tv Squawk on the Street CNBC November 7, 2022 9:00am-11:00am EST
>> all right steph, thank you appreciate -- >> good to see you. >> always do final check on the markets we are indicated up less than -- just over 100 points triple digits. the nasdaq up 31 s&p up -- we're watching the yield complex, too that might be even more important. make sure you join us tomorrow election day, one more time, business is on the ballot. "squawk on the street" is next ♪ good monday morning. welcome to "squawk on the street" i'm carl quintanilla midterms of course, cpi thursday, disney earnings and watch megacap today. road map begins with the tech turmoil. apple warning covid restrictions in china are hurting iphone production. plus, cutting back, meta set
to become the latest technology giant to begin large scale layoffs as soon as this week. and taking stock, futures right now modestly higher. this as investors await tomorrow's midterm election results. and of course, more reports on inflation. >> let's begin with apple warning about lower iphone 14 phones and shipments the foxconn plant is operating at significantly reduced capacity apple says it's continuing to see strong demand for the lineup but as the customers will experience longer wait times to receive their new products jim, a lot of discussion about who this was actually aimed at, this announcement. >> right i will say this, point blank, articles this morning said there is weakness in demand. i spend a lot of time last time working on this. it's not true. okay there is a supply problem to the point where frankly some people question whether anything was produced last month.
maybe the max was about -- not max, might have been half. then near the end none i was shown articles that translated into english which indicated that frankly demand was amazing but they couldn't produce anything it is interesting to see at what point the -- tim cook says i need a second source and i think, david, all these stories about how china is no longer debating the -- they're just going to zero covid based on absolutely nothing. they're full of sound and furry signifying nothing. >> wait. i'm sorry. where are you, they're not going to lift the covid restrictions you think all these different signs that people are pointing to they will slowly but surely start to reopen? >> yes i still think the stories that -- >> true or not true? >> true. over the weekend we first heard stories that just said, listen, they're sticking by zero covid, period. >> yes. >> but apple is, i would say,
largest employer there and apple has to have a second source you can't be shut down for your best, most in demand products and say, hey, you know what, we don't need a second source since they are all about second source by the way, that company along with qualcomm doesn't have to pretend they're not apple players. you know, qualcomm says whatever it wants about apple, which doesn't make sense but they do it they have 100% of the business until the end of next year but, i do think that the idea that apple can just forever say, you know what, we have to make it in china, for china -- >> well, the vast mo jurorty, carl, iphone pro and pro max 14 are made from this facility. hundreds of thousands of workers at this facility. >> it's apple town. >> we were reporting on this last week. of course we had that video of the workers leaving the facility or trying to escape essentially. so not a big surprise that there would be a slow down in production from this place >> again, but they made sure that you knew over the weekend
that, believe me, that it was no demand problem >> well, that's sort of the interesting part about that. let's get to eunice yoon in beijing to talk about apple, foxconn and some of these restrictions, eunice, whether this was in some way apple's attempt to register their dissatisfaction with industrial policy >> reporter: well, apple was saying that they are working very closely with their supplier here, foxconn, on trying to improve the conditions for the workers. foxconn said that the zero covid policy has forced it to revise down its forecast for q4 this is really important quarter for taiwan companies, so it's a pretty big deal. the company, foxconn, said they hope to resume full capacity as quickly as possible, and that means to the company reorganizing the facility to further restrict the movement to factory and dormitories, but at
the same time, of course, improving the conditions for the workers to maintain them and attract new ones they're offering a lot of cash, bonus for one-time bonus for anybody who wants to return to the factory. $69, pretty hefty in chinese terms. and also they're recruiting with 20% bump in salary for new folks to come to the factory now, official media is quoting sources within the factory as saying that foxconn is targeting full production by the end of november now, all this comes as china -- as you were just talking about, the top health authority over the weekend had explained a little bit more about what it believes for zero covid. and not so much of a surprise they doubled down on zero covid, saying that they believe that this policy, that's of course backed by president xi jinping is completely correct, the most economical and effective
and you guys were talking a little bit about some of the tweaking that might happen there is an expectation now that maybe the reopening is going to happen in bits and pieces, especially with some targeted measures because at the same press conference the health authority singled out the iphone city, saying that the authorities there had excessive control. so, people are seeing that mean that the local authorities are going to try to make some changes to make things a little better, but on the whole, the reopening and the expectation for one have slowed down >> eunice, it's jim. we know one thing to, the unibody cannot stop covid. and anybody who seems to think even if they're a dictator, they can determine say open by november is running a fool's run. does the communist party every speak to any scientist since we
know this is a novel virus and cannot be stopped? >> reporter: well, they talk to scientists because we have a lot of epidemiologists who will speak out. but they usually echo the party line and so, even though i'm sure that the authorities are having conversations with people of all walks of society within business or science, at the end of the day, what's most important is what all of this means for the communist party. so the communist party wants to make sure that if they do create this exit that they are not seen as having made a mistake previously, because as you well know, the narrative that has been coming out of here is that zero covid has been so successful in protecting china, unlike what's happened in the united states or elsewhere so to be able to change that kind of narrative is pretty difficult to do quickly. >> that's interesting, eunice. the journal has one destale about retail businesses being told, okay, maybe we're going to
close some of these pcr testing centers. and the reason for that ostensibly would be because it's expensive. is that a potential off ramp >> reporter: well, the pcr testing is expensive so local authorities have been very frustrated that they're the ones that are having to take on the costs. but when i read that line, i was thinking about how some of these malls have actually started requiring and also office buildings have started to require daily testing. so even on 72 hours, every three days we have to go and get a test and now some are saying daily because they're worried the numbers have surged which means we had 59 cases here so, you know, it's really not very consistent in terms of the way the policy is carried out. >> yeah. well, those investors state side trying to make sense of all this, eunice, would certainly agree. it's a tough tea leaf to read. thank you. our eunice yoon in beijing today. futures as we said meantime are rising this morning
following the rally on jobs friday got inflation data coming. midterms tomorrow among the items on wall street's radar this week. jim, mike wilson, morgan stanley says the midterms could add fuel to his upside tactical bounce. >> i think just completely channelling mike wilson. i think we'll know by tomorrow if not 5:30, i think we'll see exit polls we'll see the gop is going to take the house. i think the gop will take the senate i think that will cause a bump in the averages particularly among the oils i think the president's team is viewed distinctly anti-business, wherever business can be found it's anti- it's not the cereal or something. >> it's strange. andrew brought this up during "squawk" this morning. the split between the gop and chamber of commerce is also happening. so it's like where does business turn right now >> well, i think that business in general people who -- yes, that's a very sophisticated view but i think in general people just feel like, look, if the
republicans win, the possibility of a particular president coming back, who is very pro business goes up dramatically >> what about the possibility of them not raising the debt ceiling or at least using it and this is really many -- i mean, the expectation is the republicans are going to take the house for sure so, kevin mccarthy have already spoken to use this as the least as leverage perhaps more so saying we're not going to raise the debt ceiling unless president biden you do certain things are we going to be sitting here a few months from now talking about this in a very significant way impacting the markets? >> probably. but i think that we have seen the shutdowns have been good we can always say shutdowns -- >> i'm not talking about a shutdown, not raising the debt ceiling. it's a different thing. >> september 2011? i don't know i think it's pretty radical to ruin our credit. >> it seems -- right
it seems unlikely but if you want to play a game of chicken, you never know. >> well, look, i think that what matters more is that people initially are going to say administration will never sit down with business people. i know that when ever you talk to business people, they say the president does not want to be seen with them for fear of a picture. and i think that's going to make people feel better about business >> you're a fan of the commerce secretary, aren't you? >> our commerce secretary? >> yeah. >> absolutely. >> she's pro business and she gets it done and she's pro business in a way that we should all be proud because it's about taking back the technology from taiwan which makes sense. i think she is a practical person in the way that we used to have in the country i mean, practical people would sit down she had a lot of republicans being in her favor. >> sure. >> reminded of tip o'neal during the great period of ronald reagan, just different kind of
person likes to get it done ♪ >> yeah, i like that not endorsing her for president, but i like that. >> is she running? >> well, i would endorse her for president if she did when we come back, meta said to be joining the list of tek companies planning large scale layoffs. the journal story over the weekend. we'll talk about what may or may not come as early as wednesday. take a look at futures as we get set for another big one.
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among the biggest pre-market gainers on s&p is meta they're beginning to have large-scale layoffs this week. mark said, quote, some teams will grow meaningfully, but most other teams will stay flat or shrink over the next year. in aggregate we expect the same size or slightly smaller organization than we are today gene munster thinks 10% may be in the cards. >> i think first of all this is the worst performing stock in the s&p 500. all 500 of the s&p 500 i do think that zuckerberg wants to get his pen sits in line with revenues which would deeper cuts i think that it's going to happen i think that there's actually to some degree a concern about what shareholders think, novel.
>> there is? wait a second we know there isn't from what they just decided to do with their last quarterly report, spending reality led to free cash flow, as you pointed out. >> periodically there's changes of mind. >> do we really think this is a change of mind or is this sort of already established that something that would occur. >> i think there's tensions between the cfo who i think got a blast from some people after the last quarter and mark zuckerberg, who i think had been somewhat oblivious or -- no, wait not oblivious, not concerned >> jim, this is important because if this is the first sign that zuckerberg is starting to give in, so to speak, and say okay i've got a run this once again more for profitability in the near term -- >> not near term over the next year. >> okay. over the next year >> that would seem to indicate he's not going to spend at all
costs whatever it is on the metaverse. are we not there yet >> i think we're there. >> you do. >> look, either if you're working in a y full time in big island, don't service, there's a moment you say, you know what, it's just not a badge of honor to finish 500th. i think our executive producer finished 500th. >> in the new york city marathon. >> we have a bunch of marathoners. amazing group. >> couple 7 minute miles but i don't think that mark zuckerberg likes being 500 i think he feels that's low on the totem pole >> so you think he's ashamed by the performance? >> i think he's aware. he's been made aware. >> is he going to take in that $34 billion cap x budget for next year? >> i would think there would be head count reductions that are more sizable than what we're talking about. >> meanwhile, diller on "squawk" thinks tiktok will be banned i don't know if you saw "60 minutes" last night, but
fascinating color on the code they use domestically and code they export to other countries. >> look, wouldn't shock me reels had a great quarter. no one seemed to notice. anyone who watched football saw two things one, no ads for ford why? there's no inventory for ford. second, endless ads for whatsapp i didn't know whatsapp had a possibility with this $10 billion revenue of being broken out. so i think that those two issues largely founded in the nfl, i didn't talk about paramount and how that was some bad quarter. >> wait, warner brothers discovery or paramount >> paramount and nfl and cbs ford not having any advertisements tells you, well, they don't have any cars and trucks for sale. >> meanwhile on the layoff issues, it is interesting a year ago you had a lot of portfolio managers sort of searching the job sites to see what sas companies were hiring most
aggressively because it was a sign that they felt really good about their business just one more data point here we are a year later, and it's the reverse and who is cutting jobs. by the way, same thing if you're cutting jobs maybe you're going to get rewarded in the stock market. >> last week was one of the worst weeks. the cloud was -- they're slowing. trul owe is laying people off. >> friday was a disaster for so many of these softwares and service companies. apion, they were -- >> last quarter was -- >> twilio. >> horrible, dead. >> i want to be call it terrible there's no problems the fact we haven't been able to get as many people to look at our stuff. then once they're looking at it, we haven't been able to convert them otherwise everything is fine i mean, you know, these companies around the world because they never fired anybody. they only know -- hey, listen, we ought to slow down the hire to a trickle because we're not doing well.
>> elon musk will fire some. >> i think alphabet will show you considerable reduction. >> alphabet? >> yeah. >> alphabet? >> alphabet. >> just making sure we heard you right. >> beyond what we heard previously. >> so you're predicting future firings atalphabet. >> i'm making a prediction, yes. >> that's good. >> i could be paid for reading the news oh and meta, look at that. papa john's is down a dollar no, i'm offering something based on, david, i know you're familiar with this concept, reporting. >> excellent just want to make sure we understand what was behind that. >> we do have whole organizations that make things up but we're not one of them. >> we're going to get to some of the research calls this morning. you mentioned software, got upgrade of octa. cramer's mad dash to the opening bell in just a few moments
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let's get to a mad dash. we're going to give you a little news and it involves walgreen's this was well timed. we were going to talk on this journal reports but we got the press release. >> special breaking news. >> village md is a unit of walgreen's they operate the medical clinics essentially. >> i happen to love the medical clinic they're a real doctor. >> spending $8.9 billion to acquire what they call one of the largest independent provider groups in the u.s. that's summit health, city md, many people in the new york area may know citi-md. >> of course i'm a regular customer.
>> people go to them obviously for any number of different reasons when you don't want to see your regular doctor. tell me your thoughts on this. go through the transaction itself, 8.9 billion investments from walgreen's boots alliance and affiliate of ever north subsidiary of signa. >> i think this is important roz brewer comes in. nothing is happening comes in from starbucks, one of the fabulous executives there. i've been waiting and waiting and waiting. this mirrors or mimics what cvs has been trying to do and succeeded which is why you look at cvs's chart is nonstop because that company has decided to become a healthcare company this will make walgreen's a healthcare company and yields 5% data, one of the best yielders in the dow i think this is the bottom and it's time to get long ros brewer and walgreen's. >> csv owns aetna as well as building out this presence in
their stores walgreen's does not own a health insurance. >> no, but this is -- the health insurance business is okay what really matters is capitalizing off the idea that you have great brand and that people are -- people like this city david, a lot of people want health care and inexpensively and then they want to get prescriptions and go to walgreen's what will happen it will channel people to walgreen's and they do it now without channelling. but i find uniformly it's terrific >> as a result of the transaction, walgreen's is raising its u.s. healthcare fiscal year 2025 sales goal to 14.5 billion to 16 billion from 11 to 12 billion previously. that's their fiscal year 2025 sales goal for u.s >> it's big, david. >> they own 53% -- gets a bit complicated, village md which is the acquiring entity for -- >> it's is difficult to understand, but this is the beginning, david, of the ros brewer era there have been a series of eras
walgreen's which has been terrible >> walgreen's saying it will slightly creative to its adjusted earning share in fiscal year 2024 and 7 and 11 cents by fiscal year 2024 increasing thereafter. >> atlas walgreen's is a healthcare company you have to ring a bell and you can't buy a thing. >> okay. $8.9 billion deal. we'll have more on that and a lot of other things as well and lot of other things as well and covering the opening bel
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the pace of corporate earnings is going to slow down a bit before we get to the retailers next week. but as of know, jim, 90% of the index earnings are we're up 1% year on year goldman last night cuts their forecast for next year basically flat. >> yeah. i thought that was amazing because that percent is we're going to keep going up in rates. we do know that -- we know that housing is bad we know that banks are good.
we know that technology is bad and we know that transports are good and travel is good. and they balance out each other. if the dollar stays as strong as it is, if the dollar weakens, then they'll -- >> let's get the opening bell here cnbc realtime exchange and the big board. celebrating transfer to nyse to the nasdaq men's health charity movember speaking of the dollar, jim, it is lower there's some speculation that the vicks back to 25 could fall further after cpi. >> again, i do not want to forget we've got to focus on these midterm elections only because i continue to believe -- david, i know you talk about -- it's absolutely right -- about a possible debt default. i hate to see that but i think a lot of people feel that the administration would be alift
oil right now the administration doesn't want to hear coal, oil, just wants to hear german point of view. i think therefore there will be a knee jerk move up in the oil stocks of some significance. >> again, based on the election outcome? >> yes look, i can say coal but i will not endorse even buying coal but i do think that energy goes up i think that drug stocks go up these are patented ways of the republican party and yes, defense. although there are people who feel that -- >> although frankly there is really the belief is that you'll get gridlock if the house and senate are republican for the next two years at least and anything they try to do conceivably will be vetoed by the president. and so that usually is embraced by the market, by the way, jim. >> yeah. people like gridlock very much. >> yes. >> i know that some people say, look, if there's nothing to lose, democrats will get tougher
on regulatory. but the star of this period that no one talks about is the stock of jp morgan it's a horse it's a breeder's cup winner. >> you're right. the last couple of weeks we have seen real strength in jp morgan. >> hockey stick finish the end of the year. >> goldman sachs is only down 5% for the year far outperforming the broader market still down. >> solman said he would fire people if things slowed down and been a man of his word. >> if you had wells fargo, you're happy, too. more or less almost flat on the year. >> wells fargo could throw money at the authorities and if it would just go away one thing that's really interesting about wells fargo, you think there's -- almost everything has been settled. nothing has been settled and he's still working to settle and i know that he doesn't like sometimes when i raise expectations because you just don't know -- i'm waiting for the department of defense to go
after him agency that hasn't gone after, charlie? >> jim is referring to the reports they're you should pressure to pay a billion dollars which would shatter records and the prior record is also with wells. >> i think that they feel like wells is the poster boy. and they have -- everybody has to go after wells. can you imagine if the republicans come in? >> actually there's -- >> amongst the many legislative ideas they have is to abolish the consumer financial protection board entirely. none of that is going to happen. but it's part of their -- >> if you abolish the agencies that go after wells, i'm thinking wells -- i'm thinking -- >> more back to the fundamentals themselves of the banks themselves right now you're positive, jim, you obviously pointed to the fact that jp morgan has performed pretty well. >> they've added -- they not had increase in bad loans to speak of and david, i don't know if you've checked your balance on what -- you do because you do --
you're like chipmunk david checks all the time. intuit, you check your credit rating. >> i do? >> i don't know. i have to tell you, you're not getting that much on your account. >> yeah. >> oh, those ads i didn't know what you were talking about. >> they're getting a great return but they don't give you -- they don't share the wealth with you. >> no. you're not getting anything in your bank account. that said, you are, if you're robinhood, getting 3 .5% marcus with goldman sachs, there are opportunities now to get decent savings. >> let me switch my money to robinhood from jp morgan i would feel much more competent. sam take my money? >> they're just taking it and putting it in other banks. >> why should i trust jp morgan over robinhood i'm an old fashion guy i have business with pretty much
every major bank >> you should be trusting that man right there. that's same bankman freed. everybody should put their trust in him. >> i like to double down on him. why should i be with jamie sometimes he doesn't wear a tie. >> this is the jamie of the future you're looking at him right there. >> i'm uncomfortable -- >> really interesting beat roll. walk into your car -- >> i walked into any chase bank. i felt great hey, mr. cramer. mr. cramer, how are you doing? >> see you, sam. >> what, what, what? >> i have nothing for you there. what are you looking for >> when i go to robinhood, they don't say, hey, mr. cramer, how are you doing? disney is on deck for the week which is by the way third best dow performer this morning you have wakanda forever opening this weekend, jim. by the way, if you combine hue low, espn plus, disney plus now
overtaken netflix with 221 million subscribers. >> i think disney could say that they're opening seven new theme parks and already reserved and really incredible and the stock money goes down 10%. david, how could one stock be so hated? can you please -- is it a balance sheet? is it, i don't know, the pirates of the caribbean >> your disney is more hated than meta, come on come on now. come on. >> no. >> give me a break there. >> he has a point there. like saying green bay is better than -- >> the new york jets, which is not the case at all. no, we're saying that buffalo is better than the new york jets. i'm not sure about that anymore either. >> shut down josh allen. what i'm saying between disney and say -- >> what? >> i'm thinking 1 and 7 teams. >> disney is now 34% company parent is down 37% for the year which is more hated comcast or disney? >> i'm not going to go there >> look at that.
>> diller had nice things to say about our parent this morning because we were perfectly hedged >> yeah. >> going into a difficult -- >> that was great. >> yeah. >> that was great. i took that to the bank. >> this is a hedge like hedge funds have, isn't it don't worry. it's good. i'm all hedged only down 37% this year. >> it's not my job to make predictions. i report sometimes you say -- >> who are you >> make predictions. what >> i gave you -- >> yes, i'm the reporter you're the predictor. >> i gave you the houston texans and disney that was gutsy if they don't get a new mexico theme park -- >> listen, what's interesting is they've been measured on adding subs carl just mentioned when you add it all together their numbers. but at the same time, you've got this increasing focus on the long-term profitability of direct to consumer. >> right. >> talked about it on friday on the conference call for warner brothers discovery and it was actually thursday
night. and that's going to be a key here not to mention all the other businesses at disney boy, that stock is down -- >> you did talk about the debt this morning. >> 50 billion in debt. they did pay it back five times levered don't have any near-term maturities there's concern about the debt load diller continued to talk about it this morning. that is not responding well to the numbers that we got on thursday night obviously 9.2 billion in ebitda expected this year they're still saying 12 billion this year. but back to disney, again, it will come back to, okay, long term profitability of the business, espn, all the same questions. >> if they don't say they're going to build another theme park, i don't care it's not my new mexico 300,000 acres i got them if they don't say they're going to build another theme park, they are fools they are fools i want to know between bed, bath & beyond and warner brothers best balance sheet >> warner brothers by far.
>> why don't you -- >> when you have the free cash flow coming -- some free cash flow, that's good. when you have no free cash flow, that's bad >> warner brothers doesn't have a christmas it's worried about inventory. >> no. >> how about haines brand? >> how about caravan that and warner brothers? carvana. >> upstart, how about affirm >> i don't know. i haven't looked at their balance sheet. >> weird game of would you rather who has the worst balance sheet. >> i'll go with no bueno and some of these very no bueno. you like that? vnb for short. >> don't forget what billy said in that fable line on the bridge. >> what did he say >> we're all going to die. research today, wells does cut costco to equal weight. >> can i just say, fatuous that man or woman has never been to a costco let alone had the 1.50 hot dog.
>> growing risk to comps ch ebitda margins going flat. they were at 600 come down to 490 we'll get the big retailer next week walmart. >> they'll regret that call. we have a call today that walgreen's will beat the number. >> walmart yeah, fine i think selling costco here has been -- they can raise their dues and they can give you special dividend but that person is talking about inflation. i don't know yes, it's been wrong to sell costco over the year i wish we had a ten year of costco, a chart of ten year of costco >> we can do that for you, jim it's the magic of television look at that. >> there you go. look at that david, look at that. it's so right on the 200-year moving average. >> that is really beautiful thing in terms of wealth creation >> you want wealth creation? look at bank of america since the -- bank of america and jp morgan are huge winners along with wells. >> not over the last ten years.
>> no. but bank of america, everybody who is levered to rate hikes is crushing it. >> that's not bad actually it's better than i thought. >> it's all right. >> i know. >> neither one is as good as costco look at a ten year, tesla is going to crush those by so much. but today the stock is down about a percent and a half. >> what is that? >> i don't know. do you think there's any concern amongst tesla shareholders all the twitter stuff? for all the twitter -- just the focus that it's requiring of elon musk. he says he is working 120 hours a week seems virtually impossible but he's upped it from 80. added another 40 hours of work largely on twitter obviously space x, tesla, neuro link, other things he deals with as well. then there's this question the journal raises as to whether or not, for example, china is very important part of their business the manufacturing plant in shanghai, do you as a result of being the owner of twitter face
certain pressures for not banning chinese bots or who knows what it is or running a foul of the chinese and therefore impacting tesla as a result >> well, also the $8 to get a check mark versus the advertisement revenue they're losing some people have taken the point of view that he should just sell it for 20 billion. >> just take the loss and move on. >> take the hit. >> he's not going to do that. >> no. meantime, the pressure apparently this call with advertisers last week did not go well >> not a positive. >> ual a list of companies that suspended advertising on twitter which makes this sub model a lot more important if you're going to service that debt. >> a lot of things that ned segel fired for cause. >> former cfo of twitter. >> fired for cause, which i have to say one of the more outrageous things that hit the table. >> that will all end up in court and it's going to. >> someone who hand held many
advertisers and was known as a hand holder and a liked person well, he was -- i don't know if he was allowed to come by to pick up -- that was one of those, don't worry i'll put everything in a box and i'm going to burn it see, ned didn't go out the way he deserved to go out. georgetown grad. nice man. >> understood. but the question now is -- i just wonder as an investor in tesla, do you wonder about how much mind share twitter is taking of the guy who runs tesla? and whether there's any impact at all not to mention, of course, twitter itself which is going to be a fascinating story even though it's no longer a public company. simply see how he manages it and whether or not he can bring that musk magic to bear or whether it's going to be a disaster. >> what would be the magic i keep telling you that it has to work with banks to be able to use direct messenger got to turn it into something else what it is now is just not -- it's just a failed model particularly with all the advertisers. no many advertisers pulling back.
so it can't be what we think it is it has to be something else. they have to dream dreams. >> yes >> he's good at that. >> we'll see different kind of engineering that he's done in the past. >> wow he needs to do some reverse engineering. holding 37.80 this morning. >> happy monday. modest bounce to start the week after horrendous growth sectors last week. risk on, risk off stuff. risk on communications services and tech, modest bounce here, but again the let's call it value slash cyclical energy and industrials did better last week than the growth sectors are doing a little bit better again today. so keep an eye on all that look at big cap tech, modest bounce after absolutely horrendous week last week. almost all these were down close to 10% near 52-week lows apple is the one exception you see apple down 1.5%. of course on that news out of
china. and of course, the big question here is whether or not this is going to affect their earnings situation. apple has been that lone holdout relatively stable earnings i'm looking at fourth quarter estimates now but 2023 estimates are the same they came down in the month of september. only down a few cents here that's 2%. that's modest given what we have seen some of the other big cap tech the question is this is obviously a demand not -- excuse me, a supply not a demand issue. and the question is whether there's any weakness on the demand side and they'll move on that as of now, they're not moving big on their earnings estimates for the fourth quarter as for what we're seeing so far in the month, it is very much noticeably a terrible month for growth stocks. so communication services, tech, consumer discretionary all down 5% the s&p is down 2.5% so these are big, big,
underperformances. it's interesting the cyclicals in the value sectors the energy stocks, material stocks, industrial stocks have all been leading the market overall and i think that has not been lost on a lot of people out there. the midterm elections are coming up and this is a very well studied phenomenon it's the midterm election boost. stocks tend to underperform in the 12 months before the midterms up .3% for the s&p and tend to outperform after the midterms up 16% and particularly outperformance in the three months after the midterms. november, december, january outperformance is very noticeable the reason for the underperformance, of course, generally attributed to policy uncertainty. we don't know the outcomes now we do know the outcomes. also the prospects for a split election may be a big factor here in fact, a number of people were calling on me over the weekend and messaging me saying this is a very good possibility why we have been having this rally since the end of october we'll keep an eye on that, carl.
it will be a very interesting week we have cpi later in the week. back to you. >> thursday will be big, bob thank you. quick reminder, always get in on the cnbc investing club with jim sign up, find out more and use our handy qr code on the screen and lit take you straight there. as we go to break, let's check treasuries 2 year 4.71. ten year the only real part of the curve that's lower today, back to 4.15 don't go away. ♪
news from the future: you're going to live through that about 10 more times! (laughs) no stress. i just discovered yieldstreet. they vet investments that don't ride the stock market rollercoaster. - [narrator] yieldstreet: private market investing. . welcome back the new york marathon took place yesterday here in -- well, all five boroughs of our great city, of course, and back to its typical size tens of thousands of runners but, you know, closer to home, a lot of grit and determination, not just on this set but amongst the people who work to put this show on the air every day.
we had four, that's right, four finishers in the new york city marathon we want to congratulate them all. we mentioned them earlier, our senior executive producer todd with brandon gomez both of them proudly wearing their medals both of them veterans of the marathon in past there's my amazing producer, ke kerry. this was her first marathon, and talking to her this morning, probably her last. and kevin. that man can run brutal conditions for everybody yesterday. four, percentage widz, it's incredible we only have like 14 people that work on the show >> that's real news. that's fabulous. >> congrats to all of them well deserved. just sort of shows how tough a group we are. >> we are. don't go against us. do not go against us. >> and that was brutal conditions yesterday 75 degrees, humid.
people really suffering. >> our team takes no prisoners >> congrats, everybody. tune into cnbc on election night special. 7:00 p.m. eastern. we'll hit the business topics that play in the midterms and how the results might impact your money your money for th because you've got the next generation in global secure networking from comcast business. with fully integrated security solutions all in one place.
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let's get to jim and stop trading. >> first up, we have tangier and i've been liking the cannabis stocks they may get hurt by the election one thing that's brilliants, irvin simon, tilray just bought montauk brewing. it's reverse engineering the cannabis, and irwin needed some sort of american base that will tide over until we finally, i think, get rid of this being a class 1 felony so, worth noting i prefer that over carvana. >> oh, yeah. resumed trading after being paused due to volatility.
>> jonas had an interesting downside. >> he pulled his rating and said, can't really offer any specifics on the stock he did take his bear case target to 10 cents. >> he was on the conference call suitably - >> a lot of money has gone into that company apollo bought preferred. it's a $7 stock. it was a $307 is its 52-week high >> another big decline in used cars i think it's too early to be in carvana. have you ever used carvana it's great i bought a car, didn't like it, took it back i didn't pay that's a good business model >> yeah. baron's has a piece about how deflation is effecting some auto - >> be careful. that may be the eagle and hawk in the coal mine. >> speaking of the eagles, congrats again geez. >> the union lost and the
phillies lost. until three weeks ago i thought the union -- >> union >> teachers union. >> that's terrible >> jim, i'll still say congrats. we'll see you tonight, "mad money," 6:00 p.m. eastern time. the dow is holding onto a gain of 55 points. here's a look at what jim has tonight. coming up, a lot more on apple warning of lower iphone 14 shipments due to covid restrictions in china. don't go away.
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good monday morning. welcome to another hour of "squawk on the street" live at post 9 of the new york stock exchange have a split market. a bit of a slower pace of corporate earnings some tent pole macro data, including cpi on thursday. >> we're 30 minutes into the trading session. here are three big movers we're watching this morning. we'll start with palintir seeing sales up 53% and a jump 28% in contracting with the u.s. government but forecasting a slowdown in the pace of that sales growth overall in this
current quarter. you can see that's taken the stack down 7%. biontech posting better than expected quarterly profits and revenue share. they are falling sharply from a year ago but you can see a bounce up 1.5% keep in mind, stock down 40% year-to-date wells fargo downgrading costco from overweight to equal weight, cutting its cost target. saying shares are too expensive given the hurdles ahead, including comps that carry risk of slowing more than anticipated disinflation shares down 6%. another big mover we are watching today is apple. the shares down 1.5% the company is warning covid restrictions in china are hurting its ability to produce i phones, particularly the iphone 14 pro and iphone 14 pro max eunice yoon is live in beijing
and has a lot more for us on this story >> reporter: thanks. the supplier, of course, that handles all of those iphones is foxconn and they themselves said it needs to revise down the forecast for the fourth quarter because of these covid curbs they say they're doing what they can to mitigate any fallout. they say they are working with the government to ramp up to full production as quickly as possible, they say that means reorganizing the facilities so that they restrict the workers' movements to the factory and the dormitories. at the same time, improving their conditions and their lives on the factory at the factory in order to retain and attract workers. so, another big incentive, of course, is financial they're offering one-time bonuses of about $69 for people to return. they're also ramping up a recruit drive to get more people to consider working there with a wage hike of 20% higher than
before this is about $4.20 an hour. official media is quoting a factory source as saying the managers there are hopeful that they could ramp up to full production by the end of november now, this all comes as the chinese top health authority had singled out this iphone city of guangzhou for having excessive controls it reiterated the pledge to zero covid, the pet project of president xi jinping, saying this is completely correct, the most economical and effective. those comments have managed down expectations that we might see any type of quick reopening. there had been some hopes over the past several days, especially in the markets, that it looked as though it might be heading in that direction. much to many people's disbelief. now those expectations have been managed down again and people are saying if it is -- if we are going to see any type of
reorganizing, it would be very targeted measures. probably more on the local level. guys >> but, eunice, some of these rumors surfaces and resurfaces, kind of like whack-a-mole, have been talking about 2023 as a potential timeline we still have a winter and everything else to get through any sort of insight as to why 2023 specifically could be the magic year for this? >> reporter: no. i think it's just because people are hoping it's going to be 2023 before those rumors had popped up, most people here were talking about how we're just going to have to get through this winters we're seeing the surge of covid in other places, including the united states. so, it's going to be really difficult trying to reopen under those circumstances. of course, in china we have another big important political event that will happen in march. people were eyeing that as an optimistic date. but then people were more hopeful that something would come earlier i'm not so sure about that
anymore. even with 2023, it's hard to know if a reopening would happen later in the year because of all the kind of political wrangling the communist party has to do in order to try to change the story line to the public because up until now, they keep telling everybody that covid is so dangerous. so, people are kind of scared about it so, if you start reopening things, even if it's -- it would seem to make sense from an economic standpoint, there's still a lot of questions, morgan, as to whether or not the population is ready. >> eunice yoon, bringing us the latest from china, thank you. turning now to the broader markets on this new trading week, we do have the s&p up ever so slightly right now. 3779 joining us to discuss, citi global wealth management
investments steve wieting and katarina semnetti. katarina, i want to start with you. i'm looking at your most recent note and you posit that valuations remain rich is it your take we're in the midst of a bear market rally and we have lower to go with stocks? >> morgan, that is exactly the case in our view, as much as we're excited about this rally, we view it as a technical rally and we think it might last for some time, but eventually we will be seeing some earnings driven decline as earnings come down to a more realistic level in order for us to see the actual path to the recovery. it will be possible for companies to start reaching new heights. as much as we want to be optimistic, we are -- in our view, we are still in the bear market this is going to continue for some time. >> steven, do you see it in the
same way >> unfortunately, we do. it's going to say some time. we expect eps to fall 10% next year that's, again, even as we've had this long-winded period here to build up to it now, again, do we have a very good down payment on the end of the bear market having fallen 20%? yes. but we're not -- we have never seen in the past the economy or markets bottoming before the very first of the employment and profit declines occur. we're expecting that in the first half of the year and it will take that much time, we think. so, never having had that happen before, we wouldn't counted on this time. we think we'll be closer to halfway through a recessionary period >> i know mike wilson has said we could get to, say, 2950 s&p in the next three to four
months i think b of a has talked about a spring low in march, april, may. what's so interesting about the first half of next year about calling for a real bottom? >> we do know that we are somewhere near the bottom and historically speaking, when we buy good quality stocks near the bottom, forward-looking returns are significantly higher than ever in is the time we want to be defensive in the short front because we're not out of the woods yet but we need to be strategic in the long run. we need to think two years out when we will be hitting the recovery it's extremely important that we like what we own coming out of this environment we're excited about '23. we are going to be seeing some significant earnings revisions, but we think that that is what is going to bring us into the recovery and the -- you know, get us out of this bear market it will be nice to stop saying we're in a bear market
it would be good to move into the bull market territory. we're oouveventually going to g there. it will be a fed-driven recovery and it will be an earnings-driven recovery and it's coming. but we're not quite there yet. >> we have midterm elections tomorrow we know this is a seasonally strong period. typically, historically for the market, including fueled by midterms, especially when you see something like, for example, divide government coming out of those results, which is right now what polls are suggesting. how do you play this rally right here if you think there's more pain to come in 2023 >> well, the statistics may be on the side, again, of a divided government being better. yes, that's been true. it won't be the most dominant factor when you're heading into a new recession. so, again, i don't think this is something we haven't heard of and thought about. i think we have seen investors position portfolios bearishly. this is why we've had two rallies exceeding 10% already
this year. we came pretty close we have an immense short base in equities, currency and fixed income to say a divided government by itself is going to cure our problems, right, of awe turning point for the economy, all of this accumulated fed tightening that's behind us, that is going to reduce employment, we think, by 2 million people next year, it's just given too much weight to this political consideration. >> yeah. wasn't saying it was going to cure our issues. more curious about seasonality and what it means for investors right now. thank you. as we head to break, here's our road map for the rest of the hour, including meta joining the list of big tech belt tightening speaking of big tech, the u.n.'s climate change conference is under way and microsoft is pledging to step up its efforts. we'll go live to egypt next.
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?
wood's ark innovation funds. down about 1% right now. following the first negative week in three. the etf's second largest holding, tesla, under pressure to start this new week, despite reiterating the stock is a buy, saying, quote, autonomy will be a key differentiator for this name those shares are down about 2% right now. carl meantime the world leaders summit at cop27 getting under way at egypt diana olick joins us with a very special guest. >> technology is front and center at the conference as it will be clean in the clean energy transition. who better to talk about that than microsoft's brad smith. great to see you again some of the gains made last year already being lost due to the war in ukraine and a weaker global economy what do you and microsoft hope to achieve there
>> well, the headwinds economically and globally around climate itself have obviously become even more serious but the reality is, digital technology, data, artificial intelligence, probably remain the single most pervasive and potent tool we can bring to address these issues that's why i'm here. that's why microsoft is here we're sitting down -- just walked out of meeting with heads of state that capture this phen phenomenon everybody is worried about the need to adapt climate change, floods, wildfires and the like we have to predict these better. that's using the power of data and ai a company like microsoft actually plays a very important role >> you and i talked recently at the bill gates breakthrough summit the first so-called pillar of that is getting your own house in order how are you doing that and what are the financial investments needed for that?
>> well, i think every bit is needing to make financial investments in getting their own house in order 3,900 companies, public companies, have made climate pledges and the world is watching regulators, especially in europe, are going to be imposing more financial reporting requirements these are going to be important not just for companies based in europe or european exchanges, but, say, american companies that do business in europe what we've been doing at microsoft is investing in reducing our carbon emissions. everything from bringing renewable energy online for our data centers from moving from gas to electric kitchens at the end of the day, it really is about using data, technology, cloud computing. it's at the core because everything has to be measurable. it has to be measured. and that's what we do. including with our cloud for sustainability solution. so, increasingly what we find is
we do have the solutions for the problems that people are wanting to address >> i know you're focused on climate but we can't ignore what's happening in tech world layoffs at apple, facebook are you expecting more if so, in what areas >> i think for microsoft, we, as we always are, are focused not only on how you enter a recession, but how you eventually exit it what it really calls on, i think, a well-managed company to do is to assess all of its investments, especially in the engineering space, and ask, what are the fundamental technology drivers for the next quarter, the next year and the next decade for us, we'll continue to invest in things like artificial intelligence, cloud computing. the fundamental drivers of technology for the decade ahead. now, there may be days in a
recession when a company has to trim other investments but i think the smart move is to trim those things where you can afford to do less so you can then concentrate your resources on the fundamental sources of long-term value creation that's how microsoft has gone through every recession since we were founded in the 1970s. if there's one thing that is clear this time, in a world of economic headwinds, actually, the kind of technology we create is not about advertising it's not fundamentally about social media what we are creating is the strongest tailwind for helping any business get through these headwinds. >> is the current state of the economy making it hard to raise and spend money on climate initiatives and the clean energy transition >> in some ways the answer is yes, but in other ways the answer is no and i think you have tolook at the global economy
there is a need for people to tighten their belts. there is a temptation to postpone certain initiatives, especially in europe where there are high energy prices you see these concerns throughout the economy at the end of the day, i think most businesses know regulation is coming. they're going to need to report the results. they cannot really afford to go backwards. what they're looking for are new ways to do more with less. so, it puts a premium on cost effective technologies frankly, a lot of that, again, comes back to use of the cloud that reduces energy consumption by up to 90%, say, compared to on-premise servers the use of data to automate measurement. all of these things are coming together and so i think we're going to see this move forward in fact, it will grow even in
the middle of a recession. >> it's great to have you on the show obviously, you're very focused on climate today given where you are right now. it's one part of this broader esg movement there's been some debate around the social and governance aspects of the movement as well. for example, this is just one example, this idea that defense stocks and the war in ukraine should potentially be considered part of this movement as well. as someone who is has literally written books on national security and given the fact that microsoft is a key contractor for the u.s. government, i want to get your thoughts on these areas as well. >> i think it's a really good question you almost have to tease esg apart and look at its eases. we've been talking about the environmental piece, the e the g is the governance part i fundamentally think that most of the world and most investors are going to want to see companies continue to support good governance. good transparency with
shareholders, good responsiveness to shareholders and then you have the s, and i think that's where your question points us, the social issues these are probably the most controversial, perhaps not globally, but especially in the united states. i think companies need to know what they stand for. they need to be principle. for us as a company, we are not going to speak on every issue under the sun, but if an issue does affect the ability of our customers to use our technology, we will speak up it means we'll provide the united states military with our technology it means we will stand up and protect our security and their privacy, as we are doing in ukraine. it doesn't mean there will never be a day without controversy but as long as you engage in dialogue, be clear what you're thinking and the principles you apply, then you equip yourself as a business with the fundamental tools you need to manage through this. >> of course, that security has
to be around data centers as well microsoft, though, has pledged to be water positive by 2030 data centers touched on this before but they use a massive amount of water. how will you do that what will be the upfront and ongoing costs to do that >> that's one really good example of the wide range of issues that, frankly, any big tech company needs to address in the world today. how do you manage your data centers and meet your climate commitments? take water positive, what you mentioned. the good news is, we've been investing for years in ongoing innovation in this space so that fundamentally we can recycle almost all of the water that we use in our data centers. in places where it rains, like the pacific northwest, where we're headquartered in seattle, he can can collect rain from the roof in places where it doesn't rain, like arizona, we developed
condensation techniques. i'm very bullish on our ability to meet our goal of being water positive worldwide as a company by 2030. frankly, it's a great lesson, a great example, if you will, of what we all need to think about. we need to innovate our way out of the climate crisis. the better we innovate, the cheaper it becomes and the faster we'll move in reaching these climate goals. >> and i think that's a great place to leave it. brad smith, president of microsoft. thank you for joining us and good luck in egypt carl, back to you. >> our thanks to you. as we go to break, check out some of the biggest gainers on the nasdaq 100 meta on top, quickly followed by walgreens, moving higher with walgreens, moving higher with that deal with summi ♪ ♪ wow, we're crunching tons of polygons here!
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to buy a unit of umd summit. bertha coombs joins us with more details. >> walgreens is getting a boost and a leg up in the land grab for primary care assets. village md, majority owned by walgreens, struck an $8.9 billion to acquire summit health cigna's evernorth is making a strategic investment summit citymd has locations in new york/new jersey area and has stand-alone physician practices which is one of those things everyone is in the market for right now. the combined company will have nearly 700 provider locations in 26 markets for walgreens the deal provides more doctors as it leverages its 53% stake in village md to add urgent care. part of ceo's strategy to
diversify the pharmacy giant she has said she is focused on investment in the health care unit right now it's part of the reason why the stock has struggled so far this year if this village md deal closes at year end, the health care division of walgreens will become positive early in 2023 and the deal itself will boost 2024 adjusted earnings and fiscal 2025 sales. it's not clear how much significant that is contributing last week ceo david cordoni signaled the company was in the hunt for tuck-ins and deals rather than a big acquisition. the interesting thing here is that this is sort of the third deal for ross brewer this year she closed a special pharmacy, care centric, home care, all private deals as opposed to cvs and amazon, which have gone after public companies, which involves a lot more regulatory process. >> right although there is a regulatory review for these deals as well
it does speak to the increasing competition, bertha. i wonder, cvs has aetna. there is a presence here of a health insurer you just mentioned cigna any thoughts walgreens may want to go more towards the vs model? >> she hasn't really talked about that and feels there is a bit of an advantage to sort of bei ing payer agnostic where you can operate with everyone. if you have your own insurance company, you can steer people into your network, but at this point the strategy is to have those assets that everyone can use and you don't sort of lock out your frenemies >> bertha, thank you bertha coombs. still to come, check out shares of meta, rising on a report that is preparing to announce large scale layoffs this week. shares are popping 5% right now.
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welcome back to "squawk on the street." i'm contessa brewer with your cnbc news update. a stark warning from the united nations the world is speeding down a highway to climate hell. u.n. secretary-general antonio gutteres told global leaders at the cop27 in egypt that all worlds should adopt a solidarity pact and called out united states and china to lead. federal authorities have seized $3.3 billion of cryptocurrency they were stolen from the silk road dark website ten years ago. james xiong pled guilty to the theft. it's the largest crypto seizure behind the recent case of a new york couple charged with laundering $4.5 billion in stolen bitcoin. 50,000 people ran the new
york marathon led by chebet and lekedi, her first marathon what a beautiful, balmy 78 degree day the cnbc staff and finishers, both first-timers and marathon veterans and we wish our colleagues congratulations >> we do wish our colleagues congratulations. there's four of them here on the "squawk on the street" team. and i am in awe at also just mentioned that a friend of the show and a friend of the network, famedal lan patrickcof, age 88 was the oldest to finish yesterday and he told cbs news, quote, i decided i was going to go to burning man and i was going to walk and jog the marathon i don't know about you guys on the desk, i mean, i run for two reasons -- away from danger, toward food. so, i think i just -- huge
congratulations. our team is rock star. the rock star in the control room and rock star out on the streets of new york city >> it's true gomez, kerry and todd, four of our team we don't have a big team finished the marathon in 78 degrees. and then 88 years old. i don't know how do you that. >> i think you're up next. >> no. >> start planning for next year. >> i would rather swim it. i have a better chance of finishing. let's turn to the markets on this monday morning with the s&p, which has been middling between slight losses, slight gains. as you can see right there, 3775 is the level mike santoli is here with us at post 9 what are you watching? we have midtermings, the cpi reading later this week. >> and i would say drift before those things but a similar story today versus what we've seen for a while which is dispersion. divergence amongst different groups while the market has been able to really stay supported more than half of that rally we got
off the october 13th low has still intact, although it's still not gathering too much momentum i think you can thank the industrials, health care, the financials that held up. what is interesting is finally last week it started to see like the selling in big tech and also former broken growth tech. that's on the downside it it seemed like it got to be a bit of a liquidation today you're seeing old faang start to bounce a little bit i think that's why the overall index has held together. dollar index is off its highs. that's been a help that's relieved some pressure. maybe there's a nuanced reading of the jobs number and fed statement. you see things like apple backing off, although not too much at this point and the rest of the market able to gather itself berkshire hathaway earnings over the weekend, it's also held up over the last year or so, well more than the market its value, and apple insurance, by the way, also been the strongest group within financials. >> would you argue positioning
going into cpi is hot or not >> i wouldn't say hot. it's up off the lows positioning is not very defensive in terms of equities i do think there's a residual hope we're finally going to see some statistical just basically the comparisons get easier you might get some relief on that i don't think people are assuming they're going to get a gift with the cpi, but given the seasonals, given the fact that everyone knows the patterns of a midterm, do you really want to fight the possibility of getting through the election with whatever result and then have a benign cpi number because the market seems like it would take that and run >> yet, mike, we heard it at the top of this hour, you know, there are plenty who think s&p earning estimates for next year are way too high even though the guidance we got was not great in terms of any certainty, we haven't gotten there yet in terms of accounting for the slowdown. >> that's right. they're going down for 2023, just not very fast
it's been very, very much a kind of grinding, grudging decline. companies donts have visibility so they're not giving guidance there is this story gathering up of the biggest market cap companies in the world have their margins within their control, to a large degree that's a different wrinkle than in the past. there's this theory that they can defend those by, of course, becoming leaner at this point. >> that leads us to our next story. thanks, mike santoli meta is one of the big gainers on the s&p amid reports the company is planning large-scale layoffs this week aztec names big and small continue to tighten their belt amid the advertising and consumer slowdown. joining us is brent phil on this meta buy rating. i wonder what this news, if it comes, will do to your opex guide. >> they need to make these cuts.
last call zuckerberg said they held flat into '23 obviously, stock has been for sale ever since he made that comment and drove his combined oochlt pex and capex up 130 billion. these growth rates are insane. when you look at the expense growth relative to what the revenue growth will be, tech is decelerating revenue but we're seeing an acceleration of expense. and i think that was the disconnect this is -- if this happens, this is good news they've added 10,000 employees since the beginning of the year into the face of a recession in '23. so, i think everyone has a little bit of a head-scratcher they need to make these actions and it's counter to what they said on their call, holding head count flat. >> you don't think it would be a company by some capex cuts as well, do you >> they were pretty clear the capex has to be there for the infusion of ai throughout their
platforms. so i think capex feels like they want to spend. they always give a conservative guide and tend to beat it throughout the year, but i think they're clear they need to spend this for the next generation of the platform to fight tiktok, to build the next on-ramp for advertisers. so that, i feel, may be less convinced it's going to come down materially given the conviction level they had in the new ai clusters they're building from an opex perspective, there's no reason to ramp the head count and some of the discretionary expenses they can cut that pretty materially again, the news today, if true, is a positive step again, only a couple weeks they gave the guide they would keep head count flat. >> what does this do to the metaverse plans? palantir threw shade on the company. foundational data platforms are
not. is meta and its peers, are they recession proof or is that exactly what they're trying to counter right now? >> there's nothing recession proof than technology right now. it's actually the opposite look at the xle, the energy index up 67% and sulfur is down 30, 40%. no one is immune the metaverse is on hold it should be on hold the bulk of meta's revenue is from advertising it's not this next generation world. even when you do interviews of kids that use the head set, they'll tell you, they want to keep it on five to ten minutes and then they want to rip it off and then they don't touch it again. we have to sofl this issue of, hey, it's a novelty. yes, there's some great commercial aspects in health care and aviation for the metaverse. i think when investors are saying his investment level is way too high for what it will be there's elements we like, but i
think, again, to ush the throttle to 11 into a recession, into something that is not proven is exactly why no one wants to be in meta right now on the short term. they have to go back to the core, the advertising business, and this is a phenomenal business they need to double down it reminds me of microsoft back in the day they got ail over the place, buying nokia and doing these crazy things these need to go back to the core that's what microsoft did and they turned it around. meta can turn it. >> obviously, the cloud. we've been asking the same question of you, and i'm sure you have the same question you're saying this is counter what they -- counter to what they told us on the call, to a certain extent, this decision to eliminate more jobs, but how counter? to your point, are they really going to follow through by significant cutbacks through the year of 2023 and sort of reverse direction in the way you want them to? i'm not seeing that yet, are you? >> no, no, not at all.
it's a show me story it's all talk. it's a show me story i think they came off completely tone deaf. i asked zuckerberg a question on the earnings call, what gives you conviction these investments are going to pay off i don't think they gave a response other than, look, we are in use of billings of users andthere's an incredible opportunity to monetize against the base i think they have not proven what this investment level is what the payoff is in this environment, no one wants to be around to be part of that until they actually see it. it's a show-me story >> yep that's what it is. real quick, you mentioned something about a survey and kids ripping off their goggles, so to speak, after ten minutes what are you referring to there? do you feel confident in that sort of -- what you're hearing >> yeah. the metaverse is a multi-year journey. it's not going to show upnext quarter or a couple of quarters
and be there i think the challenge right now is usability, which is putting this headset on is cumbersome, it's uncomfortable it's certainly -- can you do it for a few minutes, but for us to live in these worlds and engage, i think that's going to be very difficult and soment so survey work we've done with younger audience, it's a novelty it's exciting but they don't -- it's not long lasting. i think we have this surge of activity in excitement and then it kind of dies off. i think the whole concept of the metaverse has to change so it's not about putting an headset on. it's an immersive experience without the headset. we'll see if they can pull that off. this is years away and they should throttle back some big investments they're pushing on >> it would be called a moonshot at a different kind of company we'll see what happens in the ten years or so. good to talk to you. brent thill.
>> thank you. after the break, how to trade the payment space. the ceo and founder of shift4 payment, jared isaacman joins us on set he'll break those down and we'll he'll break those down and we'll talk about he'd crunched numbers day and night. that's it. to maximize profitability. morning. i have quarterly numbers that are beautiful. and forecast revenue from every corner of your organization. is that important? or you could use workday. the finance hr and planning system that helps cfos make better decisions faster. for a solve problems like a genius world. workday. for a changing world. i more. shares are under pressure right has grown into eight stores. we're a must-stop shop for unique nola-inspired gifts. now. now. we're back in three.
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welcome back to "squawk on the street." fintech's once darling are facing a tight economic cycle. shift4 payments is seeing a 349% increase in end-to-end payment volume since 2019. stock is trading lower on the heels of results this morning. it's down 8%, but joining us to discuss, founder and ceo jared isaacman here at post 9. welcome. >> thanks for having me. it's great to be here. >> you did boost your full-year outlook. the last time you and i sat down, almost two months ago now, you had mentioned that the data was signaling that consumers are still out there spending, but you had noted a little bit of
caution. what are you seeing right now? >> so, i think we've been rather consistent even to the beginning of the year that, you know, we didn't know how long the $90 stakes are going to last we've seen a tremendous amount of inflation out of exuberance the last couple of years the data is still very positive. this was quite a quarter for travel and leisure and we obviously grew substantially through it we grew payment volume 54% year over year. that's still with the substantial share of restaurants/hotels, but a lot of diversification in new verticals. the consumers are still healthy now. we're cautious, just as we've been in the beginning of the year we're confident with our diversification new verticals, too. we can grow through challenging. >> are there new verticals that are, quote, unquote, recession-proof? >> at the time of the ipo in june of 2020, that's when i was here last and a lot less action was going on at sa time, so it's
great to see that come back. we had a 30% share of restaurants and 40% share of hotels pretty pandemic-impacted we've diversified a number of other verticals. one of which is the category leader in sports and entertainment stadiums, mostly nfl stadiums i wouldn't say that's pandemic-proof either but we moved into broadband subscription billing, nonprofits, gaming and we can continue to grow volume. we grew volume in 2020 with most customers restaurants and hotels >> you keep talking about belt-tightening within tech. we were talking about meta a few moments ago on the show. what are you seeing? what are you experiencing within shift4 as these recession clouds loom on the horizon looking to 2023 >> we're a 23-year-old company started in my parents' basement when i was 16. we had no outside capital for the first 15 years in the business the point is, we know how to grow through a lot of different cycles we know how to sell fun. we do not have spend -- spend
and grow at all costs is not part of our dna. so, we were adding head count the past quarter while people were reducing. in fact, we grew head count 15% in the third quarter while also expanding margins, increasing free cash flow and growing literally every one of our kpis and raising our full-year s. we are looking at this as an opportunity to elevate talent and grow our talent as we continue on our global expansion. >> the stock, you posted strong numbers. you upped the guidance this morning. stocks trading at 80%. >> a little confusing for us as well we opened up 10% we certainly think those investors had a lot more of the right idea than the ones of late but also acknowledge it's generally a chaotic time in the world and we'll keep doing what we're doing the last 23 years and grown revenue year over year every year for 23 years through every economic cycle and doing it now raising guidance and continue to do it in years ahead. >> i'll shift to space you were training, doing fighter
jet training as you get ready for your first polaris program mission, second spaceflight with spacex as soon as march. is march still the time frame? >> still looking like mid-march so feel fortunate to be part of that program spacex, an extraordinary organization and trying to learn as much as i can from such an innovative company and brit it back to shift4 that's reflective in our numbers. >> what would be something you learn from spacex you would bring back, for example? >> oh, i mean, so i went to space as part of inspiration4 september of 2021, november of 2021 we launched the shift 4 way and shift4 and a number of philosophies on how to execute with urgency when you look at spacex first company to land a rocket on a ship in 2015 they've done it over a hundred times. no one else has done it since. when haven't we seen somebody nipping at the heels and no one was able to replicate that
they have a secret sauce and i've been able to observe that and bring it into shift4 how you take out the parts and how you operate and execute with urgency and fail quickly and learn from it in order to iterate and optimize and deliver better products faster out into the market, so it's definitely been a big part of, you know, what we've been trying to incorporate. >> do you think he will weigh do the same at twitter? it sounds like a lot of things are happening realtime in the reports we hear about ha company. >> i think it's incredibly hard to ever bet against elon so he's done this multiple times over. there's a lot of entrepreneurs that have gotten lucky right place, right time. i don't know how you can't think he won't be able to deliver the same magic to twitter. >> you don't think he would be stretched given the fact he had a lot of ventures on his plate. >> he had a lot of ventures before he obviously has an incredible amount of things going on. i think every one of the initiatives is -- all comes from the idea of making the world a
better place of the i truly believe that i think he's shown that in tesla and spacex i'm sure he'll do it at twitter as well. >> just to bring it back to shift4, your results today, when you do look at travel and look at leisure and hospitality, is this still the strength, the robustness there is this still the result of pent-up demand and if so what would you expect to see happen to see that begin to ebb >> yeah, i mean for sure i think, you know, we obviously saw the grand re-opening in the first, second quarter of 2021. you know, miami, for example, i mean we had more payment volume coming out of south florida than any other state in the country at that point in time so there was a lot of exuberance at that point in time. i think this past summer you saw a lot directed toward travel and leisure postponing it for an extensive amount of time from the data we're seeing it's still holding up i felt like at some point it has to mad rate. part of the reason we
diversified into so many verticals so, you know, i think it's impossible for you not to at some point see a slowdown to what extent still remains to be seen. >> jared isaacman, thanks for joining us today ceo of shift4. let's get to dominic chu hey, dom. >> carl, what we're watching stocks higher to start out on a relative basis, modest, the energy sector is the top performing one in the s&p up 1.75%. now, within that group you've got eqt corp also baker hughes, co-terra energy and marathon leading that sector higher communication services an outperformer with shares of meta platforms leading higher on the journal. those measures perhaps adding a
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cfo john tyson was arrested over the weekend according to the arrest report, 2:05 he was found asleep in a woman's bed in her home at 4:45. the woman called police when she arrived and found tyson. she didn't know him. there's a look at the arrest record public intoxication, criminal trespassing, according to the report, police tried to wake him up speak to him but he couldn't verbally respond and after briefly sitting up he laid back down and tried to go back to sleep. tyson just took over 32 years old as the cfo on october 2nd. he is the son of tyson foods chairman you can see not doing much to the stock. and, again, no word other than
that 32-year-old cfo of tyson foods, john tyson, again arrested for public intoxication and criminal trespassing. >> my heart hurts a little when you hear stories like this maybe he was blacked out when this happened. you think about the reaction from the family. you think about the people impacted whose home he ended up in. yes, we could talk about the impact on the stock but just when you estuff like this, you know, if he needs help, you hope he's able to get it. >> tyson family does control essentially control tyson foods, 23, $24 billion market cap company as well. >> yes and, of course, it speaks to, i mean, we look at a company like tyson, food inflation, supply chain issues. >> right. >> issues that have been affecting the meatpacking industry, food in general. and, of course, comes at a day where we started the hour talking about disinflation, through disinflation and that's
the downgrade at costco we're seeing as well something we'll continue to talk about supply chain issues getting better maybe. >> looking at right there we remain firmly, let's call it, more or less in the green solidly with the nasdaq, of course, the poorest performer of the three. that's going to do it for us on "squawk on the street. "techcheck" starts right now. >> good monday morning, i'm carl quintanilla with deirdre bosa and jon fortt. a major slowdown in iphone 14 shipments, strict covid restrictions caused this at a factory in china interesting, progression of events regarding guidance then a story about numbers and i know you talked last night about the mix and how it's not the kind of product you'd want to have a shortfall on. >> no, carl. exactly. apple is like the on