake oil salesmen that you've come incontact with >> the digital revolution of finance is real.
8:54 am
and the technology's as real as the internet it's good technology the coins -- i don't know why they have any value. i mean, there was no coin invented for the internet. like, all you need is this verification methodology, so the 60,000 coins, you know, bitcoin, there's 21 million bitcoins. you could argue in a world where printing presses are going high-speed forever, that has some merit if you're in a high-inflation country and you want to get out, convert into bitcoin and get out of it and get out and then -- so, bitcoin, and to some extent, ethereum, i don't think i put those in the categories of the others >> they have to be imbued with value. that's what we keep talking about. ethereum is a great protocol, and by the way, you want it to be stable. super stable if it's an investment where it's going to go up or down, you can't -- it loses its utility in many ways. >> it's not a store value. right. look, i think when you think about property title and all that stuff is great. >> that's where the blockchain
8:55 am
>> blockchain is real. we're in this early stages of a revolution, and sadly, there are a lot of carcasses being taken out to pasture, and i did not expect sbf to be one of them i will say that. >> barry, thank you for that coming up in just a moment, what to watch ahead of the opening bell on wall stree football, housewives, football, ewives, football, housewives... whoops. oh no... the housewives are on the field. i repeat, the housewives are on the field. i just want to talk! yeah! who flips a table? get your tv together. call 1-800-directv to save up to $120.
8:56 am
8:57 am
8:58 am
♪ futures now at the lows as two-year yields rise just a moment ago we got comments from st. louis fed president jim bullard, hawkish comments saying it's possible we might need a top federal funds rate of 7% and the dovish notion, 5% let's talk more about the markets with global market strategist at jpmorgan asset management i guess we should take them at face value i think a lot of times that job owning is a technique or tough talk is something that the fed employs so that they don't maybe actually need to get to the numbers that they talk about but do you believe 7% is a possibility if inflation stays really stubborn? >> we don't want to rule anything out if inflation does
8:59 am
stay persistently high, but we are seeing signs of improvement on inflation i think the report we got recently from cpi couldn't have really been better, realistically, if we think about some of the progress we made on goods, on commodities, on supply chain, some areas of services, even owners equivalent rent from scorching hot to just boiling hot, so we're making some progress we don't want to make too much out of just one report, because we could very well see a backslide but i think it is important for the fed to continue to message tough so we don't see too much of an easing in financial conditions and don't see the markets get too ahead of themselves. >> we spent a lot of time with some people before you i have to apologize. but in 30 seconds, do you think the midpoint of 5 to 7% is what's in the cards? that's going to be scary enough. i think that's why the market's down >> it could be that we don't have to get quite to 5%. we see market pricing move all around but we are seeing some progress
9:00 am
on inflation we continue to see growth resilient, which perhaps could push the fed funds rate a little bit higher, but i think the 5% range is still a reasonable estimate for where we need to go to get inflation under control >> all right promise you, i want to hear more from you and we'll have you back, but 9:00 a.m., we're out of here. so, we appreciate it good to have you on, meera join us tomorrow "squawk on the street" is next ♪ good thursday morning. welcome to "squawk on the street," i'm carl quintanilla with jim cramer at the new york stock exchange david faber is at new york media day. futures taking a step back today. we do have hawkish fed speak dollar on pace for the best week since september. plus reaction to cisco, nvidia, macy's, and kohl's our road map is going to begin with growth concerns jpmorgan is predicting a m


info Stream Only

Uploaded by TV Archive on