Transcripts For CNBC Squawk 20240703

It slashed its Sales Forecast for its Covid Vaccine and therapies late on friday. Shares not going to be down ahead of the open. Watching apple. Reports of disappointing iphone sales in china. Lets begin with the new week for the market. Its going to have something for everybody. Were going to be on the lookout for geopolitical headlines. Earnings season will heat up. The fed speak calendar, sara, is insane. Its heavy. Theres a lot of them. Whats interesting is that fed speak has moved from hawkish to dovish now for the markets because increasingly, youve got a number of these fed speakers saying, were okay waiting and seeing the impact of our higher rates. Theyre not expressing any kind of alarm or panic over the fact that Inflation Numbers have come a little bit firmer. Cpi last week was firmer. Expectations in the university of Michigan Sentiment number on friday were a little bit firmer, and the data overall has continued to not point to recession, but it does feel like the groupthink, guys, at the fed, has moved toward, lets pause, lets wait a little bit and see the impact of the tightening, and by the way, the move in the longterm treasury yield yields, the big selloff we saw there, thats restrictive, and theyre paying attention to that and feeling like that might be doing some of the work for them when it comes to rates. Powell will be good. This is a sort of authoritative chance for him to put on the table another rate hike or not and it will be the first time he gets to react to cpi and ppi and the last jobs report, all of which have been strong. Is there a point at which its almost too much, though . I mean, you know, carl just tweeted out the schedule. Its endless. Youre not going to bring us every single sound. There can never be enough fed speak. Is it going to be every single sound byte from every single person. Ill try, but were going to try to get the forecast from companies, because so far, so good. With the banks, with pepsi, if weve only had a few reporting so far, but none of them are talking about recession, and none of them are worst case scenario. Theres stuff to monitor, like in the banks talking about higher net chargeoffs at jpmorgan and wells fargo, more Credit Card Debt being used by americans, but again, not nothing alarming at this point as far as what theyre expecting. Yeah. Got about 11 of the s p in so far. Bo bank of americas is 9 above consensus. Friday was eventful, and well get more tomorrow. Again, as sara said, the banks, yes, expecting more chargeoffs, but frankly, things not near where some had anticipated they would be given the state right now of commercial real estate or at least what seems to be the view of weakness there in particular. You know, that is a we talked to willy walker last week. Its a slowermoving story. The chargeoffs will come, but they arent here as yet. Still a small percentage overall on loans. Right. And well see what follows, obviously, as well. Less optimism, though, about, i would say, the ones that are reporting this week. Bank of america, people have been zeroing in on the unrealized bond losses in that portfolio. Goldmansachs and Morgan Stanley, whose stocks have underperformed, especially at a time when the ceos have been a little optimistic about a return, green shoots in the Investment Banking world. Matt, the Technical Analyst from miller this morning, highlighting the weakness in Morgan Stanley stock leading into this earnings in the recent weeks. Yeah, its interesting. Morgan stanley has a succession contest going on that i think is going to come into sharper focus pretty soon, because its not that far away. Three different people vying for that top job that james gorman will be stepping aside from. And goldmansachs, of course, were going to be focused on, will they say anything more in terms of their continued retreat from consumer . The wall street journal today, yet again, having another story about how internally, people are so opposed to it and why do we have the apple cart and what can we do to get rid of the apple cart, and why are we doing this stuff . Its not doing particularly well, even though it is a small percent. Revenues and fixed income, in particular, are going to be much more important. Employees, apparently, cant wait to unwind a lot of that. Some managers have moved on to other divisions. Theres talks with amex, but mastercard is in the mix that makes it messy. Lets get to one more point before we talk to dan about birkenstock. It was a tough week to go public but not an inspiring debut. I dont know if you take more out of it that its basically a Consumer Discretionary stock going public at a time when there are questions about whether the Global Consumer can hang in there or if it was just weak markets. It continues, carl, when you talk about the key to the market, continues to be focused on bonds and treasurys. You saw that sensitivity last week. Even mild bond rallies was some relief for stocks and thats reversing this morning. We have to watch that amid increasing talk of high for longer. High for longer, and then at the same time, this deluge of issuance that needs to happen for treasurys, and increasing concerns there were a lot of notes this weekend about supply and demand. We had three auctions last week that were on the weaker side, so the question of who the that marginal buyer of treasurys . We know that foreign governments havent been participating as much, and we know, what was the apollo chart . On average, across the yield curve in 2024, 23 higher issuance than this year. So, theyre going to have to raise a lot of debt. Thats a lot. And you have talked about it and reported on it, and we will continue to because its so important. But yeah, thats an enormous amount. Do we know what the increase potentially will be in yields on the longer end as a result of this supplydemand imbalance . We dont. More people talking about 5 . Larry fink talked about 5 . Not necessarily on that issue, but hes concerned about sort of sticky inflation. Lot of people are throwing out the 5 number on the long bond yield. Its true. For more on all this, lets bring in dan suzuki of Richard Bernstein advisors. Dan, great to have you. Thanks for helping us kick off the hour. I wonder your thoughts on that, whether or not 5 has some magical power and if we can sort of chip away at this relationship between yields and equities lately. Yeah, carl, i dont think theres anything magical about the number five, but i think it has a lot of psychological importance here, so i think that, listen, i think that were theres actually been improving and encouraging risks to the growth front, and i think that growth is improving, particularly from a profits perspective, that could cause more hiring, more investment spending, and that could cause more bullish outlook for the economy. That could push rates in the short term above 5 . I dont think its going to stay there necessarily for a long period, because if it gets that high, that means the fed probably has to come in and actually slow down the economy a little bit. You actually have a bearish move on the back of that, and you could actually see rates go lower. In the near term, while we have that upper momentum, sure, we could break through five, but i do think the riskreward is getting a lot better for that long part of the curve. Is that because of what we think gdp will be for q3 . I mean, you make the point about corporate earnings. There is an argument that if q2 earnings were about margins, q3 and q4 are going to be largely about demand. I think youre seeing it pretty broadly across the indicators that martitter for earnings. The stuff that matters is saying that things are not great from a level perspective, but theyre getting better, and thats going to put upward pressure on growth and so i think were on the Positive Side of the corporate profit cycle, so i think youre going to see earnings not only improve but surprise to the upside, so i think thats going to be a very big positive tailwind for particularly the cyclical areas of the market. But for q3, maybe, but then, dan, what happens in q4 and into 24 . Gdp we know gdp growth is going to be really strong this quarter, but estimates for Fourth Quarter are starting to come out early and theyre a lot weaker, and theres more pessimism building around 2024. So, what happens to earnings trajectory then . 100 , sara. I couldnt agree more. I think personally, i have a lot more confidence in the profits than i do in the recovery and the economy. Theres already been a massive decoupling between the economy, which is close to running at like 10 nominal if you believe gdp now, versus earnings growth, which has been negative. I mean, its already been decoupled. The question is, are they going to recouple as things improve on the profit side, or can profits improve yet the overall economy continues to slow . I think that i see those risks to the overall economy. The reality, though, is the levels of whether its the corporate Balance Sheets or the consumer Balance Sheets or levels of cash. I just think its going to take time to get to these for those to fall to levels where you really have to worry about a major slowdown in the economy. I mean, if you think about incomes, which is probably one of the biggest drivers of consumption, which is the lions share of our economy, income levels are still basically high singledigit levels, which would be historically equate to sort of peak level income earnings, so income growth, so i think its going to take time for those to really calm down where you have to worry about the economy going through recession. I dont think thats happening any time soon. Dan, thank you so much for that. Good to talk to you. Talk soon, i hope. Dan suzuki of Richard Bernstein. Now on to the israelhamas war entering its tenth day. Nbc news correspondent Kelly Cobiella is in tel aviv this morning with the latest. Kelly . Sara, good morning. A stormy tel aviv this morning. First, that rafah crossing in gaza, thats the crossing between gaza and egypt, which we have been talking so much about the past couple of days, still no signs that it is about to open, but there are hundreds of people there, foreign nationals, people who have foreign passports as well as family in the gaza strip, waiting to get across that border. Antony blinken, secretary of state, said rafah will reopen. He said that yesterday, but at this hour, intense negotiations are going on internationally with the united nations, israel, egypt, and the u. S. To try to find a way to briefly open that border, briefly, if need be, to allow aid into gaza and to allow those foreign posassport holder to get out of gaza, including an unknown number of americans. Some five to six americans are in gaza right now according to u. S. Officials. Not Much Movement on that this hour. There were hopes once again today that it would be reopened. Meantime, the israelis were saying that there would be a gap once again today for people in gaza to make their way south from 8 00 a. M. Until 1 00 p. M. That time has now passed. Its about 4 00 in the afternoon here. The Israeli Defense forces say that about 600,000 people have now made their way to the south, keeping in mind that about half the population of gaza is in northern gaza, so about a million people. So, a huge number of people have now made their way out, but there is still a danger to them and a humanitarian danger as well as a danger from air strikes. Israeli air strikes continuing throughout the night and today, hitting hamas targets, and there is a Security Council meeting for the Israeli Government tonight at 8 00, so we may know more about israels war plans as of tonight. Guys, back to you. Kelly, thank you. Well talk soon. Kelly cobiella, nbc news in tel aviv today. When we come back, the message from pfizer after it issued that warning on profits late friday, citing lower demand for covid products. Take a look at the premarket here. As we said, pretty steady. Well get to news on schwab, news corp. , lulu and some of these glp1s. At Morgan Stanley, old school hard work meets bold, new thinking, to help you see untapped possibilities and relentlessly work with you to make them real. This is american infrastructure, a prime target for cyberattacks. But the same aipowered security that protects all of google also defends these services for everyone who lives here. Shares of pfizer. You can see they erased had to be significant potential losses in the stock, the Company Holding an investor call over the last hour. This after it slashed its fullyear guidance. That was late on friday, so you may have missed it. It cited lower demand for its Covid Vaccines, its treatments, such as paxlovid. Lets bring in Angelica Peebles and get the latest. Anything said on the call that made investors feel better about this lack of demand for both the vaccines and the therapies . Yeah, david, pfizer today is saying that this is actually a good thing because it will provide some predictability Going Forward. You know, they have been talking about moving paxlovid, especially, into the private market. Right now in the u. S. , its been distributed by the u. S. Government, and now theyre saying this new deal with the government provides them an opportunity to start selling the antiviral directly to insurers or get reimbursed by insurers and what we saw with the Covid Vaccine was when that transition happened from the federal distribution to the private distribution, of course, the price went up pretty substantially, and so now theyre saying that this will give them a path to go forward here and get higher revenue Going Forward. Yeah, i mean, although, revenue was slashed dramatically for the quarter. It came down were talking now a range of 58 to 61 billion. That said, to be fair, angelica, the stock price has been down rather sharply. When you look back over 20 years, pfizer has not done much of anything. Are they talking about sort of where they see revenues bottoming and what kind of growth they see off that . Its interesting because evercore had a note over the weekend saying theyre taking this shortterm hit that will provide potentially longterm opportunity, because again, now that they can move into the private market, it will help them establish this market Going Forward, and they are saying, of course, though, that they will see lower demand for paxlovid and also the Covid Vaccine. Theyre expecting only about 17 of americans to get this latest booster, which is a little surprising, because thats what it was last year too, and weve heard from moderna, at least, saying that last year was an anomaly and that we would see trends start to stabilize, but pfizer executives today saying, look, were past that emergency phase, and now were going into the new normal where people are just really tired of covid, and the people who are going to get the shots are the ones who want it, and everyone else probably isnt going to get it. I also noticed they got an upgrade today, which may be part of the reason that the stock is up. Jeffries takes it to buy, a 39, likes the idea that theyre kitchensinking this and the headline is, sometimes you got to zig when they zag. Feels like the pipeline is strong, angelica, including the rsv vaccine. Theyre working on a number of cancer drugs, and i didnt realize they also have a contender for an oral obesity drug as well. Yeah, pfizer has a lot going on outside of covid. Its been the message that they have been trying to get across to investors, but its interesting, because every time you see this covid news, people react pretty strongly, even though they have been saying, covid is not over, of course, but you know, the bulk of the covid revenues are behind us. Lets focus on the future. Lets focus on obesity and the deals theyve done buying c. Gen and the cancer opportunity there. You bring up seagen, of course, their large deal that has yet to close. My understanding is they may actually have turned over the documents for the second request from the ftc, but probably wont say that for another five days or so. Let me just end, though, with this statistic you gave us on how many people will take a Covid Vaccine. 17 or something along those lines. How does that compare to people who take the flu vaccine in a given year . People about half of typical shot. Moderna is saying that were going to start to see covid look more like flu, and even pfizer not that long ago saying they expected it to be around about a quarter of americans getting this most recent one. And so, it is interesting to see them saying that 17 in line with last year still not quite what they had hoped, but they are working on a combination, flu and Covid Vaccine, and so is moderna, and thats really the hope, that if you can get covid and flu at once, that it will raise all boats. Angelica, well watch it today. Thanks very much. Angelica peebles on some of the pharma names this morning. Still to come, more of todays movers, including schwab, out with earnings. Well talk about deposits and average daily trades. Dont miss an exclusive with Walt Bettinger at 11 00 a. M. Eastern time. Together, we built something truly beautiful. It takes years of dedication to get to this milestone. 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Announcer the opening bell is brought to you by nuveen, a leader in income, alternatives, and responsible investing. I think its too early to speculate on whether or not there will be significant consequences. I think, importantly, it depends on whether the hostilities extend beyond israel and gaza, and thats certainly an outcome we would like to avoid. And are you and the Treasury Department preparing for that eventuality and what it might do to the Global Economy if the conflict does broaden out in that way . Look, i think its very early days, and were monitoring the situation at this point. Whats the treasury secretary this morning with skys wilfred frost talking about the potential impact of the israelhamas war. Netanyahus on the tape this morning, guys, warning iran and hezbollah not to test the northern border, adding any operations in gaza are going to take time. Cnbcs excnbc wilfred frost, now sky news. This is the key point about whether iran enters the fray as a major oil exporters, whether there will be more sanctions on iran if that does happen with the u. S. s fullthroated support for its ally, israel, and we heard that from secretary yellen as well, who went on to say in that interview that we can afford and have the capacity to help ukraine and help israel at the same time, which is increasingly a story in washington without the speaker of the house and whether we can get more aid passed in this government and also help fill our munitions and potentially increase our defense spending, which is something that markes per, the former defense secretary, on this show and others have called on us to do. Even though defense already is an enormous percentage of the overall budget, we may need to spend even more. Yeah, more. Listen, the market does not seem to be overly concerned at this point with the potential for hezbollah to enter in a significant way, but the implications of that, as you say, sara, would be quite significant in that it is a proxy of iran, and therefore, would it pull iran in and therefore would it potentially have impact on oil and or the u. S. Entering as well. The market would be very different if that were to happen, but it has to be a significant concern, especially given what is on the northern border of israel going on right now in terms of the back and forth. Just because were not seeing it reflected in u. S. Equities, doesnt mean its not out there. If you look at some of the gold prices jumped last week. If you look at places like the japanese yen, the swiss franc, its really taken a big jump against the euro, in a sign that there is a flight to safety here on this increasingly worrisome geopolitical issue. Lets get the opening bell and the cnbc realtime exchange. At the big board, it is Financial Services company oppenheimer, celebrating its brand relaunch, and at the nasdaq, its pepsico, honoring the culture of hispanic heritage month. Speaking of Financial Services, you want to dive into schwab . Lets dive into schwab ahead of our interview in the 11 00 hour with Walt Bettinger, the ceo. Schwab shares were lower, last i ecked, in the premarket, and look, it was lower profits. We expected that from a year ago, about 44 down. Revenue, missed to slightly what investors are focused on here. The deposit outflows, they had 7 fewer deposits this quarter from last quarter, and even though schwab continues to say the socalled cashsorting issue is getting better, thats when investors move to lower margin, higher yielding options like money market funds from the schwab bank, thats what was the big concern on schwab. The market is still having questions about that. Of course, there are still questions about the integration of tj ameritrade and how much attrition is there in terms of shifting customers over into the schwab platform, but i will tell you that were not seeing a big decline, and part of the reason why is look at the yeartodate performance on the stock, david. Its down already, almost 40 . Yeah, well, as you see, it did rebound, not all the way, but certainly had a significant rebound after that enormous decline in the spring and as you point out the movement of accounts out of schwab to a certain extent, and or their need to have to pay a much higher rate of interest. But what accounts for this recent decline, then . Is it simply a move up in move up in rates. The move in rates has clients potentially moving into higheryielding instruments like money markets. We all thought that kind of had passed as the Federal Reserve was set to stop raising Interest Rates, and then it picked up again. In the last few weeks, its not dissimilar, david, from the move weve seen in Regional Banks and moves weve seen in bank of america as well, with higher Interest Rates, making it more appealing for customers to move their deposits elsewhere, and banks have to pay up, and that pressures profitability. To the extent there were many questions in the strpring about schwab that were much more existential, so to speak, have they answered many if not all of them . Many times. And you have to also think that part of this is, you know, they also have a big retail brokerage and retail trading, and so, like, when stocks arent as appealing, even if there is volatility, that certainly doesnt help. Were going to talk to him about all of these issues. We had reporting on cnbc a few weeks ago that there were questions about succession as well, so i think hes looking forward to coming on and talking about the bank and defending it like he always does. Remember, he said in the heart of that existential crisis, hes buying the stock, hes buying shares, which was a big line in the sand. I dont think its as much existential. Its just a profitability question Going Forward with some of these banks. You mentioned the discussion about money markets and bonds versus equities. Great piece in the journal today, sort of trying to slice and dice the data out of wall street bets, the forum on r reddit, where discussions of tbills are up 4x, and discussion of stocks is down about 10 over the last several months as, i guess, i dont know, david, its like the inverse of the meme environment, right . Yeah. I mean, listen, how many times have we said it . When youre looking at 4. 7 on the tenyear or the possibility of 5 a year getting paid by the u. S. Government, that amount, it gets your attention. Thats an interesting story, though, not to mention, again, to saras point, as rates have moved up a lot of different sectors have moved down and perhaps a little less enthusiasm. But not lately. Last few sessions, things have looked a little better. Were opening here with every sector even in the green, and i do i wonder if the shift to earnings makes people feel a little bit better about the markets because the bulls say, earnings expectations are going up. Gdp growth is strong, and people have jobs, and that bodes well for corporate america, despite the higher rates, and all the doom and gloom around the world, and if you look at the stetup n earnings, in places like consumer staples, for instance, that has been such a hated sector lately, and i know its the obesity drugs. Its also the there are classic bond proxy so its hard to know how much of it is worries about the obesity and how much of it is the yield move, higher rates, make them less attractive as big dividend players. Its bouncing today, but were going to get earnings here from coke next week, and i know theres some analyst love around these companies and their fundamentals, which they just say the stocks have gotten too cheap. This ixr, goldmans got a great note today about their prime book. Hedge funds, last week, sold staples at the fastest in 11 weeks. And shortselling is the largest in three months, 95th percentile over five years. The reasons, were not sure about. You can guess. Theres a couple good suspects, but thats some ridiculous action in staples. Also, by the way, b of a today on glp1 saying were probably in the ninth inning, that this is really stretched in the lillynovo environment. Hard to chase here. And on the other side, we may be in the very early innings of really understanding what the impact may or may not be on all the sectors that we have talked about and or the stocks of particular companies that are thought to potentially suffer a decline in sales as a result of more and more people taking these antiobesity drugs. Its just too early, many would say, carl, to really understand, and yet as is often the case in the market, that hasnt stopped investors from selling now and then asking the questions later, and so weve looked at hershey shares many times, but even far afield, some of the retail those who sell food and others have suffered, sara, as a result of just concern amongst investors that glp1s will have a Significant Impact on a significant amount of the population over time in terms of their ability to want to eat. We just dont know yet. We dont know how widespread, how long people stay on these drugs, how it impacts their buying behavior and their consumption. Hugh johnston, the ceo of pepsi last week, said, were looking at it. Thats what we heard from novas ceo as well, but they dont have answers on these questions. Again, the drugs have not been certainly, many people in the population have not yet taken them who might be eligible for them. There are also questions of reimbursement from insurance companies, although given the gathering data that seems to be there in terms of the health benefits, one would think that may get answered in the positive in terms of Health Insurers stepping up. But we dont have data over any long period of time. We dont have data, but i think one interesting wakeup call was when walmarts jon ferner, the u. S. Business, said in a recent interview, we are seeing customers a slight pullback in overall basket and less units, slightly less calories. That was the first time we really got evidence. Jim and i i wasnt here much last week, but he believed that it may have been as much a as a result of people making healthier choices, not necessarily, carl, i dont want to misquote jim, motivated by the fact that they were taking g glp1s as much as just wanting a healthier choice. That walmart is the outlier. I havent had a chance to talk to jim today, sadly. You are determined to get your jetseagles trash talk in. Its just so many of our friends on twitter who are really looking forward to that moment when jim not that i dont want to see you here, sara. Its okay. Bengals won yesterday. Just to see jim watch first time ever. Weve place them since 73, never beaten them. And that last pass from jalen hurts not the last pass but his last interception, one of three, that jets defense, mahomes, allen, and now hurts all made to not look very good. Would you start rodgers on his return or would you start wilson . Is rodgers really going to come back this year . No. He was passing yesterday with no brace. Its i dont know. He cant. I know. I dont know what hes what wizard hes got, pllike, blessing his ankle every day. Anyhow, we diverge. We should probably hit apple, guys. If taylor swift wasnt there, i didnt see it. Travis kelce was, i believe, there, because his brother plays for the eagles. And snl. He had a special appearance on snl. They were out in nobu. They went to the afterparty. Did they go to the afterafterafterparty . I dont know. Its an old joke from 30 ro rock. It is bucking the overall trend because we have mega cap tech up. Sales of the flagship device in china are now down 4. 5 compared with the iphone 14 over their first 17 days after release. Theyre citing a Company Called counterpoint research, who estimate in previously unreported figures that were provided to bloomberg news. So, that has although you feel as that tho there will be about 17 different stories saying 17 Different Things between now and when we actually find the real numbers. That said, apple is the only dow name on what is red. Dow up 250. I dont know. Well keep our eye on certainly the magnificent seven. Netflix does report this week. Theres quite a few takes about their push into gaming. Theyre going to have store front locations called flenetfl house, and then elsewhere in media, david, well continue to monitor whatever progress there is on s. A. G. Along with news corp. And i know youre watching that. Were keeping an eye on that. Carl, unless i missed something, no progress on s. A. G. Lately. And then sarandos comments talking about asking for a slice of revenue was a bridge too far. As for news corp. , were keeping an eye on that because there have been reports from reuters and the wall street journal that starboard may be taking a look at news corp. , foll following a plan that others have thought about, and the company has as well, which would separate its Digital Assets overall, saying theyre undervalued. You have questions about this . So do i, and im going to be able to ask some of jeff smith. Tomorrow, were going to sit down for our annual interview from the active passive conference we always do. Mr. Smith, who i would point out last year during the same interview, salesforce was the name, and then splunk as well. So, not a bad track. Which got bought by cisco. Just got bought. Not a bad track record there in terms of what he covers in that interview when he does, thank you, jeff, actually bring real stuff to the fore every year. He has a great track record. We just had him for the cnbc Financial Advisors summit where he talked about some of his strategy and how he sort of goes through picking value stocks that he sees good value and then working with management or challenging management and boards on this. Hes led over 100 activist campaigns and has an 80 , according to him, hit rate in terms of profitability and being successful. Of course, depends honorw you characterize that, but darden, replacing the entire board and having that be successful. Thats what brought them to the fore in terms of being noticed and was a great opportunity to raise assets. But theres no doubt hes rigorous. Has he done media before . Ive seen restaurants and a lot of domain names and internet companies. Trying to remember. No. Sometimes tech. I dont remember a media name, for good reason. Its like by the way, news corp. Is a controlled company. Important to point that out. Rare to see an activist try to come up and when you do, its to try to influence in some way but youre not going to be able to take control in any way of the board, given you are fighting a controlled company. Unless you can change the structure. That being the Murdoch Family. That said, they did not go forward with that, remember, the brief effort they made to reunite news corp. And fox, because it would have required a majority of the minority and that was going to be very difficult, not that they wont try again. I think many of us believe at some point, they will. Of course, remember, Rupert Murdoch has stepped down as chairman. Hes sort of chairman emeritus, i think, now, but doesnt mean hes still not focused and or very significantly involved, given he controls the the Murdoch Family controls the company. Watching lulu getting adding to the s p, going to replace Activision Blizzard. If it can get over 410 or so, you would be talk about fresh twoyear highs, but normally, b of a says names that get added are good for about 7 for a couple days before the actual addition and that would be somewhere in that neighborhood. This was largely anticipated. Ever since the activision news looked like it was going to happen, that they were going to replace it, i guess there were some questions, still, because its kind of a technical role. Its based in canada, lululemon, and we dont usually have s p 500 companies that are based in other companies. Taiwan semi is not based there. A lot of their operations, obviously, and sales are in the u. S. And this has just its adding to what has been an already stellar performance by lululemon year to date over the last year, especially if you match that up with the competitors, like nike or adidas. They dont have as much of the International Macro headwinds. They have faster growth. Theyre coming from a much lower base. But this stock has serious momentum. Look at the comparison chart there. Exactly. Thats just this year. Wow. Year to date. 53plus billion dollar market value. Yeah, 54 billion market value. Not that dissimilar, frankly fr from what activisions was more or less. I wasnt here for the final day of microsoft closing that deal. Kind of anticlimactic. I dont know how many words i may have said about that transaction over the 22 months it took to complete it. Im out of words now. Well done, microsoft. What a gauntlet. We havent mentioned amc, and the taylor swift concert film setting some records, one of the best october opens ever, biggest open for a concert film ever. Theyre estimating somewhere in the high 90s in terms of 95 or 97 million in opening grosses. That said, amc stock has not reflected a lot of the strength that you might expect if you were bullish on the return of theatrical distribution. No, there are bigger issues here, obviously, for theaters, but no question its been a big boost to get taylor swift and then obviously beyonce as well. Guys, just want to mention, weve been following cnbc did this great, on squawk box, interview with mark rowan of apollo last week, going activist, basically, on university of pennsylvania for some of their, well, calling for the removal of their head of the school, and just over the weekend, this has picked up steam, this idea of billionaires and investors and backers of universities making it clear that the way that they are handling this issue over the terrorist attack in israel, over antisemitism in the campus, is unacceptable. Former utah governor John Huntsman, huntsman foundation, they have invested millions over the years, university of pennsylvania. They have announced that John Huntsman is ending his donations to the university, condemning the schools moral relativism on hamas, basically, calls it an unrecognizable university, fueled the universitys race to the bottom, it says in the statement, and sadly its now reached a point where remaining impartial is no longer an option. Continuing to look here, following the money for some of these bigtime donors hurting universities where they can. Theres a continued question as to whether donors should have real control over, you know, curriculum and or anything else at these universities, sara, but that said its not curriculum. I understand that. But in general, sort of the operations of the university. But the role of a president of these universities, one of the key roles is to raise money. And so, if you are hit them where it hurts. A significant portion of your donor base, thats probably not a good thing and not a good way to keep your job. Its not just ostracizing but theyre really drawing a line here on morality, on good versus bad when it comes to some of the ways these universities have been handling protests, for instance, faculty, the university of pennsylvania that mark rowan, i mean, he went after them for the festival they held in the schools name. Meantime, well watch bonds, of course, little elevated today. Were going to get harker two times, 10 30 and 4 00. Last friday, he said we could hold rates where they are. Tenyear, 4. 7 . Dow up 250. About a third of that is unh and microsoft alone. Were back in a moment. Fairly decent breath here on the dow up about 250. Apple was the only red component. Boeing and jpm have joined in. Well keep an eye on that. Were back in just a moment. The power goes out and we still have wifi to do our homework. And thats a good thing . Great in my book who are you . No power . No problem. Introducing stormready wifi. Now you can stay reliably connected through Power Outages with unlimited cellular data and up to 4 hours of battery backup to keep you online. Only from xfinity. Home of the xfinity 10g network. Welcome back. Lets get to bob pisani and talk about this open. Very optimistic open. A change we saw last week. Rates moving up and the stock market is up as well. 2 to 1 advancing to declining stocks. The sectors, heartening it see move up in the bank stocks after the better than expected bank reports on friday. Metals and mining goods, proxy for Growth Holding up well. Not breaking out but holding up. Industrials strong. Tech is lagging a little bit. Tech has held up watch. Watch mgk the vanguard mega cap, all the tech names in here, apple, microsoft, amazon, google. 5 from a new 52week high. Now branks doing well on top of that, but theres not new breakouts at all here. We got good reports on friday, but the kbe, the bank etf, thats about where it was back in matrch. No movement there. If you look at the big mini center banks some still reporting, they are just on the edge of 52week lows. 5 from 52 week lowe, bank of america, Morgan Stanley, Goldman Sachs. Well hear from goldman a little bit later on. Well hear from the Regional Banks shortly. We know whats going on, deposits are lower because of the higher yielding alternatives out there. Not much better, 5, 6, 7, 9 from new 52 week lows. Loan growth is tepid, real estate week and deposits lower. Not a lot of new information, its not moving. Nothing is really coming off of the lows here on the bank issues. Where we are right now, theres two things that are important right now for the next few weeks. One is were finally getting out of the seasonally weak period and entering the seasonally strongest period of the year, which is november and december, and this is the quarter before elections next year. Thats also strong. Secondly, earnings have been very resilient. 32 companies reporting. 90 are beating on earnings per share. 90 are beating on earnings, 65 beating on revenues. Thats generally better than they come out. Earnings going up for q3 and q4. Interest rates, a lot of fed officials were talking about last week about higher rates doing the feds work. That i think is whats really resonating with the market right now. Finally well have cathie wood on at 12 30 on half time report. The s. E. C. Side not to appeal its loss in the case so the sec will likely be forced to approve a spot bitcoin etf and cathie is one of the applicants and talk about her investment and major fund ark is doing. Back to you. Talking a little bit, bob pisani. As bob said pretty decent open here. Consumer, materials, and banks are the sectors that will lead you higher with thdoupe w about 0. 75 . Dont go anywhere. This is american infrastructure. Megawatts of power, rails and open road, and essential services of every kind. All running on countless invisible networks, making it a prime target for cyberattacks. But the same aipowered security that protects all of google also defends the systems running americas infrastructure. For these services. For the 336 million of us living here. Good monday morning. Welcome to another hour of squawk on the street. Im sara eisen with Carl Quintanilla and david faber, live for you as always at post nine of the New York Stock Exchange. Take a look at stocks kicking it off in the green for the week. The broad based rally of 0. 6 on the s p and nasdaq up 0. 6 . The weakness in utilities and real estate, defensive sectors. Everything is up. Consumer discretionary is the best performing sector. The hotel names and retail names a little bit higher. Financials also riding high after some big beats but more Big Bank Earnings on the way this week. Take a look at treasuries right now. They continue the selling we have been seeing recently after brief respite last week on the back of a safe haven bid. 10year yield 4. 7 . Stocks are hanging in moving up despite the fact that they have reacted negative throw higher yields in the past. 30 minutes in, here are three movers. Pfizer the best performer in the s p despite warning about its fullyear revenue outlook. Jeffries upgraded the target to buy, saying theres a buying opportunity here. Check out lululemon added to the s p 500 this week taking over from Activision Blizzard as it gets bought by microsoft and then shares of Charles Schwab are in rally mode despite missing revenue estimates. Whats fueling that name coming up this hour. Dont miss an interview with the ceo of schwab at 11 00 a. M. Eastern. The market which is starting off strong as the focus shifts to earnings this week. We will get a lot of fed speak as well and retail sales. For instance, tomorrow, you know, i notice that materials are on top of the market and i do feel like its worth mentioning what happened in china overnight. Even though it didnt help the market there, they continue to support their economy, so they did a big liquidity boost in the markets and, in fact, it was their biggest since 2020 according to Goldman Sachs. They added 289 billion yuan, 40 billion or so into the financial system, used a medium term lending facility. It was the largest monthly injection of liquidity that weve seen in a few years. Continuing to support their economy, you know, the recovery and debt sales by making these moves and these measures. Some of the big banks were talking about, jane fraser, the ceo of citigroup and her Earnings Call, she has a global view, of course, because of their Global Operations talking about how maybe chinas bottomed in terms of sentiment in the economy because there has been a resolve to boost it from the chinese authorities. A little distracted with the u. S. Rate situation, but that continues to be a question mark of whether china is going to grow. Although the property sector, sara, continues to be of grave concern there, doesnt it . Yep. The property sector, the debt overhang, the fact that consumer hasnt fully bounced back, the youth unemployment figures are no longer reported. Yes. Property in particular, given how important it is to the overall economy and revenues and the local municipalities that rely on tax revenues in part from those developers, i think its very much unclear, particularly given the anecdotal things you hear as to whats really is happening or how much the chinese are willing to step in to support. Hard to know. Hard to get the clean read from china. When it comes to support, there is one chart that i wanted to make when it comes to the u. S. And stimulus because, you know, the mantra is the consumers run out of excess savings and the fiscal stimulus is coming to an end. Bank of america, the chief equity strategist is pretty optimistic and one thing she wants to hear about the stimulus the u. S. Theres a great chart i pulled from the bank of america note about the fact that stimulus is still coming in the u. S. Its not boosting consumers pockets nest necessarily but coming in the inflation reduction act, infrastructure act and chips act. Heres the gross investment from the u. S. Government, the blue line leading up. In the middle you can see spending back to precovid levels. The two lines on top, the green line that you see up there and the blue line i think you see up there, those are the new stimulus programs, flakes reduction act, infrastructure act, chips act. It shows there will be a material boost in u. S. Government spending and investment and going to hit start next year and in the coming years and bank of america args thats going to be a good tailwind for earnings. Companies have been reluctant to talk about it so far but were waiting to hear how thats going to impact their spending plans, investment and growth. Generating a deficit of what next year, as much as 1. 3 trillion. Thats the flip side of this. It costs a lot and they have to issue a lot of debt to fund it. To fund that enormous deficit. The question is, is that going to be a real problem for the bond market or not . Usually the market embraces stimulus as growth, but are we at a turning point now because of the higher inflation, because of the higher Interest Rates and how thats going to cost the government. Its one of the main questions were going to tackle. Lets continue that conversation to be sure and bring in david zervos, jeffries chief market strategist. Weve talked about sort of stepping on the brakes and the gas at the same time for a while, but thats a lot of coal in the engine. Yeah. Its stimulus. Its fiscal stimulus. Im not as excited as you know, carl, about the fiscal over the lack of monetary is probably more important. Look, weve got, you know, you were talking about it earlier this morning, slight change of heart in terms of fed policy expectations, whether correct or not remains to be seen, but i think people are using the war in the middle east issue to kind of revise their views of how aggressive the fed might need to be, evenin the face of whats been some pretty incredible data over the last intermeeting period as you have highlighted as well. Which ones stand out to you . Well the expectation data on inflation, both new york fed and michigan, i think are probably ones that will worry the fed the most. Those were recent and big and theyre not going in the right direction. So i think the market is underestimating how important the fed will see that. I think the 336 payrolls you can probably not that off and say thats a one off. Weve had 2. 3 on the core cpi in a row. Its not really going in the right direction, even if some of the internals are good. Without whats happened in the last week in the middle east, i think there would be a very good case for the fed to be moving november 1st, but more than likely they will see it as an opportunity to watch and see how all of these events unfold. Couldnt the rise in Inflation Expectations be chalked up to the fact that gas prices are oil and oil makes a moving and that affects consumers confidence and expectations about inflation which should hopefully go the other way . Yeah. Look the tips market hasnt really done much so its not coming into the long dated fiveyear which the fed looks at. Thats still been range bound. You know, the long date the expectations moved in michigan. I dont want to put too much weight on it but expectations are something theyre focused on. Theyre really looking at winning this battle. They want to get inflation back towards 2 over the next couple years. I think thats jays goal as he sort of swan songs off into the sunset. I dont think he wants to go down as the guy that lets inflation back up either going into a president ial election or after the president ial election. Agree. So i think one of the questions to that end, which is strangely confusing, is the economy accelerating or weakening . And how do we judge exactly whats happening . Because gdp data for q3 looks set to be very strong. Not just that, sara, but the last four quarters have been over 2 . Weve seen one of the fastest drops in inflation in postworld war ii history. The third fastest, 1975 and 1982 the only faster drops over a oneyear period from june of last year to the summer and where we are now. All while growth has been above potential and as you point out, accelerating. This is not fitting a phillips curve model or fitting a fed frbus model. I think theres probably a lot of happiness with what happened with inflation, but theres also a lot of concern that they dont have a great story line. I think the story line is a supply side story as weve talked about. It could bring with it a hook back up in inflation which it very well could do. Demand night not be as pressured to the downside as they had thought with 525 basis points of hikes in there. You know, sara, weve written about why we think the Balance Sheet and the size of the Balance Sheet and some of the losses that are on the Balance Sheet have acted in a stimulative way than in past cycles, maybe nully fig or partially nullifying the 525. You spent prafs in your latest outlook talking about the Balance Sheet. Give us your take as it does get reduced at the fed. Look, carl, we have david, actually. Sorry. Sorry. Sorry, david. I didnt have you guys on the screen. I think the important thing to note, one is we still have an 8 trillion Balance Sheet. If the Balance Sheet were back to the same size as it was precovid about 18 of gdp, it would be about 3. 2 trillion lower. That is a neutral level of the Balance Sheet. We have about 3. 2 trillion of extra monetary stimulus in the system in our system. Thats the equivalent of two qe1s still there. Its going out slowly 90 billion a month not going out quickly. We underestimate how much of the high powered money the fed has injected into the system stimulates. Also, david, the losses on the feds Balance Sheet, 1. 5 trillion. If the fed wasnt running these big Balance Sheets like in the past, we would see those in the economy and show slow things down and taken as losses at insurance companies, banks, wealth funds. The fed is active to socialize losses and the bank of japan and all the other central banks. As rates went up that grated a stimulative wealth effect not typical of bank rise environments. That sounds technical, but the reality is think about it this way. We just had this gigantic, massive, unusual Balance Sheet still in our system, the unconventional painkiller, and we go to tighten, and its still in there. Were nully fi autoing a little bit of the nullifying a little bit of pain jay wanted to put in the system, but really, we still have a lot of stimulus in us. I think that explains a lot of why gdp has been strong, the employment market has been strong and inflation coming down has been a byproduct of the supply side story rather than the demand side story that many of the talking heads that you throw on here every once in a while seem to think was the right story a year ago we would have to crush aggregate demand to get inflation down. Like abntibiotics, you have o finish the course even if you feel better. 100 . Talk to you later. Thanks. Were going to continue to monitor the israelhamas war. Its entering what is its tenth day of conflict. Nb nbcs kelly cobuy iella is live from tel aviv. Reporter good morning. Benjamin netanyahu, the israeli Prime Minister just presided over the opening of the knesset, the israeli parliament, made an address saying many mistakes were made in this and all of them will be thoroughly investigated. He also said that the entire nation is unified right now for a common goal, and that is to attack hamas. Calling hamas part of the evil axis of iran and hezbollah saying they can plunge the middle east into an abyss of chaos and saying that they would that they essentially would be dealt with. Netanyahu also going to be presiding over a security Cabinet Meeting later tonight, so we may learn more, and i stress may, because we havent learned much from these meetings in the past on the israeli plans for moving into gaza on the ground. Speaking of on the ground, that rafah Border Crossing still closed tonight as we get later into the day. Its less and less likely that that will open today. Typically what happens is the Border Crossings when they are opened are only opened during daylight hours. Sunset is probably in ability an hour here. Antony blinken said rafah will reopen, the reason this is crucial, weve been talking about over the past couple days is because that is the effectively the only way out for foreign nationals who are in gaza, including americans, some 500 to 600 americans are in gaza, and not all of them want to leave, but hundreds of people are now gathered at that Border Crossing and have been over the past couple days hoping that they will get a chance to walk across that border and into egypt. Intense International Negotiations are under way between the united nations, egypt, israel, and the u. S. To get that open. Even for a short time. Part of the holdup is getting aid in as well. In order to get the aid in there are massive transport trucks and the trucks have to be searched before they come into gaza. So thats one aspect of just the difficulties still being worked out in those negotiations. David . Thank you. As we head to break right here, a road map for the hour. Charles schwab shares are higher. Well dive deeper into the numbers and discuss whether the best of the Bank Earnings may be behind us. Bitcoin on a tear, the highest level since early august. One luxury automaker says its going to be accepting crypto currency payment for its cars. Fords executive chair bill ford making comments this hour allen about the strike and the impact on the company. Well bring you the headlines when squawk on the street comes right back. On the company. Well bring you the headlines when squawk on the street comes right back. New projects means new project managers. You need to hire. I need indeed. Indeed you do. When you sponsor a job, you immediately get your shortlist of quality candidates, whose resumes on indeed match your job criteria. Visit indeed. Com hire and get started today. Bank earnings continue to roll in. Schwab the latest to report. Shares of the brokerage higher now after down in the premarket. Kate rooney is going through the results. Hey, kate. Carl, good morning. Charles schwab reporting a miss on revenue thanks to softer trading volumes. A lot of talk about the challenges of a higher rate environment on that analyst call. Revenue in the quarter dropped 16 from a year ago. Trading volume down 17 . Net income down 44 from a year ago. Deposits fell 28 year over year as well. Net interest revenue dropping 23 roughly, which schwab says is the result of reallocating cash in the higher rate environment. Asset and Administration Fees were a bright spot up 17 and you have Expense Growth slowing as well. Schwab is a bank as well as a brokerage firm. Yields gone up and customers moving to the uninvested assets into higheliment issues or sorting has weighed on shares. Executives have been talking about that slowdown. They said that that actually did slow down in september after an uptick in august. Schwab is still in the process of integrating td ameritrade, the major acquisition on the analyst call, the ceo saying that deal did see attrition and that is abating. While that attrition has weighed on the net new assets this summer it was better than expected and has largely passed. Saying that overall backdrop of the environment is negative. It might be easier to look at the near term challenges facing schwab, but did try to highlight and said the entirety of our position and potential for all of that it creates in the future. Trying to bring some optimism there, guys, back to you. Okay. Thank you. Speaking of schwab and Financial Services, bank of america, Goldman Sachs, Morgan Stanley, will all report earnings this week. On friday we did get a number of the biggest banks as well. Lets bring in leslie picker and get a scorecard here on what weve seen and expect. Leslie . Hey, david. Jpmorgan, citigroup, and wells fargo all reported on friday. Each beat, each raised Net Interest Income guidance again this quarter. Deposit levels have stabilized, echoing what cate was talking about with the cash sorting dynamic of customers looking for higher yielding assets elsewhere. We really saw deposits stabilize among the three that had reported. Credit costs as well were a concern. But they came in much better than analysts thought. They expected more of a no normalization but no indication theyre expecting things to get much worse at least in the near term here. Looking ahead youve got Morgan Stanley and Goldman Sachs. Those are going to be much more levered to the Capital Markets to deal making which weve seen sort of a mixed kind of performance in the three that reported on friday with regard to the Capital Markets. Well see what Morgan Stanley and Goldman Sachs have in store there. And then bank of americas exposure to loan making, the nii we talked about, Net Interest Income, well see if it mirrors the big three that reported last week. The question among the Analyst Community right now is, are these universal banks and jpmorgan alluded to this in the Earnings Call r they over earning on nii and under earning in the Capital Markets and if so what does that mean for 2024 if there is some sort of recession and if rates do stay higher for longer. What does that mean for the nii tailwinds theyve been andy jassy enjoying much longer than the street expected. Bank of america are notable they declined what many others have. 19 for the year in part. We sawit with the decline in the stock with a long fairly long dated bond portfolio when rates were 4. 8 on the 10year or more. Any expectation in terms of what its going to show or whether they discussed it . Obviously, these are embedded losses that will probably never be realized. Probably never be realized because its such a large bank and very well capitalized bank and people dont expect there to be a run on deposits like in the Regional Banks earlier this year. That said its having an impact on the stock. It raises overall concerns. I expect them to bring it up, especially on the Earnings Call. It will be something that is discussed and disclosed. But in terms of just an overarching, you know, systemic issue with the stock, its not thats not necessarily something that were going to see there. It is absolutely a concern among, you know, the street, investors, as well as analysts. Leslie, thank you. Leslie picker. Speaking of banks, next hour do not miss an interview with the ceo of Charles Schwab. After the break comments from secretary yellen on the u. S. Economy and our relationship with china. Were back in two minutes as the dow continues to power higher up 255. Some things are good to know. Like. Where to find the cheapest gas in town. 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A lot to discuss there. Sky news anchor wilfred frost sat down exclusively with secretary yellen. We miss you. What stood out to you from secretary yellen . I miss all of you guys very much as well. Its great to be back, albeit briefly. I started by asking her whether there are any conditions attached to americas support for israel, given the unfolding humanitarian crisis in gaza. Her answer to that was very clear. She said, quote, america stands behind israel, period. I also asked her whether america could afford to support two foreign wars at the same time, and a similarly clear answer to that, absolutely. And this was why she said absolutely. The economy is doing extremely well. Inflation has been high, and its been a concern to households. Its come down considerably. At the same time, we have about the strongest labor market weve seen in 50 years with 3. 8 unemployment. Weve seen a burgeoning of investment, especially in manufacturing, and Industrial Renaissance in the United States. Were creating good jobs, especially for people who have been dont have a college education, have been left out of really economic progress in the United States, so the United States economy is in a good place. Reporter looking further out, medium to long term, there was one other positive bit of news as it relates to the u. S. , but perhaps also the Global Economy. Relating to the strained u. S. China relationship of recent years, i asked whether the strain in that relationship had, perhaps, bottomed and was improving . Her response encouragingly was perhaps, and she added this. We certainly have improved communication. Weve set out clearly both to americans and also to our to the chinese a set of principles that we see as governing our relationship, and they are essentially these first of all, we will always protect our National Security and take a stand against human rights abuses. Thats nonnegotiable. But with respect to National Security, we will our objective is not to harm progress in china. It is really oriented at National Security and we will try to design our intervengsz of things like export controls narrowly to keep them focused on real National Security concerns. Second, we are not attempting to decouple from china. We have a deep economic relationship, and that kind of competition, trade and investment, is beneficial to both sides and we want an environment in which it can continue. Reporter for pretty much the last six years since the start of the trump administration, the u. S. Has been trying to encourage the european counterparts to erect barriers with china and follow the u. S. s lead. One wonders whether the first time in a long time the economic and Financial Affairs Forum Taking Place here in luxembourg the message from secretary yellen perhaps not constructive as it relates to relations with china, but less obstructive than the norm of the last few years. Im sure the Business Community will be happy to see that. Wilfred, what is the secretary doing in luxembourg and on the International Trip . Were so focused now on gee wroe politics with whats going on and alines and the u. S. Alliances and the u. S. Getting strong backing from its allies to confront an increasingly dangerous world . Reporter well, this is, as you said, the end of what has been an eight or nineday trip for her. Perhaps the key takeaway was her constructive meeting with the central bank of chinas governor. Shes added this on at the end, the Euro Group Meeting of finance ministers. No uk finance minister here anymore. Rounding off a trip that has then been dominated with conversations about israel and we did catch up about not releasing 6 billion to iran earlier. The key message here in europe much closer, of course, to the ukraine war than when shes back at home, is that america absolutely stands by that commitment to that, despite the issues in congress. She was very clear to say i believe theres a strong Bipartisan Coalition in favor of support for ukraine. It is a top priority for president biden, she said, once a speaker is in place. Will, thank you. Of course the key being there once a speaker is in place. Well monitor whats going on in the house of representatives here. Great to see you. W wilfred frost reporting from london. Sheila bair says higher rates for longer are a good thing and why the new generation of weight loss drugs, well, maybe theyre going to cause restaurant and snack companies to tighten their belts . What will that mean for investors . Well have the story. 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. Welcome back. Im Pippa Stevens with your news update. As Major Airlines suspend flights to israel amid the war with hamas, u. S. Citizens and their family members boarded a cruise ship today to get out of the country. U. S. Embassy officials verified their documents at an israeli port before boarding a ship headed to cyprus. The journey is expected to take 10 to 12 hours. A federal judge is hearing arguments this morning about whether former President Donald Trump should be subject to a limited gag order ahead of his federal election interference trial. Trumps legal team calls the special councils request for the order political motivated. The first female manager is leaving the marlins. The team made the announcement today saying kim ng turned down their team option for her to return for the 2024 season and told the athletic she was not completely aligned with the team on plans to reshape the baseball operations department. Carl . Thanks. Fords executive chair bill ford making comments on the uaw strikes. Well turn to fphil lebeau who has been monitoring the latest. This is the first time weve heard from bill ford since one month ago, one month and one day ago, when the uaw walked off the job, including at the Michigan Assembly plant in wayne, michigan, and today, bill ford said its time for this strike to end. He admits its become acrimonious. Take a look at shares of ford, its also become a costly strike. Jpmorgan estimates that so far the strike has cost ford half a billion dollars and by its estimate, jpmorgans estimate ford is losing 44 million every k day. Heres what bill ford had to say about ending this strike. This should not be ford versus the uaw. It should be ford and the uaw, versus toyota, honda, tesla, and all the Chinese Companies that want to enter our home market. Toids toyota, honda, tesla and the others are loving this strike because they know the longer it goes on, the better it is for them. Reporter we thought we would show you a comparison over the last three months of ford versus toyota, honda and tesla. Ford down almost 20 over the last three month. Important to note here, guys, bill ford, while he is adamant and he was sincere in these comments, he thinks its time to end this before theres more damage, lets say, to the supply base in the country, which he says will collapse if this strike drags on and on, its important to note, he did not give an update in terms of some of the key points which are at the heart of this disagreement over a future contract, notably whats going to happen with the staffing of electric vehicle battery plants. Are those people going to be uaw represented or not. So well send it back to you guys. Strong comments from bill ford today. One month and one day after the beginning of the uaw strike. Real quick it does feel like were moving closer to the scenario that adam jonas has been pointing out, an environment where the big three reduce capex, push back the ev targets because of whats going on with the strike . I think hes right. I think that at some point here, if you are gm, ford and stellantis, if you cant get a deal locked in relatively soon, and you dont have the terms that make you confident you can both pay the uaw, which theyre going to be paid substantially more, and invest in the development of evs, ev battery plants, you have to start prioritizing and i think were not quite there, but i wouldnt be surprised if its not far away. Phil lebeau. Well talk soon. Thank you very much. We continue to rising Interest Rates and bond yields. Markets set to digest comments from 20 fed speakers this week with fed chair powell delivering his outlook for the u. S. Economy on thursday. Our next guest in her oped saying higher rates for longer a a good thing. Joining us sheila bare, center for financial adviser. Dont tell that to someone who wants to get a mortgage or auto loan. Why is it a good thing . Well, i think, look, if money is free you dont allocate it prudently. Weigh a seen a lot of conditions, silly stuff attracting capital a lot of consolidation, a lot of that free money has been going into m a, so all those things stifel innovation and hurt the economy, and its ability to produce good paying jobs. Its not done much for wages at all. Its inflated assets a lot which helps the haves or the have nots. I think theres a lot for main street to dislike about low Interest Rates. Yeah, im sorry, my mortgage is 9. 25 in 1990 when i first got it, so i do understand, you know, its all relative to Interest Rates and Mortgage Rates seem high. Which actually fed a bubble in the Housing Market and has contributed mightily to home prices going up. Credit card debt file your pain, but please pay your bill off every month. Dont pay credit card interest. Dont carry it. Use your credit card to make payments and for convenience but pay that off at the end of the month. The thing is your opportunity costs are greater because the money you dont spend on interest you can put in a bank account and get 5 . Its been long since we can get a decent rate on our savings account. This is positive for main street as well. Its going to be painful goat the transition no doubt about it. But small businesses, sheila, its a very blunt instrument, you know, raising Interest Rates and the smaller, weaker firms that need to borrow, get hit a lot harder, and it does separate the winners and losers and the Bigger Companies to scale that are safer have a much easier time dealing with it . I would allergue that was go on with zero Interest Rate policy. It benefitted the Larger Companies that could access Capital Markets, not so much the smaller ones that had to go for bank loans. The regional and Community Banks who do the lions share of small and mediumsized business lendings were killed by zero Interest Rates. Want to know why we dont have new Community Banks over the past several years, if your Business Model is take deposits and make loans and make money off them, it was very, very difficult and that interest margin it was difficult to make money. This is painful to everybody, but once we go to a normalized environment you will see more robust Credit Availability for the small and mediumsized businesses and less disparity between the large guys. I know if you chart say the s p versus the russell 2000, they traded in line till about march, when we know what happened in march, since then theyve split and its the big corporates that have performed better because some argue the maturity walls are more intense for smaller companies. Is that not right . I think theres a lot of Big Companies that have a lot of debt resetting over the next couple years too. Im not sure. I think there will be pain for the larger ones as well. This is a difficult transition, but its important to remember historically Interest Rates arent that high. We were in an aberrational period of zero to negative rates. Were normalizing now. There will be pain in the transition for everybody. But when we get to the other side this will be better for small and mediumsized businesses and better for small and medium sized banks who can finally we need to normalize the yield curve as well, who can finally make a decent spread. If Interest Rates have hit the zero, its very hard to make money taking deposits and making loans. I think, again, when we get through this it will be a better thing not a worse thing for main street. Sheila, its david. How long until the banks normalize . We were talking about bank of america sflooerl thats a good question. Long dated bond portfolio. Wont realize losses but it does rea realize interest margin. If you dont agree with my argument, we need higher rates to contain inflation. Thats what happens when youre in a period of monetary policy, it eventually comes home to bite, you have to raise rates and puts stress on the financial system, on households. Its another reason not to ever go back to this, you know, very long period of free money because at some point you have to get out and its painful. I dont know how long its going to last. Im worried about Regional Banks. Congress should give the fdic authority, which we had during the great financial crisis, to provide an unlimited guarantee for business transaction accounts. Its important for Regional Banks, they are losing the deposits and those business transactions to the very largest banks because of people are unsettled right now. There are things in the interim that congress can do to make the pain on this leshs but theyre not doing much of anything as you can see, so i dont need to further comment on that. But the whole idea, i get why youre saying the Financial Stability comes from easing money. Financial instability comes from rising rates as well, and we saw that with the Regional Bank crisis. Only because of the inflated asset valuations build up of leverage. W you wouldnt have had people borrowing so much and they wouldnt have been based on collateral and inflated asset value. The low Interest Rates created the financial instability, and it eventually lad to end trying to drive an economy with zero cost money is not sustainable. Its just based on borrowing and you can only borrow so much. Youre pulling demand for it. Youre not create anything real value. At some point, you have to reverse course and tighten rates. When that happens, you have a problem because of all this financial instability created by lott rates that incentivize risk taking and borrowing penalized savings. It makes the economy and households less resilient and creates bad incentives. Its an interesting thought process and debate to have right now. We appreciate you joining us. My pleasure. Thanks for having me. Sheila bair. Still to come, potential impact of the weight loss drugs to restaurants and Food Companies. Mcdonalds mondelez, dominos down double digits the couple months of trading. Were back in a couple minutes. woman what would the ideal Weight Loss Program look like . No hunger, no cravings, no isolation, more energy, lasting results, and easy. Is that possible . It is with golo. These people changed their lives with golo without starvation dieting. Whether you have 100 pounds to lose or want to shed those final 20, try golo for 60 days and never diet again. uplifting music take a look at crude here extending losses as the Washington Post runs a headline that the white house is in talks with the venezuelangovernment to ease sanctions on their oil industry in return for guarantees of a competitive internationally monitored president ial election next year. This is sort of in the mix for a while now. The prospect of nonopec supply, if that does come online. You might expect crude to trade marginally lower. Well see. Wall street is beginning to digest how the latest generation of weight loss drugs will Impact Industries from food to travel. Lets bring in evercore restaurant and packaged food analyst david palmer for a bit of conversation about this. David, first off, are you getting a lot of questions from your clients about the impact on the companies you cover from these glp1s . Its a big topic. It gets conflated with the fact that a lot of our companies arent doing that great right now volume wise, so i think theres, obviously, also rate fears between the rate issue and the fact that many of our dividend found companies would be marked down because of that. The volume and traffic depending on the sector and, of course, glp1 gives a face to the enemy so to speak in terms of one reason why volume or traffic would be down for food and Restaurant Companies. Seems a little hard to imagine it really could be the reason. I mean, again, we were having this conversation a bit earlier. It is early, not to understate the significance of the drugs. Where do you come down . How do you answer those who ask you, are they having an impact already on sales . Well, we talk to our experts here who covers many of these companies in the weight loss area. 5 million or so are on these drugs, 10 million have tried them. The average consumer is often dropping off an average of 10 months into it. So its interesting that youre even getting evidence that theres some attrition that goes along with this. Getting from 5 million adults up to 15 million over a few years, gets you roughly it could be upwards of a half a point headwind per year over the three years. That seems on the high side. Meanwhile, that doesnt seem to be a big stuff when you think about food, for example. Our Food Companies right now are down 7 to 8 volume. The overall measured food is down 2 as people are pinching pennies, supermarket. And restaurants, down a little bit, 1 or so. But the big deal is always going to be pricing power. You know, for example, mcdon allegeds in the last ten years or so, theyve averaged 1. 5 traffic per year, and their stock has tripled because theyve done a lot with minimizing what they do sell in the u. S. So, were trying to put everything in context. Pricing power is more important, and Food Companies are dealing with way worse than just ozempic right now in terms of volume declines. So, the restaurant s p sector is about 16 off the 52week highs. Are there growth stories in this group . Are there some that have been thrown out that dont deserve to be . Absolutely. We talked about in the food side theres food company most of our food coverage are losing share and the overall share of stomach. In restaurants, the companies are gaining share in terms of share of stomach. Thats true in the casual dining space where players like texas r roadhouse are gaining a lot of share in casual dining, but its also true many Restaurant Companies are global, and theres accelerating and very strong growth. Even in europe, were seeing some peer growth out of uk players over there. Were expecting very strong results and accelerating unit growth overseas. Tim hortons in canada, for example, is also doing very well. The global guys are doing well, and in terms of the environment where well have some inflation, hourly wages are still going up, these large sharegaining franchise players, whether thats taco bell next year or mcdonalds, burger king is doing pretty well right now, as well, these Global Players with a share gain domestically will put you in pretty good position to have a rebound. As you point out, now were approaching the lows on valuation in a multiyear basis on many of these. David, thanks for the update. Appreciate it. My pleasure. Thank you. Thanks, david. Share of stomach is a good metric. After the break, cptryo has a shiny new object to flash. We planned well for retirement, but i wish we had more cash. You think those two have any idea . That they can sell their Life Insurance policy for cash . So theyre basically sitting on a goldmine . I dont think they have a clue. Thats crazy well, not everyone knows coventrys helped thousands of people sell their policies for cash. Even term policies. I cant believe theyre just sitting up there sitting on all this cash. If you own a Life Insurance policy of 100,000 or more, you can sell all or part of it to coventry. Even a term policy. For cash, or a combination of cash and coverage, with no future premiums. Someone needs to tell them, that theyre sitting on a goldmine, and you have no idea hey, guys youre sitting on a goldmine come on, guys do you hear that . I dont hear anything anymore. Find out if youre sitting on a goldmine. 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Bitcoin hits its highest level since early august when it traded above 30k. This comes as one luxury automaker plans to accept the cryptocurrencies as payments for its cars. Robert frank has details on that. Good morning, robert. Good morning. That automaker is ferrari. Theyre announcing it will accept bitcoin, ether, and others. Theyll partner with bitpay to process those payments. It will start in the u. S. And expand to europe next year. Ferrari saying there will be no feeings or surcharges if you pay with crypto. Typically bitpay charges a 1 to 2 fee. So its unclear if ferrari is paying that or if its being waived by bitpay. Crypto will be immediately transferred into u. S. Dollars at the time of purr class, so neither the dealers nor ferrari will be taking any actual crypto risk here. As always, of course, buyers will have to pay a Capital Gains tax if theyre a u. S. Citizen on any increase of the value of the crypto they use for that purchase. So, why would ferrari do this . They say some of their younger buyers have built their fortunes in crypto. Tesla briefly accepted crypto in 2021 before halting the program, citing energy use. Lamborghini and other supercarmakers do not accept crypto. Its not like ferrari is hurting for business. Cars are sold out for the next two to three years. I talked to a number of the dealers over the weekend who say they dont get many requests for buyers for crypto as a payment. So, a little bit of a mystery as to why ferrari would need to do this or wanted to do this right now. Robert, i always come back to the fact its got a 77 billion market value, larger than basically every automaker, at least on my screen, other than tesla. Yeah. And, you know, as i said, theyre sold out through 2023 and at least through 2025, 2026. So, they dont need the business. The hardest things the dealers have right now is getting more cars. They make less than 15,000 cars a year despite, as you say, that massive market cap. 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[ giggling ] [ screaming ] i want you to meet the others. [ screaming ] good morning. Todays stocks are trading higher. Dow is up 400plus, as we get set for a busy week of earnings. The chief office