And check out the nasdaq. Also at record levels, a whopping 44 this year. Did you guys all have your money in nasdaq stocks this year . As you know, were not allowed to hold individual stocks. But you can hold nasdaq and qqqs. Its on pace to have the best performance in 2003. You act like you didnt have it. I have a 401 k . You want me to ask. Where do you have europes, steve . In a boat, a couple of boats. Yes, thats right the s p, half a percent. That index is up just 24 this year. And, of course, you made some money in treasuries as well if you invested at the right time. Take a look at treasury yields. There we go. 4. 01 on the 30year, 3. 87 on the 10. 3. 87 on the 5, and 4. 29. I dont know. Do you think 2024 is the year when we disinvert . Thats a question we have to be watching. Yeah, definitely, absolutely. Do you think happens . Why has it been inverted for so long is the question . As the fed does its thing, you would expect a disinversion yield curb. Eventually. It may not happen too closely. Paul simon said things happen really closely in macroeconomic and they happen much more quickly. Thats why we keep you on your toes. Theres a worry of a fresh round of attacks after attacks in the red sea rattled the market. Theyre stepping up their military Campaign Including an exchange yesterday that saw a u. S. Navy destroyer and f18 Fighter Group shoot down 17 drones and missiles launched by ira Iranianbacked Houthi rebels. This is the latest sign the war between israel and hamas is spreading into a larger conflict. That war began on october 7th. While all this is happening, the Biden Administration is adding crude to the Strategic Petroleum reserve, the government pu purchasing 3 billion barrels bringing the buyback to 14 following last years sales. If you were with us yesterday, we were talking about the slump in natural gas prices. Check out Home Heating Oil dipping more than 5 on forecasts of warmer weather for the east coast. I was also reading headlines about minnesota. People were Walking Around over christmas without coats on. There is some blizzard activity. Theres this el nino thing that says its supposed to be relatively warmer through march. The interesting thing about home heating prices whether it comes from oil or natural gas or electricity is that this is one of the areas where you can make people feel poor because of what theyre spending on winter heating. Weve seen this before. It has a similar impact as summer gas prices when people want to drive and go on vacation. So what you may get is consumers feeling like they have more money in their pocket because theyre not paying out thousand dollar bills every time the guy comes to fill up the tank at home to heat their home. So whether the weather lasts, whether this is just, you know, a freak late fall sort of warmer period is to be seen. I think thats an important insight. Its the prices in front of me that shape your believes about whats going on in your life and in prices. Whether or not they represent a substantial portion of your expenditures. You do go to the gas station every day or every week and you do fill up your tank. Your other prielss are the same every month, but its the prices right in front of you. There was a journal piece about misery index. You dont historically siee it. Usually you have the misery index and inflation and it usually moves invertly with, you know, Consumer Sentiment. This year things have gotten better, but people arent feeling good and they attribute that to republicans not being happy with biden in the white house and effects after the pandemic. Theyre not happy, but theyre still spending. Theyre not happy, but still spending, so does it matter . Spending makes us feel better. I know a little bit about this. I wrote that story last week when we did our cbc allamerica survey showing high Holiday Spending but low sentiment and i wrote that story for the wall street journal in 2002 when after 9 11, Consumer Sentiment number ts plunged, spending remained robust. People found themselves extremely depressed and buying automobiles. Why . Because prices had sunk and they had incentives from the government to go buy autos some of the connection between sentiment and consumption, i think, is tenuous at best. I think if you asked economists, well at turning points it matters a lot, they can go up and down. The most important question when it comes to spending are incomes and the price youre spending. So what ive always said is dont say somebody wont spend until you know the price theyre not going to spend at. If a car is x minus and 10 off, i may go buy that car no matter how depressed i am. Its retail therapy. Exactly. We have Corporate News now. Were leading with apple. The tech giant is appealing its ban of impockets of ultra2 and series 9 smart watches after the white house declined a veto of federal agencies stopping the sale in the u. S. According to the wall street journal, apple is asking the court to allow it to sell its watches once again while the appeal is being considered. It adds if the ban remains in place, apple will suffer, quote, irreparable harm. And bloomberg reports apples outgoing design chief is joining forces with p ales famed former chief design officer jony ive and sam altman. Tam will start at the design firm on an ai project focusing on devices that inlt a great the latest capabilities in ai tech. Apple shares have been on a losing streak, but right now were seeing apple shares are in the premarket still down a tenth of a percent. But look at year to date, up almost 50 . Not chump change. Overnight softbank said it would receive shares in tmobile. This is part of the merger agreement between sprint and tmobile. And tesla is reportedly planning to launch an updated version of its popular model y from its plant in shanghai. It will feature significant interior and exterior changes and should reach mass production as soon as mid2024. The report adds the shanghai plant will pause production for about a week in preparation for the changes. The plant will need another upgrade before peak production begins. Is that what we drive here in the states . I i do think people drive it here, but i know its very, very popular in china. So an upgrade. More news from the Wonderful World of streaming. Amazon prime video will start to show ads starting january 9th. If you want the adfree tier, youve got to pay. It will be an additional 2. 99 cents a month to avoid ads. It will allow it to continue to in vest in compelling content. Amazon shares right now mostly flat, up this year 83 . We talked a little bit yesterday about were paying i dont know what were paying but the price for prime keeps going up. Mostly people may opt for prime for the Free Shipping, but you get the amazon prime on your device without the ads and already the freev comes free. Showing ads for shows we pay for i feel like this is a curmudgeony thing so say. All of a sudden they start introducing ads and he says, what is this . Welcome to life, sweetie. This is how you introduce consumerism early. I remember having a talk with a mall developer once. He said, lets see. They had this thing where you order it online and they send it in five days. Then you have a thing and they send it in three days. Then they have a thing where you order it online and pick it up at the store. Sounds like they invented the mall. Its full circle. Now it feels like with all these ads on streaming, why arent they driving me back to my cable . The ads are shorter. Theyre usually 30 seconds, tar targeted. Theres a convenience to cable. Maybe im buying Cable Companies with all these ads going on. Im very pro cable. Yeah, but we like cable here. Whats the difference. 11. 99, 9 do you have any idea what youre paying for all these . No, i do not. Honestly, ive cut a few in the last year, but no. All right. Were going to continue this discussion. Coming up, a sector investors need to watch coming into the new year. Plus will the s p tap in . Quk xger ferguson. Sawbo coming right back. We have some ads coming up. That first time you take a step back. I made that. With your very own online store. I sold that. And you can manage it all in one place. I built this. And it was easy, with a partner that puts you first. Godaddy. The power goes out and we still have wifi with a partner to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Welcome back to squawk box. As 2023 comes to a close, whats one sector to keep in mind . Dom chu with this years sectornomics. Interest rates are going to play a big part of that story. As we know, theres a lot of focus on whether the fid will cut rates as early as sometime in march. With the s p outperforming in 2023 to the tune of perhaps around 22 , 25 for the overall s p 500, what could be that one driving force . Its going to be financials. We asked a couple of our cnbc contributors why from a fundamental basis. Tom lee is looking at financials for one key reason and thats because of the rate story. Interest rates are falling and Mortgage Rates will fall and that will inprove quality for the banks. They should help Regional Bank and financials. Theyre understood owned by hedge funds right now. Theyre like the energy trade of 2021. We also asked cnbc contributor Katie Stockton from a technical perspective what she likes. Lo and be hold, she said financials as well. It has a base breakout contributess to it. The performance since the october lows, we have seen again outperformance in the s p and sector overall for financials, but the sector spdr etf, up roughly 19 higher from those low levels versus a roughly 16 gain for the broader s p 500 overall. So well see whether or not, le leslie, we see any of that continuing performance heading into 2024. Really interesting stuff. I think financials are also the least sorted sector. Definitely one to watch in 2024. I know i for sure will be watching it. Thank you, dom. Joining us now for more on the markets, zachary, were half a percentage point from another record in the s p 500. Do you think we get there before the end of the year . I think we do. We have positive momentum, seasonality. I think well be hitting alltime highs if not very early in january. Theres you know, some would say the recent rally is leaving the market vulnerable to disappointment maybe not in this kind of setup but at the end of the year with little news, little in the way of Economic Data coming. But youve got earnings to look forward to in the next few weeks or so. Do you think its priced to perfection at these levels . I think its good you brought up earnings. I think thats a cast list youre looking for in coming weeks. A lot has been looking at that. I think what that kind of misses is those companies have really outearned the rest of the market. Equal weight s p or small caps lag behind really substantially in terms of earnings power. Weve seen some breath increase over the last few weeks. Its been healthy, especially for the areas of the market that havent participated like financials you were just talking about, but to see that in a more durable way, we need earnings to validate that. We have windows where you dont have a lot of new information and i think thats kind of dominating markets. But come the end of january, i think were going to be doing a lot of wok to look at what the projections for 2024 might look like. I see you think stocks next year wont beat 2023 gains but you think theyll do better than cash and 3w07bds. So how would you be allocating your portfolio given that thee sus . Thats a great point. I think the last 18 months has been a shock in terms of what rates can do. You see a lot of people move to cash, tbills, money market bills and the like and i think 2024 is going to be that time of year of getting invested. Thats the way these things tend to go. I think its going to be a good year for the stockmarket. We dont see a recession coming. We see the fed kind of delivering cuts in q1 of this year and continuing to do that throughout the rest of the year. Weve got the head winlwind, thl wipd. All of those things tell us you do want to be exposed to stocks here in a material way. And then on the fixed income side, 5. 5 is rate, but what about the sixplus cuts in the curve next year . Its going to look a little bit different. We do think extending duration and fixed income, going from cash to fixed income is a thing that investors are going to be doing really all of 2024. Hey, zach, you have like a double reverse Psychology Program where you say everybody is going away from the big seven into the broader index, but youre going to stick with the big seven. Am i reading the notes right . Not exactly. We look for opportunities, you know, over the one to threemonth time horizon and we see that in the broadening out of the market. Weve been adding small caps in our portfolios, the ones that make the most sense since midnovember and we do think thats a window thats going to continue to work for that part of the market as we catch up. We materially underperform. These things can take a pause and thats kind of a healthy development. I do think as we look forward to next year, we still do think that kind of technology at the very top of the market is driving innovation in ai, Adoption Across the economy. Its going be where you want to be. The last thing i would say is the history of these kind of you call them the mac 7 or fanng, theyll change. I think well see that within next year. Thats something were looking out for. Maybe you wont be saying magnificent seven. Maybe its something else. Coming up, the next round is on the house. The tax on whiskey gets delayed during the ongoingar tiff battle between the u. S. And europe. Squawk box will be right back. Announcer sector nomices is sponsored by sector spdr effs. Why choose a sleep number smart bed . Because no two people sleep the same. Only sleep number smart beds let you each choose your individual firmness and comfort. Your sleep number settings. Its so smart, it actively cools and warms up to 13 degrees on either side for your ideal sleep temperature, and effortlessly responds to both of you. For your best sleep, night after night. The queen sleep number® c2 smart bed is now only 990. Plus, no interest until january 2027. Ends monday. Shop for a limited time and sleep next level. Only at sleep number. Whiskey distillers are toasting the new year after the tariff tax gets punted. Emily wilkins joins us. Good morning. Its easier for distill letters to get into the Christmas Spirit after there was an agreement to suspend the tariff. Its the result of a larger dispute on steel and aluminum tariffs put in place under the trump administration. Now the discitiesers in kentucky, virginia, and beyond can breathe easy,s at least until the end of march 2025. They have been negotiating the tariffs for two years. The representative said the goal is to forge a forwardlooking arrangement that will allow us to join forces economically to incentivize fair and clean production and trade in the steel and aluminum sectors. Republican kentucky congressman andy barr who pushed for the extension of the halting of the tariffs tells me its been critical in his home state 69. After the tariffs were initially lifted in 2021, barr said there was a 21 increase in u. S. Sk exports. Europe really matters. Were still trying to crack the code in asia and other parts of the world, but europe really understands age distilled spirits, and so this is the space where we need a level plap Playing Field to really continue to grow this industry. U. S. Whiskey distillers arent the only ones. Europeans looking to get a harleydavidson motorcycle next year will not have to face tariffs either. It will be a happy couple of years. I went to kentucky when the tariffs were first introduced, and they were up in arms, but the bourbon distillers that i spoke with felt confident that the quality of their product would be the selling point as long as the price point could be overcome. The fact that its punted, d that mean theyre optimistic there will be no negative effect for them . If you want to read the tea leaves, the fact that they both punted on these retaliatory tariffs is a pretty good sign theyre making progress and could come to an agreement soon. Down in kentucky, tennessee, and other places, they did see a drop in exports during the times that the tariffs were in place. They were retaliatory tariffs, but as its been lifted again, theyve seen it bounce back. And as you heard from congressman barr, theyve found a nearby in europe who appreciate it. Bring out the old pappy. Emily wilkins, thank you. Coming up, vice chair Roger Ferguson will tell us where hes seeing the new year and how concerned he is about the nations looming debt. And as we head to break, a look at yesterdays s p 500 winners and losers. Announcer executive edge is sponsored by at t business. Next level moments need the nextlevel network. So, the question is. Cyber attack as cyber criminals expand their toolkit, we must expand as well. We need to rethink. Next level moments, need the next level network. [speaker continues in the background] the network with 24 7 builtin security. Chip . At t business. Good morning. Lets take a look at the futures at this hour. Currently pretty flat across the board, dow indicated to open up about 17 points. Nasdaq indicated to open up about 12. S p, were on a record watch. Half a parnl point from those levels. Tr treasury complex, yields 4. 3 currently. Looking at the fed rate path, lets welcome in vice chair Roger Ferguson, now a cnbc contributor. Thanks for joining us, roger. Good morning. Good morning. Nice to be here. I was okay not dismissing but leaning against the market, pricing for deep cuts next year beginning in march, but along comes Goldman Sachs who i consider to be more considered about their forecast and maybe not quite so ready to get swept up into the meaning of it all. Heres what they wrote yesterday. We expect 3e consecutive 25 basis points in march, may, and june followed by one cut per quarter till the fed fund rate reaches 3. 25 to 3. 5 in 2025 q3. If the