Transcripts For CNBC Squawk 20240703

Walmart saying its seeing a slight pullback for certain Food Products because of those weight loss drugs. And disneys dismal run. The stock is back below 80 bucks a share, its lowest level since october 2014. Lets begin with a drop in oil prices. Wti on pace for the worst week since march, jim. We got down to 82. 35 this morning. Yesterday, biggest drop since may. The department of energy numbers were weak. Gasoline numbers were weak, the lowest, what, since 1996. When you speak to the chieftains of the Oil Companies, they just want to stand there and buy the shares because they dont think this is the right market. They think the higher price is the right market. I look at whats happened with oil, and i say, if you have retail weakness, if you have fewer people from student loans, fewer people going places, obviously, theres going to be a backup in gasoline, but i think this price is actually real. I understand that the Oil Companies want to buy back stock, but the oil stocks never went up as much as the oil prices. I know, but when you say this price is real, what do you mean . I dont think the 94, 95, they ran into resistance and there was a lot of talk that it was a short squeeze. Gas prices, meantime, lowest since the end of july, and if you look at front month futures of rbob, implies maybe another 12 down. I think its possible. When you got up to 6 in california, thats a really high price. We keep getting this strapped consumer. Natural gas. Natural gas is thats in case you wanted to look at it. Natural gas broke through 3. I tried to do a piece for the investing club on why you should buy coterra. Nobody cares. Do you think these theres linkage. Right. But thats real numbers. That gas number is a real number. Theres gasoline. What rbob . What are you trying to say . Rbob . You calling me rbob . I just think its a very subjective thing. I think the Oil Companies would stand there and buy stock back because their stocks are not expensive. David, exxon put out some numbers yesterday that were pretty good. Nobody cares. Why dont they . Well, because this is a very binary market. The earnings considerations we got from exxon . Yeah, but im saying its a binary market. Two weeks ago, it had gone through the roof. Now, we this market has got real problems, obviously. Its got not schizophrenia. Its not that strong. It needs xanax. You know what i mean . To your point, the stocks turned around before the underlying commodity, didnt they . What, in this last leg . Yeah, just this last leg. Yes, they did. They were forward looking. Chevron never went back to where it was supposed to be at 95. 95, chevron kind of languished, but i bet you mike wirths in there buying stock hand over fist today. I bet he is. Theyd rather do that than put it into new production. Well, look, they want higher for longer. Everybody wants higher for longer except for the people who take ozempic. People who want ozempic what lower for longer. I just got my no huddle. Higher for longer versus lower for longer. We will get to that, dont you worry. I dont like the way my jackets flying up. Meantime, big part of the discussion this morning on squawk was whether opec can stand for this and whether we should expect them to respond to some of these lower prices now. Theyre a fraud. They talked it up, one million, one million, one million. By the way, Oil Production for us has increased in the last few months, quietly, david. People say we havent been increasing. We have been increasing. Thats alltime highs, right . Yes, back to alltime highs. In terms of daily production. So, therefore, we are not holding back, but theres a dispute. When the refiners have this gap where they dont lower the price of gas at the pump as quickly as they buy, they tend to be shortterm buys. I like marathon mpc. Halliburton, by the way, was 42 a few weeks ago. Its now at 37. Signaling what you were saying, which is theres not more drilling. What theyre doing is getting more out of each well, and theyre drilling deeper. Theyre drilling theyre like during theyre drilling to the center of the earth. All right, how about other stuff . Anything else . Dollars . Dollar . Treasurys . Enough with oil. Five minutes on oil is enough. What do you mean, other stuff . Im going to start looking at my phone. You guys go ahead. What do you want, a comedy routine . Sure, i always like a comedy routine. You got one for me . No, i have substance. I think its time to talk about some of the earnings we had, because they were significant. Conagra, for instance. I have them on tonight. This is what youre going to see from some of these Food Companies that have food thats not necessarily good for you. They dont get the topline, thats walmart. They get the bottom line because they know how to cut kpexpenses and make more money, but will the street want top line or bottom line . And i think the street likes top line, which is probably wesson, which is the worst thing for you, french fries. When you talk to walmart, theyre saying, listen, it is happening. Jims referring to this comment yesterday about the glp 1s where they are seeing slightly smaller baskets, slighter fewer calories sold, fewer units, and this has been a theme youve been working on for i would say a couple months now. I think its interesting. Unless youre taking something to lower your Blood Pressure, or diabetes, the Insurance Companies are very loath to pay, so you have a couple people paying a couple gs out of pocket. Those are not people who are thinking whether they should have twinkies or not. Those are people that want to look better. But people with Blood Pressure, they got to get that down, because they have heart attacks and they die and thats bad. That is bad. We talked about it every day, as we should, and obviously the headline were keying off today is that, and a strange one, where walmart is saying, were seeing people buy a bit less. Article today in the journal as well, questions we have been raising and frankly asks of ceos, including earlier this week with the split. You were raising this many times. We talked about kellogg, the Cereal Company now, and the snack food company, will consumers, particularly those who are on these weightloss drugs, represent a significant part of the population that no longer feels like they have to buy pringles . I think we asked that kind of question. Heres what he had to say. We dont know the penetration that these drugs will get. We dont node longitudinally what happens with consumer behavior. We know what people are saying theyre doing in terms of changing their diets and so forth, but you know, its just way too early to tell. Well watch it. Well understand exactly whos going to be on it, but very importantly, understanding what, if anything, behaviorally changes over a period of time. And its just its just far too early to forecast this as a headwind in our opinion. I disagree with that, and i really like him, i like what hes doing. 50 of the people in the country diet at the beginning of the year. They use diet and exercise. There is no data that indicates that data and exercise works, and thats why these drugs are being prescribed for people who have failed diet and exercising. That is a very serious finding by the doctors. Very serious. What it says is if you cant lose weight through what we thought was the way to lose weight, diet and exercise, we have no choice. Anybody who thinks these drugs these drugs are very brandnew, and by the way, can i just tell you . There is no no, but theres a shortage everywhere for these drugs. Where are we in terms of Health Insurers paying and the government being willing to pay . We think longterm there will be a benefit because it will prevent other diseases, which will cost even more to deal with. That said, these things are expensive. Its not private pay if you have high Blood Pressure that cant go down. Its not private pay if you have sleep apnea or drink too much. Its certainly not private pay if you have diabetes. If you take a drug that raises your weight, then its not private pay. Now, that comes to about 40 of america. Did the numbers yesterday from mounjaro. By the way, try to find it at cvs, walgreens, you cant find it. The wegovy truck, its like tv sets during the 80s. The wells fargo wagon . You referred to the wegovy truck. Theres no wegovy truck. There is a wegovy truck. They just are not marked wegovy on the side. Hey, you know, it fell off. We find out where they are . Its like the easter bunny just comes and throws it to the crowd. Is there going to be a jesse james of wegovy trucks . Its like mardi gras. Heres wegovy, heres wegovy. No, mounjaro is in huge shortage. Theyve got another plant coming, eli lilly, but its impossible to find, and wegovy is easier to find. But not but wasnt last week. If you need some, you let me know. I may have a guy. You have a guy . I may have a guy. Your guys got the expired stuff. Probably. Hes got the stuff that was never refrigerated. Thats possible too. Just in case. Puts weight on. You let me know. Im guessing, jim, you think the impact on we talked about hershey, medtronic, strooiker, whats next . Planet finance and peloton . I think Planet Fitness is its going to get overdone, isnt it . Ive been talking about this for a few months. All these Hedge Fund Managers looking to short these names and its been selffulfilling. We dont really have the data. Smucker will tell you that you buy hostess. The people who buy hostess are not spending 2,000 a month getting maunjaro, okay . Theyre not buying twinkies and saying, you know what . Well, there are people who just are dont really care about this and they like their cheat day, like their fattening food, and then there are people who are trying to get their Blood Pressure down and lets say youre 150 90. And you take all the different Blood Pressure drugs and its not working. So they give you this. Smuckers reacting, that stock is reacting to not a great quarter. They just sold a lot of french fries. Its case by case. A lot of french fries. You know whats the worst thing you can eat is a french fry. Spun it off in 2016. Mcdonalds, we didnt mention the 10 div hike. I know. 10 . On french fries. Okay. Do you get my point . The people who buy french fries, you know, when they go to the department, they go to the convenience store, when they go to grocery, those are people who are not saying theres like two i dont want to say theres two classes of people, because david will be acting like he was with the jury duty, but there are people who dont necessarily care about their weight because they want great taste and then there are people who want things that are less filling. Wheres bob uecker . Speaking of beer, you had molson on last night, right . Talking other things. More beer category. They had great numbers. Now, there, they had good numbers going into the fracas with bud light. Now they have great numbers. Incredibly fast growing. By the way, constellation reported this morning, they reported great numbers, but the Conference Call doesnt start until 10 00, and wine and spirits werent good. Wine and spirits are a problem because they are directly in the crosshairs of mounjaro. Another theres no theres the stock is always down. They report the quarter, then they have the Conference Call, then they come on tonight and the stock goes up. Take it to 247. On this idea that these weightloss drugs are going to impact peoples taste for alcohol, theres no studies yet to support that. Its being done right now. Twodrink study. People who think two drinks a night are not doing that under the study. So far. Theyre studying everything. Sleep app knnea, Blood Pressure. Theyre studying everything. As they should be. David is skeptical that everybody can be on these, but the and im sure there was someone saying that people are ideating. Theres always going to be people who ideate when they take drugs but the side effects are minimal so far. So far. Im looking at the things coming in from people out there. Walmart, when i checked in with walmart yesterday, i thought for sure i would get, are you kidding, these things just came out, or how did you we have no read. Instead, i got, yes, theres a slight change, but were watching. I mean, you know, so, you can have kellogg and i like kellogg. But you cant argue with walmart. Walmart is thats gospel. Is the population on the drug as a percentage of walmarts overall Customer Base that big . Thats whats shocking. It cant be. Its not. Its not. I mean, thats why theres also a move, younger people dont buy younger people, by the way, are not drinking much brown and clear alcohol. The group 21 to 24 has cut back and the 21 to 24 has cut back on bad food. The 45 to 55, no. But 21 to 24 has cut back on impulse bad food and theyre not, you know, remember, theyre not mounjaro. Theyre just people who have cut back. This is what molson told you about the overall move toward health and wellness. Take a listen. Were moving beyond beer. Were moving into nonalcohol products, whether theyre energy drinks, nonalcoholic beers. One of our biggerinnovations, which i think is going to be a big deal for us, is the launch of blue moon nonalc, which were bringing in december just in time of dry january, and i think thats going to play right into that space. And when i talked to gavin after, the ceo, theyre not even clear exactly when nonalcohol beer started tasting as good as alcohol beer, but they recognize it and they know they have to have it and they think its going to be the hottest seller. Nonalcohol beer. And you get it you dont, by the way, you do not ask for it by can or bottle. You ask for it in a glass so no one knows its na. Its called na. Nonalc, as he said. David, i know that these things have no interest from you whatsoever, but nonalcohol beer is the thing right now at the big liquor stores. Okay. I didnt know that. I learn something every day here. Do not patronize me. Im not. Im being honest with you. I learn every day from you, jim. You know what someone said last night, a major ceo . What . Said, does he think youre a legendary wall street funny man . I cant be sure. You could be. Take a look at the premarket here. Well see if we can open a little bit above the flatline, although it doesnt look good at the moment. Talk more about bonds, what its going to take to stem the selloff as we got two tens, 29 basis points today. Thats the smallest inversion ncmah. Ba ia minute. when the day that lies ahead of me seems impossible to face a lovely day lovely day lovely day lovely day a bank that knows your business grows your business. Bmo. Cmon, were right there. Cmon baby. A bank that knows your business grows your business. Its the only we need. Go, go, go, go ah touchdown baby touchdown are your neighbors watching the same game . Yeah, my 5g Home Internet delays the game a bit. But you get used to it. Try these. Theyre noise cancelling earmuffs. I stole them from an airport. Its always something with you, man. Great solid greek salad . Exactly dont delay the game with verizon or tmobile 5g Home Internet. Catch it on the xfinity 10g network. Take a look at some s p laggards. We did get some notes earlier in the week, holding out hope that cloroxs update on the cyberattack impact would be positive. Not the case. Q1 organic now looks to be down 2621. Stocks going to open down about 6 . Got a downgrade out of ray jay today. Well talk about that and a lot more when we get the opening bell. We got a little less than eight minutes before we get to an opening bell on this thursday. Man, the weeks going by. Its amazing. Every day. I want to talk about ford. Tell me. Why . Theres some movement between ford and the uaw, and ford is trying to prove that they really arent the same as the others. Jim fired a huge number of United Auto Workers in the last, i dont know, the last decade, but ford didnt. Fords moved a lot of uaw temporary works to full, which is the only way to get them, within the contract theyre operating under, more money. So i know that ford felt that a little upset that biden joined the picket line, but at the same time, ford is seeing some movement by fain. David, i have a feeling that if fain doesnt fain being the man who runs the uaw, we should point out. If they dont come to the table soon, mexico will be. How soon . Couple weeks. And you can how quickly would they move manufacturing of certain things . They already have manufacturing. What does that mean when you say mexico is in play . Explain what you mean. Say you have plants in mexico. You can add on to them very easily. You cant do green field. It took mercedesbenz a huge number of years. But if you have an existing plant, its not as difficult to add on. Thats the way you can do it. By the way, the companies are very worried the remember, theres a big its not just the 146,000 uaw workers. Were seeing some original Equipment Suppliers get hurt. The layoffs are starting. I find the president look, hate him or love him, joining the picket line may have been a very big mistake, because that hardened fain, hardened the uaw, which then hardened the auto companies, and until if he hadnt come there, i think there would have been a deal. Yeah. That was not a great move. If you want to he wants to be identified as the labor president. If you favor workers away from uaw, its not a great move by the president. I would be surprised if he softens a lot. If he has horse sense. I dont know if he has horse sense. Well keep an eye on shares of ford, of course, as we get you ready for an opening bell thats about six minutes from now. You can catch us any time, e qufoow, listen to and ll thsawk on the street opening bell podcast. Meet gold bond daily healing. A powerhouse lotion that moisturizes, heals, and smooths dry skin. With 7 moisturizers 3 vitamins. And. New gold bond healing sensitive. Clinically shown to heal moisturize dry, sensitive skin. Gold bond. Explore endless design possibilities. To find your personal style. Endless hardie® siding colors. Textures and styles. Its possible. With james hardie™. Announcer the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. Yields have been criss crossing the flat line this morning, at least relative to the prior day. Tenyear back to 4. 71 . Bunch of people have weighed in this week, jim. Clarida yesterday, bill gross saying, maybe a little oversold here now. I heard someone just blast gross this morning, saying hes dead wrong. I come back and say, well, look, the interest rates, you know, rates went up very substantially after we got the jobless numbers and theyve come all the way back. I continue to believe that what you have to watch is oil because i said the other day, i mean, come on. If oil let us up, how can we dismiss oil now . There are people out there, and michael has done some fabulous work on this, who are just saying, listen, the deficit has destroyed us. By the way, the deficit, its not as much the biden plans that drove money to the economy, its really just the amount of interest that we have. But theres no doubt about it in my mind that oil going down is people are just saying its a measurement of the economy being weaker and the treasurys arent trading like they used to on the economy. We have very important job number tomorrow, but the fear that i hear that we are finally in the stages that the government is going to have a hard time financing the deficit, well, look, they can finance it. It has just a matter of whether there are buyers, and david, we have some natural buyers in bonds who actually think that theyre were going to have to find a lot of them, and most likely within our borders more so than in the past. Because chinas dumping. Weve learned about term premium or not learned, but weve been hearing a lot about that of late. Im just saying, i dont buy the, we finally got the existential crisis. If moodys downgrades are, yes, the rates i dont think this is the existential crisis. Im saying these people who come on our air, and you want to hide. Its like the cuban missile crisis with these people. Well, i agree. There are even some notes out from mike winlson, for example, and people who work with him, saying, yes, equities are in deep, deep trouble because weve lost control of yeah. Im not buying the lost control scenario. I do buy the fact that oil may have gone up too far and then and interest rates, therefore, went up too much. It never hurts. As liesman said the other day, those who think they can time stocks, well see how well you can time bonds. Lets get the opening bell here in the cnbc realtime exchange. At the big board, its pro shares, celebrating the recent listing of three cryptolinked etfs. At the nasdaq, t. I. E. New york. We think think of one scenario where bonds rally materially, and thats if risk assets fall sharply in the coming weeks. I know. We need to crash some stocks. The stock market is so small. I thought that piece was intriguing, but the stock market is teeny tiny versus bonds, so dont give me that. Thats i mean, come on. Look at the size of these markets. What i thought was most interesting, golds been down, down, down, and yet costco, this gold program, is on fire. Where theyre selling bars, you mean . Yeah, selling bars, and costco had some good numbers last night. Can it go up again on the good numbers . I think costco, david, remains very strong as a place that people want value. Theres continual pressure on the target stock, home depot, lowes, because people say their traffics not been that good. At a certain point, things should stop going down on the same news over and over. We know traffics not that good. Its not like they have been hacked, a la clorox. Right, right. Speaking of stocks going down. We just talked about the tenyear what is next era . Im going to get there. Not just next era or energy, but even the verizons of the world. Every portfolio manager, every algorithm out there, i guess, every all the ctas, they have been going through every Balance Sheet, looking at the average weight of maturities, who has a lot of debt, when do you need to refinance that debt, and if youre going to do so in this higher rate environment, what is it going to mean in terms of interest costs, and therefore, your ability to continue to pay, for example, your dividend . Verizon moving up today in part because we have seen yields settle down just a bit, but you can see the damage thats been done, and its not just verizons stock, which is down 20 this year. We talked about this. What is directv worth if theyre selling att . Directv is not worth a lot. No . No. Will you get that stupid dish off my house . Its still got directv. But at t shares have also been down. Theyve been down 20 this year. Again, coming back a bit, but we talked about this earlier in the week, jim. Dividends. But then you look at some of the utilities, nep, for example let me know whats happening, will you . Whats happening, really, is that, you know, again, you take a look at i mean, look at that thing. I can give you a little specifics on that. Theyve got let me see. Talking 5. 4 billion of debt, average weighted maturity, 3. 6 years and some other structured preferreds as well, and so youve got people targeting some of these names, looking at, okay, whats their ability going to be to continue to refinance at what level, what are interest costs going to be . Hows that going to eat into potential dividend . Then you got these yields soaring. For n. E. E. , its more of the same story weve seen with many utilities, and you brought this up earlier this week. Youre in the market financing, and what are your costs going to be, and how is that going to impact your ability to continue to return capital to shareholders, which obviously is a key consideration for utility investors. So, theres a look at those names. Worth doing. Worth taking a look at here, because we have seen continued weakness in Many Companies that rely on the debt markets in a significant way to finance their businesses and or have a lot of leverage that is going to need to be refinanced. Lets call it the next year, two years, three years. Who doesnt need to do that . Its a quiz. Its rhetorical. Drug companies. And the Drug Companies i dont think apple needs to do that. No, but do you know whats interesting . By the way, they have 130 billion in cash. I think bob was talking about this the other day. Theyre earning a lot more on that now. Well, i think that chevrons buying back more stock than apple. Very interesting. Theyre buying back almost two times the rate of apple. Chevron. And yet chevron doesnt need to do it either. When i look at these Companies Like the Drug Companies, well, theyre not hurt by theyre not hurt by any weight loss drugs. As a matter of fact, lilly, should stocks be up. J j, theres a recommendation this morning from j j, and its working. This is, again, thinking pedestrian. Maybe the economys weaker so you buy the drug stocks. Thats the way it used to be. Now, you cant buy the food stocks because we dont know what the what wegovys doing. But you shift the money over to drug stocks, and theyre working. That is a sign that, look, the old days are back. Oh, okay, the economys a little weaker, ill go buy the drug stocks, and i think that we feel like a lot of people feel that the tyranny of the tenyear has made people blind opportunity, and i agree with that. I read the j j piece today, and i said, that makes so much sense. Theyve managed to get rid of the kenvue, which is slower. I do care tremendously about whats going to happen with the plaintiffs bar, because i dont like the talc situation, but you know, look at this. I see it. The recommendation is working. Abvy has a very big yield. Thats working. I just think that this is like a little bit like the old days, except for theyre not buying the food stocks, except for lam west. Let me give you a name thats not working today, and its one that we have talked a bit about lately. In fact, the ceo was on with phil lebeau a couple days ago. Take a look at rivian shares. They did that stupid bond curve. By the way, phil asked the ceo, he asked him about future funding needs, will you be able to get to the r 2 without having to raise more money, conceivably . And the answer, i remember listening, he didnt answer the question. Maybe because he knew they were going to be doing a 1. 5 billion green convertible senior notes offering. They need to raise as much money as they can. They have a lot. What, 9 billion or something . Because when you look at it when you lose 30,000 on every automobile, every truck rolling off the Assembly Plant you can make it up in volume. Yes, you can, but you want as much cash as you possibly can to get you to that point, jim. The consumption of capital, these kind of companies, is enormous, and we know that. Weve talked about it. 1. 5 billion. These are due senior notes due in 2030. They do have the opportunity to be redeemed after october 20, 2027, if, in fact, the last reported sale price per share of rivians common stock exceeds 130 of the conversion price, but we havent gotten that yet because they havent sold this offering yet. Would this be a musk situation where people say, im willing to hold my nose and buy that because he may be the next no ones the next elon musk. I dont want to do that. Nobody is. In reading the isaacson book, you really do get an even better sense of just how focused musk was all along the way on cost, simplifying, doing more with less, pushing constantly to reduce complexity, and just being unrelenting in and mean but getting it to work. And you just wonder, is anybody else really up to that . To the point where they make so many of their own components as well at tesla. So, they have that cost advantage. Maybe rivian will be able to replicate it at some point. There was a period during which musk and tesla obviously needed to hit the Capital Markets constantly, and in part, his ability to do that ensured future success. Well, look, i think this is one worth watching, because theres definitely a love for their product. Rivian . Yeah. But look, if you cant make there have been a lot of love for a lot of different Car Companies that have failed. I happen to think that management here is very good, but i am very worried that when you did a convertible like that and the stock goes down, that means theres less faith than there was in elon musk and tesla, after year two. It was down nine premarket, a little bit worse than that now. Vfs, by the way, reaffirmed, for whatever its worth, their fiscal 23 delivery target. You had gm put a target on the strike cost for q3, and then you had jonas and Morgan Stanley with this Investor Survey where he asked, do you expect the d3 to decrease ev spend poststrike . And 57 said, yes. You know, this has been his the detroit three. This has been his take, that the strike will bring, i think, he said prosperity through austerity. Well, i do think that you are going to see the hybrids are selling very well. Thats really good for ford. I think theyll cut back. If the congress does not finance all this different debt for the batteries, i think theyll make the batteries in mexico. Okay. Youre talking up mexico. Im talking about mexico because mexico is the Nuclear Option that theyve not used with fain. I got to tell you, theyve been playing with kid gloves with fain, and they have not gone directly to the rank and file yet, which would be outrageous to fain, but fain does not have a huge mandate. You pointed that out. Well, you go to the rank and file at ford, i mean, remember, those people, david, are not making that much right now. And they were being paid 100 gs at ford on average, and now theyre making, what, 500 a week for the strike fund . Theres a disparity there. Meanwhile, ford stock, i know, its been terrible. Im not going to defend it. Dont often go over to france, guys, but im going to do that. France . Because of alston, which is one of the larger companies. Apparently, train manufacturing is having a rough go. This is like, this is an important stock over there. I mean, they basically had to suspend trading in the shares on the paris stock exchange. You know who liked that business . Well, they sold the power business to ge, remember . That wasnt colt. That was not colt. That was ml, i believe. Look at whats going on here, guys. This is a real this is not an insignificant company. Oh my. Thats one of the biggest employers in france. They had been looking for Free Cash Flow, not to be negative, but 40odd Million Euros negative. Now, 1. 15 billion euro negative is what it came in at. Also, Free Cash Flow in the range of 500 to 750 Million Euros for the full year where they had been saying previously it would be positive. Its not pretty. No. The call last night, im looking at some notes, was uncomfortable, bordering on offensive for some of the analysts who had recently turned buyers on managements reassurances, despite the predominant issue happening throughout the year. Some of it may have to do with combining with bombardier or what hasnt gone well there. They rude out an equity raise and pointed to numerous facilities. No covenants, access to a 2. 5 billion euro cp program. But you can see when you get to Start Talking about things like that, you know things are not great. Wanted to point that out. We dont often go there, but this is, as jim just said, an important employer as well. Oh, wow. That was a big issue when ge bought them, remember . Became an issue to the government. It sure did. Thats right. Thats right. Exactly. When ge bought the Power Generation business. Thats devastating. Yeah. Spains the strongest country in europe right now. Spain . Spain. Spains very strong. Any time you want to go to madrid, ill be there. Spain has got tremendous growth. I dont know. Im just pointing it out. I appreciate your doing that. No problem. Costco spain is very strong. Interesting. Yeah. Black fridays 50 days away. Oh, my. As of right now. We did get some adobe online holiday forecasts today, jim. Theyre looking for growth of 4. 8, but a lot of thats going to be on the back of aggressive discounting in adobes view, and of course they track online pretty well. Yeah. I mean, look, i think that when you read the ftc suit, and its heavily redacted, you get the sense that amazon and walmart could be in charge of this one. So powerful. And theyre not they can be bad for margins. Now, i know when i spoke to macys, jeff, tony think its going to be a terrific holiday season. Why do they think that, jim . They think that, first of all, theyve they think they have the right merchandise. But they expect more travel. Okay. And when you have travel, remember, a lot of their not a plurality, but a big chunk of their sales are harold square. People visiting new york or visiting other places. And china, you know, a lot of people just wish that we were a little bit less hard on china, but theres some more travel coming from china. Not nearly as much as there was. Not what there was. You see the discounting going on at disney parks . Okay, so, lets go there. On the wire today. Tickets as low as 50 bucks for kids. Florida is definitely weaker. Theres no doubt about it. Californias on fire. China is amazingly strong. The cruise ships are operating full, five crews, so youve got one park that definitely has some weakness, but now, this is whats important. Its still better than precovid. So, lets not freak out. Okay, but orlando is weaker. Right. Californias what . Why . Any reason why florida would be ours is not to reason why. Ours is just to tell the truth. Now, whats interesting is that walt disney was at 110 last time we got these numbers when the 2019 numbers, and these are better than 2019, but nobody cares because this is what i call a down stock. It is a down stock. Down stock. They had their investor day recently, didnt really tell us too much, other than what theyre going to spend on the parks over the next ten years, which is significantly more than what they spent over the last ten. Parks is the key cash flow contributor to this Company Without a doubt and will continue to be, but i think a lot of that move down is also just because of confusion amongst investors and trying to understand the real story here when it comes to the other parts of the business. Are you talking about hulu . Im talking about direct to consumer, what the cost of hulus going to be. Theyre now negotiating or that period has started with our parent company, comcast, for their 33 stake or roughly. What happens to the future of espn, youre certainly not going to get, from what i hear, any leagues that are going to be your partner, but will, as you pointed out, will there be another partner . Is that possible . They have the wlbalance shee to do it. I think people misinterpret here youre talking about disney. Their Balance Sheet is much better than i had initially felt. I did not know how much they had rebuilt their coffers, so im not as fearful. And you say, of course, you own the stock for the travel trust, but look, i dont understand the stock. This stock is just as if they are a pitiful, helpless giant and can do nothing right, and yet if you have california, great, beijing, great, you know shanghai. Shanghai, great. You have california, great. And you have florida, above 2019, and you have a better Balance Sheet, i dont understand the panic. I mean, i think, to davids point, theres a bottleneck of deal flow thats sort of interrupting the operations narrative. Hulu, espn, abc, got charter out of the way at least, but it is the third worst down name over 12 months it is incredible. I keep thinking that apple remember, he was in the presentation for the vision pro, bob iger. He was. But why couldnt apple be a good partner . They conceivably you brought it up a number of times. They could be for espn. Its unclear. I havent heard much in terms of updating where they really are. We dont know. Theyve got kevin mayer and tom staggs both in there helping to advise on kneesthese kinds o strategic opportunities. Theyve got day jobs, too, but they are in there as well. At least we got another meeting with s. A. G. Tomorrow. With the actors, yeah. Finally, guys, just real quick, i did want to add, horizonamgen is closing tomorrow. We followed this deal very closely. Its a very good deal for amgen. It had importance on the antitrust front, unexpectedly fascinatinged opposition from the ftc, they did reach a settlement, which didnt require much of amgen because it wasnt planning on bundling anyway. Thats going to close tomorrow. Next two to three weeks is what im hearing. Pfizer, in terms of complying with the second request, and then of course, were also probably days if not more than a couple of weeks away from microsoftactivision closing, so three of the biggest deals, one will close tomorrow. Two more headed towards close very soon. You can raise numbers on amgen when that deal closes. I think thats important. This is a very good franchise for them. Yeah. They were surprised that it was opposed, given the fact that what happened is they offered a solution, and it was rejected, and then it was accepted. Because they were not doing they werent doing what they were accused of. He was accused of being a liar. That was one of the reasons why i said the ftc has overstepped. Its overstepped. As we go to break, lets watch bonds again. Five fed speakers today. Mester, kashkari, bostic, daley, barkin and barr. You can see the tenyear holding. Not a great open, equitywise. All sectors are red with the exception of health care barely positive. Well be right back. With your hearing, if you start having a little trouble, youre concerned that its going to cost you money. To this day i only paid what i had to pay for the device. When i go back everything is covered. Theres so much youre missing by not having hearing aids. well find you a hearing aid that fits your lifestyle and budget. Unlock your riskfree trial during our limitedtime sounds of autumn event. Call 1800miracle to book your appointment today. My citi custom cash® card automatically adjusts to earn me more cash back in my top eligible category. Suddenly lifes feeling a little more automatic. Like doors opening wherever i go. [sound of airplane overhead] even the ground is moving for me yall seeing this . Wild and i dont even have to activate anything. Oooooohhh. Automatic sashimi earn cash back that automatically adjusts to how you spend with the citi custom cash® card. [mind blown explosion noise] not too many under performs on carrier. But bofa does cut to under perform. They were at 62, go to 55, nervous about specific markets. The Heat Pump Market in the eu, the commercial hvac business in the United States. Shares down about 2. 5 . Well get stop trading with jim after a short break. Youre probably not easily persuaded to switch mobile providers for your business. But what if we told you its possible that comcast business mobile can save you up to 75 a year on your wireless bill versus the big three carriers . Its true. Plus, when you buy your first line of mobile, you get a second line free. There are no Term Contracts or line activation fees. And you can bring your own device. Oh, and all on the most reliable 5g mobile network nationwide. Wireless that works for you. Its not just possible. Its happening. Its time for jim and stop trading. One of the tougher stocks out there is clox. They did have the hack. Whats difficult here, first of all, people, analysts did think they would turn positive numbers, maybe midsingle digit it organic is going to be down badly. Second, the lingo of the actual release makes it sound like they havent gotten to the bottom of it yet, which is one of the reasons its down more than initially. They havent gotten to the bottom of it, then youre not going to get the snapback that people thought would happen. I thought shes a good ceo and its a terrific brand, but, obviously, people have said they cant get a handle on this thing. If they cant get a handle on it its hard to say it will be a snapback. Most impactful cyber hack youve seen. This is one where okta would tell you that thats a self identification company, that you have an okta something that Todd Mckinnon came on and said when you have employees that are trusting and help other employees and youre imitating an employee, when an imposter, youll give up the keys to the kingdom. So it really doesnt matter whether you have an okta in there or whatever, but the idea is that maybe theyll go after someone else if you have the full suite because its just like thats the locked car versus the unlocked car in the parking lot. All that employee cyber training is for something. Dont give up the information and just presume that other person is not being honest. Tonight . I have the ridiculous constellation. The stock is down. Give me a break. Wine and spirits. If they get rid of wine and spirits at their november 2nd meeting you will feel like a dope if you sell the stock here. Sean conley, the estimates were beaten when it comes to the bottom line but not the top line in terms of sales. Levie, always controversial because are people buying apparel . Its not clear. You mentioned macys, they need apparel sales to go up. A good show. Well see you tonight at 6 00 p. M. Eastern. Mad money. Well take a break here. Markets down a little bit yitrng to hold 2450. Dont go anywhere. Bf unnecessary action hero unnecessary. Was that necessary . No. Neither is a blown weekend. With paycom, employees do their own payroll so you can fix problems before they become problems. Hmm get paycom and make the unnecessary, unnecessary. See you down the line. Good thursday morning. Welcome to another hour of squawk on the street. Im Carl Quintanilla with david faber live at post nine of the new york stock exchange. Sara eisen is live at 30 rock this hour. Well check in with her. A muted open. Dow down about 30. S p down 12. Decent mix of data between challenger and claims and fed speak, five fed speakers as all attention is still on yields. The trading session, carl, here are three movers were watching starting with rivian. Shares getting slammed on news that it plans to offer 1. 5 billion of convertible debl. He they issued Sales Estimates in line with expectations. Clorox warning Quarterly Sales and profit took a hit tied to the august cyberattack that significantly affected its operations and led to product shortages. Stock down 7. 25 . Constellation after results showed weak wine and spirit sales were a factor, but it was a positive quarter. Constellations Conference Call kicks off this hour and were monitoring it. We have to talk about the big news of the day, and it its not positive if you are looking to buy bonds and looking for some relief and that is jobless claims. Were not in recession. Jobless claims are the best indication for how companies are operating and whether theyre seeing stress because it reflects whether theyre laying off workers and we continue to be at these very low levels. They only increased 2,000 last week and up to 207, 208. Theres the fourweek moving average. It shows this step down. There is a historically low amount of americans filing for unemployment claims. The continuing claims number, which is a good snapshot, carl, is showing those that are still on jobless benefits, it continues to remain low. 164, 600 versus the week before. If youre looking for a recession or investors need to see that to see relief in bonds, were not seeing it. Went from 202, 205, 207. Its hard to imagine anyone it looking at that chart and saying we put in a definitive bottom, even after adp, for example, yesterday and depending on what jobs number says tomorrow market liked the adp number because it was weak. Theres not that much of a correlation with jobs. A lot resting on tomorrows jobs report, 170,000 or slightly less, that would show theres less hiring but there still is hiring and things are on track. Heres the setup. If you add the strong jobless claim numbers, overall strong labor market numbers, to some of the other factors at work right now, the Federal Reserve making it clear its in no rush to cut rates and its going to remain high for a long time and higher than europe and china and japan because our economy is in better shape. The fact that inflation is still persistently above the feds target. Its coming down, but its still higher than that. The fact that fed is tightening in the form of reducing its Balance Sheet. All the reasons for why we have seen this sharp and somewhat sudden bond selloff, which has pushed yields to the high levels. You add that to know the concerns about the supply and demand mismatch on treasuries and youve got this recipe for what has been a violent bond selloff. Were seeing a little bit of relief today. Equities can rally off of that. Thats been the theme. Until something stands in the way like xdata, its hard to se. You were talking about supply and demand imbalance. Weve been talking day after day, for weeks, seems to have come to the floor in the notes and analysis and the coverage in general of the bond market. Do we have anything definitive . Because if we pointed out so many times and you have, if this is sort of what were dealing with its not going to go away given the deficits were generating this year and next year and in years to come. We try to get ahead of the Research Notes. There is a good one today that apollo put out on how much more treasury issuance has to happen in the coming year. He looked at all the all across the maturities, bonds that need to be issued th is year in yellow, 2024 in blue. The percentage above yellow is the percent there. So on average about its more than its 23, 24 more than last year in terms of how much treasury has to issue to fund the deficit. Thats something that market has been paying increasing attention to. Now i dont want to overhype it because its not like we hear bond vigilantes and worry about default and austerity, that sort of thing. Its not a fullon fiscal panic. If it was you wouldnt see the dollar strengthening. You would be dumping the dollar if there was question about the u. S. s ability and credibility here. Its clearly a factor out there. And so its adding to the mix. The pervasive theme is the higher for longer, no question about it, but i think the investors are eyeing that issuance calendar and deficits and another looming shutdown, you know, all the Research Notes said yesterday including Goldman Sachs that Kevin Mccarthys ouster increases the odds of a Government Shutdown november 17th their next deadline because they cant fund the government. Its all playing into it. Its certainly part of the story. Lucky for us, fitch said that a shutdown probably wouldnt affect their ratings since they figured that in. As for the consumer, guys, pretty interesting comments were going to talk about oil in a moment and what that might mean for the consumer given the demand data. Worse for this time of year in 23 years, but these headlines out of conagra, consumers moving away from convenience into more staples like canned tomatoes and chili, trying to make meals stretch a little bit longer. I saw that, yeah. Theyve been actively reducing their remnant household inventory for the pandemic as well. They typically, they say that convenience oriented items typically top consumer priorities have lagged as shoppers have turned to hands on food prep to get bang for their buck. It kind of jives with what were hearing which is the pressure is on for especially the low income consumer and habits are changing right now. Reprioritization is a word im hearing across the Conference Calls among typical consumer behavior. Conagra had a sales miss and conagra is concentrated in frozen foods. Were monitoring the slowdown, but nobody is talking about recession. Were monitoring things, david, like disney, reducing its prices for childrens tickets at disney world on signs that all that pent up travel demand may be cooling off. Signs everywhere, but overall its nothing that would cause the fed to rethink, for instance, its higher for longer policies. We have to watch the stuff. Finally, just, sara, you mentioned the dollar. We saw it. To your point its not an environment given Everything Else youve described that would mean a dollar should be as strong as it is. What explains obviously, higher rates is helping but give us a sense as to what has been that turn . The major pull on the dollar is the yields. Currency chase yields. You chase the higher returns. When u. S. Treasury yields go up the dollar tracks it higher. Thats the simple explanation. Whats underlying there is that its all relative when it comes to currency. Our economy is in better shape. Our fed is singing the higher for longer tune. More so than europe. Have you seen the European Data . It shows they are closer to recession if not in one especially for their largest economy germany than we are. Japan is going the other way and buying bonds to try to maintain its yield curve control. For the dollar as a relative strength and high yield play in this type of economic environment. Meantime then you have oil. Well see if that is a tell as well, down after sinking more than 5 on wednesday. That is the biggest one day drop in over a year. Wti crude trading at the lowest level since the end of august. Lets bring in paul sankey to get his thought on oil move. Yeah. I mean, you have several major points, which is the consumer weakening, the major issue is gasoline demand. The gasoline crack has cratered. Remarkably. Thats telling you that the saudi pushed the oil price too high. Essentially thats whats caused gasoline cracks to collapse. Additionally as you mentioned, youve had weak demand. Were coming in weak. We called for the peak in u. S. Gasoline demand in 2019. What were looking at is weak demand. Weaker consumer, strong dollar. A lot of things working hard against oil here and thats, you know, why were selling off so aggressively. Does opec respond again . Thats a major problem for opec because saudi at 9 million a dollar. Does saudi go will force the market to stay higher going down to 8 million . Theyve done that in the past, but the problem for them is theyre losing a tremendous amount of market share. What the administration has done here is shifted from using the spr to pressure prices to using geopolitics to allowing venezuelan exports, allowing our rain yan smuggling, blind eye to russia. All those things havent been appreciated by the market. Allow for much more oil supply from sanctioned nations. Where are we in the u. S. . Expected to go higher . Were at record highs. The rig count is coming down, so thats unlikely to go higher. I would say that u. S. Production has been very resilient given the Oil Rig Count has been down quite a bit. Paul its sara the other thing you talked about is the dollar and with us being huge Oil Exporters and gas exporters, youve broken the relationship to the that are, but we say that really nervously because, of course, now we see a strong dollar and suddenly oil is collapsing and maybe this is a major issue because, of course, in india and brazil, in china, dollar prices for oil are high, turkey. Sara has a question. No, my question is on the price action. Youre talking about it like its normal supply and demand type movers. Brent crude oil is above 97 last week. We were talking about 100 a barrel and now down to 95. These are abnormally large and volatile moves, arent they . What accounts for that . Its, obviously, a massive move. After 30 years covering oil, you know, i was around last time we had a drop that big but as you said its a good long while since we had that. You know, at this level as you know, machines trade the market. I think its very much a risk off move. The market just decides to dump. We thought we could go higher on speculative interest. The run before this was low. We got up to neutral level of speculative interest and shots at 100 was that speculators would pile in. The problem as you know, risk off turned into risk off and that became, you know, the speculators running for the exits again. Still a lot of things that can happen with oil. We dont know which way putin is going to go. This week we had an outage on a canadian pipeline that would have been significant. You never know especially not heading into winter. But the reality is that this the single biggest element of the Global Oil Market is u. S. Gasoline. We consume not far off 1 in 10 barrels just in u. S. Cars. When its as weak as it came in yesterday and had been weak the week before, it becomes a problem for the Global Oil Market. Implications for retail gas prices down. 3. 30. The wholesale gasoline price is a big part of the margin falling. The wholesale price is not off as much as the margins because the crude price forced up by saudi. You can see the refiners are going into turnaround season inning by a way. Crude demand is down a Million Barrels a day. And thats where saudi has the problem. If we look through wholesale gasoline prices you will see lower prices at the pump, quite a lot lower. Its such a small percentage overall but tesla is selling 2 million vehicles a year in the United States now. Yeah. Is there going to be an impact on overall demand for gasoline as you say if we consume one of every ten barrels in the world . Yeah. We called peak, u. S. Gasoline demand in 2019, and tesla is part of that. The other thing people miss is the conventional cars. The average conventional car is more efficient than the one it scraps from 15 years ago. Its not the penetration of ev which has been disappointing apart from tesla, its the hybrids that the engines all shut off as you know in traffic, et cetera, and then high gasoline prices at a time the consumer is weakening. With conagra as lowincome people get affected by high gasoline prices they drive less. They have a fixed budget for gasoline and drive less miles. I think thats whats coming through strongly here. Paul, its a great look at the market overall. Theres a lot to devour. Thanks for coming in. Its a pleasure. Sara . As we head to break, heres our road map for the hour. A crisis of confidence for utilities. What investors need to know about the s ps worst performing sector of the year. Plus, what constellation results are saying about the consumer and Key Headlines from their Conference Call which gets under way. Bofa and citi trading close to 20 year lows. A couple wksee ahead of earnings season. Well talk about that when squawk on the street comes right back. Ah, these bills are crazy. She has no idea shes sitting on a goldmine. Well she doesnt 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 youre sitting on a goldmine. Call Coventry Direct today at the number on your screen, or visit coventrydirect. Com. Welcome back. Stocks lower trying to hold steady. Joining us at post nine Capital Markets head of equity strategy laurie with her target of 4250 a few days ago we talked about the target. Has the yield picture since then changed anything in the playbook . Not really. Its funny a couple weeks ago i put stress tests and actually i thought i was going to get questions, if yields are at x, what should the p e multiple be . If you took a 6 10year deal and ran it against our data that goes back to 1962 and says if the yield is x what should the trailing p e be . It spit out 19. 4. If you multiply that against our earnings number it gets you above 4200 on the s p. It explains to me why were sort of meandering around this level right now. You have a lot of individual stocks and or sectors that are getting hit as a result of indebtedness. Refinancing needs, sensitivity to interest rates. That starts to add up. It does. Its been a big concern on the small cap space right now. Its interesting because the data you can pull in the small cap space, whether youre looking at the effective interest rate, the amount of variable rate debt, its not as bad as people have in mind but there is capacity around that data. I think youre just seeing the market say were going to shoot first and think later and thats what i think happens when you have a very fierce, quick move up in yields is you shoot first and think later. Is there a play book anything history can tell us in terms of what the right thing to do is . The thing you want to do when bond yields are surging is buy energy and financials and those were working or energy was working until recently and now as helen was saying earlier, the storm overwhelming the fundamentals, but i think thats whats interesting because this bond yield move tells you to beat up on the growth sectors and we were doing that, but 20 minutes ago, we looked like we were getting a little bit of stabilization there. I think the market is just fighting a lot of very complex crosscurrents. It can focus on one thing and then shifts to something else. Isnt the problem with the higher yields it increases the odds of a hard landing or a recession, the consumer shock, which if you say that markets resilience is built on the soft landing narrative, doesnt this throw that out the window no matter what level of yield is. The speed of the move were seeing so far might be too much at a time where student loan payment resumption, were seeing these strikes, the job market is starting to weaken a little bit. I dont have to tell you the headwinds. Thats a good point. A couple weeks ago i was talking to someone and we side it felt like the soft landing pendulum had swung too far back in the complacency. Were having a recession, were definitely not having a recession, so maybe it was time for the pendulum to switch back. Youre right, when we tested Sector Performance against moves in bond yields one of the most consistent relationships you see over time the Consumer Sector at least, the discretionary sector under pe underperforms badly. Youre saying were going to have a soft landing or a mild recession, we know growth will stink for a while and i think maybe thats one of the reasons why things like tech are getting a little bit of stability today, even though they should get beaten up by the bond yield is if the negative effects to the economy, you want to be in secular Growth Stocks in the environment. It feels like its complex right now. Its a really interesting point. I was going to ask if youre worried about the economic environment and shift to the hard landing you would go to staples or utilities but those are praering worse than the cyclicals right now because of the yield moves and then technology during a low growth environment, but thats risky too when it comes to the multiple and which sector tends to get hurt. Its a tough call. Its a really complex call. Utilities is really funny. I was telling carl and david over the break someone was making an argument to me before utilities cracked is value it on a peg ratio and didnt look that expensive. I was pushing back saying its too expensive, i dont care if the market takes a breather. I would rather play defense in health care which doesnt have fundamental problems to the same extent and has better valuations and i thought it was funny we saw the sector people trying to stretch to make arguments we saw the bottom fall out from it. There arent good choices in defenses. Staples has a pricing problem and youre starting to hear Companies Across sectors and industries say look, inflation is moderating, we dont have as much Pricing Power as we used to and staples is caught in the cross hairs of that. Hard to play defense there too. Finally, a couple notes arguing that the only thing that brings bond stability is a hard selloff in risk assets and analogs to 87 in the way yields crept up into october. Do those interest you. We had a lousy september. Didnt great august. Look at history when you have rocky times in the fall its a couple months, not like a three month stretch. Ive been hoping we would get stability in here. I do think that things have been pretty orderly so far. It feels like theres a little bit of a sniper out there kind of creeping around. Tech was working okay, shoot that. Utilities were working okay. Shoot that. So far it seems kind of quiet, stealth and not disruptive to me. Look forward to having you back soon. Thanks for having me. Were talking about utilities, the worst performing sector right now for the year by far. One firm on the street says, quote, close your eyes and buy. Find out why and whats driving the downturn straight ahead. Squawk on the street will be right back. Some things are good to know. Like. Where to find the cheapest gas in town. And which supermarket gives you the most bang for your buck. Something else thats good to know . 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Bitcoin up more than 3 on the week despite a volatile time for stocks and bonds with the crypto currency up 70 on the year and the worlds second largest ether headed in the opposite direction, down on the week, despite some institutional interest rates. Vaneck pro shares launching this week tied to ether futures in a total of six funds. The six funds saw trading volumes total 1. 92 million in the first day of trade. Its amazing to see cryptos resilience during this period. Utilities, on the other hand, biggest loser on the year as higher rates and costs hit the sector and some are warning there could be more pain ahead for this group. Pippa stevens has been digging into this with particular names in the cross hairs. We are seeing selling in what has become a crisis of confidence for utilities. The sector had been under pressure all year thanks to rising rates which increases their costs and makes their dividends less competitive. This latest leg lower comes after nexera no longer planned to drop down an asset. Its yield because it got too expensive and that spooked the market. In the last three weeks it has shed nearly 40 billion in market cap. Even so its still by far the largest weighting in the sector and the move will have an outsized impact. The year to date spread between the sector and s p 500 is now the second largest on record, going back to 1941. Thats according to bespoke. Key bank this morning said the sector overall finally appears inexpensive and that the selloff has created sufficient valuation dislocations. The firm upgraded cms and center point to over weight and reiterated buy ratings on duke energy finishes energy, excel. On the flip sided, key Bank Downgrades nextera. Thanks. Pretty amazing story. Still to come, ubss chief economist joins us with more on where he sees rates and yield ahead. Tight range at the open circulating around 4250. South of that with the dow off of the opening lows. Stay with us. Both of my parents were born in cuba and migrated to the u. S. For political reasons. Growing up in miami the cultural melting pot that it is, was always a comforting feeling because i always felt like i was surrounded by folks that understood my heritage and understood the dynamics of my culture. And now that im able to raise my own kids here in miami, its really nice because were able to really keep a lot of our own Cultural Heritage alive. Welcome back. Im Silvana Henao and heres your cnbc news update at this hour. The Biden Administration is clearing the way to build more walls along the southern border with mexico. The white house announced today it waived 26 federals through permit the construction in a reversal from the president s promise not to build another foot of wall under his administration. Japans Fukushima Nuclear power plant began releasing a second batch of treated radioactive water in the sea. The releases are expected to continue for decades have raged strong opposition especially from china which banned all japanese seafood imports. The nearly 1. 4 million tons of radioactive waste water has been aclatsing since the plant suffered meltdown after the 2011 earthquake and tsunami. The Covid Vaccine cards once a ticket to concerts or restaurants are a thing of the past. The cdc announced it had stopped printing the cards now that vaccines are not being distributed by the federal government. Back to you. Thank you. Ill frame mine then. Were over an hour into the trading day. The s p down again. Bob pisani whats going on . The entire stock market is oversold. The entire stock market and yet theres no buying interest no real attempts to enthusiastically go after stocks. What you want to see is volume up on stocks beaten down, and those stocks moving up. Its binary. Its what would it take to get 10year yields down. Thats the story. We need better economic data. Look at the sectors moving. You heard Pippa Stevens talking about utilities. Nothing, no bounce. You think this is dramatically oversold. Nothing. Reits, threeyear low yesterday. Threeyear low in reits. No buying interest. Consumer staples terrible. You heard about conagra, confirmed their numbers but talked about the weaker consumer at the lower end. Tech is doing okay. Look under the surface, nvidia, and and, down 8, 9 in the last month. Still a lot of damage underneath that. Take a look at other things the downside leaders here and this is what i was talking about here, no bounce in utilities, energy has gone from Leadership Group to under performing group in a headspinning last couple weeks. Pepsico. Pepsi the First Company reporting a september ending quarter. Thats going to be next tuesday. You want to hear from them. They have all these other Companies Reporting ending in august. Pepsi will be important. Its doing nothing. Coke doing nothing. Consumer staples. A little bit of weakness in the semis today. Heard paul stankey talk, great on energy and oil, headspinning move in oil and gasoline. We went from a month ago talking about oh, my heavens, oil is contributing to inflation, to now, weak demand for gasoline collapsing, disinflation in it. This is in less than a month. Theyre head spinning. You can see the effect on the whole Energy Complex. These were Market Leaders two weeks ago. This week, whats been going on with the energy names, valero and the refiners are down 7, 8 . Exxon, production Companies Like conoco down. Halliburton. The entire Energy Complex doesnt matter what youre looking at went from the Market Leader two weeks ago, the bright spot on the stock market, to lagging on the stock market. These changes are head spinning and happen quickly and hard to get your head about them. The question is whether or not we can get data supporting a treasury rally. Thats all that matters at this point. The joltings report was negative, the adp positive for stocks. Tomorrow 170,000 nonfarm payrolls we want below 170,000. Were thinking i think were looking for 4. 1 exfood and energy for that. We had 4. 3 in august. Obviously, we want 4. Its just all about treasury yields right now. Thank you very much. Lets talk about what to expect from the data. 10year yield is falling from session highs. Investors tuning in to plenty of fed speak ahead of tomorrows job report. Lets bring in jonathan pingle. You never want to root for a weak jobs report. We want americans to have jobs and higher wages. It does feel like thats what the market needs to see to calm down over the bond yields. Unfortunately, i think youre probably going to get an upside surprise. Were forecasting 200,000 gained, solid back to school, private sector looking okay, and probably an upside surprise on average Hourly Earnings as well. I mean, you know, the market this is going to reinforce the resilience theme that market is having a hard time digesting at the moment. So whats that going to do . You think its going to spark another selloff . Bonds . Yeah. If you continue to get the strong data were going to look ahead to the cpi which matters more than payrolls, but, you know, you get a slew of strong taut here. You can easily put a november rate hike back on the table for the fomc. I mean, you know, were expecting a 23 basis points increase in core cpi next week. If it comes in at 0. 30 which is normal or higher, that will look like you had an acceleration and cpi from july, august, to september. If thats coming along on the back of, you know, a really solid employment report, i mean, data dependent fomc is going to end up having to have that discussion about, you know, hiking again, which was their base case in the september summary of Economic Projections, and potentially as early as november. I mean thats not our forecast, but, you know, you get Strong Enough data and theyre a data dependent committee. So i mean, i guess we should talk about why this is happening. I know there are lags on fed rate hikes. I know we had a lot of excess savings from covid. We had a lot of behavioral changes. People went out and traveled and saw taylor swift and all that helped the economy remain resilient. What is it . Why is it hanging in so much to the point where many on the street are still not expecting a recession, which is presenting a big problem ffor the bond marke . We would chalk it up to really first of all, the consumer has been super resilient. When we look at the labor market, the labor market is basically just moved in line with output growth. Its really the sort of strong spending and output growth that allowed the labor market to chug along, too, here. So when you decompose whats really supported consumer spending, you just got a lot of support from the wealth savings and credit. Household Balance Sheets were in tremendous shape, a ton of excess savings. We would estimate theres, you know, still excess savings sloshing around. And you certainly, you know, house prices have hung in there until really the last few weeks since the september fomc meeting. Equity valuations have held in there. So youve had a consumer that has had, you know, a lot of support here and has really powered the expansion along. Were showing the twoyear, 10year spread. This is the yield curve and what everybody is glued to. Something interesting is happening which is that it is uninverting from its deep negative levels. Its still negative. But typically, traditionally thats a sign that recession is more imminent,correct . Is that something you see happening as a result of the action the last few days and weeks . So, you know, we still have a recession in our baseline projection, but i will say, Market Sentiment has swung substantially the other direction towards really ongoing, solid growth over the next few years, and you can see that in the fomcs Economic Projections as well, where they basically got, you know, really fine gdp growth for basically four straight years in their projections. Now i think whats happening on a long end of the curve is more than whats happening at the front end where youve got the fed rate hikes being priced in. Further out the curve, you know, our treasury strategists have done nice decompositions where youre a seeing a slump in demand, at the same time we have a deficit problem and a certain amount of ongoing supply concerns. But, you know, certainly the combination of this slump in demand for treasuries along with the signals out of the fed two weeks ago for, you know, higher real rates, you know, certainly pushed up the long end of the curve and added a certain amount of term premium further out thats undoing some of the inversion. Yeah. I mean if its about the deficit and supply concerns, its not exactly getting fixed. We could be looking at real higher rates for a while, right . I mean the deficit has been a little bit worrisome to watch because net Interest Payments are headed towards 3 of nominal gdp and, you know, you used to think that might be some sort of cap on a sustainable level of deficits and, you know, were looking at, you know, beyond that, you know, 6, 7, 8 deficits for the foreseeable future. So the first fiscal outlook doesnt look great. The higher net Interest Payments by the federal government has not helped. And, you know, how that gets resolved is very unclear. All right. Jonathan, well, thanks for talking through some of these top issues that investors have on their minds right now. Jonathan, ubs. Thank you very much. As we head to a break check out the top laggards led by clorox. The cyberattack crushed the company. It was out of whack for six weeks in terms of getting things and operations and systems offline and back online. Net sales expected to decrease 28 to 23 from a year ago quarter. Organic sales down by 26 . Stock is getting hammered. Were back after this. We lost again. The number 52week lows today. Some of them with dom chu. There are roughly 20 of them so far. 52week lows or worse at this point in the morning. Well see what happens in the market if it does decelerate a bit. There are certain ones getting attention on the Consumer Staples side of things, check outs names like clorox, we talked about that, david mentioned that with regard to their Earnings Report and some of the issues they had with Cyber Security and hacks. Cocacola hitting a 52week low, down 2. 5 . Conagra, cisco, target among consumer staple names hitting 52 week lows. Also, some of the industrial names, Consumer Discretionary ones making 52 week lows as well. 3m down 1. 25 . General motors off nearly 1. 5 . Ch robinson worldwide transportation side of things down 1. 5 . New 52 week lows. Two names on the Money Center Bank side of things, citigroup and then today bank of america hitting a fresh 52week low over the course of the year weve lost about 21 of its value. At the highs of the year we were roughly 294 billion in market value and lost 90 billion to this point here. Bofa certainly one of the financials to watch. Citigroup made a 52 week low yesterday, happened made one in todays session. Well keep an eye on bank of america. Weve been talking about of bank of america in particular, its portfolio in terms of assets and where they are. Rising yields, of course, are concerning and when it comes to profits for the banks or, in fact, their assets, by the way, were about to kicks off earnings season next week. Chuck joins us now, owns wells fargo, fifth third in his portfolio. The banks safe here . You have to be selective. Why those two . I regard both as very attractive, very cheap. Wells fargo has some issues in the past with creating false accounts. They have been punished by the Federal Reserve. The stock got crushed. Very cheap. Slowly but surely fixing the business. Very attractive on that basis. Citi is another one thats changing its structure, selling off a lot of foreign businesses. Theyll do very well. Fifth third is our regional play. They took out all the banks and shot them back in march when Silicon Valley fell and this is an attractive company. Were very well positioned. More capital than they need. Theyre a survivor. We want to play that theme. Any concern about the embedded losses and bond portfolios at the banks and whether that will become a concern again . Those losses dont need to be realized or often dont, but nonetheless it doesid rise up te a significant concern in the spring. Thats right. Investors are well aware of what those losses are and they get reported. They dont show up in the income statement, they do the Balance Sheet can be adjusted to reflect them. Theres enough capital at the bank that it shouldnt impair them. And every day that goes by, those bonds come closer to maturity. So theyll recapture those losses. Rising yields overall, you know, youve seen this before. Where do you want to be in an environment like this . Obviously, beyond a couple of those banks that you mentioned. You really want to be in parts of the economy that are going to grow. Every one is hit by higher interest rates. The hurdle gets higher, discount rate gets larger. All stocks get hurt. Some get hurt more than others. It depends on their business. Companies that have a high level of debt like utilities, those are more at risk. Fixed income. Thats at risk. So you have to keep your duration short which what is weve been doing. In terms of sectors of the market, Consumer Staples tend to trade at high p e multiples, and yet, their growth rates lower. Thats a bad combination in a rising rate environment. I would rather keep my Consumer Staples allocation on the low side and certainly utilities. For portfolios that need income, i like Business Development companies, bdcs, theyre very attractive, high yield. I also like pipelines, oil and gas pipelines, demand for Energy Continues to rise. And those companies are doing very well and paying out large distributions. Chuck, were going to leave it there today. Appreciate you taking time. Thank you. Thank you. Meantime, some Fresh Results out of constellation. Well break down those numbers in a moment when we come back after a short break. 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Constellation brands reporting an earnings beat. The companys Conference Call under way this hour. The stock is selling off. Our Brandon Gomez has been listening in. What are you hearing . I thought the beer guidance in particular was strong. Good morning, sara. It is a strong beat for constellation this quarters. Shares are down about 2. 5 there. Still, though, up year to date. Earnings and revenue both a beat, strong beer sales but the focus was on the guidance for the fiscal year, raising guidance. Why are shares lower . Part of the reason is wine and spirit sales came in weak. A bright spot were beer sales. Seeing double digit growth year over year. The question is will that momentum continues as the marketplace is factoring in a more costconscious consumer . Take a listen to what ceo bill newlands just said on the call. We continue to see significant opportunities to maintain the growth momentum of our beer business, particularly due to the resilience of key secular trends in the consumer landscape. Like ongoing consumerled premiumization across beverage alcohol and continued outsized growth of the hispanic population in the u. S. Youll remember, sara, from our reporting in april, shares have climbed about 9 since then. When Constellation Brands modelo brand became the topselling beer in the u. S. After controversy over bud light boycott. Q4 is traditional a Strong Quarter for alcohol and beer sales. A lot to follow for the year ahead as well as the quarter. I think that bar was high for investors on this one because of the share gains. I was going to ask you about that, brandon, youve been tracking the fallout from bud light in particular. Has the bleeding stopped or is it continuing to lose share and shelf space . If you talk to analysts who cover anheuserbusch, weve reached a peak point for the impact of that. Bud light gaining back some share since the controversy, but really youre seeing brands within the Constellation Brands portfolio seeing the benefit. You have modelo, pacifico, corona benefiting from that fallout. As we continue to follow it, were seeing it, but it was an industry wide gamechanger. Thank you, brandon. Thanks, sara. Thank you as well, sara. In the last minute we have here, the s p has hit the lows of the session, down over twothirds of 1 . You can see it with the nasdaq down 1 . Weve talked a bit about some of the standouts, whether they be higher or lower. Rivian chief amongst them. 18 on this 1. 5 billion offering its proposing, green convertible debt. Obviously, it would be have a dilutive impact theres a look at anheuserbusch as well, which is actually up. You just heard brandon talking about constellation and the loss of share there from bud light. That does it for yeah, theres rivian. Thank you, guys. Just getting crushed. Again, youve got to raise a lot of money when youre losing 30,000 or so with each vehicle that rolls off the line. At least as of now. Squawk on the street comes back right after this. Every day, businesses everywhere are asking is it possible . With comcast business. It is. Is it possible to help keep our Online Platform safe from cyberthreats . Absolutely. Can we provide health care virtually anywhere . We can help with that. Is it possible to use predictive monitoring to address operations issues . We can help with that, too. With the advanced connectivity and intelligence of global secure networking from comcast business. Its not just possible. Its happening. Good thursday morning. Im Carl Quintanilla live from the new york stock exchange. Is the boom or bust cycle for stocks here to stay . Fidelitys head of macro is with us this morning. A warning on the three bears that could break the market. Sa satori funds dan niles is with us. Wells fargos head of fixed income weighs in on higher rates and why a harder landing may be inevitable. We start the hour with the activity in the bond market, which continues to dominate sentiment for stocks, which are selling off and the momentum is fading fast here. S p down