tv Squawk on the Street CNBC November 30, 2022 9:00am-11:00am EST
much movement there's going to be in the job market, and then of course, on friday, we get the big jobs number. if you're watching the treasuries right now, the ten-year is at 3.779%. the two-year is at 4.535 >> we didn't talk about soccer and iran ha, ha >> go, usa >> ha, ha. >> what a way to make that finish go, christian. that does it for us today. we'll see you tomorrow ♪ good wednesday morning, welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber is back at the new york stock exchange. big day, powell at brookings, that's the headliner lots of data, including a softer adp, slightly hotter revised gdp, and of course, final day of november today road map begins with the fed expectations, investors reading tea leaves from the fed chair about whether the fed will slow
rate hikes >> plus, china continues to ease some of its covid lockdowns. we'll have the latest on a potential off-ramp strategy for that zero covid policy and doordash is cutting more than a thousand jobs, ceo admitting that "growth has tapered. let's begin with the markets awaiting the fed chair's speech later this afternoon, jim. it's going to be the beginning of the fed blackout window general consensus is still play hawkish? >> the gdp number gives him every single reason to say, i can be hawkish we can have a soft landing that's a lot of room things are still okay. we're just seeing layoffs now. i think if i were him, i would say, we still have room to run we still have a lot of companies that are admitting that there are supply chain problems, also a lot of companies that, david, are -- where the wages are going higher, and that's really not the plan for fed chairman powell welcome back >> thank you yeah, you said for some time,
they want wages -- not lower, but they certainly want them stable and where are you seeing signs of wages going higher? >> oh, i was going over the truckers, railroads, right in our face they really want more. obviously, the railroad companies don't think so there will be a 1992-like resolution, i think, but not before we start hearing that their numbers have to be higher just in the face of the fed. but no one cares the only place, david, where there is pricing pressure is if you're in enterprise software. good luck. >> that has been a difficult area >> yeah. and then, of course, in delivery tony su, you know, doordash is going for profitability. >> well, laying off 1,250 employees, that's about 6% yesterday it was amc networks, 20%. h&m today, 1,500 jobs. >> so we're starting to get it at a certain point, i think that what -- there are a couple
things they really want to see they're not hoping that anybody gets laid off. they just want stability but i also think that any speculation -- i saw today that crypto is up that could be in advance of the sam bankman-fried foolish interview. i thought he was lawyered up my advice to him is, get a lawyer, but not before you ruin your -- different action with andrew but i think crypto crushed it. nft, crypto. jay powell is a gent he doesn't come out and say, i want all you people who are buying this stuff to realize it's phoney, but it would help the cause, carl, if crypto would go below 4,000 >> we saw a lot of technicians talking about 12 or 13, production costs >> who are they owned by tom brady? give me a break. fed doesn't like this stuff. fed doesn't like it. this is sourcing they think crypto, really? i saw some people last night who are all worth more than
$10 billion, which is a lot of money. >> you did >> yeah. >> were you at a secret billionaire's meeting of some kind >> like "eyes wide shut" thing >> if i told you more about it, i would be killed. but no, i mean, they were all, like, laughing at crypto and just talking about the munger view you know the munger view >> i do. >> well, that's now become very much en vogue. >> well, to his credit, he didn't change his view throughout back to doordash for a moment, which we saw the stock, which is up i mean, the ceo does say, you know, we were not as rigorous as we should have been in managing our team growth. that's on me so operating expenses aggrew mo quickly. >> wasn't that the story, though, of the 2021 expansion? this is a covid company. >> right >> tony had no discipline. tony's a very disciplined guy, clearly. this is a very fall on the sword note don't you think?
>> it is but it's being responded to potentially positively in the market >> i'll tell you when powell's going to be happy, when you fire people and your stock goes down, because it means you're in trouble. like carvana i don't think they're having the vending machine success we thought they would >> well, we got a fresh downgrade today, unbelievably, goes to neutral, likely to run out of cash by the end of '23. >> where did you say it might go to >> it says, zero >> that's a -- that's sup optimal. zero's no good >> either zero or several times its current price is b of a. >> i saw a lot of zero price targets in 2001. >> yeah. they're at zero. >> their target is 10. >> yeah, but they say it could be likely the equity value falls to zero. significantly likely now, i would say, that when you think -- if you own a stock and bank of america, which i -- legitimate firm as far as i'm concerned -- says likely they fall to zero, that's not a
bottom fish situation. and i like to fish no, i like to fish for flounder. they're going to be worth more than this. some call it fluke it would be a fluke if this thing doesn't end there. >> it becomes more and more difficult to raise capital >> you think so? >> yeah, we've seen it with credit suisse as well, which i've been following for weeks now. the stock continues to fall. that does not help your efforts to shore up the balance sheet, get the company ready for a major restructuring. it's 3.21. >> is it too early to buy? >> it may be they backstopped the rights offering, but even though you can buy the right to buy stock at a lower price than this, still got to put the money out a lot of people don't want to do that >> this is credit suisse we're talking about. this is a firm i almost went to work for, like a real firm >> yeah. >> stock's down 65%. >> yeah. again, we just keep an eye on it because to the point you're making with carvana in a way --
>> these are happening i mean, we don't want to be -- >> how much dilution can your shareholder base withstand >> people work at these places -- i'm not trying to be too glib, but it's starting to happen when you get ten of these, and you get crypto where chairman powell wants it, you're not going to get that gdp number then he's going to have to say, you know what? we're going to have to do 25s. >> or there's the other view from the likes of elon musk at 4:00 this morning, which is that the fed's got to cut now >> he's made a series of ill-advised decisions and statements over the last two or three months, and i really think that that was one of the more -- >> ill-advised >> david, i'm no longer thinking he's necessarily the call when it comes to -- since he bought twitter, he's become a little more irrational and erratic. >> yeah. i'm somewhat left speechless by some of his -- i don't really know what there is to share.
elon musk is, again, the most consequential businessman on the planet we have to follow him extremely closely. >> more than batten-down bezos >> of course, because he controls tesla and spacex, and mow he controls twitter as well, which while a private company, like spacex, has enormous impact so, yes, i think there's no doubt about that, but i mean, as somebody who was also awake t typically at 4:00 a.m., any advice you might share with him about choosing to tweet at that time >> i think he should stop tweeting he should be much more interested in the back office of tweeting >> we cover jeff bezos saying, batten down the hatches. we cover dimon talking about economic hurricanes. >> i'm so worried about all the rich people. think about all the rich people we just mentioned. bezos is telling us, after he's made a couple billion, now he's got to close the door on us. how about the people watching the show trying to make a couple
smackers, but they hear from billionaires saying, listen, you're done. forget it. >> to musk's point here -- >> what? >> you think otherwise you don't believe that the fed should reverse course? >> we have what i call rampant inflation in a lot of places, and i just don't think that just because i just spent $44 billion on something that it's just worth about 15, that i would probably be upset too. i probably would, literally -- let's say you brought a present for your wife for $440 and you saw it on canal street for $150. wouldn't you feel like an idiot? >> the same thing or a ripoff? >> a counterfeit version >> during the harder days, i bought my wife some kate spade bags down there. >> if you're going to do that, you might as well go a little higher end than kate spade >> i'm just trying to make an analogy to people watching the show $44 billion to that guy is like $440 for a lot of our people
watching the show. >> the birkin bag thing. >> that's a scam that's worse than the nft. >> i did not expect to be talking purses and handbags. >> there are a lot of rich people in nft, and they have to make a stand we don't have a bug for nft. there's a stand being made right now on crypto, and we keep getting these stands what's interesting about the stands, they're being made, they don't really know whether you have anything in your account. i bank at jpmorgan, and when i check on monday, it's actually what i have. when you check at block fee, try to figure out what you have. have you tried that? >> i haven't had that, because i have nothing there, nor do i have any -- >> such a smart -- have you tried draft kings? they're a better bank because it's right there >> as for the markets, mike wilson on "fast" last night,
reiterating the view that you could see a potential drawdown of 20-plus percent in the first few months of next year. here is what he said >> it's about the path nobody cares about what's going to happen in 12 months they need to deal with the next three to six months, and that's where we think there's significant downside, so while 3,900 sounds like a really boring six-month, no, this is going to be challenging. it's going to be a wild ride you should expect an s&p between 3,000 to 3,300 sometime in probably the first four months of the year. that's when we think the deceleration and the revisions and the earnings side will kind of reach its crescendo >> not the first time he said that >> no, but that's the 5% solution you get the 5% fed funds, he wins >> down a thousand points from here on the s&p potentially? >> on 5% what are you, going to stay in a stock? you think our people watching at home, cd versus stock, right cd versus crowd strike, what do you think?
cd versus intab. >> we've already seen that playing out. >> but i'm saying that it's -- that's the -- i'm talking about what wilson could be right on. i don't think he's going to be right on earnings. there's too many companies doing well i think he's going to be right on the competition to stocks, carl, which is 5% is just a home run. >> yeah. jpmorgan this morning pointed out -- remember j'marcuackson h, and powell gave that speech? >> that's when you should have sold everything that had anything to do with cloud. anything even, like, meatballs. remember that book >> "cloudy with a chance of meatballs. i read that many times >> you were a good dad >> i was i am what do you mean, was? i'm trying really hard to still be a good dad, but they're really big now, and they make interesting decisions. >> when we come back, live report from beijing on these
go efficiency. go results. emerson's plantweb digital ecosystem is the brain for smarter, safer and more sustainable performance. go plant go. go boldly. emerson. these days, our households depend on the internet more and more. families grow, houses get smarter, and our demands on the internet increase. that's why we just boosted speeds for over 20 million xfinity customers, on us. so you get more of the speed you need for day and night streaming.
more speed you need when you're work from homeing. and more speed you need as your family keeps growing. check in on your current speed through the xfinity app today. protests in china erupting again over the country's zero covid policy our eunice yoon is on the ground in beijing with the latest and several moving pieces today, eunice. >> reporter: yeah, that's right,
carl the export hub announced today that it's going to lift most of its lockdowns and this is after videos emerged online that appeared to show clashes that had turned quite violent between residents and the authorities because of the zero covid controls now, the mood among protesters, as well as the public at large, will likely be affected by another major political development here, and that is the death of former president jiang zemin. state media today reported that jiang, who oversaw the country in the 1990s and the early 2000s, died in shanghai at the age of 96 because of leukemia and organ failure. under his watch, china entered the wto. hong kong was successfully handed over from the uk to china, and also a big multinational companies like gm, mcdonald's entered china, which was in a period of tremendous economic transformation and opening up
now, in light of the covid protests, there are many who are already making comparisons with the tiananmen square protests in 1989, because for those protests, they were sparked by memorials of the death of another major senior political leader in chinese politics so, that man was beloved by chinese reformers, and what investors should really be watching for now is whether or not we see public gatherings and vigils for jiang zemin, which could potentially become a part of a larger protest movement, and what this all means for the power of president xi jinping. already, we are seeing signs that the leadership is quite skittish any comments right now among ordinary chinese are being blocked on the internet, guys. >> eunice, isn't it kind of a leap to go from the people's
congress, the video we saw, the consolidation of power by xi, just a few weeks ago, now to an idea where they're going to be nostalgic for the '90s and the reopening and wto? >> reporter: no. i mean, i think that, you know, it's interesting because jiang zemin is actually viewed here as a political conservative, so he's not like that man that i mentioned who was seen as a big reformer but at the same time, he represents a happier time in china. a poorer time in china, but still a happier time, so there is a risk that he could be seen as a symbol of a better time when china didn't have to deal with all of these covid controls also, there's another debate, though, that is the kind of the counterdebate, that perhaps with jiang zemin gone, that president xi could consolidate power even more since jiang was part of a different faction.
>> well, eunice, i'm reminded of what happened in russia, in afghanistan. you had a totalitarian state, and at a certain point, the mothers said, no more, and that was the end of afghanistan, the end of the foray by the russians i often think that in china, when the elderly say, no more, that president xi won't cross them this is not students this is the elderly. they're a different status could that be happening? >> reporter: you mean the elderly among -- the elderly population of china? >> yes. >> reporter: or do you mean the elderly statesmen such as -- >> the president xi cannot buck the elderly. if the elderly are against him, then they are the divisions against him, and that's who he's got -- he's not worried about this political dissent but he is worried that the elderly will turn on him, and i think he has to come up with a solution >> reporter: right, but it isn't very obvious that the elderly are en masse against president xi if anything, it could be the
opposite, because we still see a lot of elderly people in the rural areas. it's very difficult to know whether or not people in the rural areas are even against zero covid but most of the people who are speaking out appear to be in the major cities and also appear to be young people who don't like living this way, who had seen things opening up, had been living a certain lifestyle, which could -- would mimic the west and maybe want a big change >> well, i don't think he cares much about them as much as he cares about the elderly. if the elderly are on board, then he's got them >> that's why we call them tea leaves for a reason. they're hard to read appreciate it, eunice. when we come back, cramer's "mad dash," we'll count down to the opening bell a lot of pieces to the puzzle today between powell, the data, obviously the names at dealbook 'lgeto aeron wel t all of it in a moment ing. jerry, you've got to see this. seen it. trust me, after 15 walks it gets a little old.
[golf ball bounces off rover] [ding] ugh. what if you were a major transit system with billions of passengers taking millions of trips every year? you aren't about to let any cyberattacks slow you down. so you partner with ibm to build a security architecture to keep your data, network, and applications protected. now you can tackle threats so they don't bring you to a grinding halt. and everyone's going places, including you. let's create cybersecurity that keeps your business on track. ibm. let's create if you wake up thinking about the market and want to make the right moves fast... get decision tech. for insights on when to buy and sell. and proactive alerts on market events. that's decision tech. only from fidelity.
so, you're 45. that's the perfect age to see some old friends, explore new worlds, and to start screening for colon cancer. yep. with colon cancer rising in adults under 50, the american cancer society recommends starting to screen earlier, at age 45. i'm cologuard, a noninvasive way to screen at home, on your schedule. and i find 92% of colon cancers. i'm for people 45+ at average risk for colon cancer, not high risk. false positive and negative results may occur. ask your provider if cologuard is right for you.
all right, let's get to a "mad dash. we start trading in seven minutes, what we like to call hump day, of course. let's get to biogen, because, you know, there had been some news out about what had been -- we originally thought -- a promising development in terms of alzheimer's >> and then we had the deaths. >> there were a couple of deaths but now, better news >> jpmorgan, first of all, says, on deaths, this is a study they released does not appear to be a direct link to the biogen drug, and david, the results are consistent with the positive headlines, results from the trial. now, this would, of course, be one of the biggest drugs of all time because you would have to be on it consistently and take it for a very long time. whether the government will pay for it, we don't know.
>> we're talking about a treatment that would at least slow the progression of alzheimer's. >> yes i mean, now, there are a lot of people -- i mean, i'm doing the american brain foundation gala, and i work with american migraine foundation. a lot of people feel we don't really know how long it extends your protection. but obviously, the beginning of the end, maybe, of alzheimer's very, very long beginning. >> could be a very significant development. by the way, we've been down this road before with biogen. many people were burned by a drug that came on the market, did not get much support very controversial, okay from the fda that many doctors looked askance at >> the doctors i talked to say, this is one where you don't just start popping pills. you have to start taking it maybe at 40 or 35. and will the government pay for it we don't know. let's not get ahead of ourselves. the numbers last night were good, and that's what matters, and that verifies this move. >> right that's the original move when we
got data from this trial >> and the full trial came out -- >> that was the other day before we had any real information. >> this was the deaths may be linked >> and now we're up again because the actual trial results themselves, again, we're getting a closer look, were good >> exactly >> okay. >> this is one where there's just tremendous interest on wall street >> yeah. well, as you say, could be a very expensive drug. it could bankrupt the government, but it also could positively impact millions and millions of lives. >> david, the government is not carvana. >> no. we can just print money. >> exactly right carvana cannot print money that i know of. >> we got a lot more for you, including an opening bell that's just a few minutes away. by the way, remember, you can catch us any time, anywhere, listen to and follow the "squawk on the street" opening bell podcast.
lily! welcome to our third bark-ery. oh, i can tell business is going through the “woof”. but seriously we need a reliable way to help keep everyone connected from wherever we go. well at at&t we'll help you find the right wireless plan for you. so, you can stay connected to all your drivers and stores on america's most reliable 5g network. that sounds just paw-fect. terrier-iffic i labra-dore you
regarding the app store, specifically from elon musk. today, it's daniel ek of spotify who says apple offers consumers the illusion of choice, rails against what he's calling anti-competitive behavior and has for a while, also pointing that there's momentum in his view, politically, to do something about this >> well, okay, so i have my apple file for today and i come, oh, by the way, bear cutting early on twitter i come back and say, here's the apple line google wants to do it, go ahead. if mark zuckerberg wants to do it, do the instagram store apple's not stopping anyone from doing a store. and that's the argument that will be compelling in washington when tim cook goes which is, you know what? we're open to anyone doing a store, so why -- >> you got to have a phone to do a store. google does have a phone but i mean, they don't have a phone with billions of users >> do you think that apple is, like, saying, you know what?
we're not going to allow anybody else to have a store anyone who wants to can have a store. you and i could have a store >> the store doesn't mean anything without the phone the installed base >> there are some. amazon put out a store this is nonsense these are people who literally want lower prices for an apple, and you know what? good luck. start your own darn store. apple's got its -- >> and build your own phone. >> you keep saying start your own store. you mean, build your own enormous worldwide ecosystem >> let's have apple give money to a new store that is owned by the people the people united will never be defeated. >> apple's not going to authorize them to do ios >> what is apple supposed to do? we're going to create a new store with the ftc that doesn't work. what are they supposed to do they have a great store. they're not saying nobody
else -- i mean, this is really, when you talk to apple, they say, listen, what are we going to do? we have a great store. >> the developers say 30% on the first year subscription, 15% thereafter is just too high. >> 30% is better than nothing at all. okay >> we had this discussion yesterday regarding your -- >> he was busy >> i'm sure he was watching. >> i was watching a lot yesterday. i was sitting in bed just watching you guys. you were excellent >> that's a job for you. i want to sit in bed and watch how much they pay you to sit in bed and watch the show >> it will be your turn next >> don't say that. >> you don't want to be sick >> and the new rules, by the way, i think everybody in america knows. if someone, you know, unfortunately, knock wood, gets sick, stay home. >> that's the thing. >> just stay home. >> i didn't take a sick day for 15 years i've taken four this year. four >> i tested every day because of you, and i hadn't even seen you. >> i didn't have covid >> i told regina, i want more of those abbott tests because
abbott's stock is awful. have you seen some of these stocks >> do you want to mention who did the honors do we move on? >> it's a bunch of names we haven't got into, jim, hp, intuit >> hp was excellent. some of that was component costs lower. workday was extraordinarily good with an amazing outlook and a buyback. the famous pivot that you have to have, that's what i think they want to do at doordash. intuit was a, perhaps, credit karma is losing its karma. >> they talked about, yeah, degrading fundamentals across verticals. >> yeah. i mean, that's -- that was just a tough one. not good that could be further cuts from intuit going forward and crowdstrike was just plain-out disappointing, although george did say the big deals are okay, it's the small and medium-size businesses when you start seeing that
c-suite takes longer >> crowdstrike's a disaster, man. the stock's losing a fifth of its value. >> i'm a diplomat. >> it was really the revisiting annual revenue expectations that hurt them. >> david's right it was disappointing it was bad >> the citing of the macroeconomic environment is being seen as almost a positive by some. >> good economic environment how is it possible that palo alto had excellent economic environment and crowdstrike didn't you know >> so, are you calling out crowdstrike for not being completely honest here about what was the reason for the shortfall? >> let me be more specific because george is an honest guy. what he's saying is not to worry but we have this i think another guy down is in the cards, even though he didn't guide down >> morgan stanley's still on board. they say, buy the dip. i call that more of a crash. >> buy the mariana's trench.
>> estimates now appropriately derisked from macro and positioning. >> that's just untrue. when he guides down the next quarter, and i believe he will, then you believe be even more derisked zoom was derisked at $120. derisked is, we're going to ban that term, derisked. ain't nothing derisked >> well, stifel cuts to hold they go to 120 >> that was good ain't nothing but the real derisk, baby >> then your point with palo alto, which has been doing well -- >> you had to pivot. he decided it's time to make money. we can have profitable growth. and he's been doing it now, the stock's going to be brought down by crowdstrike, but i think nikesh is doing better, and the fact that stock was down $8 and it's now only down $3 is the recognition that if you go back to reading his quarter, he actually did not have these
issues i'm not saying george is disingenuous at all. i'm saying this could spread to larger, and i, therefore, am more cautious. >> i think that's the important distinction. small and medium-sized businesses being a key part of their customer base, not as much for palo alto. >> no, palo alto's mostly large enterprise again, george kirts is totally on the up and up the problem is, david, when you have a stock, okay, when you have a stock that's valued at a time sales multiple, you're going to get these kind of pressure they're still valued at time sales, not earnings. that game ended. it ended at jackson hole, okay it just ended. it ended in november, and -- of last year, and yet people continue to play it. and i don't understand i come out every night, and i say -- i said this since november if a company does make things, do stuff, add a profit and return capital, avoid it
period i've been saying it since the november pivot of last year, and so far, i'm hated even more than i was. which is standout. >> guys, the world of m&a, we got some news late yesterday i think "the journal" first reported interest in a company called horizon therapeutics. i guess you'd call it rare disease. they have a multibillion dollar drug, though in fact, estimates that it could peak as much as $4 billion for thyroid eye disease. it needs to be infused it's actually -- the drug is marketed to your ophthalmologist. it's not a gene therapy or anything like that but it is a rare disease drug, so to speak, and by the way, we've seen a lot of consolidation in both either oncology or rare disease over the last, let's call it, 18 months the belief being, when it comes to rare disease, perhaps it's not quite as problematic to get
reimbursement from insurers. in this case, there seem to be three interested parties what i have heard as well, as you might expect, they went out to even more than that, so it does appear to be an auction essentially, the company saying, let's see who's out there. unclear what motivated that, whether there was a letter sent initially that said, we'll check and see what happened. very much unclear what will happen from here remember, this is irish takeover law, very similar to uk takeover law, which means, a, when there's any report, they need to come out and say whether it's true or not. so, they have. we know three companies that they at least have had some conversations with amgen, santa fe, j&j and january 10th is now the date at which one or all need to come up with some sort of actual firm intention to make an offer or else you kind of go on your time-out period. so, we'll keep an eye on it.
it will be a very large deal >> huge. >> this is not a small company we're talking well over $20 billion. people make their decisions there in terms of what this company is worth, but clearly seems to have been an auction mode, guys and again, an area that we have seen a lot of interest in being rare disease where there are certain benefits, as i mentioned, including, perhaps, less reimbursement issues, not as dependent on a large sales force. remember genzyme that was kind of the first to go >> remember that >> but again, also, carl, speaks to the fact -- you asked me last week there is a bead to m&a right now. there is perhaps more than we might have anticipated we'll see whether they get to the finish line here >> all right >> j&j's mentioned because of the med? that's device. >> this is different this is the pharma side. >> i'm not sure j&j's going to
decide, that's going to get our growth better. >> yep >> their pharma is spectacular remember, they're doing the split-up we'll see. >> guys, we spent a lot of time talking about disney i haven't been here the last couple days but i know iger's town hall came out 10k is out, annual report. not much in there, per se, but i did do a search for the word, restructuring. it's in there 32 times so, i think it's just fair to say, there's a lot to come here on disney, including the restructuring, change in business strategy, once determined, could result in impairment charges, and there you have it. so, that's kind of the key here, takeaway, in part. we don't know what bob iger is going to do here specific to said restructuring, but it comes up an awful lot. and by the way, restructuring
impairment charges in fiscal 2022 were $200 million but again, there's an expectation there's a lot more to come. >> now, did you see yesterday, the other day, that bob iger had seen hamill and he was reflective >> what about it >> well, it turns out there's a man by the name of hamilton faber at atlantic equities, who says, no easy fix. >> atlantic fix is fascinating they talk about discounting at the parks. >> who is this faber fellow? >> like faber college. >> hamilton faber? >> talk about a reset, which is what i think iger has to do. we are going to start at ground zero, going to re-evaluate espn, we're going to take a look at m&a, maybe even sell some things, but it is clearly t tabula rasa, and i think this hamilton faber piece is
excellent. ham faber. what's the matter? >> i notice it's a london interchange there. faber & faber was t.s. elliot's publisher. >> i don't think we should make fun of a guy's name. >> no. i just don't know anybody in the family with that name. i was thrown for a minute. doesn't sound like we're in the same branch there. >> i say nothing >> on pelts and dipsney, that continues. i don't know what nelson is after. >> he has a billion already. he has a billion in stock and i think would like -- i think it would be interesting if he got on the board >> what is it he would want to share? what expertise >> he could make it so there's more accountability per division, a la what he did with procter. he can come in and be a change agent because he can be a guy who says, no, no to this this has to cut. people can say, well, i guess we'll let him be the hatchet man.
nelson pelts can be the hatchet man. >> that's not done with. >> olymkay, ham >> let's get a look at bonds this morning they've been around the block a couple times so far today, largely on the heels of the weaker-than-expected adp number. we were looking for 200, prior 239, but resumed strength and a little bit hotter than expected consumption and core pce numbers for q3 we'll be right back. i promise - as an independent advisor - to put the financial well-being of you and your family first. i promise to serve, not sell. i promise our relationship will be one of partnership and trust. i am a fiduciary, not just some of the time,
if your business kept on employees through the pandemic, innovation refunds could qualify it for a payroll tax refund of up to $26,000 per employee, even if you got ppp. and all it takes is eight minutes to find out. then we'll work with you to fill out your forms and submit the application. that easy. innovation refunds has helped businesses like yours claim over $1 billion in payroll tax refunds. but it's only available for a limited time. go to innovationrefunds.com to learn more. ♪♪ go. go green. go wind turbines. go gorgeous reliable grid. go emerson software. go science people. go breakthrough meds and safe science. go space age welds for super silent cars.
go big. or go home. from software that delivers new cures at warp speed, to technology that makes clean energy reliable, emerson innovation helps make the world healthier, safer, smarter and more sustainable. go boldly. emerson. ♪ rick santelli here with breaking news. our november read on chicago pmi, are we going to have our third number below 50? indeed, 37.2 not only is it our third number below 50, it's our first number below 40, and this is the lowest level going back to 32.1 in may of 2020.
that was the low due to covid. so, this number is a huge disappointment 45.2 in the rear view mirror, and if we consider the previous data was better than expected, this probably puts it back down to 3.75 with regard to tens. still have j.o.l.t. and penny home sales to go "squawk on the street" will return after a short break
♪♪ we all have a purpose in life - a “why.” maybe it's perfecting that special place that you want to keep in the family... ...or passing down the family business... ...or giving back to the places that inspire you. no matter your purpose, at pnc private bank, we will work with you every step of the way to help you achieve it. so let us focus on the how. just tell us - what's your why? ♪♪
i think we can make a lot of progress in the labor market just on the hiring intention side, job opening side i don't think it's necessary to see very substantial layoffs the tech sector is special they have been hit in this slowing economy, declining ad revenue, and then, of course, they benefitted massively from the boom in technology during the pandemic so, i think there is some special factors that are affecting that sector. but the u.s. economy is slowing down, but it's operating at a very healthy level >> that's the treasury secretary
a few moments ago at the dealbook summit, offering her take on the labor market, jim. she also says she looks forward to remaining as treasury secretary. there are national security risks regarding tiktok and that u.s. companies should consider the risk of china moving on taiwan as they do business ther >> they should at all times. i agree with her on everything except for her ill-advised three pack a day cigarette habit. >> three packs a day until 1976. >> june 26, 1976 threw them in a dumpster at kennedy airport, never smoked again. but she did smoke three packs a day for a while. >> ill-advised. >> that's 60 cigarettes. >> that's hard core. >> i've always respected her i guess if i had known her in 1965, i would think different. >> by the way, the comments about the labor market and the
economy came just as we got chicago pmi, jim, which was a ten-point miss. >> can i just say, when i see a number like that, it shows how hard it is to be jay powell. that's a clear recession number. he's got his work cut out for him. the bonds didn't move on that. we want to follow the dealbook all day because there's going to be news there. >> lineup is amazing andy jassy, zelenskyy, zuckerberg and sbf which will be the one people pay attention to. >> biden wouldn't go justice roberts? why is he holding out? >> it's quite a lineup and ends, i believe, or bankman-fried is at the end of the day. >> i think his lawyers are saying, you know what, get another lawyer we're resigning.
you can't control yourself you and your hundred gs, that's all you have >> he did say he was down to the last batch of cash. >> he should spoke three packs a day. dow is down 50 let's get to bob pisani. >> moving around on the economic data stocks rallied on the weaker adp and then declined on the stronger gdp numbers and the gdp chain price reports. we're flat tisch right now s&p only down two point. risk a little more apparent. it's been that way all week. k-web, china stocks have been moving k-web, that's crane shares, up 15% this year. metals have been strong. that's another risk on group kathy wood's arc innovations has been doing well. 70 was positive at the open, just turned negative there's a very entering disparity going on in the
market a big disparity emerging between the boss toms-up analysts and most of the strategists out there. the consensus of 2023, up about 5% a lot of strategists way below this lori calvasina, 199, goldman at 224. 208 is what we werein 2021 there's a big disparity here between the investment community that's out there there's another big disparity. carl mentioned this on monday, between oil and oil stocks usually oil and oil stocks, they directionally move in the same direction. beginning a couple months ago, everything diverged all of a sudden crude oil is down 40% from the 52-week highs. energy stocks were at new highs just last week it's 4% off the highs. that's a little strange, that divergence it's mostly where
people think oil is headed in 2022 the bulls are saying the supplies will remain tight china demand is going to come back opec production is going to do production cuts if they need to. the bears are saying we're facing an economic slowdown in 2023 it's going to slow down and there will be more supply available. the question is who is right the reason this is important is a lot of people are hiding in energy stocks, not just for the prices, but paying really big divi dividends, 3, 4, 5%. many instituted variable dividends where they have a fixed dividend, and on top of that they pay an additional dividend that's variable depending on the cash flow some of these companies are doing variable dividends have high yields, pioneer, coterra, devon. the concern is the cash flow comes down because oil prices come down. they're going to keep reducing the amount they're paying out because the cash flow is going
to be smaller. we don't know if that's going to happen, but that's a big concern people have out there. i think the key point is a lot of disparities or disagreements of where the market is going to be in 2023 on earnings and on the price of oil carl, back to you. >> thanks, bob pisani. let's get to jim and "stop trading. >> citi raised the price target from 13 to 14. i like the oils very much. if you think there's no recession -- i like it. >> also accelerating their mach e production. >> they're sold out. >> i noticed you have a -- >> we have hormel on tonight this is something i bought for david. this is figgy pudding spam talk about something right up david's alley. it might be from a different tribe. >> that's a limited edition. >> of course those go like hot cats >> wow
>> let's open some right now here is what i'm going to do, david. i'm going to do something you want to try -- >> you don't need a special key? it's just a flip top >> you want to know what good is it's spam juice. >> oh, i cannot unsee that >> oh, my. >> wow >> figgy pudding bring out the figgy pudding. it gets better with each one. >> what was that show on nbc where people would eat bugs. >> that is total "fear factor" right there, jim you've done this before. >> this is the best one. >> i did the halloween, the pumpkin thing. this, david, is a game-changer. >> hormel and snow tonight. >> snowflake. >> and salesforce. >> he's getting his tongue in there now. >> oh, yeah! tastes just like figgy pudding when i was growing up.
remember figgy pudding >> figgy pudding i don't remember that combination. >> all the kids loved it >> rock of ages and figgy pudding. >> we'll see you tonight if you survive. "mad money" 6:00 p.m. eastern time dow is down 90 points. >> didn't know we were going to end the show like that. >> jolts after the break to adapt in the changing world, you could hire a professor of theoretical mathematics. we all know this equation, right? 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.
ah, these bills are crazy. she has no idea she's sitting on a goldmine. well she doesn't know that if she owns a life insurance policy of $100,000 or more she can sell all or part of it to coventry for cash. even a term policy. even a term policy? even a term policy! find out if you're sitting on a goldmine. call coventry direct today at the number on your screen, or visit coventrydirect.com.
good wednesday morning welcome to another hour of "squawk on the street. i'm carl quintanilla with morgan brennan and david faber. very big day today powell this afternoon, adp, gdp, chicago pmi and now jolts. let's get to rick santelli. >> job openings and labor turn over expecting a number around 10,250,000, very close, 10,334,000 this is the lightest numbers since just august, 10,280,000. this number really does underscore the notion that pre-covid we were at 7 million
job openings even though this has come off the high watermark, the all time high going back to inception in 2007, it was march of this year, 11,855,000 so we've come off, but we're still, what, over 30% higher than we were pre-covid and interest rates are coming back off. we saw some solid gains on consumes as you pointed out earlier. core pc hotter than expected the horrible chicago pmi and we're not done yet pending home sales for the month of october hitting the wires, and for that we turn diana olick. diana? >> pending home sales in october dropped 4.6% from september, just about along expectations, but down 37% year over year. this is the fifth straight month of declines in this reading which measures signed contracts on existing homes. it's an indicator of future closed sales about one to two months out while mortgage rates have come back a bit this month, october was rough.
the 30-year fixed was over 7% for the vast majority of the month which was a 20-year high then the big drop on november th after the latest government report on inflation. regionally pending home sales dropped everywhere month to month except in the midwest. sales fell hardest in the west where homes are most expensive the midwest is where homes are least expensive. given the recent drop in rates down to the mid 6% range, the upcoming months should see a return of buyers of course, the upcoming months are historically the slowest while home prices are easing a bit, inventory is still very low. so morgan, not so sure. >> all right diana olick, thank you we're 30 minutes into the trading session. three big movers we're watching this morning, net app tumbling, out with a weaker than expected forecast
sh those shares lower by 9% on the other hand, petco is soaring, revenue topping expectations the stock is down more than 40% year-to-date it's up 8.5% so far in this morning's trade, people love their pets doordash, the latest to announce job cuts, laying off more than 1200 employees you can see those shares are moving higher in response to that news as well. currently up 2.5%. >> let's turn to china, this as more protests erupted overnight. of course, amid this continuing tension over the zero covid lockdowns. eu eu eunice yoon will give us the latest. >> reporter: the export hub of gaung joe lifted most of the lock doups this is after a video emerged online which showed residents clashing quite
violently with riot police the public at large will likely be affected by another big political development here, and that is the death of the former president jiang zemin. he over daw the sunt in the 1990s and early 2000s died at the age of 96 because of organ failure and leukemia under his watch china entered the wto, hong kong was handed over successfully from the uk to china. big multinational companies such as mcdonalds and gm entered the country which was going through a huge economic transformation and opening up in light of the covid protests, there have been plenty of people making comparisons with the tiananmen square protests in 1989 those protests were fueled by memorials of the death of another big senior chinese
politician who was revered by reformers. so what investors need to watch for at this point is whether or not there are going to be public gatherings or vigils for zemin which could add fuel to the fire in the protests over covid controls and what impact it could have on president xi jinping's power. there is already signs that the leadership is quite sensitive about what's going on because of the comments that people might want to post online about jiang zemin are all being blocked. guys >> eunice, there seems to be at least in the marketplace, and i often look at shares of alibaba as a good reflection, hopes that the posts will be somewhat effective in getting the leadership to lift some of the lockdowns. alibaba is up almost 9% here this morning
what's your take >> reporter: well, i think that we are seeing some signs that the authorities are trying to accommodate this public backlash as i mentioned gaung joe said it's lifting most of the lock downs today. china's iphone city said they were going to lift their lockdown we're seeing on the margins, cities as well as other local authorities trying to accommodate the protests and pain that we're seeing around the country. at the same time, it still all falls in line with what beijing said it was going to do which is zero covid, but mitigating some of the most excessive measures so the way the government and the top authorities are describing it, is that the local authorities are the ones that need to make these adjustments, but everybody is still pushing in the same direction from the chinese government's perspective, and that is still zero covid >> eunice, appreciate that
setup. eunice yoon, we'll talk later. for more on the macro picture and china's impact, let's bring in ceo charles delara. charles, it's great to have you back welcome back. >> good morning. good to be with you this morning. >> before we talk about i guess the fed and sort of monetary policy, impact from china, yellen this morning at a conference did suggest as others have that it might renew some of the supply chain worries we had earlier in the year. >> well, certainly that is a risk here. i think we just have to monitor closely the evolution of the lockdown policies in china to see if there is no significant easing in the lockdown i think we could see renewed further supply chain difficulties which could put further pressures on price levels on the other hand, the chinese
economy is clearly in a relatively weak state, especially compared to its historical performance i think we have to monitor the situation closely to see which way it goes in the weeks ahead certainly we have not yet seen any dramatic move toward reopening the economy, nor have we seen a major shift away from zero covid. >> so with that, and obviously on watch for powell this afternoon, your overall view is that the fed is going to remain vigilant in fighting inflation, even with chicago pmis in the 30s and pending homes down 40% and cotton and chicken and commodities down, and this curve inversion. you think they're still going to remain resolute? >> well, i think that is the highest probability really i think that they know the recent american history. they know in 1980 after an
initial period of serious tightening, paul volcker eased up prematurely the consequence of that was when he had to come back in early '81, he really had to hammer the economy. i think powell and his team want to avoid that this time. i think, also, they're in the process of rebuilding their credibility in markets to ensure that inflationary expectations do not get out of control. those various factors, in my view, argue for continued vigilance, continued tightening, albeit at a moderated pace over the last five month we've seen the most historically rapid rise in fed rates in modern history. >> in light of that, charles, is stagflation a real risk? if that is a risk on the table that the fed is watching very closely, does that mean it's more than willing to and perhaps
it is even inevitable we'll get some sort of recession to avoid that >> well, our base case still has the u.s. barely avoiding a recession. to be quite honest, it's touch and go i do believe the risk of a recession in the u.s. are quite significant. the risk of a recession in europe obviously much higher if i focus on the u.s., i do have -- i think we have at partners group quite a considerable concern about a stagflationary scenario over the next several years, where the fed gets inflation down somewhere in the range of 3% to 4%, but nevertheless, it's higher than it would wish -- it's very difficult to envision a rebound in that environment. we are in a period of deep globalization.
we have to recognize that, the focus of deglobization, trade protectionist reasons are all around us. i think the combination of these factors raises a risk of a stagflationary environment as we saw in the late 1970s. >> unwinding decades of the opposite trend charles appreciate that very much, look forward to talking again soon. as we go to break, the rest of the hour, bitcoin on track for another losing month as the crypto industry continues to feel the effects from ftx. fed chair powell expected to make an address regarding the economy. crowd strike down double digits on week revenue groh.wt a closer look at that when "squawk on the street" returns don't go anywhere.
welcome back to jooet. bitcoin down 20% the sector's biggest players fight bankruptcy during a growing contagion. joining us is silvergate capital ceo alan lane. given the fact that silvergate has a front row seat as essentially the bridge between crypto and traditional finance, as we see more headline, whether it's the block phi bankruptcy, headlines about genesis looking to avert a possible bankruptcy
filing other firms halting lending and other trading services and activity, how dire is the situation in the crypto market right now? >> good morning, morgan. it's good to be with you again the way i think we should be thinking about this, i think we need to zoom out i just heard you mention the price of bitcoin and eth both being down this month. silvergate has been banking the ecosystem for nine years this type of volatility isn't new to us. we built our platform to help our customers through both the good times and the challenging times, such as we're experiencing now if i step back to when we first got into this business, it was bitcoin only, and our primary focus when we got out of this business was to essentially help bitcoiners on-ramp and off-ramp between the u.s. dollar and other fiat currencies into
bitcoin and back out we developed the silvergate exchange network to bring the legacy banking system that only operates during normal business hours during the week into the 24/7 bitcoin trading market, so that helps our customers move crypto 24/7. the silvergate exchange network, provides the same service we've been providing for years 24/7, access to u.s. dollars. >> to your point, you're federally regulated, you provide liquidity to the system. presumably you're in a position because of that to defend on a so-called run on the bank to satisfy redemption requests. have there been many >> so as a publicly listed company, morgan, i have to stick to our public statements, but we
have provided mid quarter update where we did share our average deposits for the first half of the quarter were down compared to the third quarter but importantly, i want to go back to the first point that you just made which is that as a federally regulated bank we have built our platform to essentially be able to handle customer withdrawals and customer inflows 24/7. the way we do that, and again i'll stick to our publicly disclosed numbers, but as of september 30th, silvergate had a little over $13 billion in cash and investment securities that were available to support only $12 billion in deposits. another way to think about that is, if all the deposits left, silvergate has cash and securities to support all of that outflow this is certainly a deep crypto bear market, but we don't think it's going to zero so anywhere between zero and
that $12 billion that we ended the quarter at, silvergate has the liquidity to service our customers 24 hours a day, seven days a week. >> you make some key points there, and yet your stock has been trading as if it's a direct proxy to bitcoin and the cryptocurrency market in general. it raises the question and i ask this knowing many wall street analysts continue to be very bullish on your stock. can you continue to grow even if the cryptocurrency market continues to weaken here and perhaps for a prolonged period >> sure. it's a fair question, more gan what i would say is certainly our growth is going to be somewhat dependent on the broader digital asset market again, we've been doing this for nine years we've seen these periods of volatility before. this is a little bit of a shakeout but the way we're viewing this is over the long run, bitcoin has a limited fixed supply, and as adoption growing, then this
whole ecosystem will grow. so we take a much longer-term view than what some of the folks are taking right now unfortunately as a public company, our stock is going to essentially trade with the volatility of the broader digital asset market but we're going to continue to provide the same services we provide our customers 24/7. >> when it comes to transparency, alan, there's obviously been a lot more demand for that you have a lot of highly liquid securities that are treasuries backing yours. how transparent are you being with all of your depositors, for example, in terms of what's there. should others perhaps be more transparent as well who have similar businesses >> it's, again, another great question one of the things that we have to do, because we are publicly-traded, our customers are also in the public, right?
so we can't be sharing specific information with them that we're not sharing with the broader public what i can tell you is when our customers show up and they want to withdraw funds, many of our institutional investor clients have gone risk-off there's a lack of trust in this overall ecosystem, so many of them have decided, you know what, we're just going to stand on the sidelines and wait until the dust settles, and to the extent those customers want to take their dollars off our platform, we've been able to do that and we continue to be able to do that as far as your other question on transparen transparency, this is one of the great things that i think is lost even before we became public as a federally regulated financial institution, we file a quarterly called report which is a very detailed financial report that's available to the public, even before you're a public company. obviously as an s.e.c. registrant, we have additional disclosures that are required.
we're probably the most regulated and the most transparent company in this ecosystem. >> alan, a lot of minnesota quarterbacking on regulation some argue the s.e.c. by not approving a spot bitcoin etf kept people from losing money. others argue it forced people into riskier elements of the space where they did lose money. what do you think? >> i read a lot of that stuff as well i'm going to go back to what i said a few minutes ago when we first got into this business it was bitcoin only now, we certainly don't stand here to try to choose winners and losers as some of these other tokens come on the scene i will tell you that bitcoin continues to operate uninterrupted 24/7 it is the only protocol that has 100% uptime since before we got into this business in 2013 so it continues to hum along
the price is going to be volatile because you just -- you can't manipulate it. so the price is going to be based on demand. the other things like you're mentioning, like etfs, those might have the effect of pumping the price at times and maybe even exacerbating the downturn so we don't spend a lot of time worrying about whether or not an etf is going to be approved. we focus on providing this u.s. dollar on-ramp and off-ramp in a regulated bank, and that's why we're a critical infrastructure to this ecosystem. >> okay. in light of that, i want your response from the bloomberg news report stating some customers of ftx which we know is controlled by bankman-fried -- also controlled by bankman-fried and that according to people familiar with the matter hat add
tribbeted that raarrangement to the reluctance to engage in crypto firms including etx silver gate, you couple that with social media speculation over the last couple months, about silver gate's role where ftx funds are concerned. your response to all that, and just as importantly, if you can lay out what the bank's responsibility is for conducting screenings of entities applying for accounts and, of course, the usage of those accounts? >> sure, morgan. i really appreciate the opportunity to address this. there's a lot of speculation and rumor out there that is just unfounded in truth so to be clear, before silvergate on boards any customer, we go through a very comprehensive due diligence process. we make sure they have the appropriate licenses to do the business that they are purporting to want to do across our platform
we then -- once we on board them, we go through on going monitoring i think we're probably the first bank in the world to get into this business on purpose in 2014 there were other banks back in the early days that didn't really understand what bitcoin was. they didn't understand these companies were money service businesses but we went into this very intentionally with our regulators in 2014 understanding that these companies that are providing services to this ecosystem are essentially money service businesses, they need to have a money transmitter license, need to be registered with thin send, they need all the appropriate licenses and compliance program in order to provide services to the ecosystem. so we do all those checks. now, what is our responsibility? our responsibility is, if we receive wire instructions from a
customer, then our obligation is to verify those wire instructions so if we get a wire instruction that clearly says send your money to alameda or ftx or any one of our 1,600 customers, if that is a valid wire instruction, then we're going to honor that wire. the next step is we also then have to monitor going on and on the activity moving across the send we have 1600 customers and many of them are using it every day so we monitor for activity that will be inconsistent with the purported use of the account as long as the activity is consistent, then there's nothing else that we would do. now, if we do see activity that is inconsistent, we're required to file a suspicious activity report the industry calls it a sar.
those are confidential we're not allowed to tell the customer, not allowed to tell you, the s.e.c., not allowed to tell anybody into filed a sar. that can potentially start an investigation that can sometimes lead to the things that you see a year or two later. >> all right >> so, again, we built this business compliance first. we satisfy all the regulatory requirements, and we have also in the past, we have offboarded customers if we see activity that is inconsistent and if they can't correct it or explain it, then we off-board those customers. >> alan lane, appreciate the extensive response there ceo of silvergate, thanks for joining us. >> you bet thank you very much. food producer hormel with mixed results. cramer, of course, eating spam on air this morning. >> ah. >> that company issued a
welcome back to "squawk on the street." it's the last day of trading for the month. our dom chu is very familiar with the calendar. he looks at what sectors are driving the moves this november. dom. >> i'm looking at my watch, too. it says the 30th of november right now, david, to your point. from an etf standpoint, certain parts of the market have seen a steadier outperformance, if you take a look at some of the more interesting stories developing over the course of this particular month, it has been a turn-around in computer chip stocks, semiconductors, we've been talking about them a lot as a sentiment indicator for the broader technology trade that still languishes. but the etf is up 14% on a month-to-date basis. that's a big one biotechnology getting a little
more attention these days as well keep an eye on that particular industry group meanwhile, internet related stocks, media telecom are down fdn is down nearly 2% in that span there has been outperformance, markedly so, for some of the more established induss, like the dow jones industrial average. out performing the sbp and the nasdaq 100 as well over the course of this month, you can see the move higher translates into a roughly 1,000 point gain on a month-to-date basis for the dow. one of the big reasons for that outperformance has been due to one stock in particular, and that is boeing that stock is up about 24% in just this month alone. so this kind of move higher we've seen here is up roughly 24% for shares of boeing what's important about that, morgan, is boeing and that move has translated into roughly a
quarter of the 1,000-point gain we've seen overall for the stock. so keep an eye on that particular move. by the way, remember, boeing shares very prominently placed in certain aerospace and etf -- aerospace and transportation etf. so keep an eye on those boeing shares morgan, i'll send things back over to you. >> of course we're getting the news u.s. lawmakers might be discussing a compromise measure to allow boeing to certify some of its new aircraft models dom chu, thank you later today, do not miss another special cnbc pro interview, this time with legendary investor leon cooperman. he'll be answering your questions directly starting at 3:00 p.m. eastern. we'll be right back. stay with us ♪ ♪ wow, we're crunching tons of polygons here!
what's going on? where's regina? hi, i'm ladonna. i invest in invesco qqq, a fund that gives me access to the nasdaq-100 innovations, like real time cgi. okay... yeah... oh. don't worry i got it! become an agent of innovation with invesco qqq go. go lights. go big city lights. go spotlights. go stadium lights. emerson software helps clean energy become reliable electricity. go “good night." go boldly. emerson.
i'm christina parts vel lows a bombing in aflg. the afghan affiliate has carried out other attacks since the taliban regained power more than a year ago the european union is proposing a u.s.-backed special court to investigate possible war crimes by russia in ukraine that's the latest effort to hold russia accountable for the invasion the haig court is investigating russian military crimes. the eu wants to use frozen russian assets to pay for the estimated 600 billion euros incurred by the war. mila kunis was recognized for her ukraine fund-raising, matthew mcconaughey for his gun reform leadership after the school shooting in uvalde,
texas, jennifer hudson honored for her inclusive work on her own talk show. and writer krista broon sten picked for her writing on "abbott elementary." wall street awaiting fed chair powell's speech on the state of the economy our steve leisman has more on what we can potentially expect. >> it doesn't appear to be as high as it was ahead of the jackson hole speech in august, despite a higher stock market. the fed is in a very different place. powell has somewhat less lifting to do. krishna gu ha writes, this is not a jackson hole revisited before powell spoke in jackson hole in august, the peak fed fund rate was 3.8% this morning trading at 5.05%. that's 125 basis points higher on the market's outlet for the
fed showing powell's work is done in jackson hole, the fed chair faced a strong stock market rally. since then ten years up by about 80 basis points. the two-year almost 110 basis points higher. powell and the fed's biggest challenge could be the resilience of the u.s. economy the government revised higher the estimated third quarter gdp to 2.9%. estimates for the fourth quarter running around 2% suggesting not much slowing from gdp potential. adp reported lower than expected job growth the fed may get weakness or slack in the economy powell will be careful not to pump markets to rethink the 5% peak funds rate or cuts are coming any time soon powell has less convincing to do david. >> steve, thank you. steve leisman. that sets up our next
conversation joining us is interactive broker's chief strategist steve sosnick and wilmington ton trust. steve leisman mentioned the resilience of the u.s. economy how do you see that balance there in terms of what the fed is trying to accomplish, that resilience that we're seeing and what that may mean for people who want to invest in the equity markets? >> good morning, david this makes it a very tricky question because the -- at some level we're hoping for a recession by looking for the change in interest rates that are predicted by fed funds rate the second half of the year. that's what bullard and williams are trying to stamp out. i suspect powell will try to stamp that out today the problem is, are we rooting for recession because we want lower rates or we want a good economy. the atlanta fed gdp which is usually a pretty good indicator is showing 4.3% for fourth quarter gdp.
that's well above economist estimates. really nobody is clear about what's going on. i don't think the fed wants a recession. the market has got to be clear about what it wants. do we want stuff so bad that the fed cuts rates that's a tricky thing to wish for. >> yeah, it is at the same time stocks seem to be -- at least there are many who seem to be banking on the idea of a soft landing despite, of course, what are those version 210s, for example. what is your take? is what many investors are hoping for in terms of a soft landing perhaps a very mild recession, if one at all, going to be realized >> the bond market is saying it's not when the stock market and the bond market die verge about the economy, i tend to lean into what the bond market is saying the one thing about an inversion, though, is it can take a while before that takes place. so you've had recessions after big inversions, but sometimes it's taken a year or more. so, again, we're looking -- right now i think the fed is
trying to manage expectations about what it's going to do. they've been treating the market like kids in the back seat asking are we there yet. they keep saying no, we're not there yet. we'll tell you when we're there. stop asking. i think that will be the tone of powell's speech, not as harsh as jackson hole but this reminder that things have still got to resolve themselves we're not afraid of a recession, but we're not looking for one, you shouldn't be either. >> i like that analogy, megan, kids in the back seat. i want your thoughts on this topic and why investors do seem to be kids in the back seat right now. >> yeah. i do have young kids, so i know that very well i agree with the analogy i think a big reason why the fed is not able to give much more than, no, we're not there yet, is because the forward guidance that investors became so addicted to has to be removed from the equation. that was a tool that the fed was using when interest rates were
at zero and it was trying to guide policy, even easier than that and now we have a great deal of inflationary uncertainty and a fed that is far from zero in terms of their interest rates. so i don't think we're going to get a lot more information from the fed, and we really shouldn't be getting a whole lot more information until we see the data come through. i think as we look into the next year, i don't think it's likely that you see the economy stay as resilient as it is while also having inflation come down as quickly as we need it to one of those has to give, and i think that's where we get to our expectation for a mild recession next year. >> steve, finally, one part of the discussion today is whether or not powell will be as vocal and plain and hawkish as he was at jackson hole where, by the way, the s&p fell 3% in a day. i wonder if you think the market is a little bit less offsides right now than it was back then.
>> that's what steve mentioned before and i do agree, that before we were getting wildly ahead of ourselves in terms of a pivot and the fed changing policy at jackson hole powell had to come out and say, absolutely not, disabuse yourself of this idea now i think it's more nuanced. i think it's still going to be, look, we're not going to be pivoting any time soon, so get that idea out of your head, and we're not going to really tell you when we're peaking, even but we'll be pacing ourselves a bit more slowly. i do think they're a bit more comfortable even though the market is off its lows i don't think they want a bad stock market that's not in their goal i think they don't want investors overreacting the stuff that may or may not be hang down the road, sort of addressing themselves as being more market friendly than they might actually be. >> finally, meghan, we can't have this conversation looking domestically at markets and not pull in what's going on internationally, case in point this week with china how do you position yourself as
an investor when you have swing factors that can affect monetary policy there and thus equity performance here as we're seeing right now on the heels of protests and the knee-jerk response in china-facing stocks? >> absolutely, morgan. i think that's spot on china is a huge swing factor and really difficult to predict. it's so hard to have an edge on how this is going to play out. they're clearly trying to move away from zero covid and those restrictions and very, very tight regulations. we expect that to be a somewhat more gradual process than maybe the market reacted to over the last few weeks if we do get a reopening at some point in the second half or in the middle of next year, i should say, then we would expect to put some upward pressure on oil prices which consumers and businesses have been enjoying that decline in energy costs and we would expect that a return to growth for china would
definitely put some more inflationary pressure on that particular piece of the puzzle. >> meghan and steve, thanks to you both >> thank you >> thank you coming up after the break, well eel turn to crowdstrike, the stock is definitely sinking today after those results. wel lkbo iwh wco'lta autt ene me back after the break
♪♪ energy demands are rising. and the effects are being felt everywhere. that's why at chevron, we're increasing production in the permian basin by 15%. and we're projected to reach 1 million barrels of oil per day by 2025. all while staying on track to reduce our carbon emissions intensity in the area. because it's only human to tackle the challenges of today to help ensure a brighter tomorrow.
welcome back to "squawk on the street." shares of crowdstrike plunging, down 18.5% right now subscriptions coming in below analysts' photographs. macro headwinds and economic uncertainty are making customers delay spending our next guest is downgrading the stock from buy to hold and also slashing price target in half to $120 brad recac joins us now. brad, walk me through your downgrade. >> thanks very much for having us
they missed expectations tore new bookings coming in light for the first time since the summer of 2019 ipo. they blamed it on slower demand, customers not buying as aggressively and lower customers doing slower rollouts of existing new contracts >> so how much of this is, do you think is company specific versus a reflection of those macroeconomic conditions and what we can expect from competitors as we start to see more reports from them >> sure. look, i think macro has a big impact here across the board that being said, i also think that crowdstrike is seeing increased competition from the likes of microsoft they have a security bundle re-fi product which some of our checks are leading us to believe they're seeing some traction there as customers look to save
money, and maybe not using the best product in the market which is still crowdstrike microsoft is good enough at this point and causing them some competitive issues to your point, we think that this will continue to play across the broader software security specifically across the quarters you have the issue where customers brought a lot of security software over the course of the pandemic in order to protect themselves, working from home, et cetera they're now working off some of that inventory. >> obviously you've been a lot more positive on the company give me some sense here as to why 120, which is essentially not far from where the stock is right now as an appropriate price for the stock now. >> so look for a long period of time this was a stock with value on eebitda sales. they've leveraged the business they should do north of a
billion dollars of free cash flow in calendar '24 the target price is based on about 25 times that number which is in line with our growth rate for arr and revenue in the out year >> i want to just come back to the comments you about microsoft. again, while macroeconomics are playing a role here, are they losing market share then in your opinion? is that something that may well continue >> it's something to keep an eye on for sure. one of the other concerning metrics here was new customer adds were down 10% year over year that's the first time that happened since they have been public management put a lot of that on delayed sales cycles within the mid-market that's the place microsoft would have the most potential impact so it is something to keep an eye on. >> all right finally, just in a week where we are seeing a lot of enterprise software names report earnings, we have had a lot of conversations on our network leading up to this about this
idea that maybe enterprise software, enterprise-facing tech could be more resilient in the face of a potential recession because the digitization of everything and the securing of it is a secular trend that's going to continue. is that your belief, or when you see a report like this from crowdstrike, does it raise questions about this actually being the first place that other companies are going to cut spending >> so, look, i think it absolutely continues just at a more normalized rate we clearly had a very aggressive investment during covid as people moved to digitized, especially front office offerings. on the flip side, workday, with while they reduced forward expectations, they meaningfully increased their profit profile and that stock's reacting very well so i think the key takeaway for investors broadly is those management teams focusing on controlling what they can control, which is their op exurbia, will be well rewarded in the market.
a lot of speculation around the top line more importantly, can deliver on the out back side. >> okay. we'll be watching. to your point, workday, best performer in the nasdaq 100 right now. thanks for joining us. >> thank you. as we go to break, dow in the red, down 200. s&p 3940 got a reversal in oil to the upside on bigger than expected inventory draws. 2 1/2 hours away from powell the fireworks still to come. don't go away.
get refunds.com powered by innovation refunds can help your business get a payroll tax refund, even if you got ppp and it only takes eight minutes to qualify. i went on their website, uploaded everything, and i was blown away by what they could do. getrefunds.com has helped businesses get over a billion dollars and we can help your business too. qualify your business for a big refund in eight minutes. go to getrefunds.com to get started. powered by innovation refunds.
as a business owner, your bottom line is always top of mind. go to getrefunds.com to get started. so start saving by switching to the mobile service designed for small business: comcast business mobile. flexible data plans mean you can get unlimited data or pay by the gig. all on the most reliable 5g network. with no line activation fees or term contracts. saving you up to 60% a year. and it's only available to comcast business internet customers. so boost your bottom line by switching today.
you ok, man? the internet is telling me a million different ways i should be trading. look! what's up my trade dogs? you should be listening to me. you want to be rich like me? you want to trust me on this one. [inaudible] wow! yeah! it's time to take control of your investing education. cut through the noise with best-in-class education resources that match your preferred style of learning.
china going from what i call a economic minded economy to an ideological economy. we are seeing the effects of that and a chinese economy slowing down to a three. we have the european economy that is really fundamental changed right now related to the russian gas and the cost of energy and the fiscal support by
governments. and so i believe after we get out of this real spike in inflation we will be waking up to a world that's going to be a two-ish, three percent world with 3 or 4% inflation i think that's going to be the fundamental issue we will be facing. yeah, wide ranging interview, that was blackrock chairman and ceo larry fink at "the new york times" annual deal book summit. it was wide ranging. we have those comments from fink also talking about rates being that they believe rates are going to have to be fundamentally higher than where they are today, talking about ftx and the shakeout we are seeing there also the response to the whole idea of, quote, unquote, capitalism. >> yeah. saying rates fundamentally we are going to have rates fundamentally higher than today, but they are not going down at the same time, we are not going to have an economy based on real growth that we are accustomed to
from mr. fink, of course, largest money manager in the world. as for our markets, the nasdaq is in positive territory the s&p not so much. and we have a significant rally going on in many chinese-related names again. the broader market, as you saw, with alibaba up 10%. a reflection of the hopes that that zero-covid policy will be backed off that does it for us on "squawk on the street. "techcheck" starts now. >> good morning. i'm carl quintanilla with john ford cloud week continues on "techcheck." a lineup this morning, servicenow's bill mcdermott with us, plus the chief executives of hpe and intuit on the heels of their results. those are not the only movers. also the big swings in crowdstrike, workday and netapp as we await powell this afternoon. >> yeah, we got a start with the move in crowdstrike though and the ripple effects in the cybersecurit